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Bahamas Numbered Acts |
No. 20 of 2004 |
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AN ACT TO MAKE PROVISIONS IN RESPECT |
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OF SEGREGATED ACCOUNTS COMPANIES |
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[Date of Assent - 20th September, 2004] |
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Enacted by the Parliament of The Bahamas. |
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PART I |
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PRELIMINARY |
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1.(1)
This Act may be cited as the
Segregated Accounts Companies Act, 2004.
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Short title and commencement. |
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(2)
This Act shall come into
operation on such date, as the Minister by notice published in the
Gazette, may appoint.
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2.(1)
In this Act -
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Interpretation. |
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"account owner" in relation to a segregated account means any person who is - |
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(a)
the registered holder of shares
which are -
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(i)
issued by the segregated
accounts company, and
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(ii)
linked to that segregated
account; or
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(b)
expressly identified in the
governing instrument linked to a segregated account as being an
account owner for the purposes of this
Act in respect of that
segregated account; or
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(c)
expressly designated in the
records of the segregated accounts company as being an account
owner in respect of that segregated account,
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and the interests of an account owner in any of the foregoing capacities in relation to any segregated account are referred to in this Act as "account holdings" ; |
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"Commission" means the Securities Commission established by section 3 of the Securities Industry Act; |
Ch. 363. |
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"contract" includes written agreements, instruments or other writings (including electronic records) which create or affect rights or obligations; |
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"counterparty" means any party (other than the segregated accounts company itself, save where section 32(1) applies) to a transaction to which the segregated accounts company is a party, and under which assets or liabilities are wholly or partly linked to a segregated account, but an account owner shall not (in that capacity) also be a counterparty; |
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"court" means the Supreme Court; |
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"creditor" means, in respect of any segregated account (and in that regard may include a counterparty of the segregated account) or the general account respectively, any person to whom any liability is owed by the segregated accounts company and such liability is linked to that segregated account or is a liability of the general account, but, except as provided for in section 36(5), an account owner shall not (in that capacity) also be a creditor; |
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"general account" means an account comprising all of the assets and liabilities of a segregated accounts company which are not linked to a segregated account of that company; |
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"general shareholder" means any member of a segregated accounts company not being the holder of a share linked to a segregated account; |
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"governing instrument" means one or more written agreements, instruments, Memorandum or Articles of Association, prospectuses, resolutions of directors, registers or other documents (including electronic records), setting out the rights, obligations and interests of account owners in respect of a segregated account; |
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"insurance business" means insurance business either as defined in section 2 of the Insurance Act or in section 2 of the External Insurance Act; |
Ch. 347. Ch. 348. |
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"known creditors" means creditors whose identity and whereabouts are known to, or with due diligence could be discovered by, the company; |
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"linked" means referable by means of - |
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(a)
an instrument in writing
including a governing instrument or contract; or
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(b)
an entry or other notation made
in respect of a transaction in the records of a segregated accounts
company,
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which identifies an asset, right, contribution, liability or obligation as belonging or pertaining to a segregated account; |
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"manager" means any person who, by virtue of the terms of a governing instrument or otherwise with the consent of a segregated accounts company, has control of a segregated account; |
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"officer" in relation to a segregated accounts company, includes director and secretary; |
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"operative date" means the date on which this Act comes into force; |
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"Minister" means the Minister responsible for Companies; |
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"primary regulator" means a person or supervisory body in charge of regulating and governing the activities of companies engaged in the business of investment funds, issuing securities, insurance business and any other business as prescribed by the Minister; |
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"register" means the register of segregated accounts companies maintained under section 6; |
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"registered" means registered under section 6; |
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"Registrar" means the Registrar of Companies appointed under section 2 of the Companies Act; |
Ch. 308. |
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"security" in relation to a segregated accounts company, means any share, note, bond, debenture, evidence of indebtedness, certificate, unit, warrant, derivative or right conferring an option to acquire shares or any other right issued by or pertaining to the company, but does not include a contract of insurance unless the terms of the contract so provide; |
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"segregated account" means a separate and distinct account (comprising or including entries, recording data, assets, rights, contributions, liabilities and obligations linked to such account) of a segregated accounts company pertaining to an identified or identifiable pool of assets and liabilities of such segregated accounts company which are segregated or distinguished from other assets and liabilities of the segregated accounts company for the purposes of this Act; |
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"segregated accounts company" means a company which is registered under section 6 and, unless the context otherwise requires, references to "the company" shall be construed as references to such company; and |
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"transaction" means any dealing of whatever nature, which may be evidenced by a governing instrument (in the case of a transaction with an account owner) or contract (in the case of a transaction with a counterparty), including the issue of any security, by which assets or liabilities become linked to a segregated account or by which the assets or liabilities linked to a segregated account are otherwise affected, or, in the case of assets linked to a segregated account which are intended by the parties to be applied to a risk of any nature and any dealing which exposes such assets to liability or loss. |
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(2)
For the purposes of this Act,
excluding section 45(1) -
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(a)
a segregated accounts company
shall be deemed to be solvent if the general account without
reference to any liabilities of a segregated
account is able to pay
its liabilities as they become due; and
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(b)
a segregated account shall be
deemed to be solvent if it is able to pay its liabilities
(excluding obligations to account owners in
that capacity) as they
become due.
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(3)
For the avoidance of doubt it
is declared that, notwithstanding section 35, a segregated accounts
company is not by reason only of
the operation of segregated
accounts carrying on trust business in or from within The
Commonwealth of The Bahamas for the purposes
of the Banks and Trust
Companies Regulations Act.
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Ch. 316. |
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(4)
For the avoidance of doubt,
and notwithstanding that a segregated accounts company may have
created one or more segregated accounts
pursuant to the provisions
of this Act -
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(a)
a segregated accounts company is
a single legal person, and
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(b)
the establishment by a segregated
accounts company of a segregated account does not create, in
respect of that segregated account,
a legal person separate from
the company.
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(5)
The provisions of the
Companies Act shall, subject to the provisions of this Act, and
unless the context otherwise requires, apply
mutatis mutandis in
relation to a segregated accounts company to which the Companies
Act applies.
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Ch. 308. Ch. 308. |
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(6)
The provisions of the
International Business Companies Act shall, subject to the
provisions of this Act, and unless the context otherwise
requires,
apply mutatis mutandis in relation to a segregated accounts company
to which the International Business Companies Act applies.
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Ch. 309. Ch. 309. |
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PART II |
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REGISTRATION |
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3.(1)
Any company to which the
Companies Act or the International Business Companies Act applies
-
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Application for registration to operate segregated accounts. Ch. 308. Ch. 309. |
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(a)
if it is engaged in the business
of investment funds with the written consent of the Commission or
if applicable an Investment Fund
Administrator; or
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(b)
if it is engaged in the business
of issuing securities with the written consent of the Commission;
or
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(c)
if it is engaged in insurance
business, with the written consent of the Registrar of Insurance;
or
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(d)
if it is a subsidiary of a Bank
or Trust Company and not licensed by the Central Bank with the
written consent of the Central Bank
of The Bahamas; or
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(e)
if is engaged in any other
business, with the written consent of a primary regulator who maybe
prescribed by the Minister,
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may, by filing a request under section 4, apply to be registered under section 6. |
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(2)
No company licensed under the
Banks and Trust Companies Regulation Act shall apply under this
section to be registered under section
6.
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Ch. 316. |
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(3)
Before a company can be
registered under this Act it must consult with its primary
regulator who may -
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(a)
impose such conditions on the
registration of a company as he may consider necessary to ensure
the reputation of The Bahamas as an
off-shore financial centre and
in particular to verify the identity of the account owners of
segregated accounts as prescribed by
regulations and to ensure
compliance with this Act; and
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(b)
require the company to take
certain steps or to refrain from adopting or pursuing a particular
course of action or to restrict the
scope of its segregated
accounts business in a particular way.
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(4)
The primary regulator may
revoke or vary any condition or requirement imposed under
subsection (3) by giving notice thereof to the
company.
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(5)
From the date of registration
under this Act, a segregated accounts company shall be bound by,
and may avail itself of , the provisions
of this Act and from such
date it may, without in any way limiting the generality of the
foregoing, establish one or more segregated
accounts to which the
provisions of this Act shall apply.
