MERCANTILE BANK NOTE ISSUE ORDINANCE

MERCANTILE BANK NOTE ISSUE ORDINANCE

CHAPTER 71.

MERCANTILE BANK NOTE ISSUE.

To provide for the issue by the Mercaittile Bank of India,
Limited, of bills and notes payable to bearer on demand.

[29th December, 1911]

1. This Ordinance may be cited as the Mercantile Bank Note
Issue Ordinance.

2. In this Ordinance-

'company' means the Mercantile Bank of India, Limited, whose
chief office is in 15 Gracechurch Street, London,

England;

'notes' means bills and notes payable to bearer on demand.

3. (1) Subject to the provisions of this Ordinance, it shall be lawful
for the company to make, issue, reissue and circulate notes in the
Colony.

(2) Such notes shall not be issued for any other sum than the sum
of five dollars or some multiple of such sum.

(3) The total amount of such notes actually in circulation shall not
at any time exceed the amount of the capital of the company actually
paid tip. If the company issues notes in excess of the amount authorized
by the provisions of this Ordinance, it and the manager of its office in
the Colony shall each upon summary conviction be liable to a fine of
fifty dollars a day for every day during which such excess of any sum
not exceeding ten thousand dollars continues, and to a further fine of
fifty dollars a day for every day during which such excess continues
for every complete additional sum of ten thousand dollars in notes so
issued in excess ss.

(4) Such part of the books of the company as may contain any
entry relating to the notes issued or to be issued by the company or
relating to the amount of such notes in circulation from time to time, or
any account, minute or memorandum in the possession of the
company or of any person in its employ, the sight or inspection
whereof may tend to ensure the rendering or taking of true accounts
for





any period of the average amount of such notes in circulation or to test
the truth of any such account, shall be open for the inspection and
examination at all reasonable times of any person authorized in that
behalf in writing signed by the Financial Secretary. Every such
authorized person shall be at liberty totake copies or extracts from any
such book, account, minute or memorandum. If the company or any
person in its employ keeping any such book, account, minute or
memorandum, or having the custody or possession thereof or power to
produce the same, on demand made by any such authorized person
showing if demanded his authority in that behalf, refuses to produce
any such book, account, minute or memorandum to him for his
inspection and examination or to permit him to inspect and examine the
same or to take copies thereof or extracts therefrom, the company and
such person in its employ shall each upon summary conviction be
liable to a fine of five hundred dollars: Provided that the Financial
Secretary shall not exercise or cause to be exercised the powers
aforesaid without the consent of the Governor.

4. (1) The Company shall deposit and at all times
keep deposited with the Grown Agents securities to be
approved by the Secretary of State to an amount equal in
value to the face value of the notes in circulation with the
addition of five per cent of such value. Such securities
shall be under the control of the Financial Secretary and
shall be held by the Crown Agents as special funds,
exclusively available for the redemption of such issue of
notes, and in the event of the company being wound up
such securities shall be sold and the proceeds of sale shall
he applied so far as necessary towards the redemption of
the notes outstanding. Nothing in the foregoing shall
prejudice the rights of the holders of notes in the event of
such proceeds of sale proving to be less than the face value
of the notes outstanding, but if such proceeds amount to
more than such face value the difference shall be paid over
to the company.

(2) Notwithstanding the provisions of subsection (i), further notes
of the company may be issued and be in actual circulation other than
those against the issue of which securities have, been deposited
under such subsection, if





there has been paid in accordance with subsection (i) of section 4 Of
the Exchange Fund Ordinance, to the Financial Secretary of the Hong
Kong Government for the account of the Exchange Fund referred to in
such Ordinance and against the issue to the company of certificates of
indebtedness as provided in such Ordinance, an amount equal to the
face value of such further notes for the time being actually in
circulation, such amount to be held by such Exchange Fund
exclusively for the redemption of such notes.

5. (1) There shall be pubtished in the Gazette every month a
statement (to be rendered by the company on the first working day of
each month) of the face value of the notes outstanding, and of the
securities held against these notes. The statement shall show the
nominal value of such securities, the price at which they were valued
on deposit and also the latest market price of such securities.

(2) If for two consecutive months the said market price indicates a
selling value less than the amount required by section 4, the Financial
Secretary shall demand that all notes returned to the company shall be
retained and not reissued until the amount so required is reached, or at
his option lie shall demand the deposit of additional securities
sufficient to raise the selling value of the securities already deposited
to the amount so required, and the company shall comply with such
dernand. If however for three consecutive montlis the said market price
indicates a continued and constant increase on their selling value, the
Governor in Council may allow the securities to be reduced, provided
the selling value of stich securities is never allowed to fall below the
amount required by section 4.

6. Subject in all respects whatsoever to the provisions of this
Ordinance, it shall be lawful for the company to make, issue, reissue
and circulate notes until and including the 12th day of July, 1951, or
such later date as may be fixed under the provisions of section 5 of the
Bank Notes Issue Ordinance, after which date the company shall cease
to issue or reissue notes but shall redeem any notes which it has
previously issued or reissued: Provided however that if the company
fails to comply with the demand of the





Financial Secretary referred to in subsection (2) of section
5, or fails to comply with any of the other provisions of
this Ordinance, the power of the company to make, issue,
reissue and circulate notes shall immediately cease. [7A

7.Nothing contained in this Ordinance shall exempt
the company from the operation of any law restricting or
regulating the issue of notes in the Colony. [8

8. Nothing in this Ordinance shall affect or be deemed
to affect the rights of His Majesty the King, His Heirs and
Successors or the rights of any body politic or corporate
or of any other persons except such as are mentioned in this
Ordinance and those claiming by, from or under them. [9
Originally 65 of 1911. Fraser 65 of 1911. 4 of 1951. Short title. Interpretation. 4 of 1951, Schedule. Power for company to make and issue bills and notes and conditions of such issue. 4 of 1951, Schedule. [s. 3 cont.] Deposit of securities as funds exclusively available for redemption of note issue and in the event of insolvency. 4 of 1951, Schedule. (Cap. 66.) Monthly publication in Gazette of outstanding notes and securities. 4 of 1951, Schedule. 4 of 1951, Schedule. Period of availability of powers to issue bank-notes. 4 of 1951, Schedule. (Cap. 65.) [s. 6 cont.] Saving as to laws restricting note issue. Saving.

Originally 65 of 1911. Fraser 65 of 1911. 4 of 1951. Short title. Interpretation. 4 of 1951, Schedule. Power for company to make and issue bills and notes and conditions of such issue. 4 of 1951, Schedule. [s. 3 cont.] Deposit of securities as funds exclusively available for redemption of note issue and in the event of insolvency. 4 of 1951, Schedule. (Cap. 66.) Monthly publication in Gazette of outstanding notes and securities. 4 of 1951, Schedule. 4 of 1951, Schedule. Period of availability of powers to issue bank-notes. 4 of 1951, Schedule. (Cap. 65.) [s. 6 cont.] Saving as to laws restricting note issue. Saving.

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