OVERSEAS TRUST BANK (COMPENSATION OF REGISTERED HOLDERS OF SHARES) REGULATIONS

OVERSEAS TRUST BANK (COMPENSATION OF REGISTERED HOLDERS OF SHARES) REGULATIONS

OVERSEAS TRUST BANK (COMPENSATION OF REGISTERED
HOLDERS OF SHARES) REGULATIONS

ARRANGEMENT OF REGULATIONS

Regulation...................................
Page

PART I

GENERAL

1. Citation............................... ... ... ... ... ... ... ... ... ... A 2

2. Interpretation................. ... ... ... ... ... ... ... ... ... .. A2

PART II

DETERMINATION OF
COMPENSATION

3. Establishment of Tribunal .............. ... ... ... ... ... ... ... ... A 2

4. Time limit for seeking compensation ... ... ... ... ... ... ... ... ... ... A 2
5. Appointment of Tribunal ... ... ... ... ... ... ... ... ... ... ... ... A 3
6. Function of the Tribunal ... ... ... ... ... ... ... ... ... ... ... ... A 3
7. Hearings ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... A 3
8. Attendance and representation at hearing ... ... ... .. ... ... ... ... .... A 4

9. Hearings to be in private .............. ... ... ... ... ... ... ... ... A 4
10................Disclosure and discovery ... ... ... ... ... ... ... ... ... ... ... A 4
11................Decisions of the Tribunal ... ... ... ... ... ... ... ... ... ... ... A 5

12..............Powers of the Tribunal .... ... ... ... ... ... ... ... ... ... ... ... A 5
13..............Costs of the Tribunal ..... ... ... ... ... ... ... ... ... ... ... ... A 6
14..............Determination ............. ... ... ... ... ... . . ... ... ... A 7

15................Notice of determination ... ... - ... ... ... ... ... ... ... A 7

16.........Immunity ....................... ... ... ... ... . ... ... ... ... A 7

17. Offences ... ... ... ... ... ... ... ... ... .. A 7

PART III

PAYMENT OF
COMPENSATION

18. Payment of compensation .............. ... ... ... ... ... ... ... ... A 8

Schedule................. ................. ... - ... ... ... ... ... ... ... ... A 8





OVERSEAS TRUST BANK (COMPENSATION OF
REGISTERED HOLDERS OF SHARES) REGULATIONS

(Cap. 379, section 10)

[28 February 1986.]

PART I

GENERAL

1. These regulations may be cited as the Overseas Trust Bank
(Compensation of Registered Holders of Shares) Regulations.

2. In these regulations

'accountant' means a certified public accountant as defined by the
Professional Accountants Ordinance;

'Chairman' means the Chairman of the Tribunal appointed under
regulation 5;

'compensation' means compensation payable to registered holders of
shares under section 9(1) of the Ordinance;

'hearing' includes any adjourned hearing;

'registered holder of shares' means a person referred to in section 9(1)
of the Ordinance;

'representations' includes the calling or giving of evidence;

'shares' means the shares in the capital of the company held by
registered holders of shares immediately before commencement;

'Tribunal' means the Overseas Trust Bank Compensation Tribunal
established under regulation 3.

PART II

DETERMINATION OF
COMPENSATION

3. (1) For the purpose of determining the amount of compensation
the Governor may, and if requested in writing by any registered holder
of shares shall, by notice published in the Gazette, establish a Tribunal
to be known as the Overseas Trust Bank Compensation Tribunal.

(2) The Tribunal shall have the functions, powers and duties
prescribed by these regulations.

4. (1) If within 3 months of the coming into operation of these
regulations no request in writing is made by any registered holder of
shares under regulation 3(1) and the Governor has not established the
Tribunal under that regulation, the Financial Secre





tary Incorporated may, by notice in writing sent by post to the last
address shown in the share register of the company, advise each
registered holder of shares of his rights under regulation 3(1) and the
effect of this regulation.

(2) If a notice is given by the Financial Secretary Incorporated
under paragraph (1), and if no request in writing by a registered holder
of shares under regulation 3(1) is received prior to the expiration of the
period beginning from the coming into operation of these regulations
and ending on a date 3 months after the latest date of service of that
notice, the amount of compensation shall be deemed to be nil.

5. (1) The Tribunal shall consist of 3 persons appointed by the
Governor as follows

(a) ajudge who shall be Chairman;

(b) 2 other persons neither of whom shall be a public officer.

