As enacted

Contents

Finance Business Act 2011 · As enacted · Part III · Examinations and Supervisory Actions on Finance Companies

25. Procedure to be followed when Director is of opinion that finance company is following unsound practices

Official English translation. The Sinhala text prevails. Open the official Sinhala text, official PDF on documents.gov.lk

(1)

Where the Board, on a report made under section 14 or subsection (2) of section 24 by the Director, is of the opinion that a finance company-

(i)

is carrying on or is likely to carry on, its business following unsound or improper financial practices, which are detrimental to the interest of its depositors and other creditors; or

(ii)

has contravened or failed to comply with any provisions of this Act, or any direction, rule, order or requirement made or imposed thereunder, the Board may do one or more of the following-

(a)

impose a penalty not exceeding five hundred thousand rupees payable within such period as may be specified by the Board;

(b)

direct such finance company to cease any such practice;

(c)

direct such finance company to comply with the provisions of this Act or direction, rule, order or requirement made or imposed thereunder which such finance company has failed to comply with, forthwith or within such period as may be specified by the Board;

(d)

direct such finance company to take necessary action to correct the conditions resulting from such practice or contravention;

(e)

publish the name of the finance company as a finance company regarding which the Board has serious supervisory concerns;

(f)

appoint a person to manage the affairs of such finance company with regard to the proper conduct of the business of such finance company;

(g)

appoint an officer of the Central Bank as its representative in such finance company to monitor the affairs of such finance company and carry on such other functions on terms of reference as may be determined by the Board;

(h)

restrain any director, manager or controller of the finance company from carrying out any function in or in relation to the finance company;

(i)

remove any director, manager or employee of the finance company;

(j)

re-organize the finance company, by arranging for the increase of its capital or reconstituting its Board of Directors or taking both such measures;

(k)

require the reduction of the number of shares held in the finance company by any person;

(l)

provide for such arrangements as are necessary for the amalgamation of the finance company with another finance company or any other institution, with the consent of such other finance company or institution;

(m)

notwithstanding the provisions of any other written law, review any contract entered into by a depositor with the finance company and vary the terms of such contract, including the terms relating to repayment, interest rates and charges where it considers that such contract has been entered into without due regard to the interests of depositors or other creditors of the finance company or due regard to prudent commercial practice;

(n)

notwithstanding the provisions of any other written law, review any agreement or contract entered into by the finance company, with any person and if upon such review, it appears to the Board that the agreement or contract has been entered into without due regard to the interest of the depositors and other creditors of the finance company or without due regard to prudent commercial practice, vary the terms of such agreement or contract.

(2)

Any finance company dissatisfied with a direction given under paragraphs (b), (c) or (d) of subsection (1), may, before the expiry of thirty days from the date of the issue of such direction, appeal in writing to the Board and the Board shall render its decision within thirty days of receipt of such appeal.

(3)

The Director may make an application to the

Magistrate to impound the passport of any director or key management personnel of a finance company in an event where such finance company has violated the provisions of this Act and the Director has reasons to believe that such director or key management personnel is responsible for such violation.

Part IV