Finance Companies (Amendment) Bill

Bill No. 16/1969

Read the first time on 15th October 1969.

An Act to amend the Finance Companies Act, 1967 (No. 43 of 1967).

Be it enacted by the President with the advice and consent of the Parliament of Singapore, as follows: —

Short title

1. This Act may be cited as the Finance Companies (Amendment) Act, 1969.

Amendment of section 2

2. Section 2 of the Finance Companies Act, 1967 (hereinafter in this Act referred to as “the principal Act”) is hereby amended —

(a)

by deleting the expression “, which period shall be not less than one month of the original acceptance of any deposit” appearing in the last three lines of paragraph (a) of the definition of “financing business” therein; and

(b)

by deleting the expression “or not, or by instalments;” appearing at the end of paragraph (b) of the definition of “financing business” therein and substituting therefor the following: —

“or not, or by instalments,

and shall include the business of financing hire-purchase transactions arising out of hire-purchase agreements, as defined in the Hire-Purchase Act, 1969 (Act 1 of 1969), where the money used, or to be used, for such business is borrowed from the public;”.

Amendment of section 3

3. Subsection (1) of section 3 of the principal Act is hereby amended by inserting immediately before the word “company” appearing in the second line thereof the word “public”.

New section 3A

4. The principal Act is hereby amended by inserting immediately after section 3 thereof the following new section: —

“Use of words “finance company”

3A. No person or body of persons, whether incorporated or not, other than a finance company licensed under this Act shall, without the consent of the Commissioner, use the words “finance company” or any of its derivatives in any language, or any other words indicating that it transacts financing business, in the name, description or title under which such person or body of persons is transacting business in Singapore or make or continue to make any representations to such effect in any bill-head, letter paper, notice, advertisement or in any other manner whatsoever:

Provided that nothing in this section shall prohibit an association of finance companies formed for the protection of common interests from using the words “finance company” or any of its derivatives in any language as part of its name or description of its activities.”.

Amendment of section 9

5. Section 9 of the principal Act is hereby amended —

(a)	by deleting the word “special” appearing in the third line of subsection (1) thereof; and
(b)	by deleting the word “five” appearing in the fifth line of subsection (4) thereof and substituting therefor the word “three”.

Amendment of section 10

6. Subsection (1) of section 10 of the principal Act is hereby amended —

(a)

by deleting the word “or” appearing at the end of sub-paragraph (ii) of paragraph (b) thereof;

(b)

by inserting immediately after sub-paragraph (ii) of paragraph (b) thereof the following new sub-paragraph: —

“(iii)

carries on business while its paid-up capital (unimpaired by losses or otherwise) is less than five hundred thousand dollars; or”;

(c)

by renumbering the existing sub-paragraph (iii) of paragraph (b) thereof as sub-paragraph (iv); and

(d)

by deleting the words “of its officers” appearing in the first line of sub-paragraph (i) of paragraph (c) thereof and substituting therefor the words “person who is in a managerial or executive position in that finance company”.

Repeal and re-enactment of section 12

7. Section 12 of the principal Act is hereby repealed and the following substituted therefor: —

“Maintenance of reserve fund by finance companies

12. Every finance company shall —

(a)

maintain a reserve fund;

(b)

if the paid-up capital of the finance company is not less than two million dollars, 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 fifty per centum of the paid-up capital, a sum equal to not less than thirty per centum of the net profits;
(ii)	so long as the amount of the reserve fund is not less than fifty per centum but less than one hundred per centum of the paid-up capital, a sum equal to not less than fifteen per centum of the net profits;
(iii)	so long as the amount of the reserve fund is not less than one hundred per centum of the paid-up capital, a sum equal to not less than five per centum of the net profits; and

(c)

if the paid-up capital of the finance company is less than two million dollars, 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 fifty per centum of the paid-up capital, a sum equal to not less than fifty per centum of the net profits;
(ii)	so long as the amount of the reserve fund is not less than fifty per centum but less than one hundred per centum of the paid-up capital, a sum equal to not less than twenty-five per centum of the net profits;
(iii)	so long as the amount of the reserve fund is not less than one hundred per centum of the paid-up capital, a sum equal to not less than ten per centum of the net profits.”.

Amendment of section 14

8. Section 14 of the principal Act is hereby amended —

(a)

by inserting immediately after the word “languages” appearing at the end thereof the words “not later than six months after the end of each financial year”; and

(b)

by inserting at the end thereof the following new paragraph: —

“In this section, the expression “financial year” shall have the same meaning as is assigned to that expression in section 4 of the Companies Act, 1967 (Act 42 of 1967), except that for the word “corporation” therein there shall be substituted the words “finance company”.”.

