Long Title

Part I PRELIMINARY

Part II LICENSING OF FINANCE COMPANIES

Part III RESERVE FUNDS, DIVIDENDS, BALANCE-SHEETS AND INFORMATION

Part IV REGULATION OF BUSINESS

Part V MINIMUM LIQUID ASSETS

Part VI INSPECTION AND CONTROL OF FINANCE COMPANIES

Part VII SUBMISSION OF ACCOUNTS AND DUTIES OF AUDITORS

Part VIII MISCELLANEOUS

Legislative History

Comparative Table

PART IV
REGULATION OF BUSINESS
Acknowledgment of indebtedness
22.  Where a finance company has accepted money from any person as a deposit, the company shall within 2 months after the acceptance of the money issue to that person a document which acknowledges or evidences or constitutes an acknowledgment of the indebtedness of the company in respect of that deposit.
Dealings by finance companies and credit facilities and limits
23.
—(1)  No finance company shall —
(a)
accept any deposit which is repayable on demand by cheque, draft or order drawn by a depositor on the finance company;
(b)
deal in any foreign currency, gold or any other precious metal;
(c)
acquire stocks, shares or debt or convertible securities of any financial, commercial, agricultural, industrial or other undertaking or government which are denominated in any foreign currency;
(d)
grant or permit to be outstanding to any one person or to any group of persons under the control or influence of any one person, any credit facilities if the aggregate amount of such credit facilities exceeds 25% of its capital funds or such other percentage not exceeding 100% of its capital funds as the Authority may approve;
(e)
grant substantial loans which in the aggregate exceed 50% of its total credit facilities or such other percentage as the Authority may from time to time determine; or
(f)
grant unsecured advances, unsecured loans or unsecured credit facilities —
(i)
to any person or body of persons, whether incorporated or not, which in the aggregate and outstanding at any one time exceeds $5,000; and
(ii)
which in the aggregate and outstanding at any one time exceeds 10% of the capital funds of the finance company.
[27/94]
(2)  Notwithstanding the provisions of subsection (1)(b) and (c), a finance company with capital funds of not less than $100 million may apply to the Authority for exemption from those provisions and the Authority may approve the application subject to —
(a)
the condition that the aggregate amount of foreign currency exposure of the finance company shall not at any time exceed 10% of its capital funds; and
(b)
any other condition which the Authority may think fit to impose.
[27/94]
(3)  Subsection (1)(d) and (e) shall not apply to —
(a)
transactions with the Government;
(b)
transactions with banks; or
(c)
any other type of transaction which the Authority may from time to time approve.
[27/94]
(4)  Subsection (1)(f) shall not apply to the purchase of —
(a)
any Government securities; or
(b)
any bonds issued by such statutory corporation as the Authority may, by notification in writing, determine.
[27/94]
(5)  All the directors of a finance company shall be liable jointly and severally to indemnify a finance company against any loss arising from the making of any unsecured advance, loan or credit facility to —
(a)
any of its directors, whether those credit facilities are obtained by its directors jointly or severally;
(b)
a firm or limited liability partnership in which that finance company or any of its directors has an interest as a partner, manager or agent;
(ba)
any individual of whom, or firm or limited liability partnership of which, any of that finance company’s directors is a guarantor;
(c)
a company in which any of that finance company’s directors, whether legally or beneficially, owns more than 50% of the issued capital or in which any of that finance company’s directors controls the composition of the board of directors, but excluding any public company the securities of which are listed on the Singapore Exchange Securities Trading Limited or any other securities exchange which the Authority may approve under the Securities and Futures Act (Cap. 289), and the subsidiaries of such public company; or
(d)
a corporation that is deemed to be related to the finance company as described in section 6 of the Companies Act (Cap. 50).
[27/94; 42/2001; 5/2005]
(6)  In this section —
(a)
“aggregate amount of foreign currency exposure” means the aggregate value of investments in securities denominated in foreign currencies which are listed on exchanges recognised by the Authority and holdings of foreign currencies;
(b)
the reference to “director” in subsection (5) includes the wife, husband, father, mother, son or daughter of a director;
(c)
“substantial loan” means any credit facility granted by a finance company to a single person or to any group of persons under the control or influence of a single person which in the aggregate exceeds 15% of the finance company’s capital funds;
(d)
“unsecured advance”, “unsecured loan” or “unsecured credit facility” means any advance, loan or credit facility given without security, or in respect of any advance, loan or credit facility given with security, any part thereof which at any time exceeds the market value of the assets constituting that security, or where the Authority is satisfied that there is no established market value, on the basis of a valuation approved by it.
[27/94; 9/95]
(7)  Any finance company which contravenes any of the provisions of this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000.
[27/94]
Dealing by finance company in its own shares, etc.
24.
