Hong Kong Ordinances

BANKING ORDINANCE - SECT 70B

Restrictions on and sale of shares

(Past version on 01/07/1997).
(Past version on 30/06/1997).

(1) This section shall apply to a person being a majority 
shareholder controller of an authorized institution incorporated in Hong  Kong
as it applies to a person being a minority shareholder controller of an
authorized institution incorporated in Hong Kong.

(2) The powers conferred by this section shall be exercisable where a person-

   (a)  has become a minority shareholder controller of an authorized 
        institution in contravention of section 70(3) in that-

        (i)    a notice in writing has been served under section 70(3)(a) on
               the Monetary Authority by that person in respect of that
               institution but neither of the events specified in
               section 70(3)(b) has occurred;

        (ii)   no notice in writing has been served under section 70(5) in
               respect of that contravention;

        (iii)  a notice in writing has been served under section 70(5) on the
               Monetary Authority by that person in respect of that
               contravention, the Monetary Authority has served a
               notice of objection under section  70 (6) on that person in
               respect of that contravention, and either- (A) the period
               specified in the Administrative Appeals Rules ( Cap 1 sub.
               leg.) within which that person may appeal under section 132A(3)
               against the decision of the Monetary Authority to serve such
               notice of  objection has expired without any such appeal having
               been made; or (B) an appeal under section 132A(3) by that
               person against the decision of the Monetary Authority to so
               serve such notice of objection is unsuccessful; or

        (iv)   that person has been convicted of an offence under section  70
               (18) in respect of that contravention; or

   (b)  continues to be a minority shareholder controller of an
        authorized institution after having been served with a
        notice of objection under section 70A(3) in respect of his being such
        a controller and either-

        (i)    the period specified in the Administrative Appeals Rules (
               Cap 1 sub. leg.) within which that person may appeal under
               section 132A(3) against the decision of the Monetary Authority
               to so serve such notice of  objection has expired without any
               such appeal having been made; or

        (ii)   an appeal under section 132A(3) by that person against the
               decision of the Monetary Authority to so serve such
               notice of objection is unsuccessful. (Amended 4 of 1997 s. 27)

(3) Subject to subsection (8), the Monetary Authority may, by notice in
writing served on the person concerned, direct that any specified shares to
which this section applies shall, until further notice, be subject to one or
more of the following restrictions-

   (a)  any transfer of those shares or, in the case of unissued shares, any
        transfer of the right to be issued with them, and any issue of such
        shares, shall be void;

   (b)  no voting rights shall be exercisable in respect of the shares;

   (c)  no further shares shall be issued in right of them or pursuant to any
        offer made to their holder;

   (d)  except in a liquidation, no payment shall be made of any sums due from
        the authorized institution, or other company, concerned on the shares,
        whether in respect of capital or otherwise.

(4) Where shares are subject to the restrictions under subsection

(3)(a), any agreement to transfer the shares or, in the case of unissued
shares, the right to be issued with them, shall be void.

(5) Where shares are subject to the restrictions under subsection

(3)(c) or (d), an agreement to transfer any right to be issued with other
shares in right of those shares, or to receive any payment on them

(otherwise than in a liquidation), shall be void.

(6) Where shares are subject to any restrictions under subsection

(3), any person affected by any of those restrictions may request the
Monetary Authority to make an application referred to in subsection (7)(a) in
respect of those shares and, where such a request is made, the Monetary 
Authority shall, not later than 1 month after that request has been made-

   (a)  if, by virtue of subsection (9), the Monetary Authority is prohibited
        from making such an application, serve a notice in writing on that
        person stating that he is so prohibited;

   (b)  in any other case-

        (i)    comply with that request; or

        (ii)   serve a notice in writing on that person stating that he does
               not propose to comply with that request.