Amendment of section 15

9. Section 15 of the principal Act is hereby amended —

(a)

by inserting immediately after subsection (1) thereof the following new subsection: —

“(2) Nothing in this Act shall authorise the Commissioner to enquire specifically into the affairs of an individual depositor of a finance company and any information relating to the affairs of such individual depositor obtained by him in the course of an inspection or investigation made under this Act shall be secret between him and that finance company:

Provided that nothing in this section shall be deemed to limit any powers conferred upon the High Court or a Judge by the Evidence (Bankers’ Books) Ordinance (Cap. 5) or to prohibit obedience to an order made under that Ordinance or any such law.”; and

(b)

by renumbering the existing subsection (2) thereof as subsection (3).

Amendment of section 17

10. Section 17 of the principal Act is hereby amended —

(a)

by inserting immediately after the word “order” appearing at the end of paragraph (a) of subsection (1) thereof the words “drawn by a depositor on the finance company”;

(b)

by deleting paragraph (c) of subsection (1) thereof and substituting therefor the following new paragraphs: —

“(c)

grant unsecured advances, unsecured loans or unsecured credit facilities which in the aggregate and outstanding at any one time exceed ten per centum of the paid-up share capital and published reserves of the finance company and which as regards —

(i)	any individual director whether borrowing on his own account or jointly with another director;
(ii)	a firm in which it or any of its directors has an interest as a partner, manager or agent, or to any individual or firm of whom or of which any of its directors is a guarantor;
(iii)	a corporation that is deemed to be related to the finance company as described in section 6 of the Companies Act, 1967 (Act 42 of 1967); or
(iv)	any other person or body of persons whether incorporated or not,

exceed at any time the sum of five thousand dollars; and

(d)

grant or permit to be outstanding to any customer any advances, loans or credit facilities, or give financial guarantees or incur any other liabilities on his behalf to an aggregate amount of such advances, loans or credit facilities, guarantees or liabilities in excess of sixty per centum of the paid-up share capital and published reserves of the finance company:

Provided that, with the approval of the Commissioner, the percentage referred to in this paragraph may be increased to one hundred per centum of the paid-up share capital and published reserves of the finance company.”;

(c)

by deleting the expression “sub-paragraph (i) of” appearing in the first line of subsection (3) thereof; and

(d)

by inserting immediately after the expression “sub-paragraph (i)” appearing in the fourth line of subsection (4) thereof the expression “, (ii) or (iii)”.

Amendment of section 19

11. Section 19 of the principal Act is hereby amended —

(a)

by renumbering the existing section as subsection (1); and

(b)

by adding thereto the following new subsection: —

“(2) Except as provided in this Act a licensed finance company shall not carry on any kind of business other than financing business.”.

Amendment of section 20

12. Section 20 of the principal Act is hereby amended —

(a)

by renumbering the existing section as subsection (1); and

(b)

by adding thereto the following new subsection: —

“(2) Notwithstanding the provisions of subsection (1) of this section, the percentage holding or interest referred to in that subsection may upon the application of a finance company to the Commissioner, and with the consent of the Commissioner, be increased to not more than fifty per centum of the paid-up share capital and published reserves of that finance company.”.

Amendment of section 21

13. Section 21 of the principal Act is hereby amended —

(a)

by inserting immediately after the word “therein” appearing in the second line thereof the words “exceeding in the aggregate at any one time twenty-five per centum of the finance company’s paid-up share capital and published reserves”;

(b)

by renumbering the existing section as subsection (1); and

(c)

by adding thereto the following new subsections: —

“(2) This section shall not apply to such property as may from time to time be approved by the Commissioner.

(3) The Registrar of Titles in issuing any certificate of title or registering any assurance in the Registry of Titles and Deeds 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.”.

Amendment of section 23

14. Subsection (1) of section 23 of the principal Act is hereby amended by inserting immediately after the word “interest” appearing in the first and in the second lines of paragraph (d) thereof the words “or commission”.

Amendment of section 24

15. Subsection (5) of section 24 of the principal Act is hereby amended —

(a)	by deleting the word “exceeding” appearing in the fifth line thereof and substituting therefor the words “less than”; and
(b)	by inserting immediately after the word “deposits” appearing in the eighth line thereof the words “or enter into new commitments”.

Repeal and re-enactment of section 25

16. Section 25 of the principal Act is hereby repealed and the following substituted therefor: —

“Inspection and investigation of finance companies and production of books, etc.

25.—(1) The Commissioner may, from time to time, inspect or cause to be inspected under conditions of secrecy, the books, accounts and transactions of any finance company and of any branch, agency or office outside Singapore opened by a finance company incorporated in Singapore.