(2) Every appointment under paragraph (1) shall be notified in the
Gazette.

(3) The Tribunal may appoint a public officer to be the Clerk to the
Tribunal and such other public officers to be clerical and secretarial
assistants to the Tribunal as it considers necessary.

6. The function of the Tribunal shall be to determine the amount of
compensation by calculating the value of a single share in accordance
with the factors and principles set out in the Schedule.

7. (1) For the purpose of discharging its function under regulation
6 the Tribunal may, and if requested in writing by a registered holder of
shares shall, by notice signed by the Chairman and published in the
Gazette, give notice (hereinafter in these regulations referred to as
notice of hearing) that it intends to conduct a hearing at which, subject
to these regulations, representations may be made by or on behalf of a
registered holder of shares or the Financial Secretary Incorporated and
requiring any registered holder of shares who intends to make
representations to give notice to the Tribunal within such reasonable
time and at such address as shall be specified in the notice of hearing.

(2) Within the period specified in the notice of hearing every
registered holder of shares who intends to make representations at the
hearing shall give notice in writing to the Tribunal of that intention.

(3) Upon the expiration of the period specified in the notice of
hearing and after having regard to the number of registered holders of
shares who have given notice under paragraph (2), the Tribunal shall
consider whether to exercise its powers under regulation 12(1)(b) or
(c).





(4) The Chairman shall fix a day for the first hearing and shall give
notice of that date, by notice in writing signed by him, to the Financial
Secretary Incorporated, the company and

(a)in the event that the Tribunal has exercised its powers under
regulation 12(1)(b), any registered holder of shares appointed
pursuant thereto; or

(b)in the event that the Tribunal has decided not to exercise its
powers under regulation 12(1)(b), every registered holder of
shares who has given notice under paragraph (2).

8. At the hearing referred to in regulation 7-

(a)any registered holder of shares to whom notice has been
given under regulation 7(4) may, subject to any directions
given by the Chairman as to time and location, attend and
make representations, and may be represented by counsel or a
solicitor;

(b)the Financial Secretary Incorporated may make
representations and may be represented by counsel or a
solicitor or by a legal officer within the meaning of the Legal
Officers Ordinance;

(e)the company may make representations in relation to such
matters as may be determined by the Tribunal and may be
represented by counsel or a solicitor.

9. All hearings of the Tribunal shall be conducted in private and
the Chairman shall determine who may be present and may exclude any
person including a person mentioned in regulation 8 from any part of
the hearing.

10. (1) Subject to paragraph (2), the company or any director,
servant, auditor, adviser or agent thereof shall not be required to
disclose to any person or to the Tribunal any information or to produce
to any person or to the Tribunal any document, as to the affairs of any
of the customers of the company or the relationship between the
company and any other bank or other financial institution.

(2) The Tribunal may, by order in writing, require the company and
any director, servant, auditor, adviser or agent thereof to disclose or
produce to an accountant appointed by the Tribunal under regulation
12(1)(j) or (k) or to an accountant employed to advise the Financial
Secretary Incorporated, such of the matters mentioned in paragraph (1)
as may be necessary for that accountant properly to advise the
Tribunal, the registered holders of shares or the Financial Secretary
Incorporated.

(3) Except as provided in this regulation no person shall publish or
otherwise disclose any evidence, submission, document, information,
decision, determination, statement or other matter





whatsoever received or made by or produced or disclosed to the
Tribunal, used in the course of the hearing or obtained under an
order made under paragraph (2), save that nothing in this paragraph
shall prevent the publication of any determination of which notice
has been given under regulation 15(1) or of any matter disclosed
under regulation 15(2).

(4) An accountant mentioned in paragraph (2) may report
to the Tribunal, the registered holders of shares or the Financial
Secretary Incorporated, as may be appropriate, but nothing in this
paragraph shall authorize him to disclose any of the matters
mentioned in paragraph (1).

(5) In this regulation 'company' includes a subsidiary.

11. (1) Any-

(a)exercise by the Chairman of any discretion under these
regulations; or

(b) decision or determination by the Tribunal as to law or fact,

shall, subject to paragraph (4), be final.

(2) Subject to paragraph (3) a decision or determination of
any 2 members of the Tribunal shall be the decision or determina-
tion (as the case may be) of the Tribunal and in the event that no 2
members agree the decision or determination of the Chairman shall
be the decision or determination (as the case may be) of the
Tribunal.

(3) On questions of law the decision of the Chairman shall be
the decision of the Tribunal.