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4(1) The request to be registered as a segregated accounts company under section 6 shall be filed with the Registrar and shall contain the following information - |
Documents to be filed. |
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(a)
the name of the proposed company
which shall include the expression "SAC" or "Segregated Accounts
Company" ;
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(b)
the nature of the business of the
company;
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(c)
the address of the registered
office of the company in The Bahamas; and
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(d)
the date of incorporation of the
company.
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(2)
Where the company has
conducted business prior to its registration, the company, in
filing a request under subsection (1), shall -
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(a)
file with the primary regulator a
statutory declaration made by at least two directors as at the date
of the request setting out a
true and accurate statement of -
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(i)
the assets and liabilities of
the company as at a date within three months prior to the date of
the request;
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(ii)
a description of any transaction
or event which, as of the date of the request, has occurred, or is
expected to occur, between the
date of the statement of assets and
liabilities prepared pursuant to subparagraph (i) and the date of
registration of the company
as a segregated accounts company which,
if it had occurred before the date of that statement, would have
caused material changes
to the assets and liabilities disclosed
therein; and
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(iii)
the segregated accounts the
company intends to operate and the assets and liabilities which the
company proposes to assign to each
of those segregated
accounts;
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(b)
declare that on registration
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(i)
the company and each segregated
account will be solvent;
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(ii)
no known creditor of the company
will be prejudiced;
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(iii)
the liabilities transferred or
to be transferred to a segregated account, that the known creditors
in respect of such liabilities
of the company have consented in
writing to the company proceeding to register; or
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(iv)
the liabilities transferred or
to be transferred to a segregated account, that adequate notice has
been given in accordance with subsection
(4) to all known creditors
of the company in respect of such liabilities and no such creditor
objects to the registration otherwise
than on grounds that are
frivolous or vexatious; and
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(c)
attach evidence of the consent in
writing to registration of 75% in number of those persons who
would, on the registration of the
company, be the account owners of
the segregated accounts of the company and 75% of those persons who
would, on the registration
of the company, be creditors.
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(3)
The company, in filing a
request under this section, shall -
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(a)
in the event that the company is
an investment fund, attach evidence of the consent in writing to
registration, of either the Commission
or the Investment Fund
Administrator;
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(b)
in the event that the company is
engaged in the business of issuing securities, attach evidence of
the consent in writing to registration,
of the Commission;
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(c)
in the event that the company is
engaged in insurance business under the Insurance Act, or the
External Insurance Act, attach evidence
of the consent in writing
to registration, of the Registrar of Insurance;
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Ch. 347. Ch. 348. |
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(d)
in the event that the company is
a subsidiary of a Bank or Trust Company, attach evidence of the
consent in writing to registration,
of the Central Bank; or
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(e)
in any other case, attach
evidence of the consent in writing to registration, of the primary
regulator designated by the Minister.
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(4)
For the purposes of subsection
(2)(b)(iv) adequate notice is given if -
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(a)
a notice in writing is sent to
each known creditor having a claim against the company that exceeds
$1,000; and
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(b)
notice is published in the
Gazette,
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in each case stating that the company intends to register under this Act and that a creditor of the company may object to the registration within 14 days from the date of such notice, or publication of such notice. |
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5.(1)
Where the company has
conducted business prior to its registration, subject to subsection
(2), account owners or creditors who object
to the registration of
the company may apply to the court for the annulment of the
registration of the company.
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Application to court by parties who object to registration of segregated accounts company. |
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(2)
An application under
subsection (1) may only be made by -
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(a)
not less than 20% in number of
such persons who are as a result of the registration of the
company, account owners;
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(b)
not less than 20% in number of
such persons who are as a result of the registration of the
company, creditors; or
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(c)
not less than 20% in number of
such persons as are mentioned in paragraphs (a) and (b) combined
who are account owners or creditors
on registration:
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Provided that an application shall not be made by any person who has voted in favour of the registration or has given to the company a statement in writing duly signed that he, having had notice, consents to the registration. |
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(3)
An application under
subsection (1) shall be made within 28 days from the date of
registration, and may be made on behalf of the persons
entitled to
make the application by one or more of their number as they may
appoint in writing for the purpose.
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(4)
On an application under
subsection (1) the court may make an XXX annulling or confirming
the registration, either wholly or in part,
and on suXXX terms and
conditions as it thinks fit, and may, if it thinks fit, adjourn the
proceedings in order that an arrangement
may be made to the
satisfaction of the court for the purchase or other disposition of
the interests of persons objecting to the registration,
and may
give such directions and make such orders as it may think expedient
for facilitating or carrying into effect any such
arrangement.
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6.(1)
The Registrar shall maintain a
register of segregated accounts companies.
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Register of segregated accounts companies. |
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(2)
Upon application and upon
payment of such fees as may be prescribed the Registrar, if
satisfied -
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(a)
that the company complies with
this Act; and
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(b)
that the necessary consents have
been obtained under section 4(3),
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shall register the company as a segregated accounts company and publish in the Gazette a notice of the registration of the company. |
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(3)
After registering a company
pursuant to subsection (2), the Registrar shall issue a certificate
showing the date of registration.
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(4)
The Registrar shall place a
copy of the certificate referred to in subsection (3) on the public
file maintained by him in respect
of the company.
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(5)
The register shall be
available for inspection by members of the public.
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7.
Where the Registrar refuses to
register a company as a segregated accounts company pursuant to
section 6(2), he shall assign a reason
for his refusal and his
decision shall be subject to appeal in court.
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Refusal of Registrar to register segregated accounts company. |
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8.(1)
If 75% of the accounts owners
in number and value of a segregated accounts company and 75% of the
counterparties in number and in
value who are creditors submit a
written request to the Registrar for deregistration, then the
Registrar shall remove the company
from the register and the
provisions of this Act shall cease to apply to the company.
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Deregistration of segregated accounts company. |
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(2)
A segregated accounts company
must notify all creditors and all account owners of the segregated
accounts company of the removal of
the company from the
register.
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(3)
An account owner of a
segregated account or any creditor who is aggrieved by a request
made pursuant to subsection (1) may, within
21 days of receipt of
notice of the request, apply to the Registrar to refuse to remove
the segregated accounts company from the
register or, if the
removal has already occurred, to reinstate the company on the
register.
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(4)
Where an application has been
made under subsection (3) and the Registrar has made a decision on
the application, any person who is
aggrieved by that decision may,
within 21 days of the decision, appeal to the court and the court
shall hear the matter and make
such order as it thinks fit.
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(5)
The making of a request
pursuant to subsection (1) shall not of itself effect the removal
of a segregated accounts company from the
register and the
Registrar in his absolute discretion shall determine whether to
give effect to the removal of the company from the
register and, in
this regard may require such information from the company as he
considers necessary to render such a decision.
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PART III |
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MANAGEMENT AND ADMINISTRATION |
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9.(1)
A segregated accounts company
shall -
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Company to inform persons they are dealing with segregated accounts company. |
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(a)
inform any person with whom it
enters into a transaction that it is a segregated accounts
company;
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(b)
where the transaction relates to
a segregated account, for the purposes of that transaction identify
or specify that segregated account;
and
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(c)
include a reference to the fact
that the company is a company registered under this Act on its
letterhead and contracts.
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(2)
If in contravention of
subsection (1), a segregated accounts company -
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(a)
fails to inform a person that he
is transacting with a segregated accounts company, and that person
is otherwise unaware that, and
has no reasonable grounds to believe
that, he is transacting with a segregated accounts company;
or
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(b)
fails to identify the segregated
account in respect of which a person is transacting, and that
person is otherwise unaware of, and
has no reasonable basis of
knowing, which segregated account he is transacting with,
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then in either such case : |
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(i)
the directors shall
(notwithstanding any provision to the contrary in the relevant
governing instrument or a contract which is binding
on those
parties in relation to the affected segregated account or general
account), incur personal liability to that person in respect
of the
transaction; and
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(ii)
unless otherwise provided for in
the governing instrument the directors shall have a right of
indemnity against the assets of the
general account unless they
were fraudulent, reckless , negligent or acted in bad faith.
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(3)
Notwithstanding subsection
(2)(i), the court may relieve a director of all or part of his
personal liability thereunder if he satisfies
the court that he
ought fairly to be so relieved because -
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(a)
he was not aware of the
circumstances giving rise to his liability and, in being not so
aware, he was neither fraudulent, reckless,
negligent, nor acted in
bad faith; or
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(b)
he expressly objected, and
exercised such rights as he had as a director, whether by way of
voting power or otherwise, so as to try
to prevent the
circumstances giving rise to his liability.
