Section 13

Maintenance of reserve fund by finance companies

of Finance Companies Act

ActIn forceProvision 12 of 45

Every finance company shall -

(a)

maintain a reserve fund;

LAWS OF BRUNEl

Finance Cbnzpanies

CAP. 89 15

(b)

if the paid-up capital of the finance company is not less than

$2 million, transfer to such reserve fund out of the net profits of each year after due provision has been made for taxation -

(i)

so long as the amount of the reserve fund is less than 50 per cent of the paid-up capital, a sum equal to not less than 30 per cent of the net profits;

(ii)

so long as the amount of the reserve fund is not less than 50 per cent but less than 100 per cent of the paid-up capital, a sum equal to not less than 15 per cent of the net profits;

(iii)

so long as the amount of the reserve fund is not less than 100 per cent of the paid-up capital, a sum equal to not less than 5 per cent of the net profits; and

(c)

if the paid-up capital of the finance company is less than $2

million, transfer to such reserve fund out of the net profits of each year after due provision has been made for taxation -

(i)

so long as the amount of the reserve fund is less than 50 per cent of the paid-up capital, a sum equal to not less than 50 per cent of the net profits;

(ii)

so long as the amount of the reserve fund is not less than 50 per cent but less than 100 per cent of the paid-up capital, a sum equal to not less than 25 per cent of the net profits;

(iii)

so long as the amount of the reserve fund is not less than 100 per cent of the paid-up capital, a sum equal to not less than 10 per cent of the net profits.

Minimum cash balances 13A. (1) The Authority may require finance company to maintain minimum cash balances, not exceeding 30 per cent of each finance companys' deposit and other liabilities, on deposit with the Authority as reserves against their deposit and other liabilities.

(2)

Subject to the limit specified in subsection (1). the Authority may prescribe different ratios for different types of liabilities and may further

CAP.89

Finance Companies prescribe the method of computing the amount of the required reserves, but the ratios shall be uniform for all finance con~panies.

(3)

Any prescription of, or change in, the minimum reserve requirements under subsection (1) or (2) shall take effect only after the expiration of 30 days' notice to the finance companies of the Authority's intention to take such action.

(4)

Where a finance company (in this section referred to as the defaulting finance company) has failed to maintain sufficient minimum cash balances required under subsection (I), the Authority may by order in writing direct the defaulting finance company to make good the deficiency within the period specified in the order and the defaulting finance company shall comply with the requirements of the order.

(5)

If the defaulting finance company fails to make good the deficiency within the period specified in the order referred to in subsection (4), it shall be lawful. notwithstanding the provisions of any other written law, for the Authority to serve a notice in writing upon any other finance company with which the defaulting finance company has a credit balance. whether in current or deposit account, directing that finance company to transfer to the Authority such amount (not exceeding such credit balance) 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) and the other finance company shall immediately comply with the requirements of that notice.

(6)

No action shall lie against' and no liability shall attach to, any finance company that complies with the requirements of a notice referred to in subsection (5) for any loss or damage suffered by the defaulting finance company as a result of the other finance company taking action in compliance with the requirements of that notice.

(7)

The Authority may, in addition to any action taken under subsections (4) and (5), impose on any finance company that fails to maintain sufficient minimum cash balances required under subsection (1) a penalty interest charge of $1,000 per day or such larger amount as the

Authority may determine for every day during which the deficiency continues.

Finance Companies

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(8)

Any finance company that fails or refuses to pay a penalty interest charge under subsection (7) is guilty of an offence against this Act.

punishable under section 34(1).

Read in full context — Finance Companies Act →

Section 13

Maintenance of reserve fund by finance companies

of Finance Companies Act

ActIn forceProvision 12 of 45

Every finance company shall -

(a)

maintain a reserve fund;

LAWS OF BRUNEl

Finance Cbnzpanies

CAP. 89 15

(b)

if the paid-up capital of the finance company is not less than

$2 million, transfer to such reserve fund out of the net profits of each year after due provision has been made for taxation -

(i)

so long as the amount of the reserve fund is less than 50 per cent of the paid-up capital, a sum equal to not less than 30 per cent of the net profits;

(ii)

so long as the amount of the reserve fund is not less than 50 per cent but less than 100 per cent of the paid-up capital, a sum equal to not less than 15 per cent of the net profits;

(iii)

so long as the amount of the reserve fund is not less than 100 per cent of the paid-up capital, a sum equal to not less than 5 per cent of the net profits; and

(c)

if the paid-up capital of the finance company is less than $2

million, transfer to such reserve fund out of the net profits of each year after due provision has been made for taxation -

(i)

so long as the amount of the reserve fund is less than 50 per cent of the paid-up capital, a sum equal to not less than 50 per cent of the net profits;

(ii)

so long as the amount of the reserve fund is not less than 50 per cent but less than 100 per cent of the paid-up capital, a sum equal to not less than 25 per cent of the net profits;

(iii)

so long as the amount of the reserve fund is not less than 100 per cent of the paid-up capital, a sum equal to not less than 10 per cent of the net profits.

(2)

Subject to the limit specified in subsection (1). the Authority may prescribe different ratios for different types of liabilities and may further

CAP.89

Finance Companies prescribe the method of computing the amount of the required reserves, but the ratios shall be uniform for all finance con~panies.

(3)

(4)

(5)

(6)

(7)

Authority may determine for every day during which the deficiency continues.

Finance Companies

CAP. 89 17

(8)

Any finance company that fails or refuses to pay a penalty interest charge under subsection (7) is guilty of an offence against this Act.

punishable under section 34(1).

Read in full context — Finance Companies Act →