As enacted

Contents

Finance Business Act 2011 · As enacted · Part V · Regulatory and Resolution Actions on Finance Companies

31. Suspension

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

(1)

Where the Director is satisfied after examination by himself or by any officer of the Central Bank or any other person, authorized on that behalf by the Director, or upon information received from the finance company, that it is insolvent or is likely to become unable to meet the demands of its depositors or that its continuance in business is likely to involve loss to its depositors or other creditors, the Director shall make a report accordingly to the Governor of the Central

Bank for submission to the Board; and if the Board, upon review of the facts and circumstances, is of opinion that action should be taken as hereinafter provided, the Board may make an order directing the company forthwith to suspend business and directing the Director to take charge of all books, records and assets of the company, and to take such measures as may be necessary to prevent the continuation of business by the company.

(2)

Any director, manager, secretary or employee of the finance company or any other person having in his possession or custody any books, records or assets of the company, who fails to hand over the same to the Director or to an officer of the Central Bank or to any other person, authorized on that behalf by the Director, or any person who obstructs or resists the Director or an officer of the Central

Bank or any other person, authorized on that behalf by the

Director from taking charge of any books, records or assets of the company or from taking such other measures as the

Director may consider necessary to prevent the continuation of business by the company, shall be guilty of an offence under this Act.

(3)

Where any loss or damage is incurred or is likely or alleged to have been incurred by reason of any order made in good faith under subsection (1) no action or proceeding may be instituted in a court for securing review or revocation of such order or recovery of such loss or damage unless it can be proved that such order was not made in good faith.

(4)

The Board may take such steps as it may consider necessary for enabling the continuation of recovery of debts of the finance company and for such purpose shall have the power to open bank accounts in the name of the finance company to enable the debtors to make payments to the finance company.

(5)

Any order of suspension made by the Board in respect of any finance company under this section shall cease to have effect upon the expiration of a period of six months from the date on which it is made and it shall be the duty of the Board as soon as practicable-

(a)

make order permitting the company to resume business, either unconditionally or subject to such conditions as the Board may consider necessary in the public interest, or in the interest of the depositors and other creditors of the company; or

(b)

cause the Director to make application as hereinafter provided to a competent court for the winding up of the finance company and notify such company accordingly. Where a finance company is so notified, the company shall not resume business unless an order to do so is made by a Court, without prejudice to the generality of the powers conferred by paragraph (a) and notwithstanding anything to the contrary in any other written law or the memorandum and articles of association of the company, the Board may, as a condition of permitting the company to resume business, remove any director, manager or employee of such company where it is of the view that the continuance of such director, manager or employee in the company is detrimental to the interests of its depositors and other creditors and appoint any person as a director, manager or an employee of such company.

(6)

Notwithstanding anything to the contrary in any other written law or the Memorandum and Articles of Association of a finance company, the Board, may where an order has been made by the Board under paragraph (a) of subsection (5), do one or more of the following -

(a)

make such arrangements as it considers 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;

(b)

re-organise the finance company by increasing its capital and arranging for new shareholders;

(c)

reconstruct the finance company in any manner as it deems necessary in the interest of depositors and other creditors of such finance company;

(d)

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

(e)

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

(f)

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

(g)

reconstitute the Board of Directors of the finance company;

(h)

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;

(i)

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;

(j)

direct any shareholder of the finance company to divest or transfer the ownership of the shares owned by him, to a person nominated by the Board, on payment by such person of compensation as follows:-

(i)

where such shares are quoted, at the market value thereof; or

(ii)

where such shares are not quoted at a price to be determined by a valuer nominated by the Board.

(7)

A shareholder who fails to comply with a direction given to him under paragraph (j) of subsection (6) shall be guilty of an offence under this Act.

Read on from s 32

Part VI