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srilawsby aturio
As enacted
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Part V · Regulatory and Resolution Actions on Finance Companies

34. Board may take over administration and management of a finance company

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

(1)

The Board may, after review of the facts and circumstances upon the receipt of a report by the Director under section 31 as an alternative to taking action under section 31, take over the administration and management of such finance company for such period as may be determined by the Board and shall publish a notice in the Gazette of such take over. The Board may extend the original period of take over and shall publish a notice of such extension in the

Gazette. The Board shall inform the Registrar General of

Companies of such take over and any extension thereto and the Registrar General shall make a minute thereof in the books relating to the company.

(2)

Where the Board takes over the administration and management of a finance company, the Board may do one or more of the following -

(a)

exercise, perform and discharge with respect to such finance company all the powers, duties and functions conferred or imposed on, or assigned to, the Board of Directors of such company by or under any written law or by the Articles of Association of such company or imposed on or assigned to any other person by the Articles of Association of such company;

(b)

enter into any agreement with any person for the management of the finance company subject to such conditions as may be agreed upon between the

Board and such person having regard to the interests of the depositors and other creditors of the company and in the public interest;

(c)

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;

(d)

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

(e)

reconstruct the finance company in any such manner as it considers to be in the interest of depositors and other creditors of such finance company;

(f)

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

(g)

reconstitute the board of directors of the finance company;

(h)

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

(i)

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

(ii)

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

(i)

notwithstanding anything to the contrary in 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;

(j)

notwithstanding anything to the contrary in 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.

(3)

During the period for which the administration and management of finance company is taken over by the Board, every director, manager and secretary of such finance company shall, unless expressly authorized to continue by the Board, cease to exercise, perform and discharge any powers, duties and functions with respect to such company.

(4)

Where the administration and management of a finance company is taken over by the Board, the Board may where it considers it in the public interest to do so-

(a)

arrange for or grant such financial accommodation as it may consider necessary to the finance company by way of loans or other accommodation, other than by way of grants; and

(b)

meet all costs, charges and expenses incurred in the administration and management of the company.

(5)

That the Board may at any time after the taking over of the administration and management of a finance company under subsection (1) suspend the business of the company, if it is of opinion, that it is in the interest of the public or of the depositors to do so, or direct the Director to apply to wind up the company, if on a report made by the Director or any person authorized by the Board, it appears to the Board that the company cannot be made viable and solvent within a reasonable period of time. In the event of the Board directing the Director to wind up the finance company, the provisions of section 32 relating to winding up shall apply.

Read on from s 35

Part VI

Insurance of Deposits

Read on from Part VI

Part VII

Action Against Persons Carrying on Finance Business or Accepting Deposits Without Authority

Read on from Part VII

Part VIII

Offences and Penalties

Read on from Part VIII

Part IX

General

Read on from Part IX