(4) The Tribunal shall have power to correct any mistake or
error in any decision or determination or the reasons for any
determination.

12. (1) The Tribunal shall, subject to paragraph (2), have
power-

(a)for the purpose of regulation 7, to determine who is a
registered holder of shares;

(b)to appoint one or more registered holders of shares to
make representations on behalf of the registered holders of
shares or any group thereof,

(c)to order that representations by registered holders of
shares shall only be made by a person appointed under
sub-paragraph (b);

(d)to receive and consider any material whether by way of
oral evidence, written statements, documents or otherwise,
notwithstanding that such material would not be admis-
sible in evidence in civil or criminal proceedings;





(e)to determine the manner in which the material mentioned in
sub-paragraph (d) shall be received;

(f) to administer oaths and affirmations;

(g)subject to regulation 10, to require, by notice in writing
signed by the Chairman, any person to attend before it at any
hearing and to give evidence and produce documents;

(h)to give directions as to the filing and service of pleadings and
written submissions;

(i)to examine on oath, affirmation or otherwise any person
attending before it at any hearing and require such person to
answer all questions put by or with the consent of the
Tribunal;

(j)to appoint on behalf of the registered holders of shares or
any group thereof an independent accountant to investigate
the financial affairs of the company prior to commencement in
accordance with the factors and principles set out in the
Schedule and, subject to regulation 10, to report to and
advise such registered holders of shares;

(k)to appoint an accountant to investigate the financial affairs of
the company prior to commencement in accordance with the
factors and principles set out in the Schedule and, subject to
regulation 10, to report to and advise the Tribunal;

(l)to determine the procedure to be followed at any hearing
including the power to adjourn the hearing;

(m)to receive representations from the company in relation to
such matters as the Tribunal may determine;

(n) to incur expenditure;

(o)to exercise such powers as may be necessary for the purpose
of exercising its functions;

(p)to do all things ancillary to the powers conferred by this
paragraph.

(2) A person at any hearing conducted by the Tribunal may refuse
to answer any question or produce any document or thing if to do so
would tend to expose that person or his spouse to proceedings for an
offence or for the recovery of a penalty.

13. (1) Any member of the Tribunal appointed under regulation
5(1)(b) shall be entitled to be paid $2,500 for each day or part thereof on
which he attends a hearing of the Tribunal.

(2) The Tribunal may make such order as to the reimbursement of
fees and expenses of

(a)any accountant appointed by the Tribunal under regulation
12(1)(j) or (k); and





(b)any legal representative of a registered holder of shares or
any group thereof or of the company,

as it may consider appropriate.

(3) Any money payable or ordered to be paid by the Tribunal shall
be paid by the Government.

14. The Tribunal shall at the hearing at which it gives its
determination under regulation 6 give reasons to such extent as it
considers proper for its determination and within 14 days thereafter
shall, by notice signed by the Chairman and sent by post to the last
address shown in the share register of the company, notify each
registered holder of shares of that determination.

15. (1) The Financial Secretary Incorporated shall by notice in the
Gazette give notice of any determination under regulation 6.

(2) The Financial Secretary Incorporated may by such notice as it
thinks fit disclose such matters relating to any determination under
regulation 6 that it considers necessary.

16. Subject to these regulations

(a) the Tribunal;

(b)any person mentioned in regulation 8 who makes
representations at any hearing of the Tribunal;

(c)any person summoned by the Chairman under regulation
12(1)(g);

(d)any accountant appointed by the Tribunal under regulation
12(1)(j) or (k);

(e)any accountant appointed to advise the Financial Secretary
Incorporated; and

(f) any witness at any such hearing,

shall have the same privileges and immunities in any such hearing or in
the exercise of the Tribunal's functions or powers as they would have
had if that hearing or exercise were a hearing or exercise by a court.

17. Any person who without lawful authority or reasonable excuse

(a) contravenes regulation 10(3);

(b) refuses or fails-

(i) to comply with any notice under regulation 12(1)(g);

(ii) to answer truly and fully any question put to him by or
with the consent of the Tribunal;

(iii) to produce any book, paper or document which the
Tribunal has required him to produce;

(iv) to comply with any lawful order or direction of the
Tribunal; or





(c) disturbs or otherwise interferes with the proceedings of the

Tribunal,

commits an offence and is liable on conviction to a fine of $5,000 and to
imprisonment for 6 months.

