FINANCIAL INSTITUTIONS ACT, 2004

PART II
COMPULSORY WINDING UP

Start of compulsory winding up

8. (1) The date of the start of compulsory winding up of a local financial institution is the date on which the revocation of its banking licence –

(a) becomes final in terms of section 13(5); or

(b) is ordered under paragraph 6 of this Schedule, paragraph 5(1) (b) of Schedule 3 or paragraph 8 of Schedule 4.

(2) When the compulsory winding up of a local financial institution starts it shall immediately suspend all business and the liquidator appointed under paragraph 9 shall take charge of all books, records and assets of the financial institution and shall direct the winding up in accordance with this Part of this Schedule.

(3) The liquidator shall without delay make an inventory of the assets of the financial institution and shall give to the Central Bank a copy of that inventory, which shall be available at the office of the Central Bank for examination by any interested person at such times as the Central Bank determines.

Appointment of liquidator

9. (1) At the start of the compulsory winding up of a local financial institution the Central Bank shall appoint a person who, in the opinion of the Central Bank, is suitably qualified to be liquidator of the financial institution.

(2) The liquidator shall give effect to any direction communicated to him by the Central Bank which is not inconsistent with this Act.

(3) In this Part of this Schedule (except in the reference in paragraph 11 to the liquidator in a winding up by the Court under sections 222(1) and (2) of the Companies Act) "liquidator" means a liquidator appointed under this paragraph.

Notice of liquidator

10. A notice of compulsory winding up, giving such information as the Central Bank may require, shall be –

(a) published by the liquidator in the Gazette and in a local newspaper; and

(b) given by the liquidator to the Registrar of Companies within 14 days of the start of the compulsory winding up.

Powers of liquidator

11. The liquidator shall have the full and exclusive power of management and control of the financial institution for the purpose of the winding up, including without prejudice to this generality, the power –

(a) to wind up its operations;

(b) wholly or partially to suspend, limit or stop the payment of its obligations;

(c) to employ any necessary staff;

(d) to execute any instrument in the name of the financial institution;

(e) to initiate, defend and conduct in the name of the financial institution any action or any proceedings to which the financial institution may be a party,

and shall have the power of the liquidator in a winding up by the Court under section 222(1) and (2) of the Companies Act, and in the application of those provisions to a winding up under this Part of this Schedule, for the reference to the sanction either of the court or of the committee of inspection there shall be substituted a reference to the sanction of the Central Bank.

Operation of contracts, liens etc.

12. Notwithstanding the Civil Code or any other law to the contrary, under compulsory winding up proceedings, any period, whether statutory, contractual or otherwise, on the expiration of which a claim or right of the financial institution would expire or be extinguished within 6 months of the start of compulsory winding up shall be extended so that it expires or is extinguished on the date of 6 months after the start of compulsory winding up.

Power to terminate contracts

13. (1) Within 6 months from the start of compulsory winding up the liquidator may, notwithstanding the relevant contract, but subject to any other relevant law, terminate –

(i) any employment contract;

(ii) any contract for services to which the financial institution was a party;

(iii) any obligation of the financial institution as a lessee.

(2) A lessor who receives 90 days’ notice that the liquidator is exercising discretionary powers under subparagraph (1) to terminate the lease has no claim for rent (other than rent accrued on the date of termination of the lease) nor for damages by reason of that termination.

Termination of fiduciary functions

14. As soon as possible after the start of compulsory winding up, the liquidator shall take the necessary steps –

(a) to terminate all fiduciary functions performed by the financial institution and all functions performed by the financial institution on behalf of other persons;

(b) to deliver any assets or property held by the financial institution as a fiduciary or on behalf of any person to another person as fiduciary or to the person entitled to possession of the assets or property, as may be appropriate; and

(c ) to settle the fiduciary accounts of the financial institution.

Statements of claim

15. (1) As soon as possible after the start of compulsory winding up the liquidator shall send by registered post to all depositors, beneficial owners, other creditors, safe deposit box lessees, and owners of funds or property held by the financial institution as a fiduciary or on hire, loan, deposit or pledge, a statement setting out the nature and amount in respect of which their claim against the financial institution is shown on its books.

(2) Any person referred to in subparagraph (1) who does not receive a statement under that subparagraph may lodge a claim or objection with the liquidator within 90 days of the start of compulsory winding up.

(3) A statement under subparagraph (1) shall state that any objection concerning the nature or amount of the claim must be filed with the liquidator before a specified date not later than 60 days after the date of the statement and shall ask safe deposit box lessees and owners of property held by the financial institution on hire, loan, deposit or pledge to withdraw their property.

(4) The Central Bank may, before the commencement of the 60-day period, exempt the liquidator from sending statements under subparagraph (1) to any specified person if it is satisfied that –

(a) it is impracticable to do so; and

(b) the person is not likely to dispute the nature or amount for which his claim is shown on the financial institution’s books.

Rejection of claims and determination of amounts owing

16. (1) Within 3 months after the date specified under paragraph 15(3), or within such longer period as may be determined by the Central Bank, the liquidator shall –

(a) reject any claim or any objection filed under paragraph 15(3) if he doubts its validity;

(b) determine the amount, if any, owing to each known depositor or other creditor and the priority class of his claim under paragraph 17;

(c) notify each person –

(i) whose claim has not been allowed in full;

(ii) whose claim or objection has been rejected; or

(iii) whose claim may not be paid in full.

(2) Any person aggrieved by a notice under subparagraph (l)(c) may, within 21 days of such notification, appeal against the decision of the liquidator to the Supreme Court, who may uphold, vary or reverse the liquidator’s decision.