—(1)  Except as is otherwise expressly provided by this Act, no finance company shall give, directly or indirectly and whether by means of a loan guarantee or the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person of, or for, any shares in the finance company or, where such company is a subsidiary, in its holding company, or in any way purchase, deal in or lend money on its own shares.
(2)  Nothing in subsection (1) shall prohibit —
(a)
the provision by a finance company, in accordance with any scheme for the time being in force, of money for the purchase of or subscription for fully-paid shares in the finance company or its holding company, being a purchase or subscription by trustees of or for shares to be held by or for the benefit of employees of the company, including any director holding a salaried employment or office in the company; or
(b)
the giving of financial assistance by a finance company to persons, other than directors, bona fide in the employment of that company or of a subsidiary of that company with a view to enabling those persons to purchase fully-paid shares in the finance company to be held by themselves by way of beneficial ownership.
(3)  If there is any contravention of this section, the finance company and every officer of that company who is in default shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 12 months.
[33/84]
(4)  Nothing in this section shall operate to prevent the finance company from recovering the amount of any loan made in contravention of this section or any amount for which it becomes liable on account of any financial assistance given in contravention of this section.
Restrictions on trade by finance companies
25.
—(1)  No finance company shall engage, whether on its own account or on a commission basis, and whether alone or with others, in the wholesale or retail trade, including the import or export trade, except for the purpose of carrying on its financing business.
(2)  Except as is otherwise provided in this Act, a finance company shall not carry on any kind of business other than financing business.
Restrictions on investments by finance companies
26.
—(1)  No finance company shall acquire or hold any part of the share capital of, or otherwise have a direct interest in, any financial, commercial, agricultural, industrial or other undertaking exceeding in the aggregate 25% of the capital funds of that finance company except such shareholding as the finance company may acquire in the course of realising debts due to it, which shareholding shall, however, be disposed of at the earliest suitable moment.
[27/94]
(2)  Notwithstanding subsection (1), the percentage holding or interest referred to in that subsection may upon the application of a finance company to the Authority, and with the consent of the Authority, be increased to not more than 50% of the capital funds of that finance company.
[27/94]
Restrictions on holding immovable property by finance companies
27.
—(1)  No finance company shall purchase or acquire any immovable property, or any right, title or interest therein exceeding in the aggregate at any one time 25% of the finance company’s capital funds, except as may be reasonably necessary for the purpose of conducting its business or of housing or providing amenities for its staff.
(2)  Subsection (1) shall not prevent a finance company —
(a)
from letting part of any building which is used for the purpose of conducting its business; or
(b)
from securing a debt on any immovable property and in the event of default in payment of the debt, from holding that immovable property for realisation by sale or auction at the earliest suitable moment.
[27/94]
(3)  This section shall not apply to such property as may from time to time be approved by the Authority.
(4)  The Registrar of Titles in issuing any certificate of title or registering any assurance in the Land Titles Registry or any purchaser shall be exonerated from enquiring as to any matter or fact relating to the title of a finance company to, or to the power of a finance company in dealing with, any immovable property, or any right, title and interest therein, which has been purchased or acquired in contravention of the prohibition contained in this section and shall be protected from the effect of notice of any such matter or fact.
Control over finance companies in the acquisition of shares in companies
28.
—(1)  No finance company shall enter into an agreement to acquire the share capital of any company by virtue of which the finance company would, if the agreement is carried out, acquire or hold, directly or indirectly, an interest of 20% or more of the share capital of that company, without first notifying the Authority of its intention to enter into the agreement and obtaining the approval of the Authority to its entering into the agreement.
[33/84]
(2)  The Authority may approve the entering into the agreement with or without conditions or may disapprove it without giving any reasons.
[33/84]
(3)  Subsection (1) shall not apply to an agreement by virtue of which the finance company would acquire an interest of 20% or more of the share capital in a company by way of enforcement of security to satisfy debts due to it by the company if, upon making the acquisition, the finance company obtains the approval of the Authority to retain the shareholdings as an investment.
[33/84]
(4)  If the Authority does not grant approval under subsection (3), the finance company shall dispose of the shareholdings at the earliest opportunity.
[33/84]
(5)  In this section, “company” means a company whether incorporated in Singapore or elsewhere.
[33/84]
(6)  A finance company which contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000.