PART III

PAYMENT OF
COMPENSATION

18. (1) A registered holder of shares shall be entitled to be

paid compensation equal to the value of one share as calculated by the
Tribunal under Part II multiplied by the number of shares held by him
immediately before commencement, together with interest on that
compensation from commencement until payment at the rate calculated
in accordance with paragraph (2).

(2) For the purpose of paragraph (1) simple interest shall be

calculated daily during the period referred to in paragraph (1) by
applying to that compensation the daily maximum single rate of interest
paid on savings accounts denominated in Hong Kong dollars during
that period by members of the Hong Kong Association of Banks.

(3) Compensation and interest payable under these regula

tions shall be paid by the Government.

SCHEDULE [regs. 6 & 12.]

1 . (1) In this Schedule, unless the context otherwise requires

'company' includes any subsidiary;

'company as a going concern' means a company continuing to be operated with a
view to paying dividends out of its earnings;

'earnings' means the profit for one year according to the published results of a
company after taxation and after excluding any extraordinary items;

'earnings per share' means earnings divided by the number of shares in issue by a
company;

'price earnings ratio' means a figure calculated by dividing the current price of a
share of a company by the earnings per share;

'reconstructed company' means the company reconstructed by the payment into
shareholders funds of the company reconstruction costs referred to in
paragraph 6;

'shareholders funds' means the net assets of the company calculated in
accordance with sub-paragraph (2).

(2) Shareholders funds shall be calculated using standard accounting conven-

tions and practices by deducting from the assets of the
company(a) depreciation;

(b)provisions for bad or doubtful debts calculated in accordance with
paragraph 4;

(c) provisions for contingent liabilities;







(d) such other provisions as the Tribunal considers reasonable;
(e) all other liabilities of the company.





2. The value of a single share shall be calculated in accordance with the
factors and principles set out in this Schedule and on the basis of the amount that
a willing sole purchaser would on the day prior to commencement in the ordinary
course of business have paid a willing seller for all of the shares sold in one block
after negotiating at arms length and with full knowledge of the true financial
position and value of the company on the day prior to commencement divided by
the total number of shares.

3. For the purpose of making the calculation under paragraph 2 the Tribunal
shall

(a) disregard

(i) the acquisition under the Ordinance;

(ii) the possibility of such acquisition;

(iii) the possibility of any financial support or assistance being made
directly or indirectly by or at the behest of the Hong Kong Government
at or after commencement;

(iv) the possibility of any financial support or assistance being made by
another bank or financial institution except in the ordinary course of
business;

(v) the possibility of any claim by the company against any director,
servant, auditor, adviser or agent of the company,

and the effect that such events may have had on the amount to be
calculated under that paragraph;

(b) assume that the purchaser would have

(i) been a corporation with sufficient credit standing so as to be able to
attract for the company inter bank deposits at normal inter bank interest
rates and with sufficient funds at commencement to operate the
company properly and prudentially as a going concern and in particular
to reconstruct the company in accordance with paragraph 6;

(ii) had as full and true knowledge of the financial position of the
company on the day prior to commencement as it would have had if it
had conducted its own thorough audit and investigation with full co-
operation and disclosure by the company and its management, including,
but without derogating from the generally thereof, knowledge of

(A)the amount of its liabilities including contingent or deferred
liabilities, capital commitments and contracts for future
performance;

(B)the value of its banking assets after making a proper and
prudent provision against bad or doubtful debts calculated in
accordance with paragraph 4;

(C)any immediate funding requirements of the company and in
particular whether, and to what extent, short term borrowings
or other credit facilities might need to be made or refinanced by
the company;

(D)the market value of all fixed assets and investments and any
adjustments that might need to be made in the books of account
of the company to state such assets at market value; and

(E)in the light of his knowledge of matters set out in sub-sub-
subparagraphs (A), (B), (C) and (D), the amount of shareholders
funds including any accounted for in the form of inner reserves.,







(c)assume that all necessary consents to the sale and transfer of the shares
would be given;

(d)except as provided by paragraph 4 have regard only to information that
would have been available to the purchaser on the day prior to
commencement.

4. For the purpose of calculating the level of proper and prudent provision
for a bad or doubtful debt to be made against each debt on the day prior to
commencement the Tribunal shall accept as proper and prudent the provision
made by the directors appointed under section 7 of the Ordinance against such
debt as at 30 June 1985 unless the Tribunal is satisfied, having regard to the
information that would have been available to the purchaser on the day prior to
commencement. that the purchaser would have made difrerent prudent provision
against such debt in which event the Tribunal may determine the level of such
provision.