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(4)
Where, pursuant to subsection
(3), the court relieves a director of all or part of his personal
liability under subsection (2)(i),
the court may order that the
liability in question shall instead be met from such assets of a
segregated account or the general account
of the company as may be
specified in the order.
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(5)
Any provision in the articles
of a segregated accounts company or the governing instrument in
respect of a segregated account, and
any other contractual
provision under which the segregated accounts company may be
liable, which purports to indemnify directors
in respect of conduct
which would otherwise disentitle them to an indemnity against the
assets of the general account by virtue of
subsection (2)(ii),
shall be void.
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10.(1)
This section shall only apply
to a segregated accounts company which has applied for approval to
be registered pursuant to section
3(1)(e).
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Segregated accounts representative. |
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(2)
A segregated accounts company
shall appoint and maintain a segregated accounts representative in
The Bahamas who shall be a person
approved by the primary regulator
designated by the Minister, as the segregated accounts
representative of the company. This representative
shall be
resident and licensed in The Bahamas as -
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(a)
a licensee under the Banks and
Trust Companies Regulations Act;
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Ch. 316. |
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(b)
a licensee under the Financial
and Corporate Service Providers Act;
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Ch. 369. |
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(c)
a licensee under the Securities
Industry Act;
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Ch. 363. |
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(d)
a licensee under the Investment
Funds Act;
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No. 20 of 2003. |
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(e)
a licensee under the Insurance
Act; or
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Ch. 347. |
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(f)
a licensee under the External
Insurance Act.
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Ch. 348. |
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(3)
The particulars of the
segregated accounts representative of a segregated accounts company
shall be included in the register of directors
and officers of the
company.
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(4)
It is the duty of the
segregated accounts representative within 30 days of -
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(a)
his reaching the view that there
is a reasonable likelihood of a segregated account or the general
account of a segregated accounts
company for which he acts becoming
insolvent; or
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(b)
it coming to his knowledge or his
having reason to believe that the segregated accounts company for
which he acts has failed to comply
with -
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(i)
any term or condition imposed
under section 3(3);
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(ii)
any requirement imposed by
sections 12, 15, 16 or 24;
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(iii)
any regulation made under
section 47; or
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(iv)
has become involved in any
criminal proceedings in The Bahamas or elsewhere,
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to make a written report to the primary regulator setting out all the particulars of the case that are available to him relating to the insolvency, failure or involvement. |
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11.(1)
Where the segregated accounts
company is a company with a representative appointed under section
10(2) and this representative resigns
or has its licence revoked
pursuant to the provisions under its principal Act and the company
has not notified the primary regulator
designated by the Minister
of any replacement of its representative, the primary regulator
shall serve on the company at its registered
office, a notice
directing the company to replace the representative.
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Replacement of segregated accounts representative. |
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(2)
If the segregated accounts
company fails within thirty days from the date of the notice to
notify the primary regulator of any replacement
of its
representative, the primary regulator shall recommend to the
Registrar that the company be removed from the register.
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12.(1)
The rights, interests and
obligations of account owners in a segregated account shall be
evidenced in a governing instrument and the
rights, interests and
obligations of counterparties shall be evidenced in the form of
contracts.
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Governing Instrument. |
|||||||||||||||
(2)
The governing instrument in
relation to any segregated account shall be governed by the laws of
The Bahamas and the parties thereto
shall submit to the
jurisdiction of the courts of The Bahamas and, in relation to such
governing instrument -
|
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(a)
a person shall become an account
owner and shall become bound by the governing instrument if such
person complies with the conditions,
if any, for becoming an
account owner as set out in the governing instrument;
|
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(b)
an account owner shall take such
interest in a segregated account as may be stipulated in respect of
him in accordance with the terms
of the governing instrument and,
absent such stipulation or other compelling indication (in the
discretion of the directors of the
company, exercised reasonably),
the extent of the interest of such account owner shall be
nil;
|
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(c)
if no other provision for
management is specified in the governing instrument, the company
shall manage the segregated account and
may-
|
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(i)
appoint and supervise the
officers, managers, employees and other persons who have management
of the segregated account; and
|
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(ii)
enter into financial
arrangements for payment for services including the charging of
fees, disbursements and other charges which may
be withdrawn from
the segregated account;
|
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(d)
unless otherwise provided in the
governing instrument, the company may take any action, including
-
|
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(i)
the amendment of the governing
instrument;
|
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(ii)
the appointment of one or more
managers;
|
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(iii)
for the benefit of the
segregated account only, the sale, lease, exchange, transfer,
pledge or other disposition of all or any part
of the assets of the
segregated account, or the orderly winding-up of the affairs and
termination of the segregated account, or may
provide for the
taking of any action to create under the provisions of the
governing instrument a class, group or series of account
holdings
that was not previously outstanding, without the vote or approval
of any particular manager or account owner, or class,
group or
series of managers or account owners;
|
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(e)
the company may, if and to the
extent that voting rights are granted under the governing
instrument, set forth provisions relating
to -
|
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(i)
notice of the time, place or
purpose of any meeting at which any matter is to be voted on;
|
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(ii)
waiver of any such notice;
|
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(iii)
action by consent without a
meeting;
|
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(iv)
the establishment of record
dates;
|
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(v)
quorum requirements;
|
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(vi)
voting in person, by proxy or in
any other manner; or
|
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(vii)
any other matter with respect to
the exercise of any voting rights;
|
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(f)
unless otherwise provided in the
governing instrument in relation to a segregated account, the
company may in respect of that account
grant to, or withhold from,
all or certain managers or account owners, or a specified class,
group or series of managers or account
owners, the right to vote,
separately or with any or all other classes, groups or series of
managers or account owners, on any matter,
such voting being on a
per capita, number, financial interests, class, group, series or
any other basis;
|
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(g)
unless otherwise provided in the
governing instrument in relation to a segregated account, the
company in respect of that account
may create further segregated
accounts to which all or any part of the assets, liabilities,
profits or losses linked to any existing
segregated account may be
transferred, and for the conversion of the interest (or any part
thereof) of all or certain account owners
in an existing segregated
account into interests of account owners in the separate segregated
account; and
|
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(h)
unless otherwise provided in the
governing instrument in relation to a segregated account, the
company in respect of that account
may set forth provisions therein
regarding -
|
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(i)
the governance of the business
(or any aspect thereof) of the segregated account and the rights,
powers and duties of the company,
any manager and the account owner
and their respective servants, agents, employees, successors or
assigns;
|
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(ii)
the identity of the segregated
account to which the transaction and any assets or liabilities are
linked; and
|
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(iii)
the extent of the interest of
the account owners and others (if any) therein and subordination
thereof (if any).
|
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(3)
Any written contract by the
company governing a transaction with a counterparty, including
those executed outside The Bahamas, shall
include the name of the
counterparty, and, unless otherwise provided therein, shall include
a term that the parties select the law
of The Bahamas as its
governing law and submit to the jurisdiction of the courts of The
Bahamas.
|
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(4)
Unless otherwise expressly
agreed in writing by the parties to the transaction by virtue of a
governing instrument or contract which
is binding on those parties
in relation to the affected segregated account or general account
and which is executed by parties having
authority in relation to
those accounts any contract pertaining to a transaction shall be
deemed to contain a statement that the
rights of the counterparty
shall not extend to, and the counterparty will not have recourse
to, the assets which are linked to any
other segregated account or
to the general account.
|
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(5)
For the avoidance of doubt, it
is hereby declared that any provision of a contract or governing
instrument relating to the segregation
of assets or liabilities of
a segregated account shall be governed by and construed in
accordance with this Act, and the parties
may not contract
otherwise in such regard.
|
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13.(1)
Notwithstanding any other
provision of this Act, a segregated accounts company may apportion
an asset or liability among two or more
segregated accounts and the
general account.
|
Apportionment of assets among segregated accounts. |
|||||||||||||||
(2)
Where a segregated accounts
company has apportioned an asset or liability pursuant to
subsection (1), the extent to which the asset
or liability is
linked to each segregated account shall be clearly indicated in the
contract or governing instrument effecting the
apportionment.