(7) Subject to subsection (9), the Court of First Instance may- (Amended 25 of
1998 s. 2)

   (a)  on the application of the Monetary Authority, order the sale of any
        specified shares to which this section applies and, if they are for
        the time being subject to any restrictions under subsection (3), that
        they shall cease to be subject to those restrictions;

   (b)  on the application of a person who has made a request under subsection
        (6) where-

        (i)    paragraph (b) of that subsection applies in respect of that
               request; and

        (ii)   he has been served with a notice in writing under paragraph

   (b)  (ii) of that subsection in respect of that request; or

        (iii)  the period specified in that subsection has expired and neither
               of the events referred to in paragraph (b) of that subsection
               has occurred in respect of that request, order the sale of any
               shares to which that request relates and that they shall cease
               to be subject to any restrictions under subsection (3).

(8) Where the Monetary Authority has, by virtue of subsection

(2)(a)(ii), served a notice in writing under subsection (3) on the person
concerned and-

   (a)  that person has, not later than 14 days after the service of that
        notice, served a notice in writing under section 70(5) on the
        Monetary Authority in respect of the contravention of section 70(3) to
        which that first-mentioned notice relates; and

   (b)  either-

        (i)    no notice of objection under section 70(6) has been served by
               the Monetary Authority on that person in respect of that
               contravention within the period in respect of which
               section 70(9)(b) permits such a notice of objection to be so
               served; or

        (ii)   such a notice of objection has been so served within that
               period but an appeal under section 132A(3) by that person
               against the decision of the Monetary Authority to so serve such
               notice of objection is successful, (Amended 4 of 1997 s. 27)
               whichever first occurs, the Monetary Authority shall forthwith
               serve a notice in writing on that person to the effect that the
               first-mentioned notice is revoked.

(9) The Monetary Authority shall not, by virtue of subsection

(2)(a)(ii), make an application referred to in subsection (7)(a) unless-

   (a)  the application relates to shares which are the subject of a notice in
        writing under subsection (3); and

   (b)  the person upon whom that notice has been served has not, within 14
        days after the service of that notice, served a notice in writing
        under section 70(5) in respect of the contravention of section  70 (3)
        to which that first-mentioned notice relates: Provided that this
        subsection shall be without prejudice to the Monetary  Authority's
        power, by virtue of subsection (2)(a)(iii), to subsequently make such
        an application in respect of those shares. (Amended 82 of 1992 s. 19)

(10) Where an order has been made under subsection (7), the Court of First
Instance may, on the application of the Monetary Authority, make such further
order relating to the sale or transfer of the shares as it thinks fit
(including an order that the holder of the shares shall cause the shares to be
transferred to a nominee of the Monetary Authority specified in the order and
within the period specified in the order). (Amended 25 of 1998 s. 2; 32 of
2001 s. 14)

(11) Where shares are sold pursuant to an order under this section, the
proceeds of the sale, less the costs of the sale, shall, unless otherwise
specified by the Court of First Instance, be paid into court for the benefit
of the persons beneficially interested in them, and any such person may apply
to the Court of First Instance for an order that the whole or part of the
proceeds be paid to him. (Amended 25 of 1998 s. 2; 32 of 2001 s. 14)

(12) This section shall apply-

   (a)  to all the shares in the authorized institution concerned by virtue of
        which the person concerned is a minority shareholder controller of the
        institution which are held by him or any associate of his and were not
        so held immediately before he became such a controller; and

   (b)  where the person concerned became a minority shareholder  controller
        of the authorized institution concerned by virtue of the acquisition
        by him or any associate of his of shares in another company, to all
        the shares in that company which are held by him or any associate of
        his and were not so held immediately before he became such a
        controller.

(13) A copy of a notice in writing served under subsection (3) or

(8) on the person concerned shall be served on the authorized institution or
other company to whose shares it relates and, if it relates to shares held by
any associate of that person, on that associate.

(14) The Chief Justice may make rules regulating the practice and procedure in
connection with applications (including any class of applications) made under
subsection (7).

(15) It is hereby declared that-

   (a)  the operation of subsection (3)(b) shall not of itself cause any
        person to contravene section 70;

   (b)  an order under subsection (10) in relation to the shares may be made
        at the same time as an order under subsection (7) in relation to the
        shares. (Added 32 of 2001 s. 14) (Added 95 of 1991 s. 18. Amended 82
        of 1992 s. 25)