5. (1) The amount the purchaser would, on the day prior to commencement
in the ordinary course of business, have paid referred to in paragraph 2 shall be the
amount produced by deducting the amount of company reconstruction costs (if
any) calculated in accordance with paragraph 6 from the value of the
reconstructed company as a going concern, calculated in accordance with
paragraph 7.

(2) The amount the purchaser would on the day prior to commencement in
the ordinary course of business have paid shall be deemed to be nil if the sum
calculated in accordance with sub-paragraph (1) is a negative amount.

6. (1) 'Company reconstruction costs' means the amount (if any) by which
revised shareholders funds calculated in accordance with sub-paragraph (2) is less
than required shareholders funds calculated in accordance with sub-paragraph (3).

(2) 'Revised shareholders funds' shall be calculated by preparing a new
balance sheet for the company as on the day prior to commencement after
making all necessary adjustments and provisions, including

(a)making proper and prudent provision against shareholders funds for bad
or doubtful debts of no less sum than the sum determined in accordance
with paragraph 4;

(b) crediting or charging (as the case may be) the shareholders funds by-

(i) the amount of any revaluation of assets made under paragraph
3(b)(ii)(D);

(ii) the amount of any adjustment of liabilities of the company made
under paragraph 3(b)(ii)(A).

(3) 'Required shareholders funds' means the amount of shareholders funds
that would be necessary in relation to the assets and liabilities shown in the new
balance sheet prepared in accordance with sub-paragraph (2) to enable the
company to comply with sections 77, 81, 83, 87, 88 and 90 of the Banking
Ordinance.

7. (1) The value of the reconstructed company as a going concern shall be
ascertained by multiplying the price earnings ratio, calculated in accordance with
sub-paragraph (2), by the earnings of the reconstructed company on the day prior
to commencement, calculated in accordance with sub-paragraph (3).

(2) The price earnings ratio shall be calculated by reference to the average of
the price earnings ratios, during the period 27 May 1985 to 31 May 1985, of The
Hongkong and Shanghai Banking Corporation, The Hang Seng Bank Limited, the
Bank of East Asia Limited and The Wing Lung Bank Limited or, if the Tribunal
thinks that reference inappropriate, by reference to the reciprocal of the yield
during the period 27 May 1985 to 31 May 1985 on long term fixed rate Hong
Kong dollar bonds or certificates of deposit. and by making such adjustments to
that average or reciprocal, as the case may be, as the Tribunal considers reasonable
to take into account

(a) the fact that the purchaser would gain control of the company;

(b) the prospects for the company after commencement.

(3) The earnings of the reconstructed company on the day prior to
commencement shall be calculated by taking the average of the earnings of the
company published for the 3 consecutive financial years ending 30 June 1984
reduced by such amount (if any) as the Tribunal considers appropriate in the event
that the average of the return on the gross assets of the company for that period
is higher than the average of the averages of the returns on the gross assets
achieved in the same period of the banks mentioned in sub-paragraph (2).

(4) In this paragraph 'return on the gross assets' means the return on the
gross assets calculated on the earnings and the gross assets shown in the audited
accounts published for a financial year.
L.N. 54/86. 27 of 1986. Citation. Interpretation. (Cap. 50.) Establishment of Tribunal. Time limit for seeking compensation. Appointment of Tribunal. Function of the Tribunal. Schedule. Hearings. Attendance and representation at hearing. (Cap. 87) Hearings to be in private. Disclosure and discovery. Decisions of the Tribunal. Powers of the Tribunal. Decisions of the Tribunal. Powers of the Tribunal. Schedule. Schedule. Costs of the Tribunal. Determination. Notice of determination. Immunity. Offences. Payment of compensation. 27 of 1986, s. 137. (Cap. 155.)

L.N. 54/86. 27 of 1986. Citation. Interpretation. (Cap. 50.) Establishment of Tribunal. Time limit for seeking compensation. Appointment of Tribunal. Function of the Tribunal. Schedule. Hearings. Attendance and representation at hearing. (Cap. 87) Hearings to be in private. Disclosure and discovery. Decisions of the Tribunal. Powers of the Tribunal. Decisions of the Tribunal. Powers of the Tribunal. Schedule. Schedule. Costs of the Tribunal. Determination. Notice of determination. Immunity. Offences. Payment of compensation. 27 of 1986, s. 137. (Cap. 155.)

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