Preferential payment

17. (1) In a compulsory winding up under this Part of this Schedule there shall be paid, in priority to all other debts or claims against the financial institution and in the following order –

(a) all necessary and reasonable expenses incurred by the liquidator in the application of this Part of this Schedule;

(b) all wages or salary (whether or not earned wholly or in part by way of commission) of any officer or employee in respect of services rendered to the financial institution during the four months immediately preceding the date on which the banking licence was revoked, being a sum which, in the case of anyone claimant does not exceed R2,000;

(c) all tax on income and other taxes assessed on the company up to the 31st day of December in the year immediately preceding that in which the banking licence was revoked, but not exceeding in the whole one year’s assessment, the year for which priority is claimed being selected by the Commissioner of Taxes;

(d) any funds deposited with the financial institution with interest accrued thereon, not exceeding in respect of any one account R10,000;

(e) all other claims lodged timeously;

(f) other deposits with interest accrued thereon;

(g) any fees and assessments due to the Central Bank.

(2) If the amount available for any class is insufficient to provide payment in full, the amount shall be distributed rateably among the members of the class.

(3) After payment of all claims specified in subparagraph (1) the liquidator may pay any remaining claims not lodged within the specified time.

Schedule of proposed steps and timetable

18. (1) Within 3 months after the date specified under paragraph 15(2), or within such longer period as may be determined by the Central Bank, the liquidator shall –

(a) prepare a schedule of the steps proposed to be taken and the timetable proposed to be followed to complete the winding up under this Part of this Schedule; and

(b) publish once in the Gazette, and once a week for 3 consecutive weeks in a local newspaper, a notice of the date and place where the schedule and timetable will be available for inspection, and the date, not earlier than 30 days from the date of the third publication in the local newspaper, on which the liquidator will lodge the schedule and timetable with the Supreme Court for approval.

(2) Within 21 days after the schedule and timetable have been lodged with the Supreme Court under subparagraph (1), any depositor, other creditor, shareholder, or other interested party may file an objection to any step or time proposed.

(3) If an objection is sustained by the Supreme Court, it shall direct that an appropriate modification of the schedule and timetable be made.

Payment of claims

19. (1) Where the schedule and timetable have been approved by the Supreme Court the liquidator may, from time to time, make partial distribution to the holders of the claims which are undisputed or which have been allowed by Court, on condition that a proper reserve is established for the payment of disputed claims.

(2) As soon as possible after all objections have been decided on, the liquidator shall make the final distribution.

Disposal of assets

20. Any assets remaining after all claims have been paid under paragraph 19 shall be distributed among the shareholders in proportion to the nominal values of their respective shares.

Safe deposit boxes and unclaimed property

21. (1) Any safe deposit boxes the contents of which have not been withdrawn before the date specified under paragraph 15(3) shall be opened in the manner determined by the liquidator.

(2) The contents of safe deposit boxes opened under subparagraph (1), or any unclaimed property held by the institution on hire, loan, deposit or m pledge, shall –

(a) if they are monies, be transferred on the direction of the Central Bank to a special account with the Central Bank;

(b) if they are not monies, be referred on the direction of the Central Bank to the Minister for such action as he shall determine.

(3) Any items dealt with under subparagraph (2) shall be presumed to be abandoned property, and shall be dealt with in accordance with Part VI (abandoned property) of this Act if within 10 years of the original date of deposit the owner has not evidenced an interest in the items.

Unclaimed funds

22. (1) Unclaimed funds remaining after the final distribution under paragraphs 19 and 20 or which are not subject to other provisions of this Act shall, on the direction of the Central Bank, be transferred to a special account with the Central Bank and may be used by the Central Bank for such purposes as may be determined by the Central Bank after consultation with the Minister.

(2) If within 10 years of the date of the final distribution under paragraphs 19 and 20, as the case may be, the owner has not evidenced an interest in funds transferred under subparagraph (1) they shall be presumed to be abandoned property and shall be dealt with in accordance with Part VI (abandoned property) of this Act.

Audit

23. (1) When all assets have been distributed in accordance with this Part of this Schedule, the liquidator shall, after approval by the Central Bank, submit to the Supreme Court for its approval an audited statement of account of his dealing with the assets of the financial institution together with an auditor’s report.

(2) The auditor shall be a person who in the opinion of the Central Bank is suitably qualified to discharge the duties of auditor, and his remuneration shall be paid by the liquidator.

(3) A person shall not be qualified for appointment as auditor of the liquidator’s statement unless he is a member of a body of accountants (whether established in or outside Seychelles) for the time being recognised for the purposes of this paragraph by the Central Bank.

(4) In his report the auditor shall state –

(a) whether in his opinion the liquidator’s statement of accounts is full and fair and properly drawn up;

(b) whether the statement exhibits a true and correct statement of the dealings of the liquidator with the assets of the financial institution; and

(c) where the auditor has called for any explanation or information from the liquidator and whether that explanation or information is satisfactory.

(5) The approval of that statement of account and report by the Court relieves the liquidator and the Central Bank of any liability in connection with the winding up.

(6) The liquidator shall inform the Registrar of Companies of the approval of statement of account and report by the Court and the Registrar shall –

(a) strike the name of the financial institution off the register of companies; and

(b) publish a notice of the striking off in the Gazette,

and on the date of publication in the Gazette of that notice the financial institution shall be dissolved.

(7) Without prejudice to the generality of section 65 (application of the Companies Act), the provisions of the Companies Act, other than those specified in Part III of this Schedule, shall apply to a financial institution struck off under subparagraph (6) as they apply to a company struck off under section 305 of that Act, and the liability, if any, of every director, officer, member, shareholder and contributory of the company shall continue and may be enforced as if the company had not been dissolved.