BANK OF CEYLON ORDINANCE

Arrangement of Sections

1. Short title.

2. Establishment of bank.

3. Incorporation of bank.

4. Central office.

5. Branches and agencies.

6. Board of Directors of the bank.

7. Capital.

8. Permanent reserve fund.

9. Contingency fund.

10. Government guarantee.

11. Disclosure of interest by a Director.

12. Director to disclose any obligation to other banks and lending institutions.

13. Provisions relating to applications for loans and their disposal.

14. Nominations by persons having a deposit or savings account.

15. Default of payment.

16. Action by Board where default is made.

17. Authorisation of manager to take possession of immovable property.

18. Procedure where manager is appointed.

19. Authorisation of sale of mortgaged property.

20. Where borrower is dead.

21. Notice of resolution of Board to sell mortgaged property.

22. Notice of sale.

23. Payment before sale.

24. Upset price.

25. Default in respect of one of several loans on same property.

26. Recovery of expenses and costs incurred by the bank.

27. Payment of excess balance.

28. Certificate of sale.

29. Order for delivery of possession.

30. Cancellation of sale.

31. Resale by bank.

32. Board not precluded from other methods of recovery.

33. Minister to give directions.

34. Repealed.

35. Repealed.

36. Repealed.

37. Repealed.

38. Repealed.

39. Repealed.

40. Repealed.

41. Contracts.

42. Bills of exchange and promissory notes.

43. Persons authorised to act on behalf of the bank.

44. Execution of deeds abroad.

45. Repealed.

46. Repealed.

47. Repealed.

48. Repealed.

49. Repealed.

50. Repealed.

51. Repealed.

52. Repealed.

53. Repealed.

54. Repealed.

55. Repealed.

56. Appointment of staff.

57. Officers to furnish security.

58. Dismissal of general manager.

59. No liability for damage or loss caused otherwise than by misconduct or willful or default.

60. Reimbursement for incurred on behalf of the bank.

61. Declaration of secrecy.

62. Right to refuse to answer questions.

63. Receipts when valid.

64. Inspection of documents.

65. Application of the provisions of the Public Corporations (Financial Control) Act.

66. Repealed.

67. Repealed.

68. Money Lending Ordinance and Debt Conciliation Ordinance not to apply to debts due to the bank.

69. Pawnbrokers Ordinance not to apply to debts due to the bank.

69A. Bank may possess rubber in excess of quantity prescribed by Rubber Control Act.

69B. Bank may possess tea in excess of quantity prescribed by Tea Control Act.

69C. Bank may possess excise articles in excess of quantity declared to be limit of sale by retail.

69D. Tea and Rubber Estates (Control of Fragmentation) Act not to apply to transfer of property authorised to be sold under section 19.

70. Application of the Provision of the companies Ordinance.

71. Business which the bank transact.

72. By-laws of the bank.

73. Repealed.

74. Applications to the Minister.

75. Repealed.

76. Interpretation.

SCHEDULES

53 of 1938,

45 of 1939,

53 of 1943,

4 of 1944,

34 of 1944,

7 of 1945,

10 of 1974,

39 of 1949,

19 of 1952,

42 of 1954,

37 of 1955,

34 of 1968,

60 of 1980,

54 of 2000.

AN ORDINANCE to provide for the establishment and regulation of a State-Aided Bank in Sri Lanka.

[Date of Commencement: 1st December, 1938]

1. Short title.

This Ordinance may be cited as the Bank of Ceylon Ordinance.

2. Establishment of bank.

A bank to be called the Bank of Ceylon is hereby established.

3. Incorporation of bank.

The bank shall be a body corporate with perpetual succession and a common seal and may sue and be sued in its corporate name.

4. Central office.

The central office of the bank shall be at Colombo in Sri Lanka.

[S 4 subs by s 2 of Law 10 of 1974.]

5. Branches and agencies.

The bank may establish and maintain—

(a) agencies in any part of the world;

(b) branches in Sri Lanka or elsewhere.

6. Board of Directors of the bank.

(1) The management and administration of the affairs of the bank shall be vested in a Board, consisting of six Directors appointed by the Minister, one of whom shall be a representative of the Ministry charged with the subject of Finance (hereinafter referred to as the "ex officio Director”).

(2) The Board may exercise, discharge or perform the powers, functions or duties of the bank for the purpose of carrying on the business, and administering the affairs, of the bank.

(3) No act or proceeding of the Board shall be invalid by reason only of the existence of any vacancy among the Directors or any defect in the appointment of a Director or authorisation by the ex officio Director under subsection (8).

(4) A Member of Parliament shall not be qualified to be a Director.

(5) The Minister shall appoint one of the appointed Directors as the Chairman of the Board.

(6) Every appointed Director shall hold office for a period of three years, unless he is earlier removed from office or vacates his office,

(7) If any appointed Director is temporarily unable to discharge the duties of his office on account of ill health, or absence from Sri Lanka, or any other cause, the Minister may appoint some other person to act as a Director in his place.