|
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(3)
Notwithstanding the contents
of any governing instrument or subsections (1) and (2) above, it
shall be the duty of the directors of
a segregated accounts company
to keep the assets and liabilities of each segregated account and
the general account separate and
separately identifiable from
assets and liabilities of each other segregated account and the
general account.
|
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14(1) A segregated accounts company may create and issue securities in one or more classes or series linked to the same segregated account, the proceeds of issue of which shall be included in the assets linked to that segregated account. |
Issue of securities linked to a segregated account. |
|||||||||||||||
(2)
Where the company has effected
a transaction by issuing a security linked to a segregated account,
the issue of the security shall
be identified as being linked to
the segregated account in the accounts, books and records required
to be kept by the company pursuant
to this Act.
|
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(3)
The proceeds of the issue of
shares or other securities, other than securities linked to a
segregated account, shall be included in
the general assets of the
company only and except as provided for in this Act and the general
shareholders shall have no rights to
the assets of any segregated
account by reason only of being a general shareholder.
|
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15(1) A segregated accounts company may pay a dividend in respect of securities of any class linked to a segregated account whether or not a dividend is declared on any other class of securities linked to the same or any other segregated account or any other securities issued by the company. |
Dividends, repurchases and other acquisitions of shares. |
|||||||||||||||
(2)
Notwithstanding any other
provision of this Act, a dividend shall not be declared or paid in
respect of securities linked to a segregated
account if there are
reasonable grounds for believing that -
|
||||||||||||||||
(a)
the segregated account is not, or
would after the payment not be, solvent; or
|
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(b)
the realisable value of the
assets of the segregated account would be less than the sum of its
total liabilities other than deferred
taxes, as shown in the books
of account, and its issued and outstanding share capital.
|
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(3)
Dividends in respect of
securities linked to a segregated account shall be paid or made on
or in respect of those securities by reference
only to the assets
and liabilities of the segregated account linked to those
securities, and not by reference to the general account
or any
other segregated account, and otherwise in accordance with the
rights of such securities.
|
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(4)
Notwithstanding any other
statutory provision a segregated accounts company may purchase or
otherwise acquire the shares or securities
linked to a segregated
account using the assets linked to the relevant segregated account
provided that on the date of purchase or
other acquisition, after
taking into account the purchase or other acquisition, there are
reasonable grounds for believing that -
|
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(a)
the relevant segregated account
is solvent; and
|
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(b)
the realisable value of the
assets of the segregated account would be more than the aggregate
of its liabilities and its issued share
capital of all
classes.
|
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(5)
Where a company in respect of
a segregated account having a share capital has -
|
||||||||||||||||
(a)
purchased or otherwise acquired
any of its own shares in respect of a segregated account; or
|
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(b)
cancelled any shares, otherwise
than in connection with reduction of share capital under section
16,
|
||||||||||||||||
the company shall within thirty days after so doing give notice thereof to the Registrar specifying the shares purchased or otherwise acquired or cancelled and the Registrar shall register any such particulars. |
||||||||||||||||
16.
In any case where a segregated
accounts company in respect of a segregated account has share
capital, if authorised by a resolution
of the account owners of the
segregated account to which the shares are linked and subject to
the governing instrument in relation
to that segregated account, on
such terms as it may decide, the company may reduce its capital in
any way, and in particular, without
prejudice to the generality of
the foregoing power, may -
|
Reductions of capital of a segregated account. |
|||||||||||||||
(a)
extinguish or reduce the
liability on any of its shares in respect of share capital not paid
up;
|
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(b)
either with or without
extinguishing or reducing liability on any of its shares, cancel
any paid up share capital which is lost or
unrepresented by
available assets; or
|
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(c)
either with or without
extinguishing or reducing liability on any of its shares, pay off
any paid up share capital that is in excess
of the requirements of
the company,
|
||||||||||||||||
and may, so far as is necessary, alter its memorandum accordingly. |
||||||||||||||||
17.
Where a segregated accounts
company passes a resolution approving a reduction of capital
pursuant to section 16, it shall apply to
the court for an order
confirming the reduction.
|
Application to court for confirming order. |
|||||||||||||||
18.(1)
Subject to subsection (2),
where the proposed reduction of share capital in respect of a
segregated account involves either a decrease
in liability in
respect of unpaid share capital or the payment to any account owner
of any paid-up share capital in respect of a
segregated account,
and in any other case if the court so directs -
|
Court directs a list of creditors entitled to object. |
|||||||||||||||
(a)
every creditor of the segregated
account who at the date fixed by the court shall be entitled to any
debt or claim which, if that
date were the commencement of the
winding up of the segregated account, would be admissible in proof
against the company, shall be
entitled to object to the
reduction;
|
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(b)
the court, unless satisfied on
affidavit that there are no such creditors, shall settle a list of
creditors so entitled to object,
and for that purpose shall
ascertain, as far as possible without requiring an application from
any creditor, the names of those creditors
and the nature and
amount of their debts or claims, and may publish notices fixing a
day within which creditors not entered on the
list are to be
excluded from the right of objecting to the reduction; and
|
||||||||||||||||
(c)
where a creditor entered on the
list, whose debt or claim is not discharged or has not determined,
does not consent to the reduction,
the court may, if it thinks fit,
dispense with the consent of that creditor, on the company securing
payment of his debt or claim
by appropriating, as the court may
direct, the following amount -
|
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(i)
if the company admits the full
amount of the debt or claim, or, though not admitting it, is
willing to provide for it then the full
amount of the debt or
claim; and
|
||||||||||||||||
(ii)
if the company does not admit
and is not willing to provide for the full amount of the debt or
claim, or if the amount is contingent
or nor ascertained, then an
amount fixed by the court after the like inquiry and adjudication
as if the company were being wound
up by the court.
|
||||||||||||||||
(2)
The court may, having regard
to any special circumstances of the case, direct that subsection
(1) shall not apply as regards any class
or any classes of
creditors in respect of a segregated account.
|
||||||||||||||||
19.(1)
The court, if satisfied with
respect to every creditor of a segregated account who under section
18 is entitled to object to the reduction
that either his consent
to the reduction has been obtained or his debt or claim has been
discharged or has determined, or has been
secured, may make any
order confirming the reduction on such terms and conditions it
thinks fit.
|
Order of court confirming reduction. |
|||||||||||||||
(2)
Where the court makes an order
under subsection (1) it may -
|
||||||||||||||||
(a)
if for any special reason it
thinks proper to do so, make an order directing that the company
shall, during such period, commencing
on or at any time after the
date of the order, as is specified by the order, add to its name as
the last words thereof the words
"and reduced" ; and
|
||||||||||||||||
(b)
make an order requiring the
company to publish as the court directs the reasons for reduction
or such other information in regard
thereto as the court may think
expedient with a view to giving proper information to the public,
and, if the court thinks fit, the
causes which led to the
reduction.
|
||||||||||||||||
(3)
Where a company is ordered to
add to its name the words "and reduced" those words shall, until
the expiration of the period, if any,
specified in the order, be
deemed to be part of the name of the company.
|
||||||||||||||||
20(1) The Registrar, on production to him of an order of the court confirming the reduction of the share capital of a segregated account, and the delivery to him of a copy of the order and a minute approved by the court showing, with respect to the share capital of the segregated account as altered by the order, the amount of the share capital, the number of shares into which it is to be divided, and the amount of each share, and the amount, if any, at the date of registration deemed to be paid-up on each share, shall register the order and minute. |
The Registrar to register the order and minute. |
|||||||||||||||
(2)
On the registration of the
order and minute, the resolution for reducing share capital in
respect of a segregated account as confirmed
by the order so
registered shall take effect.
|
||||||||||||||||
(3)
Notice of the registration
shall be published in such manner as the court directs.
|
||||||||||||||||
(4)
The Registrar shall certify
under his hand the registration of the order and minute, and his
certificate shall constitute conclusive
evidence that the
requirements of this Act with respect to reduction of share capital
have been complied with, and that the share
capital of the
segregated account is such as is stated in the minute.
|
||||||||||||||||
(5)
The minute when registered
shall be deemed, so far as is necessary to be substituted for the
corresponding part of the memorandum,
and shall be valid and
alterable as if it had been originally contained therein.
|
||||||||||||||||
(6)
The substitution of any such
minute for part of the memorandum of the company shall be deemed so
far as is necessary to be an alteration
of the memorandum within
the meaning of section 29 of the Companies Act.
