Finance Business Act 2011 · As enacted · Part I · Licensing of Finance Companies
5. Licensing of companies as finance companies
Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.
Official translationFrom Department of Government Printing, unchanged
Where an application is made to the Board for a licence under this Act, the Board may require the Director to make his recommendation in respect of the application and the Director may call for information as he may consider necessary and call for and examine or cause to be examined books, records and documents of whatever description, of the company applying for a licence and its holding company, any subsidiary company, any associate company or any subsidiary or associate company of its holding company or any other company that in the view of the Director, has a substantial financial interest or a significant management interest in the company applying for a licence and shall make his recommendation to the Board.
The Board may, at any time prior to issuing of a licence under subsection (3) to a company, cause such investigations as it may deem necessary to satisfy itself as to the suitability of the applicant company and may require the applicant company to satisfy the Board on any matter relevant to the suitability of the applicant company and in particular—
the veracity and validity of the documents and particulars submitted by the applicant company ;
the financial status and history of the applicant company;
the academic and professional qualifications, experience, financial standing and suitability of the Board of Directors, the Chief Executive Officer and key management personnel, as the Board may deem necessary;
the adequacy of the capital of the applicant company or based on the information furnished by the applicant company, the ability of such company to raise adequate capital;
the ability of the applicant company to cover all obligations and liabilities that may be incurred in the conduct of finance business of such company and to comply with the provisions of this Act; and
the applicant company’s compliance with the provisions of this Act or any direction given thereunder in relation to the application for a licence under this Act.
On consideration of an application made to the Board and the recommendations of the Director under subsection (1) and after such investigations under subsection (2) —
if the Board is satisfied that—
the applicant company has a core capital of not less than two hundred million rupees or such other higher amount as may be determined by the Board in terms of subsection (1) of section 17;
the applicant company has the ability to comply with the directions and rules applicable to finance companies; and
the issue of a licence to the applicant company on the strength of the information made available to the Board, would not be detrimental to the interests of its creditors and other stakeholders, the Board may issue a license to the applicant company as a finance company to carry on finance business subject to such terms and conditions as the Board may deem fit;
if the Board is satisfied that the issue of a licence to the applicant company would not be detrimental to the interests of its creditors and other stakeholders and that the applicant company has the potential to fulfil the requirements specified in sub-paragraphs (i) and (ii) of paragraph (a), the
Board may grant provisional approval subject to such terms and conditions as the Board may deem fit; or
if the Board is satisfied that the issue of a licence to the applicant company would be detrimental to the interests of its creditors and other stakeholders or to the interest and stability of the financial system, the Board may reject the application and issue such directions as it deems necessary.
The provisional approval granted under paragraph (b) of subsection (3) shall be valid for such period as may be determined by the Board. The Board may in exceptional circumstances extend the period of validity of a provisional approval: Provided however, the period of validity of the provisional approval shall not exceed eighteen months from the date on which the provisional approval was granted under paragraph (b) of subsection (3).
An applicant company to whom a provisional approval has been granted shall not commence finance business before being issued with a licence under this Act.
Any prospectus or notice issued or any advertisement or other publication made by such company shall not state the fact that it has been granted provisional approval under paragraph (b) of subsection (3) unless such disclosure is required under any written law.
The Board may, withdraw the provisional approval:
if any information contained in the application for a licence or any information submitted in connection therewith by the applicant company is found to be false, incomplete or incorrect; or
if having regard to any information made available to the Board it becomes apparent that the issue of a licence to the applicant company is detrimental to the interest and stability of the financial system.
The Board having considered the fulfillment of terms and conditions imposed under paragraph (b) of subsection (3) and information received after granting provisional approval and being satisfied that the licensing of the applicant company would not be detrimental to the interests of its creditors and other stakeholders or to the interest of financial system stability may issue a licence to the applicant company subject to such terms and conditions as the Board may deem necessary:
Provided however, that the provisional approval shall not bind the Board to grant a licence to the applicant company.
Upon the issuance of a licence to an applicant company, the Board shall cause to be published in the
Gazette and in at least one Sinhala, Tamil and English daily newspapers circulating in Sri Lanka, a notice informing the public that a licence has been issued to such applicant company authorizing it to carry on finance business.
Any person who submits information in an application for a licence or in any other document submitted in connection therewith or in the course of any inquiry or investigation conducted to ascertain the suitability of the company to be issued with a licence under this Act, which is false, incomplete or incorrect, shall be guilty of an offence under this Act.
Part II
Directions, Rules and Requirements on Finance Companies
Part III
Examinations and Supervisory Actions on Finance Companies
Part IV
Financial Statements and Audit of Finance Companies
Part V
Regulatory and Resolution Actions on Finance Companies
Part VI
Insurance of Deposits
Part VII
Action Against Persons Carrying on Finance Business or Accepting Deposits Without Authority
Part VIII
Offences and Penalties
Part IX