Division 5B — Resolution funding
Interpretation of this Division
98.  In this Division, unless the context otherwise requires —
“Agency” means the company designated by the Minister under section 56 of the Deposit Insurance and Policy Owners’ Protection Schemes Act 2011 as the deposit insurance and policy owners’ protection fund agency;
“DI Fund” means the Deposit Insurance Fund reconstituted under section 9 of the Deposit Insurance and Policy Owners’ Protection Schemes Act 2011;
“financial institution” means any person that is approved, authorised, designated, recognised, registered, licensed or otherwise regulated by the Authority under this Act or any of the written laws set out in the Schedule;
“financial institution under resolution” means the pertinent financial institution that is the subject of a resolution measure and, in relation to a resolution fund, means the pertinent financial institution that is the subject of the resolution measure for which the fund is established;
“market infrastructure” means a pertinent financial institution that performs the functions of a market, a central clearing counterparty, a trade repository, a central securities depository, or a securities settlement system;
“participant”  —
(a)in relation to a market infrastructure, means a participant of the market infrastructure, and includes a client of such participant; and
(b)in relation to a payment system operator, means a participant of the payment system (within the meaning of the Payment Services Act 2019) operated by the payment system operator;
“payment system operator” means a person who operates a payment system within the meaning of the Payment Services Act 2019;
“provisional entity”, in relation to a resolution fund, means an entity established or incorporated to do one or more of the following:
(a)temporarily hold and manage the assets and liabilities of the financial institution under resolution;
(b)to be the transferee of any part of the business of the financial institution under resolution under Division 2;
(c)do any other act for the orderly resolution of the financial institution under resolution;
“resolution fund” means a fund established under section 99;
“resolution measure” means —
(a)the making of a determination under Division 2, 2A, 3, 4, 4A or 5A, the issue of any certificate under Division 2, 2A, 3, 4 or 4A, the making of an order under Division 5A, or the exercise of any power under any such certificate or order; or
(b)the exercise of any power under any relevant provision applicable to the financial institution concerned;
“resolution measure”, in relation to a resolution fund, means the resolution measure or measures for which the fund was established;
“similar financial institution” means a financial institution that is prescribed by regulations made under section 126 for the purposes of section 102(1)(b)(i), as belonging to the same category as the financial institution under resolution;
“trustee”, in relation to a resolution fund, means the entity appointed under section 99(2) as the trustee of the fund.
[31/2017; 2/2019]
Establishment of resolution fund
99.—(1)  For the purposes of supporting a resolution measure undertaken for a financial institution and other matters relating to the measure, the Minister may, on the recommendation of the Authority, establish a resolution fund.
[31/2017]
(2)  The Minister must appoint a body corporate or unincorporate established or incorporated in Singapore, or established under any Act, to be the trustee of the resolution fund.
[31/2017]
(3)  The Authority must publish a notification in the Gazette and in such newspaper or newspapers as the Minister determines, of the establishment of a resolution fund and the trustee of the fund.
[31/2017]
(4)  The trustee of a resolution fund may obtain a loan from the Authority for the purpose of constituting the fund.
[31/2017]
(5)  In addition to the loan in subsection (4), the following are to be paid into a resolution fund:
(a)all payments, levies and late payment fees collected or recovered under sections 103, 105, 106 and 107;
(b)any interest from a loan made out of moneys withdrawn from the fund;
(c)any other income from the use of moneys withdrawn from the fund;
(d)any proceeds from the exercise of the resolution measure;
(e)any moneys paid out of the DI Fund under section 29A of the Deposit Insurance and Policy Owners’ Protection Schemes Act 2011 and given to the trustee of the fund;
(f)any additional loan obtained from the Authority.
[31/2017]
(6)  The moneys mentioned in subsection (5)(e) must be put in a separate account of the resolution fund from the other moneys, and moneys from that separate account may not be used to make any payment of compensation and associated costs under Division 5C.
[31/2017]
(7)  The trustee of a resolution fund must keep proper accounts and records of transactions in respect of the fund.
[31/2017]
(8)  The accounts and records of the resolution fund are to be audited by an auditor appointed by the trustee in consultation with the Minister.
[31/2017]
(9)  The first audit of the resolution fund must take place as soon as practicable after the end of the first year in which the first withdrawal from the fund is made, and the fund must be audited every year thereafter until it is dissolved.