|
Ch. 308. |
|||||||||||||||
21.(1)
Subject to subsection (2) in
the case of a reduction of share capital in respect of a segregated
account an account owner of the segregated
account, past or
present, shall not be liable in respect of any share to any call or
contribution exceeding in amount the difference,
if any, between
the amount of the share as fixed by the minute and the amount paid,
or the reduced amount if any, which is to be
deemed to have been
paid, on the share.
|
Contributories liable to pay debt of creditors of altered segregated accounts. |
|||||||||||||||
(2)
If any creditor, entitled in
respect of any debt or claim to object to the reduction of share
capital in respect of a segregated account
is, by reason of his
ignorance of the proceedings for reduction or of their nature and
effect with respect to his claim, not entered
on the list of
creditors, and immediately after the reduction, the segregated
account is unable, within the meaning of the provisions
of this Act
with respect to winding up by the court, to pay the amount of his
debt or claim, then-
|
||||||||||||||||
(a)
every person who was an account
owner of the segregated account at the date of the registration of
the order for reduction and the
minute, shall be liable to
contribute for the payment of that debt or claim an amount not
exceeding the amount, if any, which he
would have been liable to
contribute if the company had commenced to be wound up on the day
before the said date; and
|
||||||||||||||||
(b)
if the company is wound up, the
court, on the application of any such creditor and proof of his
ignorance, may if it thinks fit, settle
accordingly a list of
persons so liable to contribute, and make and enforce calls and
orders, on the contributories settled on the
list as if they were
ordinary contributories in a winding up.
|
||||||||||||||||
(3)
Nothing in subsections (1) and
(2) shall affect the rights of the contributories among
themselves.
|
||||||||||||||||
(4)
Any officer of a segregated
accounts company who -
|
||||||||||||||||
(a)
wilfully conceals the name of any
creditor entitled to object to a reduction of capital of a
segregated account;
|
||||||||||||||||
(b)
wilfully misrepresents the nature
or amount of the debt or claim of any such creditor; or
|
||||||||||||||||
(c)
aids, abets or is privy to any
such concealment or misrepresentation as is described in paragraph
(a) or (b),
|
||||||||||||||||
is guilty of an offence and shall be liable on summary conviction to a fine of fifty thousand dollars or to imprisonment for two years, or to both. |
||||||||||||||||
22.
Sections 16 to 21 (inclusive)
shall not apply to a segregated accounts company to which the
International Business Companies Act applies.
|
Non-application of the Act to a SAC to which the IBC Act applies. Ch. 309. |
|||||||||||||||
23.(1)
In any case where the
International Business Companies Act applies to a segregated
accounts company and, in respect of a segregated
account's share
capital, if authorised by a resolution of the directors and subject
to the governing instrument in relation to that
segregated account,
on such terms as it may decide, the company may reduce its capital
in any way, and in particular, without prejudice
to the generality
of the foregoing power, by -
|
Application of IBC Act to reductions of capital of a segregated account. |
|||||||||||||||
(a)
returning to account owners any
amount received by the company upon the issue of any of its shares,
the amount being surplus to the
company;
|
||||||||||||||||
(b)
cancelling any capital that is
lost or not represented by assets having a realisable value;
or
|
||||||||||||||||
(c)
transferring capital to surplus
for the purpose of purchasing, redeeming or otherwise acquiring
shares that the directors have resolved
to purchase, redeem or
otherwise acquire; and
|
||||||||||||||||
(d)
cancel any capital that is lost
or not represented by assets having a realisable value.
|
||||||||||||||||
(2)
Where a segregated accounts
company reduces its capital pursuant to subsection (1), no
reduction of capital shall be effected unless
the directors
determine that immediately after the reduction -
|
||||||||||||||||
(a)
the segregated account will be
able to satisfy its liabilities as they become due in the ordinary
course of its business; or
|
||||||||||||||||
(b)
the realisable value of the
assets of the segregated account will not be less than its total
liabilities, other than deferred taxes,
as shown in the books of
account, and its remaining issued and outstanding share
capital,
|
||||||||||||||||
and in the absence of fraud, the decision of the directors as to the realisable value of the assets of the segregated account is conclusive unless a question of law is involved. |
||||||||||||||||
24.(1)
A segregated accounts company
shall -
|
Accounts' records. |
|||||||||||||||
(a)
maintain records in accordance
with generally accepted accounting principles used in the
preparation of the financial statements of
the company so that the
records shall, to the best of the knowledge, information and belief
of the directors and officers of the
company, clearly show the
share capital (if any), proceeds of rights, issues, securities,
reserves, assets, liabilities, income and
expenses, dividends and
distributions that are linked to each segregated account;
|
||||||||||||||||
(b)
maintain a record of each
transaction entered into by the company; and
|
||||||||||||||||
(c)
maintain a general account with
records in accordance with this Act and with all of the assets and
liabilities of the company which
are not linked to a segregated
account and which discloses any assets intended by the parties to
be applied to a risk of any nature,
and which therefore exposes
such assets to liability or loss.
|
||||||||||||||||
(2)
The records maintained with
respect to a segregated account may be inspected by any account
owner of that segregated account, but
an account owner shall not
have a right to inspect the records relating to any other
segregated account or (in such capacity) the
general account.
|
||||||||||||||||
25.(1)
A segregated accounts company
shall prepare or cause to be prepared financial statements in
respect of each segregated account provided
that the account owner
of a segregated account may agree in writing to waive his right to
have laid before a general meeting financial
statements or the
auditor's report thereon for an indefinite period but such waiver
shall be expressed to be revocable at the option
of such account
owner.
|
Financial statements of a segregated account. |
|||||||||||||||
(2)
Subject to subsection (1), a
copy of the financial statements of a segregated account shall be
made available to the account owner
of a segregated account at such
intervals and for such periods as are agreed between the company
and the account owner of the segregated
account, but in any event
shall be made available not less frequently than once in each
financial year.
|
||||||||||||||||
26.
If -
|
Court may order immediate production of statements. |
|||||||||||||||
(a)
the records maintained with
respect to a segregated account; or
|
||||||||||||||||
(b)
the financial statements of a
segregated account,
|
||||||||||||||||
are not made available for the inspection by any account owner of that segregated account, the court may, on application by the affected account owner, by order compel immediate production of the records or financial statements. |
||||||||||||||||
27.(1)
A segregated accounts company
shall maintain a register of account owners setting out their
respective interests in any segregated
account together with the
particulars required in respect of members of the company as set
out in section 56(1) of the Companies
Act, or section 29(1) of the
International Business Companies Act, (as the case may be).
|
Register of owners of segregated accounts. Ch. 308. Ch. 309. |
|||||||||||||||
(2)
The register of account owners
shall not be open to inspection, provided that an account owner
shall be entitled to receive a copy
of the information in the
register pertaining to his interest in the company.
|
||||||||||||||||
(3)
The register of account owners
shall be prima facie evidence of any matters by this Act directed
or authorised to be inserted therein.
|
||||||||||||||||
(4)
A segregated accounts company
must file the number of segregated accounts it has with the
Registrar so that fees can be properly assessed.
|
||||||||||||||||
28.(1)
Notwithstanding any other
provision of this Act, the establishment of a segregated account
does not create a legal person distinct
from the company.
|
Nature of segregated accounts. |
|||||||||||||||
(2)
Notwithstanding any enactment
or rule of law to the contrary, but subject to this Act, any
liability linked to a segregated account
shall be a liability only
of that account and not the liability of any other account and the
rights of creditors in respect of such
liabilities shall be rights
only in respect of the relevant account and not of any other
account, and, for the avoidance of doubt,
any asset which is linked
by a segregated accounts company to a segregated account -
|
||||||||||||||||
(a)
shall be held by the company as a
separate fund which is -
|
||||||||||||||||
(i)
not part of the general account
and shall be held exclusively for the benefit of the account owners
of the segregated account and
any counterparty to a transaction
linked to that segregated account; and
|
||||||||||||||||
(ii)
available only to meet rights of
the account owners and liabilities to creditors of that segregated
account; and
|
||||||||||||||||
(b)
shall not be available or used to
meet liabilities to, and shall be absolutely and for all purposes
protected from, the general shareholders
and from the creditors of
the company who are not creditors with claims linked to segregated
accounts.