[33/84]
Power of Authority to secure compliance with sections 23, 26, 27 and 31
29.
—(1)  Any finance company, if at any time called upon in writing by the Authority to do so, shall satisfy the Authority, by the production of such evidence or information as the Authority may require, that the finance company is not in contravention of any of the provisions of section 23, 26, 27 or 31.
[33/84]
(2)  For the purpose of securing compliance with the sections referred to in subsection (1), the Authority may from time to time by notice in writing require any finance company to aggregate its assets, liabilities or profits, as the case may be, with the assets, liabilities or profits of all or any of the finance company’s related companies, as described in section 6 of the Companies Act (Cap. 50), and the finance company shall comply with that requirement within such time as is specified in the notice.
[33/84]
(3)  A finance company which fails to comply with any requirement of the Authority under this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $2,000 for every day during which the default continues after conviction.
[33/84]
Notices to finance companies
30.
—(1)  The Authority may, if it appears to the Authority to be necessary or expedient in the public interest or the interest of the financial system, by notice in writing to finance companies give directions or impose requirements on or relating to the activities or operations of and standards to be maintained by finance companies.
[27/94]
(2)  Without prejudice to the generality of subsection (1), any notice under that subsection may be given in respect of —
(a)
the revaluation of the assets of finance companies;
(b)
the maintenance of credit files of borrowers and classification of loans, advances and credit facilities of a finance company;
(c)
the restrictions on the granting of Singapore dollar credit facilities in whatever form or by whatever means to residents of Singapore where such facilities are to be used outside Singapore, or to non-residents;
(d)
the appointment of directors, chief and deputy chief executive officers of a finance company;
(e)
the code of conduct governing the manner and method by which a finance company solicits business and deals with its customers, the procedures for the reporting of transactions between a finance company and its employees, and conflicts of interest involving the finance company and its employees or involving the finance company and its customers;
(f)
the maximum aggregate permissible percentage holdings by any class, category or description of persons of interests in shares of a finance company;
(g)
the preparation by finance companies of profit and loss accounts and balance-sheets and the form and content thereof;
(h)
the conditions under which finance companies can engage in the financing of trade and inventory;
(i)
the forms, returns and submission of statistics for the purposes of this Act; and
(j)
the provision for and writing off of bad debts by a finance company.
[27/94]
(3)  Every finance company shall comply with any direction or requirement imposed by any notice under this section.
[27/94]
Orders by Authority
31.
—(1)  The Authority may, by order, prescribe —
(a)
the maximum rates of interest that finance companies shall pay on different types or classes of deposits;
(b)
the maximum amount or amounts, expressed as a percentage or percentages, of total assets that finance companies may hold in one or more types or classes of loans, or advances;
(c)
the minimum down payments and maximum maturity periods for different types or classes of loans, or advances granted by finance companies;
(d)
the maximum rates of interest or commission and other charges and the methods of computing such interest or commission and other charges that finance companies may impose on different types or classes of loans, or advances granted by them;
(e)
the maximum amount of loans or advances which finance companies may grant to any person or class of persons; and
(f)
the reserves to be maintained with the Authority.
(2)  Any order made under subsection (1) shall apply uniformly to all finance companies, or to any class or classes of finance companies, and shall, together with its effective date, be published in the Gazette.
(3)  Where a finance company has failed to maintain the reserves required by an order made under subsection (1)(f), the Authority may by notice in writing direct that finance company to make good the deficiency within the period specified in the notice.
[27/94]
(4)  If the defaulting finance company fails to make good the deficiency within the period specified in the notice referred to in subsection (3), it shall be lawful, notwithstanding the provisions of any other written law, for the Authority to serve a notice in writing upon any bank with which the defaulting finance company has a credit balance, whether in current or deposit account, directing that bank to transfer to the Authority up to such amount as is specified in the notice as being equivalent to the amount of the deficiency in the minimum cash balances of the defaulting finance company required under subsection (1)(f) and the bank shall comply immediately with the requirements of that notice.
[27/94]
(5)  The Authority may, notwithstanding any notice given under subsection (3) or (4), impose on any finance company that fails to maintain the reserves required by an order made under subsection (1)(f) a penalty interest charge of $100 per day or such larger amount as the Authority may determine for every day during which the finance company continues to fail to maintain such reserves.
[27/94]