[31/2017]
Trustee of resolution fund
100.—(1)  The duty of the trustee of a resolution fund is to administer and manage the fund, and in particular —
(a)to make withdrawals from the fund in accordance with sections 101 and 109(1) and to apply the moneys withdrawn for the purposes mentioned in those provisions;
(b)to collect and recover payments, levies and late payment fees under sections 103, 105, 106 and 107 and pay these into the fund;
(c)to collect proceeds in relation to the resolution measure and pay these into the fund;
(d)at the direction of the Minister (being one made on the Authority’s recommendation), to give a guarantee to any person for, or enter into any agreement with any person to share, any liability of the financial institution under resolution, a provisional entity, or a person to whom any asset or business of the financial institution under resolution is transferred;
(e)to deal with the balance in the resolution fund after the fund is no longer needed for the purposes in section 101(1) or 109(1), in accordance with the regulations made for the purposes of section 109(2); and
(f)do any other thing that is incidental or conducive to the discharge of its duties under paragraphs (a) to (e).
[31/2017]
(2)  The trustee of a resolution fund may be paid such fees for carrying out its duties and exercising its powers under this Division as the Minister may determine, and such fees are to be paid out of the fund.
[31/2017]
(3)  The expenses incurred by the trustee of a resolution fund in carrying out its duties and exercising its powers under this Division are, with the Minister’s approval, to be paid out of the fund.
[31/2017]
(4)  The trustee of a resolution fund may, with the Minister’s approval and subject to such conditions as the Minister may impose, appoint any person to discharge any part of its duties or exercise any part of its powers.
[31/2017]
(5)  No action, suit or other legal proceedings lie against —
(a)any current or former trustee of a resolution fund;
(b)any current or former director, officer, employee or agent of the trustee; or
(c)any person acting under the direction of the trustee,
as a result of anything done (including any statement made) or omitted to be done in good faith in carrying out any of the trustee’s duties or exercising any of the trustee’s powers under this Division.
[31/2017]
Withdrawal from resolution fund
101.—(1)  The trustee of a resolution fund must, at the Minister’s direction, make one or more withdrawals from the fund and apply the moneys withdrawn for one or more of the following purposes:
(a)to pay the operating costs of a provisional entity;
(b)to discharge a guarantee for, or an obligation under an agreement to share, a liability of the financial institution under resolution, a provisional entity or a person to whom any asset or business of the financial institution has been transferred;
(c)to pay the costs of transferring the whole or any part of the business of the financial institution under resolution pursuant to the resolution measure;
(d)to make or provide a loan, advance, overdraft or other credit facility to the financial institution under resolution or a provisional entity;
(e)to pay any other costs reasonably incurred in the resolution measure, such as interest costs, legal cost, cost of any advisory services, and the cost of an independent valuation of the financial institution under resolution;
(f)to make any payment of compensation and associated costs under Division 5C;
(g)to pay the remuneration and expenses of a valuer mentioned in section 115(9);
(h)to provide capital to the financial institution under resolution or the provisional entity;
(i)such other purposes in support of the resolution measure as may be prescribed by regulations made under section 126.
[31/2017]
(2)  The Minister may only give a direction to the trustee under subsection (1) on a recommendation of the Authority.
[31/2017]
(3)  In determining whether to make a recommendation to the Minister to direct a trustee of a resolution fund to make a withdrawal under subsection (1), the Authority must have regard to all of the following:
(a)whether losses are imposed on shareholders and unsecured creditors of the financial institution under resolution under Division 4 or 4A;
(b)whether funding from the private sector can be obtained for the resolution measure;
(c)such other factors as may be prescribed by regulations made under section 126.
[31/2017]
(4)  The Authority may only make a recommendation to the Minister under subsection (1)(h) to make a withdrawal to provide capital to the financial institution under resolution —
(a)if the Authority is of the view that the provision of the capital is necessary for the orderly resolution of the financial institution under resolution; and
(b)after the Authority has taken into account whether appropriate losses have been imposed on shareholders and unsecured creditors of the financial institution under resolution under Division 4 or 4A.
[31/2017]
(5)  Where a direction has been made to the trustee under subsection (1), the Authority must, as soon as practicable, publish a notice of that fact in the Gazette and in such newspaper or newspapers as the Minister determines.
[31/2017]
Recovery of sums withdrawn
102.—(1)  Where one or more withdrawals have been made from a resolution fund under section 101, the Minister may direct the trustee of the resolution fund to recover the sum or sums withdrawn in one or both of the following ways:
(a)by making a claim for all or part of that sum or those sums from the financial institution under resolution;
(b)by imposing a levy, in accordance with section 104 and the regulations made under section 126 for that section, on the following persons (called in this Part levy payers):
(i)financial institutions that have been prescribed by regulations made under section 126 as belonging to the same category as the financial institution under resolution;
(ii)if the financial institution under resolution is a market infrastructure, those participants of the market infrastructure and of other market infrastructures, that have been prescribed by regulations made under section 126 as levy payers;
(iii)if the financial institution under resolution is a payment system operator, those participants of the payment system operator that have been prescribed by regulations made under section 126 as levy payers.