|
||||||||||||||||
29(1) For the purposes of this Act, the Companies Act and the International Business Companies Act, the assets recorded in the general account shall be the only assets of a segregated accounts company available to meet liabilities of the company that are not linked to a segregated account. |
Assets of the general accounts. Ch. 308. Ch. 309. |
|||||||||||||||
(2)
No assets of the general
account may be transferred from the general account to a segregated
account unless, on the date from which
the transfer is to be
effective, and taking into account that transfer, the general
account is solvent or all the shareholders and
creditors of the
general account on that date have expressed in writing their
concurrence to the transfer, and in the event a transfer
is made to
a segregated account in breach of this subsection, on an
application by an affected party, the court may declare that
the
transfer is void, without prejudice to the rights of bona fide
purchasers for value without notice.
|
||||||||||||||||
30.(1)
Unless otherwise expressly
agreed in writing by the affected - parties -
|
Liability of a segregated accounts company. |
|||||||||||||||
(a)
by virtue of one or more
contracts, governing instruments or other documents which are
binding on those parties in relation to the
affected segregated
accounts or general account, and which are executed by parties
having authority in relation to those accounts,
|
||||||||||||||||
where a liability of a segregated accounts company to a person arises from a transaction or matter relating to, or is otherwise imposed in respect of or attributable to, a particular segregated account, that liability shall - |
||||||||||||||||
(b)
extend only to, and that person
shall, in respect of that liability, be entitled to have recourse
only to, the assets linked to that
segregated account;
|
||||||||||||||||
(c)
not extend to, and that person
shall not, in respect of that liability, be entitled to have
recourse to, the assets linked to any
other segregated account;
and
|
||||||||||||||||
(d)
not extend to, and that person
shall not in respect of that liability, be entitled to have
recourse to, the general account.
|
||||||||||||||||
(2)
Where a liability of a
segregated accounts company to a person -
|
||||||||||||||||
(a)
arises otherwise than in respect
of a particular segregated account; or
|
||||||||||||||||
(b)
is imposed otherwise than in
respect of a particular segregated account,
|
||||||||||||||||
that liability shall extend only to, and that person shall, in respect of that liability , be entitled to have recourse only to, the general account. |
||||||||||||||||
31(1) In the event that a segregated account has insufficient assets to pay all its obligations in full, the order and priority of the rights in relation to assets linked to a segregated account shall (without prejudice to the rights of any parties holding valid security interests against assets linked to that segregated account and any valid preferential claims in respect of that segregated account) be determined by the terms of the governing instrument and any contracts pertaining to that account, and any ambiguity in respect of the order and priority rights shall be resolved as follows : |
Priority rights of parties to segregated accounts. |
|||||||||||||||
(a)
the claims of creditors shall
rank ahead of the claims of account owners;
|
||||||||||||||||
(b)
the claims of creditors amongst
themselves shall rank equally; and
|
||||||||||||||||
(c)
the claims of account owners
amongst themselves shall rank equally.
|
||||||||||||||||
(2)
A segregated accounts company
may, with the consent in writing of all account owners of, and
counterparties who are creditors with
claims linked to, a given
segregated account, transfer to the general account or another
segregated account an asset from the segregated
account to which it
is linked, if the segregated account to which such asset is linked,
taking into account the proposed transfer,
remains solvent, and, in
the event a transfer is made to the general account or another
segregated account in breach of this subsection,
on an application
by an affected party, the court may declare that the transfer is
void, without prejudice to the rights of bona
fide purchasers for
value without notice.
|
||||||||||||||||
(3)
Any asset transferred in
accordance with subsection (2) shall cease to be linked to the
segregated account from which it was transferred
on the date of the
transfer.
|
||||||||||||||||
(4)
Subject to the terms of the
governing instrument relating to a given segregated account, on
dissolution of the company or termination
of the segregated account
and after paying creditors of the segregated account, any property
linked to that segregated account shall
be paid pro rata to the
account owners of such segregated account or, if there are no
account owners, shall be deemed to fall into
the general
account.
|
||||||||||||||||
(5)
Without prejudice to the
rights of parties to resolve disputes by reference to arbitration
or to the court, where -
|
||||||||||||||||
(a)
there is, on grounds that are
reasonable, uncertainty as to whether any given interest in a
segregated account is an interest as a
counterparty or an interest
as an account owner, that interest shall be deemed to be an
interest as a counterparty; and
|
||||||||||||||||
(b)
a given liability is not linked
to a particular segregated account, or where there is, on grounds
that are reasonable, uncertainty
as to whether the liability is
linked to a segregated account, that liability shall be deemed to
be the liability of the general
account.
|
||||||||||||||||
32(1) Notwithstanding any enactment or rule of law to the contrary - |
Internal transactions. |
|||||||||||||||
(a)
a segregated accounts company
acting in respect of the general account may enter into
transactions with the company acting in respect
of one or more
segregated accounts; and
|
||||||||||||||||
(b)
a segregated accounts company
acting in respect of a segregated account may enter into
transactions with the company acting in respect
of one or more
other segregated accounts.
|
||||||||||||||||
(2)
For the avoidance of doubt
-
|
||||||||||||||||
(a)
a transaction referred to in
subsection (1); and
|
||||||||||||||||
(b)
any transaction between the
company in respect of one segregated account and a third
party,
|
||||||||||||||||
shall have effect or otherwise as the transaction would have done under the general law if the transaction had been entered into between the company and a third party, and without restricting the generality of the foregoing - |
||||||||||||||||
(c)
such a transaction shall be void,
at the instance of any creditor of the company in respect of the
relevant segregated account or
at the instance of the company
itself in respect of the relevant segregated account or at the
instance of any other person if the
transaction would have been
void, by such person under any rule of law which would have applied
to the transaction if the transaction
had been entered into between
the company and a third party in the same circumstances; and
|
||||||||||||||||
(d)
an account owner, counterparty,
or receiver of any given segregated account shall have standing to
pursue, on behalf of the relevant
segregated account, any rights of
action (including recourse to arbitration under section 33)
available to the company in respect
of that segregated account
pursuant to this section.
|
||||||||||||||||
(3)
Notwithstanding any enactment
or rule of law to the contrary -
|
||||||||||||||||
(a)
where a manager or officer of or
other person on behalf of a segregated accounts company or a
segregated account is also acting in
respect of the general account
and one or more of the segregated accounts or in respect of two or
more segregated accounts which
are entering into a transaction, he
may so act notwithstanding any material interests or conflicts
which may exist as between the
manager, officer or directors or
which any of them may have in acting in respect of such accounts;
and
|
||||||||||||||||
(b)
where -
|
||||||||||||||||
(i)
a given segregated account
enters into a transaction as described in paragraph (a),
|
||||||||||||||||
(ii)
the manager, officer or such
other person has disclosed in writing to the company the nature and
extent of their interest, and
|
||||||||||||||||
(iii)
the governing instrument of the
segregated account so authorises, or a majority of the account
owners consent in writing to the entry
into of such a
transaction,
|
||||||||||||||||
then the manager, officer or such other person, the company and the company in respect of any segregated accounts shall not be held liable to the company in respect of that segregated account or any of its account owners in respect of any conflict of interest arising in relation to the transaction. |
||||||||||||||||
33.(1)
Any dispute which arises in
connection with a transaction under section 32(1) -
|
Arbitration. |
|||||||||||||||
(a)
as between the company in respect
of a given segregated account and the company in respect of any one
or more other segregated accounts;
or
|
||||||||||||||||
(b)
as between the company in respect
of the general account and the company in respect of one or more
segregated accounts,
|
||||||||||||||||
may be referred to the court or may be submitted to arbitration under the Arbitration Act. |
Ch. 180. |
|||||||||||||||
(2)
If the managers, officers,
attorneys-at-law or others representing the company in respect of
the separate interests of the affected
accounts cannot agree on
whether a particular matter should be referred to court or to
arbitration, then that matter shall be referred
to court.