(8) If the ex officio Director is unable to attend any meeting of the Board, he may authorise any other officer to be present on his behalf at such meeting; and the officer so authorised shall be deemed for the purpose of such meeting to be a member of the Board.

(9) An appointed Director may resign his office by letter addressed to the Minister.

(10) The Minister may, if he thinks it expedient to do so, remove an appointed Director from office.

(11) A Director who vacates office by resignation or effluxion of time shall be eligible for reappointment.

(12) The ex officio Director shall have all the same rights and privileges as the appointed Directors.

(13) The provisions of subsections (1), (2) and (3) shall be deemed to have come into operation on October 12, 1961.

[S 6 subs by s 3 of Law 10 of 1974.]

7. Capital.

(1) The authorised capital of the bank shall be fifty billion rupees divided into fifty million shares of one-thousand rupees each.

[S 7(1) subs by s 2 of Act 54 of 2000.]

(2) The paid-up capital of the bank shall be such amount as may be determined from time to time by the Minister by Order published in the Gazette.

[S 7(2) subs by s 2 of Act 60 of 1980.]

(3) The liability of the Government at any time as sole shareholder shall be limited to the total amount of the capital represented by the shares held for the time being by the Government.

[S 7(3) subs by s 2 of Act 60 of 1980.]

8. Permanent reserve fund.

(1) The Board shall, out of the profits available for payment of dividend and before any dividend is declared, set aside a sum equivalent to twenty per centum of such profits to the credit of a fund called the permanent reserve fund of the bank until such permanent reserve fund is equivalent to one-half of the paid-up capital of the bank for the time being; and in the event that at any time thereafter the amount of such permanent reserve fund is less than one-half of the paid-up capital of the bank for the time being, the Board shall as soon as practicable carry to that fund such further sum or sums out of the profits available for dividend as may be necessary until the amount of the permanent reserve fund is equivalent to one-half of the paid-up capital of the bank for the time being. The Board may from time to time in its discretion carry to the permanent reserve fund out of profits such further sums as it may deem fit, in addition to the sums required by the preceding provisions of this subsection to be carried thereto.

(2) The permanent reserve fund shall be shown separately in the balance sheet of the bank.

[S 8 subs by s 5 of Law 10 of 1974.]

9. Contingency fund.

(1) In addition to the permanent reserve fund the Board shall create a fund called the contingency fund of the bank and shall carry to that fund such sums out of the profits of the bank as the Board thinks proper.

(2) The contingency fund may be applied from time to time in such manner as the Board shall determine—

(a) for meeting depreciation and losses;

(b) for equalising dividends;

(c) for repairing, improving or maintaining any of the property of the bank;

(d) for any other purposes which the Board may think proper.

(3) The Board may divide the contingency fund into such special funds as it thinks fit, and may consolidate into one fund any special funds or any parts of any special funds into which the contingency fund may have been divided as it thinks fit, with full power to employ the whole or any part of the assets constituting the contingency fund in the business of the bank without being under any obligation to keep the same separate from other assets of the bank. The Board may also, (subject to the provisions of this Ordinance), without placing the same to reserve, carry over any profits which it may think it is not prudent to divide.

(4) It shall not be necessary to show the contingency fund separately in the balance sheet of the bank.

[S 9 subs by s 6 of Law 10 of 1974.]

10. Government guarantee.

(1) The Minister in charge of the subject of Finance shall guarantee the repayment of any sum due to the bank on any loan, overdraft, advance or other accommodation granted by the bank with the approval of such Minister under clause 3(a) of Part II in the First Schedule hereto.

(2) Any sum required for the fulfillment of a guarantee provided under subsection (1) may, with the approval of Parliament, be paid out of the Consolidated Fund.

(3) Immediately after a guarantee is given under subsection (1), the Minister in charge of the subject of Finance shall lay a statement of the guarantee before the Cabinet of Ministers.

(4) Where any sum is paid out of the Consolidated Fund in fulfillment of a guarantee provided under subsection (1), the Minister in charge of the subject of Finance shall forthwith lay before Parliament a statement that such sum has been paid.

[S 10 subs by s 7 of Law 10 of 1974.]

11. Disclosure of interest by a Director.

A Director who or whose spouse or dependent child or a firm or company in which such Director, his spouse or dependent child has a substantial interest is directly or indirectly interested in any business transacted or proposed to be transacted by the bank shall disclose the nature of such interest at the meeting of the Board where such business is discussed. The disclosure shall be recorded in the minutes of the Board and such Director shall not take part in any deliberation or decision of the Board with regard to that business and shall withdraw from such meeting whilst such deliberation is in progress or decision is being made.

[S 11 subs by s 8 of Law 10 of 1974.]

12. Director to disclose any obligation to other banks and lending institutions.

A Director for the time being of the bank who incurs an obligation or debt to any other bank or to a lending institution shall, within one month of the date on which such obligation or debt was incurred, disclose to the bank the particulars relating to such obligation or debt.

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