(2) The Minister may at any time direct the Commissioner to make an investigation, under conditions of secrecy, of the books, accounts and transactions of a finance company, if he has reason to believe that such finance company is carrying on its business in a manner detrimental to the interests of its depositors and other creditors or has insufficient assets to cover its liabilities to the public, or is contravening the provisions of this Act.

(3) The Commissioner may appoint any auditor, other than the auditor appointed by the finance company under the provisions of section 172 of the Companies Act, 1967 (Act 42 of 1967), to exercise the powers of the Commissioner under subsections (1) and (2) of this section.

(4) For the purpose of an inspection or investigation under this section, a finance company shall afford the Commissioner access to its books, accounts and documents and shall give such information and facilities as may be required to conduct the investigation:

Provided that such books, accounts and documents shall not be required to be produced at such times and at such places as shall interfere with the proper conduct of the normal daily business of that finance company.

(5) If any book, account or document or information is not supplied in accordance with subsection (4) of this section, the finance company concerned shall be guilty of an offence under this Act and shall be liable on conviction to a fine not exceeding two thousand dollars and to a further fine of two hundred and fifty dollars in respect of every day during which the default continues after conviction.

(6) The Commissioner shall be deemed to be a public servant within the meaning of the Penal Code (Cap. 119).”.

Amendment of section 27

17. Subsection (1) of section 27 of the principal Act is hereby amended by deleting the words “Every director” appearing in the first line thereof and substituting therefor the words “The directors”.

Amendment of section 28

18. Section 28 of the principal Act is hereby amended —

(a)

by inserting immediately after subsection (2) thereof the following new subsection: —

“(3) The Commissioner may authorise or appoint any person to assist him in the exercise of his functions and duties under this Act, either generally or in a particular case.”; and

(b)

by renumbering the existing subsection (3) thereof as subsection (4).

Amendment of section 29

19. Section 29 of the principal Act is hereby amended by inserting at the end thereof the words “or on any day declared to be a bank holiday under any written law relating to banking”.

Amendment of section 35

20. Section 35 of the principal Act is hereby amended —

(a)

by renumbering the existing section as subsection (1); and

(b)

by adding thereto the following new subsection: —

“(2) The Commissioner may, without instituting proceedings against any person for any offence under this Act, or any regulations made thereunder, which is punishable only by a fine or a default penalty, demand and receive the amount of such fine or default penalty or such reduced amount as he thinks fit from such person, whereupon —

(a)	if such person pays such amount to the Commissioner within fourteen days after the demand, no proceedings shall be taken against him in relation to the offence; and
(b)	if such person does not so pay the amount so demanded, the Commissioner may cause proceedings to be instituted in relation to the offence.”.

Amendment of section 36

21. Section 36 of the principal Act is hereby amended —

(a)	by deleting the expression “paragraph (b) of” appearing in the first and second lines of subsection (2) thereof;
(b)	by inserting immediately after the word “duty” appearing in the fifth line of subsection (2) thereof the words “of securing compliance with the provisions of this Act or any order made under this Act or any other written law relating to finance companies in Singapore or with the duty”; and
(c)	by deleting the expression “paragraph (b) of” appearing in the second line of subsection (3) thereof.

Amendment of section 39

22. Section 39 of the principal Act is hereby amended —

(a)

by deleting the word “or” appearing at the end of paragraph (b) thereof;

(b)

by deleting the full-stop appearing at the end of paragraph (c) thereof and substituting therefor the expression “; or ”;

(c)

by inserting immediately after paragraph (c) thereof the following new paragraph: —

“(d)	any business of pawnbroking carried on by a person licensed under the Pawnbrokers Ordinance (Cap. 195).”;

(d)

by renumbering the existing section as subsection (1); and

(e)

by adding thereto the following new subsection: —

“(2) Notwithstanding any provisions in this Act, the Commissioner, with the approval of the Minister, may exempt any finance company from any or all of the provisions of this Act.”.

Repeal and re-enactment of section 42

23. Section 42 of the principal Act is hereby repealed and the following substituted therefor: —

“Operation of Act not to affect the Companies Act, 1967

42. Nothing in this Act shall affect the operation of the Companies Act, 1967 (Act 42 of 1967), and any company that is liable to be incorporated under that Act shall continue to be so liable as if this Act had not been passed but in case of conflict between that Act and this Act the provisions of this Act shall prevail unless otherwise provided in this Act.”.

Amendment of section 43

24. Section 43 of the principal Act is hereby amended —

(a)

by deleting the words “and for prescribing fees to be charged under this Act” appearing in the last line thereof;

(b)

by renumbering the existing section as subsection (1); and

(c)

by adding thereto the following new subsection: —

“(2) Without prejudice to the generality of subsection (1) of this section, the Minister may by such regulations —

(a)	prescribe fees to be charged under this Act; and
(b)	regulate advertisements of finance companies.”.

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