|
||||||||||||||||
34(1) There shall be implied (except in so far as the same is expressly excluded in writing) in every contract and governing instrument entered into by a segregated accounts company the following terms - |
Creditor enforcement rights limited to account assets. |
|||||||||||||||
(a)
that no party shall seek, whether
in any proceedings or by any other means whatsoever or wheresoever,
to make or attempt to make liable
any assets attributable to any
segregated account of the company in respect of a liability not
attributable to that segregated account;
|
||||||||||||||||
(b)
that if any party shall succeed
by any means whatsoever or wheresoever in making liable any assets
attributable to any segregated
account of the company in respect of
a liability not attributable to that segregated account, that party
shall be liable to the company
to pay a sum equal to the value of
the benefit thereby obtained by him; and
|
||||||||||||||||
(c)
that if any party shall succeed
in seizing or attaching by any means or otherwise levying execution
against any assets attributable
to any segregated account of the
company in respect of liability not attributable to that segregated
account, that party shall hold
those assets or their proceeds on
trust for the company and shall keep those assets or proceeds
separate and identifiable as such
trust property .
|
||||||||||||||||
(2)
All sums recovered by a
segregated accounts company as a result of any such trust as is
described in subsection (1)(c) shall be credited
against any
concurrent liability pursuant to the implied term set out in
subsection (1)(b).
|
||||||||||||||||
(3)
Any asset or sum recovered by
a segregated accounts company pursuant to the implied term set out
in subsection (1)(b) or (1)(c) or
by any other means whatsoever or
wheresoever in the events referred to in those subsections shall,
after the deduction or payment
of any costs of recovery, be applied
by the company so as to compensate the segregated account
affected.
|
||||||||||||||||
(4)
Notwithstanding sections 29(2)
and 31(2), in the event of any assets attributable to a segregated
account being taken in execution
in respect of a liability not
attributable to that segregated account, and in so far as such
assets or compensation in respect thereof
cannot otherwise be
restored to the segregated account affected, the company shall
-
|
||||||||||||||||
(a)
cause or procure its auditor,
acting as expert and not as arbitrator, to certify the value of the
assets lost to the segregated account
affected; and
|
||||||||||||||||
(b)
in priority to all other claims
against the account transfer or pay, from the assets of the account
to which the liability was attributable
to the segregated account
affected, assets or sums sufficient to restore to the segregated
account affected the value of the assets
lost.
|
||||||||||||||||
35.(1)
Notwithstanding any enactment
or rule of law to the contrary, any asset of a segregated accounts
company which is linked to a particular
segregated account is
deemed to be owned by the company as a separate fund which is not
part of the general account and which is
not part of the company's
own assets.
|
Legal rights and obligations of a segregated accounts company. |
|||||||||||||||
(2)
Except to the extent otherwise
provided in the governing instrument, the account owners are
entitled to the same limitation of personal
liability as is enjoyed
by members of companies limited by shares under the Companies Act
or the International Business Companies
Act.
|
Ch. 308. Ch. 309. |
|||||||||||||||
(3)
A segregated accounts company
may -
|
||||||||||||||||
(a)
sue and be sued in respect of a
particular segregated account, and service of process upon the
company in accordance with subsection
(5) shall be
sufficient;
|
||||||||||||||||
(b)
be sued for debts and other
obligations or liabilities contracted or incurred by the company in
respect of a particular segregated
account, and for any damages to
persons or property resulting from the negligence of the company
acting in the performance of duties
with respect to that account;
and
|
||||||||||||||||
(c)
exercise the same rights of
set-off (if any) as between accounts as apply under the general law
in respect of companies, including,
on an insolvent liquidation of
the company, the same rights of set-off which arise in an insolvent
liquidation of a company.
|
||||||||||||||||
(4)
The property of a segregated
account is subject to orders of the court as it would have been if
the segregated account were a separate
legal person (and
notwithstanding that it is not a separate legal person).
|
||||||||||||||||
(5)
A segregated accounts company
may be served with process in the manner prescribed by the
Companies Act, or the International Business
Companies Act, in all
civil actions or proceedings involving or relating to the
activities of a segregated account or a breach by
the company of a
duty to the segregated account, or to any account owner thereof or
to a counterparty to a transaction linked thereto.
|
Ch. 308. Ch. 309. |
|||||||||||||||
36.(1)
Except to the extent it may be
agreed otherwise by virtue of the governing instrument or contract
an account owner of a segregated
account shall have an undivided
beneficial interest in the assets linked to a segregated account,
and, after satisfying in full the
claims of creditors of the
segregated account, account owners shall share in the profits and
losses of the segregated account in
such proportions of the
residual undivided beneficial interest in the segregated account
owned by that account owner as may be specified
in any governing
instrument relating to such segregated account.
|
Account owners beneficial interests in segregated account. |
|||||||||||||||
(2)
An account owner's beneficial
interest in a segregated account is personal property
notwithstanding the nature of the property of
the segregated
account.
|
||||||||||||||||
(3)
Except to the extent it may be
agreed otherwise by virtue of the governing instrument or contract,
an account owner has no interest
in specific segregated account
property.
|
||||||||||||||||
(4)
Except to the extent it may be
agreed otherwise by virtue of the governing instrument or contract,
an account owner's beneficial interest
in the segregated account is
freely transferable.
|
||||||||||||||||
(5)
Subject to the company
complying with section 15, and except to the extent it may be
agreed otherwise by virtue of the governing instrument
or contract,
at the time an account owner becomes entitled to receive a payment,
distribution, allocation or dividend pursuant to
any governing
instrument, he has the status of, and is entitled to all remedies
available to, a creditor of the segregated account
with respect to
the payment, distribution, allocation or dividend, and the
governing instrument or contract may provide for the establishment
of record dates with respect to such payment, distribution,
allocation or dividend.
|
||||||||||||||||
37.(1)
To the extent that, at law or
in equity, a segregated accounts company or manager has duties
(including fiduciary duties) and liabilities
relating to a
segregated account or to an account owner or to a counterparty
-
|
Remedies in law and equity for parties of a segregated account. |
|||||||||||||||
(a)
that company or manager acting
under a governing instrument or contract is not liable to the
segregated account or to any account
owner or counterparty for the
company's good faith reliance on the provisions of that governing
instrument or contract to which that
account owner or counterparty
is a party, and
|
||||||||||||||||
(b)
the company's or manager's duties
and liabilities may be expanded or restricted by provisions in a
governing instrument to which the
person is a party.
|
||||||||||||||||
(2)
Subject to section 34(1)(c)
and (2), the provisions of this section shall operate to the
exclusion of any rule of law relating to
trusts dealing with the
same subject matter, and no rule of law relating to trusts may be
pleaded by any person to augment or modify
the operation of this
Act, but nothing in this section shall be construed so as to deny
-
|
||||||||||||||||
(a)
the remedy of tracing in law and
in equity the assets or the proceeds of the assets of any
segregated account where such assets or
proceeds have been
commingled with the assets of any other segregated account or the
general account; or
|
||||||||||||||||
(b)
any remedies available under the
doctrine of constructive trusts or similar equitable remedies where
those remedies would otherwise
be available.
|
||||||||||||||||
(3)
To the extent permitted in the
governing instruments of the affected segregated accounts, the
company in respect of a segregated account
may be an account owner
of one or more other segregated accounts of the same segregated
accounts company.
|
||||||||||||||||
PART IV |
||||||||||||||||
RECEIVERSHIP AND WINDING UP |
||||||||||||||||
38.(1)
Subject to the provisions of
this section, if, in relation to a segregated accounts company, the
court is satisfied that -
|
Receivership orders. |
|||||||||||||||
(a)
a particular segregated account
is not solvent, the general account is not solvent, a liquidation
has been commenced in relation to
the company, or for other reasons
it appears to the court just and equitable that a receiver should
be appointed; and
|
||||||||||||||||
(b)
the making of a receivership
order under this section would achieve the purposes set out in
subsection (3),
|
||||||||||||||||
the court may make a receivership order in respect of that segregated account. |
||||||||||||||||
(2)
A receivership order may be
made in respect of one or more segregated accounts.
|
||||||||||||||||
(3)
A receivership order shall
direct that the business and assets linked to a segregated account
shall be managed by a receiver specified
in the order for the
purpose of -
|
||||||||||||||||
(a)
the orderly management, sale,
rehabilitation, run-off or termination of the business of, or
attributable to, the segregated account;
or
|
||||||||||||||||
(b)
the distribution of the assets
linked to the segregated account to those entitled thereto.
|
||||||||||||||||
(4)
No resolution for the winding
up of a segregated accounts company of which any segregated account
is subject to a receivership order
shall be effective without leave
of the court.
|
||||||||||||||||
39.(1)
An application for a
receivership order in respect of a segregated account may be made
by -
|
Application for receivership orders. |
|||||||||||||||
(a)
the company;
|
||||||||||||||||
(b)
the directors of the
company,
|
||||||||||||||||
(c)
any creditor of the company in
respect of that segregated account; or
|
||||||||||||||||
(d)
any account owner of that
segregated account; or
|
||||||||||||||||
(e)
the primary regulator.
|
||||||||||||||||
(2)
The court, on hearing an
application -
|
||||||||||||||||
(a)
for a receivership order;
or
|
||||||||||||||||
(b)
for leave, pursuant to section 38
(4), for a resolution for winding up,
|
||||||||||||||||
may make an interim order or adjourn the hearing conditionally or unconditionally. |
||||||||||||||||
(3)
Notice of an application to
the court for a receivership order in respect of a segregated
account shall be served upon -
|
||||||||||||||||
(a)
the company;
|
||||||||||||||||
(b)
the primary regulator; and
|
||||||||||||||||
(c)
such other persons (if any) as
the court may direct,
|
||||||||||||||||
each of whom shall be given an opportunity to make representations to the court before the order is made. |
||||||||||||||||
40.