[31/2017]
(2)  In addition to the purpose in subsection (1), the Minister may direct the trustee of a resolution fund to impose a levy, in accordance with section 104 and the regulations made under section 126 for section 104, on levy payers for the purpose of meeting any shortfall in the amount of the levy collected to make good the amount withdrawn from the account, or for any other prescribed purpose.
[31/2017]
(3)  The Minister may only give a direction under subsection (1) or (2) on a recommendation of the Authority.
[31/2017]
(4)  The Authority must, as soon as practicable after the Minister has given a direction under subsection (1) or (2), publish a notice in the Gazette and in such newspaper or newspapers as the Minister determines, of the direction.
[31/2017]
Claim from financial institution under resolution
103.—(1)  Where a direction has been given under section 102(1)(a), the trustee of the resolution fund must make a claim mentioned in that provision on the financial institution under resolution to pay the sum mentioned in the direction, at such time and in such manner as the trustee determines, and the sum claimed is recoverable as a debt due from the financial institution under resolution to the trustee.
[31/2017]
(2)  Any sum recovered from the financial institution under resolution must be paid into the resolution fund.
[31/2017]
Computation and notice of levy
104.—(1)  After the Minister has given a direction under section 102(1)(b) or (2), the Authority must, in accordance with the regulations made under section 126 for the purpose of this section —
(a)compute the amount of levy payable by every levy payer; and
(b)give a written notice to the trustee of the amount of levy payable by every levy payer.
[31/2017]
(2)  After receipt of the notice mentioned in subsection (1)(b), the trustee must give the notices mentioned in subsection (3), (4), (5) or (6) (whichever is applicable) to the levy payers and in the manner set out in that subsection.
[31/2017]
(3)  Where the levy is to be imposed on a similar financial institution, the trustee must give each similar financial institution a written notice stating —
(a)the amount of the levy;
(b)the date by which the levy is to be paid;
(c)the manner of payment of the levy; and
(d)such other matters as may be prescribed by regulations made under section 126.
[31/2017]
(4)  Where the levy is to be imposed on participants of a market infrastructure on a transaction basis, the trustee must give —
(a)a notice to the market infrastructure stating —
(i)the description of the participants on which the levy is imposed;
(ii)the amount of the levy it is to collect from each participant, or the rate of computation of that amount;
(iii)the period and manner of collection;
(iv)the date by which the market infrastructure is to pay the total amount of the levy imposed on the participants to the trustee;
(v)the information and documents it is to provide to the trustee when making the payment under sub‑paragraph (iv); and
(vi)such other matters as may be prescribed by regulations made under section 126; and
(b)a general notice to those participants, to be published on such medium as may be determined by the trustee, stating —
(i)the matters in paragraph (a)(i), (ii) and (iii); and
(ii)such other matters as may be prescribed by regulations made under section 126.
[31/2017]
(5)  Where the levy is to be imposed on participants of a market infrastructure on a lump sum basis, the trustee must give to each participant of the market infrastructure a written notice stating —
(a)the amount of the levy;
(b)the date by which the levy is to be paid;
(c)the manner of payment of the levy; and
(d)such other matters as may be prescribed by regulations made under section 126.
[31/2017]
(6)  Where the levy is to be imposed on participants of a payment system operator, the trustee must give to each participant a written notice stating —
(a)the amount of the levy;
(b)the date by which the levy is to be paid;
(c)the manner of payment of the levy; and
(d)such other matters as may be prescribed by regulations made under section 126.
[31/2017]
(7)  The notice under subsection (3), (5) or (6) may require the levy payer to pay an amount of levy regularly over a period of time.
[31/2017]
(8)  The trustee may, at any time, vary a notice mentioned in subsection (3), (4), (5) or (6), and give the notice of the variation to every person to whom the initial notice was given, and each reference in section 105 or 106 to a notice given to a person under this section includes a reference to the notice of the variation given to the person under this subsection.
[31/2017]
Payment of levy by similar financial institutions, participants of market infrastructure on lump sum basis, or participants of payment system operator
105.—(1)  This section applies where a notice under section 104(3), (5) or (6) is given to a levy payer that is a similar financial institution or a participant of a market infrastructure or payment system operator.
[31/2017]
(2)  The levy payer must pay to the trustee of the resolution fund on or before the date of payment specified in the notice, the amount of the levy specified in the notice.
