Hong Kong - Banking Ordinance

    Hong Kong

    Hong Kong - Banking Ordinance

    The Banking Ordinance (as amended) (the Ordinanceregulates banking and the business of taking deposits, provides protection to depositors, and promotes the stability and effective working of the banking system. In particular, the Ordinance stipulates powers of authorised institutions, and specifies the functions of the Hong Kong Monetary Authority (‘HKMA). In addition, the Ordinance details processes of authorisation, revocation of authorisation, and limitations of exposure incurred by authorised institutions. 

    Last Updated: July 24, 2019

  • Requirements

    The HKMA may, after consultation with the Financial Secretary and other relevant persons, make rules prescribing limits on the exposures incurred by an authorised institution, including: 

    • exposures to a counterparty or a group of counterparties; 
    • exposures to a party connected to the institution; and 
    • exposures to an employee of the institution. 

    The HKMA may also  prescribe limits on the exposures of an authorised institution to, or the holding by the institution of interests in, certain assets or classes of assets, including direct or indirect exposures to the equity of any other company, and the holding of interests in land inside or outside Hong Kong. (Article 81A of the Ordinance)  

    Article 119A of the Ordinance stipulates that authorised institutions are not to create certain charges; and specifies that the term charge includes lien, encumbrance, equitable interest and third party rights. The Ordinance further provides in this Article that an authorised institution incorporated in Hong Kong must not, without approval, create any charge over its assets if either the aggregate value of charges exceeds 5% of the sum value of the total assets, or if the charge would cause the aggregate value to exceed this sum. 

    Furthermore, Article 118 of the Ordinance specifies that any director, manager, employee or agent of a company and/or any other person commits an offence and is liable to a fine and to imprisonment for 6 months if they: 

    • fail to produce any books or papers which it is his duty to produce;  
    • fail to attend before the inspector when required to do so; or  
    • fail to answer to the best of his ability any question which is put to him by an inspector. 
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