FINANCIAL INSTITUTIONS ACT, 2004

Section 66(2)

SCHEDULE 2

WINDING UP OF LOCAL FINANCIAL

INSTITUTIONS

PART I
VOLUNTARY WINDING UP

Authorisation

1. (1) No local financial institution shall be voluntarily wound up except with the prior written authorisation of the Central Bank.

(2) Authorisation under subparagraph (1) shall be granted only if it appears to the Central Bank that –

(a) the financial institution is solvent and has sufficient liquid assets to repay its depositors and other creditors without delay; and

(b) the winding up has been approved at a general meeting of the financial institution called expressly for the purpose by the affirmative vote of the holders of not less than three quarters of the issued shares entitled to vote:

Provided that if the winding up is to be effected in whole or in part through the sale of any of the assets of the financial institution to, or the assumption of any of its deposit liabilities by, another financial institution, the Central Bank may, if it considers that the institution is in imminent danger of insolvency, waive the requirement in subparagraph (b) for approval at a general meeting.

(3) The voluntary winding up is deemed to commence on authorisation by the Central Bank under this paragraph.

Operations of local financial institution to cease

2. (1) When a local financial institution has received the authorisation of the Central Bank under paragraph 1 it shall –

(a) immediately cease to do business, except for business necessary to effect an orderly winding up;

(b) repay its depositors and other creditors;

(c) return all funds and other property held by it to the persons entitled to the possession of such funds and property; and

(d) wind up all operations undertaken prior to the receipt of the authorisation.

(2) Notwithstanding anything to the contrary in its memorandum or articles, the financial institution shall continue to be a body corporate under the Companies Act, until it is dissolved under paragraph 5(4).

Notice of winding up

3. (1) A notice of voluntary winding up, giving such information as the Central Bank may require, shall be –

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

(b) given by the financial institution to the Registrar of Companies within 14 days of the authorisation under paragraph 1; and

(c) sent within 30 days of the authorisation under paragraph 1 by the financial institution by registered post to all customers, depositors, beneficial owners, other creditors, safe deposit box lessees, owners of funds or property held by the financial institution as a fiduciary or on hire, loan, deposit or pledge and to all shareholders.

(2) The Central Bank may exempt the financial institution from sending notice under subparagraph (1)(c) to any specified person if it is satisfied that –

(a) it is impracticable to do so; and

(b) the person has otherwise had adequate notice.

(3) A copy of the notice under this paragraph shall be kept displayed in a conspicuous place in the public part of each place of business of the financial institution and shall be given such other publicity as the Central Bank may direct.

Rights of depositors etc.

4. (1) Authorisation for winding up under paragraph 1 shall not prejudice –

(a) the rights of a depositor, beneficiary owner or other creditor to payment in full of his claim; or

(b) the right of any person to the return of funds or other property held by the financial institution.

(2) All lawful claims shall be paid promptly and all funds and other property held by the financial institution shall be returned to the persons entitled to possession within such period of time as the Central Bank may determine.

Discharge of obligations of institution

5. (1) Subject to subparagraphs (2) and (3), where the Central Bank is satisfied that a local financial institution has discharged all the obligations referred to in paragraph 4(2) –

(a) the banking licence of the institution shall be revoked; and

(b) the remainder of its assets shall be distributed by the financial institution among the shareholders in proportion to the nominal values of their respective shares.

(2) No distribution under subparagraph (1) shall be made before –

(a) all claims of depositors, beneficial owners and other creditors have been paid, or, in the case of a disputed claim, before the financial institution has turned over to the Central Bank sufficient funds to meet any liability that may be judicially determined;

(b) any funds payable to a depositor, beneficial owner or any other creditor who has not claimed them have been turned over to the Central Bank; and

(c) any other funds and property held by the financial institution which cannot be returned to the persons entitled to their possession in accordance with this paragraph have been dealt with in accordance with section 59 (reports of abandoned property).

(3) All costs, charges and expenses properly incurred in the winding up are payable out of the assets of the financial institution in priority to a distribution under subparagraph (1)(b).

(4) The Central Bank shall inform the Registrar of Companies of the revocation of the banking licence of the financial institution under subparagraph (1) 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.

(5) Without prejudice to the generality of section 65 (application of 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 sub-paragraph (4) 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.

(6) When the remainder of the assets of the local financial institution have been distributed in accordance with subparagraph (1)(b), its books and papers shall be disposed of in such way as the Central Bank directs.

Revocation of banking licence if assets insufficient

6. (1) Where a local financial institution is being wound up voluntarily under this Schedule, and, in the opinion of the Central Bank –

(a) the assets of the financial institution will not be sufficient for the full discharge of its obligations; or

(b) the completion of the winding up is unduly delayed, the Central Bank shall revoke the banking licence of the financial institution and appoint a liquidator for the compulsory winding up of the financial institution in terms of Part II of this Schedule.

Effective date of revocation

7. Sections 13(2) to (5) (taking effect of revocation) and section 16 (appeals against revocation) do not apply to a revocation under paragraph 5 or 6.