The account owners of a
segregated account or the directors of the company may by
resolution voluntarily appoint a receiver in respect
of the
segregated account.
|
Parties of segregated accounts company may appoint a receiver. |
|||||||||||||||
41.(1)
The receiver of a segregated
account -
|
Functions and powers of a receiver. |
|||||||||||||||
(a)
may do all such things as may be
necessary for the purposes set out in section 38(3); and
|
||||||||||||||||
(b)
shall have all the functions and
powers of the directors and managers of the company in respect of
the business and assets linked
to the segregated account.
|
||||||||||||||||
(2)
The receiver may at any time
apply to the court for -
|
||||||||||||||||
(a)
directions as to the extent or
exercise of any function or power; or
|
||||||||||||||||
(b)
the receivership order to be
discharged or varied.
|
||||||||||||||||
(3)
In exercising his functions or
powers the receiver is deemed to act as the agent of the company in
respect of the segregated account,
and does not incur personal
liability except to the extent that his conduct amounts to
misfeasance.
|
||||||||||||||||
(4)
Any person dealing with the
receiver in good faith is not concerned to enquire whether the
receiver is acting within his powers.
|
||||||||||||||||
(5)
During the period of operation
of a receivership order the functions and powers of the directors
and managers and any liquidator of
the company cease in respect of
the business and assets linked to the segregated account in respect
of which the order was made.
|
||||||||||||||||
(6)
At any time after the
appointment of a receiver in respect of a segregated account, the
company or any account owner or creditor of
that account may, where
an action or proceeding against the company in respect of that
account is pending, apply to the court for
a stay of those
proceedings, and, on such an application being made, the court may
stay the proceedings accordingly on such terms
as it thinks
fit.
|
||||||||||||||||
(7)
The appointment of a receiver
shall not act as a stay of execution against a counterparty with a
valid security interest over the
segregated account and such
counterparty may enforce his security interest in accordance with
its terms subject to applicable law.
|
||||||||||||||||
42.(1)
The court shall not discharge
a receivership order unless it appears to the court that the
purpose for which the order was made has
been achieved or
substantially achieved or is incapable of achievement.
|
Discharge and variation of a receivership order. |
|||||||||||||||
(2)
The court, on hearing an
application for the discharge or variation of a receivership order,
may make any interim order it thinks
fit or adjourn the hearing,
conditionally or unconditionally.
|
||||||||||||||||
(3)
When making an order
discharging the receiver, the court may release the receiver from
liability save in respect of misfeasance.
|
||||||||||||||||
43.
The remuneration of a receiver
and any expenses properly incurred by him shall be payable in
priority to all other unsecured claims
from the assets linked to
the segregated account in respect of which the receiver was
appointed but not from any assets of the general
account or any
assets linked to other segregated accounts.
|
Remuneration of a receiver. |
|||||||||||||||
44.(1)
Sections 141(1) and (2) of the
Companies Act dealing with disqualified receivers shall apply to
the receiver of a segregated account.
|
Companies Act disapplied in respect of receivership. Ch. 308. |
|||||||||||||||
(2)
Sections 139 to 151
(inclusive) of the Companies Act, shall not apply to the making of
a receivership order in respect of a segregated
account.
|
||||||||||||||||
45.(1)
Subject to this section, a
segregated accounts company shall be wound up in accordance with
the provisions of this Act, and either
the Companies Act, or the
International Business Companies Act, depending on which Act
applies to such company save that in the event
of any conflict, the
provisions of this Act shall prevail.
|
Winding up of segregated accounts companies. Ch. 308. Ch. 309. |
|||||||||||||||
(2)
For the purposes of
determining whether a segregated accounts company may be wound up
on the ground of insolvency the assets and liabilities
linked to
segregated accounts shall not be taken into account.
|
||||||||||||||||
46(1) Notwithstanding any statutory provision or rule of law to the contrary, in the winding up of a segregated accounts company the liquidator shall deal with the assets and liabilities which are linked to each segregated account only in accordance with this Act and accordingly the liquidator shall ensure that the assets linked to one segregated account are not applied to the liabilities linked to any other segregated account or to the general account, unless an asset or liability is linked to more than one segregated account, in which case the liquidator shall deal with the asset or liability in accordance with the terms of any relevant governing instrument or contract. |
Application of assets by liquidator. |
|||||||||||||||
(2)
The remuneration to be paid to
the liquidator shall be apportioned by the liquidator to each
segregated account and the general account
in such amounts as would
best reflect the duties performed by the liquidator and approved by
the court.
|
||||||||||||||||
(3)
The liquidator, or any person
affected by a decision of the liquidator, may apply to the court
for directions in relation to the remuneration
of the
liquidator.
|
||||||||||||||||
PART V |
||||||||||||||||
GENERAL |
||||||||||||||||
47.
The Minister may make
regulations for carrying out the provisions of this Act and without
prejudice to the generality of this provision
may make regulations
-
|
Power to to make regulations. |
|||||||||||||||
(a)
for prescribing fees to be paid
for matters authorised by this Act; and
|
||||||||||||||||
(b)
for any other matter or thing
which may be or is required to be prescribed under this Act.
|
||||||||||||||||
48.
Subject to sections 29(2) and
31(2), no transaction or interest in a segregated account shall be
void by reason only that at the relevant
time the company fails to
comply with, or is in breach of, any provision of this Act.
|
Effect on transactions and interest in a segregated account of infringement of this Act. |
|||||||||||||||
49.
A segregated accounts company
shall file an annual declaration, signed by at least two directors
certifying that the company is and
that its operations during the
preceding year were in compliance with the provisions of the Act,
which declaration shall be filed
by 31st January each year.
|
Annual declaration. |
|||||||||||||||
50.
Any person who -
|
Offences. |
|||||||||||||||
(a)
for any purpose under this Act
makes a statement or declaration that he knows or has reasonable
grounds to believe to be false, deceptive
or misleading in a
material particular, or
|
||||||||||||||||
(b)
fails to comply with a term or
condition under section 3(3),
|
||||||||||||||||
is guilty of an offence and is liable on summary conviction to a fine of $50,000 or imprisonment for two years, or to both. |
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51.(1)
The fees in relation to a
segregated accounts company shall be specified in the Schedule and
all such fees shall be payable to the
Registrar.
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Fees. Schedule. |
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(2)
All fees paid pursuant to
subsection (1) and the Schedule shall be placed in the Consolidated
Fund.
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Schedule. |
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(3)
The Minister may by
regulations vary the fees prescribed in the Schedule, so, however,
that any such regulations which increase the
amount of any fees
payable under this Act shall be exempt from the provisions of
section 32 of the Interpretation and General Clauses
Act but
instead be subject to affirmative resolution of both Chambers of
Parliament.
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Schedule. Ch. 2. |
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(4)
In subsection (3) the
expression "affirmative resolution of both Chambers of Parliament"
in relation to regulations means that the
regulations are not to
come into operation unless and until affirmed by a resolution of
each of those Chambers.
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SCHEDULE |
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FEES TO BE PAID TO THE REGISTRAR |
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Subject to the following paragraphs of this Schedule, the following shall be the fees under this Act - |
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