[31/2017]
(3)  If the levy payer fails to comply with subsection (2) —
(a)the trustee may, by written notice to the levy payer, impose on it such late payment fee as may be prescribed by regulations made under section 126; and
(b)the levy payer must pay to the trustee the late payment fee together with the amount of the unpaid levy on or before the date specified in the notice under paragraph (a), and in the manner specified in the notice.
[31/2017]
(4)  The late payment fee under subsection (3) must not exceed the amount of the unpaid levy.
[31/2017]
Payment of levy by participants of market infrastructure on transaction basis
106.—(1)  This section applies where a notice under section 104(4) is given to a market infrastructure.
[31/2017]
(2)  The market infrastructure must —
(a)during the period of collection specified in the notice, collect from each participant on whom the levy is imposed under the notice and in the manner specified in the notice, an amount equal to the levy so imposed;
(b)pay to the trustee of the resolution fund the total amount of the levy it is to collect from its participants by the date of payment specified in the notice; and
(c)together with the payment, give a notice to the trustee setting out how the amount of levy is arrived at and providing such other details as the trustee may reasonably require.
[31/2017]
(3)  A market infrastructure does not incur any civil liability for doing anything with reasonable care and in good faith in compliance with subsection (2).
[31/2017]
(4)  If a market infrastructure fails to comply with subsection (2)(b) —
(a)the trustee may, by written notice to the market infrastructure, impose on it such late payment fee as may be prescribed by regulations made under section 126; and
(b)the market infrastructure must pay to the trustee the late payment fee, together with the amount of the unpaid levy, on or before the date specified in the notice under paragraph (a), and in the manner specified in the notice.
[31/2017]
(5)  A market infrastructure that —
(a)fails to comply with subsection (2)(c); or
(b)in purported compliance with that provision, provides to the trustee of the resolution fund any information that the market infrastructure knows or has reason to believe is false or misleading,
shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part of a day during which the offence continues after conviction.
[31/2017]
(6)  The late payment fee under subsection (4) must not exceed the amount of the unpaid levy.
[31/2017]
Recovery, refund and remission of levies and late payment fees, etc.
107.—(1)  The levy imposed on a person under section 104(3), (5) or (6), and any late payment fee imposed on the person under section 105(3), are both recoverable as a debt due from that person to the trustee of the resolution fund concerned.
[31/2017]
(2)  The amount of levy that a market infrastructure is required to collect from its participants under section 106(2), and any late payment fee imposed on the market infrastructure under section 106(4), are both recoverable as a debt due from the market infrastructure to the trustee of the resolution fund concerned.
[31/2017]
(3)  Where the trustee of a resolution fund has commenced any legal proceedings in a court in Singapore to recover any levy or late payment fee from a person, the trustee is entitled to claim costs on a full indemnity basis from that person.
[31/2017]
(4)  All levies and late payment fees collected or recovered are to be paid into the resolution fund concerned.
[31/2017]
(5)  Where a levy payer has paid an amount of levy that is in excess of the amount imposed on the levy payer under a notice under section 105, the trustee of the resolution fund concerned must make a withdrawal from the fund to refund the excess amount to the levy payer.
[31/2017]
(6)  In any particular case other than the one to which subsection (5) applies, the trustee of a resolution fund may, with the approval of the Minister —
(a)make a withdrawal from the fund to refund in whole or in part any levy paid by a levy payer; or
(b)remit in whole or in part any levy payable by a levy payer.
[31/2017]
Disclosure of information on levy
108.—(1)  This section applies to a notice given under section 104(3), (5) or (6) to a levy payer that is a similar financial institution or a participant of a market infrastructure or payment system operator.
[31/2017]
(2)  Subject to subsections (3) and (4), the levy payer, and any of its officers, must not disclose to any person —
(a)the amount of the levy specified in the notice; and
(b)any information which, if disclosed, would enable the amount of the levy to be identified or deduced.
[31/2017]
(3)  Despite subsection (2), the levy payer and any of its officers may disclose any information mentioned in subsection (4) to —
(a)any officer of the levy payer;
(b)where the levy payer is one that is established or incorporated in a foreign country or territory, its head office, parent corporation, parent supervisory authority, resolution authority, deposit insurance authority or policy owners’ protection scheme authority, as the case may be;
(c)where the levy payer is a financial institution that is a subsidiary of a foreign corporation, that corporation or the corporation’s parent supervisory authority, resolution authority, deposit insurance authority or policy owners’ protection scheme authority, as the case may be; or
(d)such other person or class of persons as the Authority may approve in writing.
[31/2017]
(4)  The information that may be disclosed under subsection (3) is such information that is necessary for the performance of the duties of the person or authority mentioned in subsection (3)(a), (b), (c) or (d), as the case may be.
