Central Bank Act, 1989.

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Directions by Bank to holders of licences.

38.—The Act of 1971 is hereby amended by the substitution of the following section for section 21:

“21.—(1) Where the Bank is of the opinion that it is in the public interest to do so, or that the holder of a licence—

(a) has become or is likely to become unable to meet his obligations to his creditors, or

(b) is not maintaining or is unlikely to be in a position to maintain adequate capital resources having regard to the volume and nature of his business, or

(c) has failed to comply with any condition imposed in relation to the licence in accordance with section 10 of this Act and the circumstances are such that the Bank is of the opinion that the stability and soundness of the holder are affected by such failure, or

(d) is conducting business in such a manner as to jeopardise and prejudice the security of deposits taken by him or the rights and interests of persons who made those deposits, or

(e) is under common control with one or more than one other enterprise (whether or not any such other enterprise is the holder of a licence) and the Bank is of the opinion that the common control is not in the interest of persons maintaining deposits with the first mentioned holder of a licence,

the Bank may give a direction in writing to that holder to suspend, for such period, not exceeding six months, as shall be specified in the direction, all or any of the following, that is to say—

(i) the carrying on of banking business,

(ii) the making of payments to which paragraph (i) of this subsection does not relate,

(iii) the acquisition or disposal of other assets or liabilities,

which have not been authorised by the Bank.

(2) The Bank may revoke a direction given under subsection (1) of this section unless an order under subsection (4) of this section has been made in respect of the direction.

(3) The holder of a licence to whom a direction is given under subsection (1) of this section may apply to the Court for, and the Court may grant, an order setting aside the direction.

(4) The Bank may apply to the Court for, and the Court may grant, an order confirming a direction given under subsection (1) of this section or confirming the direction and subject to subsection (5) of this section extending the period of its operation for such time, not exceeding the period of twelve months from the date the direction commenced to have effect, as the Court may, having regard to all the circumstances, consider appropriate.

(5) A direction to which subsection (4) of this section relates shall cease to have effect—

(a) where the direction was confirmed, upon the expiration of the period to which the direction relates,

(b) where the direction was confirmed and the period of its operation was extended, upon the expiration of that extended period,

(c) from such date as the Court by order determines on a subsequent application to it by the Bank,

(d) upon the making of a winding up order in respect of the holder of the licence concerned, or

(e) where the Court is of the opinion that the circumstances which gave rise to the direction have ceased to exist and that it would be unjust and inequitable not to make an order to that effect, from such date as the Court by order determines,

whichever first occurs.

(6) The Court may, in addition to or in lieu of making an order under subsection (3) or (4) of this section, make such other order in relation to the matter as may appear to it to be necessary, including an order directing any person who holds money or other assets for or on behalf of the person to whom the direction relates not to dispose of any of those assets except on such conditions and in such circumstances as are specified in the order.

(7) Where a direction given under this section is a subsisting direction, then—

(a) winding up or bankruptcy proceedings shall not be initiated in relation to the holder of the licence to whom the direction was given,

(b) a receiver over the property of that holder shall not be appointed, and

(c) the property of that holder shall not be attached, sequestered or otherwise distrained,

unless the prior approval of the Court has been obtained.

(8) (a) Where the Bank is of the opinion that, notwithstanding the fact that the holder of the licence to whom the direction was given under this section appears to it to be able to meet his obligations to his creditors, the circumstances which gave rise to the direction are unlikely to be rectified, it shall forthwith apply to the Court for, and the Court may grant, an order directing the holder to prepare, in consultation with the Bank, a scheme for the orderly termination of his banking business and the discharge of his liabilities to persons who have deposits maintained with him under the supervision of the Bank and to submit the scheme to the Court within two months for the Court's approval.

(b) The Court shall not approve the terms of the scheme without hearing the Bank and, in the event of any dispute concerning the terms of the scheme, either or both the Bank and the holder of the licence to whom the direction was given may apply to the Court to adjudicate on the matter.

(c) If the holder of the licence to whom the direction was given fails to comply with the order of the Court or fails to adhere to the scheme approved by the Court, the Bank may apply to the Court for and the Court may make such further order as it considers appropriate, including an order of commital or a winding up order on the ground that it is just and equitable that the holder should be wound up.

(9) Where, in proceedings brought under this section against the holder of a licence to whom a direction was given under this section, a winding up order is made, the law relating to companies (including this Act) shall apply in the same way as if the order had been made on a winding up petition under that law and as if for any reference in that law to the presentation of the winding up petition there were substituted a reference to the making of the winding up order under this section.

(10) Where the Court is satisfied, because of the nature or the circumstances of the case or otherwise in the interests of justice, that it is desirable, the whole or any part of proceedings under this section may be heard otherwise than in public.

(11) The Court may by order revoke or amend an order made by it under this section.

(12) For the purpose of subsection (1) (e) of this section, the holder of a licence and one or more than one other enterprise shall be deemed to be under common control if the decision as to how or by whom each shall be managed can be made by the same person or is made by the same group of persons acting in concert.”.