Skip to content
srilawsby aturio
As enacted
Contents

Part II · Resolution Measures

23. Capital increase by existing shareholders

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

The Central Bank, or the Administrator with the approval of the Central Bank, may take following actions to increase the capital of the licensed bank subject to resolution through the issuance of new shares: -

(a)

to determine the extent of losses and prepare the financial statements of such licensed bank covering the amount of such losses from and out of the profits, reserves and, if necessary, the capital of such licensed bank; and

(b)

to determine the amount of additional capital required to be invested in the shares of such licensed bank in order to comply with all capital requirements made under the Banking Act and to request in writing, the existing shareholders of the licensed bank to subscribe and purchase additional shares, by submitting binding commitments equal to the full amount of additional capital needed, or any part thereof, within the time specified in such request:

Provided however, prior to the request referred to in this paragraph, the Central Bank may, if it considers necessary, examine and identify shareholders who may have acted as shadow directors and contributed directly or indirectly to the failure of such licensed bank and shall not allow such shareholders to participate in the increase of the capital under this section:

Provided further, if shareholders subscribe or purchase additional shares under this section, such shareholders may be exempted from the application of directions issued by the Monetary Board under the Banking Act on share ownership limits of licensed banks for a period as may be determined by the Central Bank.

(2)

Notwithstanding anything to the contrary in any other written law, or the articles of Association or any other constituent document of the licensed bank, the existing shareholders of a licensed bank subject to resolution shall have no pre-emptive or any other rights to purchase additional shares issued except as provided for in subsection (1).

(3)

Subject to the provisions of subsection (1), the Central

Bank shall have the power to recognize losses to be allocated to shareholders and subordinated debt holders in the performance of its duties under this section.

Read on from s 24

Part III

Sri Lanka Deposit Insurance Scheme

Read on from Part III

Part IV

Financial Sector Crisis Management Committee

Read on from Part IV

Part V

Winding Up of Licensed Bank

Read on from Part V

Schedules