[31/2017]
(5)  A person to whom information is disclosed under subsection (3) must not disclose the information to any other person except as approved by the Authority.
[31/2017]
(6)  Any person who contravenes subsection (2) or (5) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $125,000 or to imprisonment for a term not exceeding 3 years or to both.
[31/2017]
(7)  This section does not apply to any information that is public information.
[31/2017]
(8)  In this section —
“deposit insurance authority”, in relation to a levy payer or foreign corporation, means an authority of the foreign country or territory in which the levy payer or foreign corporation is incorporated or established that, whether alone or together with one or more other authorities, is responsible for administering a deposit insurance scheme for deposits of the levy payer or foreign corporation;
“foreign corporation” means a corporation incorporated in a foreign country or territory;
“officer”, in relation to a levy payer, includes —
(a)a director, secretary or an employee of the levy payer;
(b)a receiver or manager of any part of the undertaking of the levy payer appointed under a power contained in any instrument; and
(c)the liquidator of the levy payer appointed in a voluntary winding up;
“parent corporation”, in relation to a levy payer, means a corporation that is able to exercise a significant influence over the direction and management of the levy payer or that has a controlling interest in the levy payer;
“parent supervisory authority”, in relation to a levy payer or a foreign corporation, means the supervisory authority that is responsible, under the laws of the country or territory in which the levy payer or foreign corporation is incorporated or established, for supervising the levy payer or foreign corporation, as the case may be;
“policy owners’ protection scheme authority”, in relation to a levy payer or a foreign corporation, means an authority of the foreign country or territory in which the levy payer or foreign corporation is incorporated or established that, whether alone or together with one or more authorities, is responsible for administering a protection scheme for the policy owners of insurance policies of the levy payer or foreign corporation, as the case may be;
“resolution authority”, in relation to a levy payer or a foreign corporation, means an authority of the foreign country or territory in which the levy payer or foreign corporation is incorporated or established that, whether alone or together with one or more other authorities, is responsible for the resolution, or for preparing plans for dealing with the resolution of, the levy payer or foreign corporation, as the case may be.
[31/2017]
Use of resolution fund to pay loan, etc., and balance in resolution fund
109.—(1)  The Minister may, from time to time, direct the trustee of a resolution fund to make a withdrawal from the resolution fund for any of the following purposes:
(a)to repay the Authority all or any part of the loan made under section 23(7A), together with any interest on such loan;
(b)to reimburse the Agency for any payment the trustee received under section 29A of the Deposit Insurance and Policy Owners’ Protection Schemes Act 2011.
[31/2017]
(2)  The Minister may by regulations made under section 126 provide for —
(a)how the balance in a resolution fund is to be dealt with after the fund is no longer needed for any of the purposes mentioned in section 101(1) or subsection (1); and
(b)the dissolution of the resolution fund after the balance of the fund has been dealt with in accordance with the regulations, and the publication of a notice of such dissolution.
[31/2017]
Priority of debt of financial institution to trustee
110.  Despite any written law or rule of law relating to the winding up of companies, in the event of a winding up of a financial institution (other than one that is a bank, a finance company or a licensed insurer) —
(a)any sum claimed by the trustee of a resolution fund from the financial institution under section 103; and
(b)any levy and late payment imposed on the financial institution under section 104, 105 or 106 and due from the institution, and any levy which the financial institution is liable to collect under section 106(2) and due from the institution,
have priority over all unsecured liabilities of the financial institution other than preferential debts specified in section 203(1) of the Insolvency, Restructuring and Dissolution Act 2018.
[31/2017; 40/2018]
Regulations for this Division
111.—(1)  Regulations may be made under section 126 for the purposes of this Division.
[31/2017]
(2)  Without limiting subsection (1), regulations may be made in relation to the imposition and recovery of a levy and late payment fee under sections 104, 105, 106 and 107, and in particular in relation to one or more of the following:
(a)the levy payers on and from whom the trustee of the resolution fund may impose and recover the levy;
(b)the classification of the levy payers mentioned in paragraph (a) for the purpose of imposing different amounts of the levy;
(c)the manner in which the amount of the levy for each class of levy payers is to be determined;
(d)the amount of the late payment fee;
(e)the manner and date of payment of the levy and late payment fee;
(f)a duty of a financial institution under resolution, a levy payer, a market infrastructure or a payment system operator to provide such information as the Authority or trustee may reasonably require for the purposes of computing the levy or late payment fee or preparing a notice under section 104;
(g)such other matters as the Authority considers necessary for the computation, imposition and recovery of the levy or late payment fees.
[31/2017]