ARRANGEMENT OF SECTIONS

SECTION

PART I
PRELIMINARY

PART II
DEPOSIT INSURANCE FUND

PART III
DEPOSIT INSURANCE CORPORATION

PART IV
SPECIAL POWERS OF THE CORPORATION

PART V
MISCELLANEOUS

CHAPTER 317

PROTECTION OF DEPOSITORS

[Assent 30th September, 1999]
[Commencement 10th November, 1999]

"affiliate" has the same meaning as in section 2 of the Companies Act;

"agent" in relation to an institution, includes its bankers and any persons, whether officers of the institution or not, who are employed as its auditors, but does not include its legal advisers;

"the Bank" means the Central Bank of The Bahamas established by section 3 of the Central Bank of The Bahamas Act;

"Board of Management" means the Board of Directors of the Corporation;

"Chairman" means the Chairman of the Board of Management;

"Corporation" means the Deposit Insurance Corporation established under section 7;

"deposit" means-

"directors" includes any category of persons performing the functions of directors or analogous functions;

"the Fund" means the Deposit Insurance Fund established under section 3;

"institution" means any person carrying on banking business wholly or partly in Bahamian currency;

"Minister" means the Minister of Finance;

"officer" in relation to an institution, includes any category of managers as well as any person in the employment of the institution;

"parent company" means a company that owns at least fifty per cent of the outstanding voting shares in another company;

"premium year" means in relation to the calculation and payment of premiums pursuant to this Act the period beginning on January 1 and ending on December 31 in any year;

"subsidiary company' means a company at least fifty percent of whose outstanding voting shares are owned by another company.

(2) In this Act a reference to a director, officer or agent of an institution includes a reference to a person who has been but is no longer a director, officer or agent thereof.

(3) For the purposes of this Act , an institution is deemed to be closed when the institution is ordered by the Governor to wind up its business under section 14 of the Banks and Trust Companies Regulation Act.

(2) The Fund shall be managed by the Board of Management of the Corporation.

(2) Every member of the Fund shall pay an annual premium to the Fund, equal to one twentieth of one per cent of an amount equal to the average of the sum of those deposits insured by the Corporation and deposited with the member institution as of March 31 and September 30 in the immediately preceding premium year.

(3) For the purpose of making the calculation referred to in subsection (2), a member institution may use any method approved by the Corporation to determine the aggregate amount of its deposits that are insured by the Corporation.

(4) The premium payable by a member institution shall be based on returns to be certified by the member institution and submitted in such form and at such time as the Corporation may require.

(5) One half of the premium payable by a member institution shall be paid to the Corporation on or before June 15 in the premium year for which the premium is payable, and the remainder shall be paid to the Corporation on or before December 15 in the premium year.

(6) Notwithstanding subsection (2), the premium payable by a member institution in respect of the premium year in which it becomes a member institution shall be the same proportion of one twentieth of one percent of the amount equal to the sum of those deposits insured by the Corporation and deposited with the member institution as at the end of the month in which it becomes a member institution, as the number of days in which any of the deposits with that member institution are insured by the Corporation in that premium year is of three hundred and sixty five.

(7) Notwithstanding subsection (5)-

(8) Where in the opinion of the Corporation the Fund had made or is likely to make payments to depositors which have exhausted or are likely to exhaust the Fund, the Corporation shall furnish the Minister with an estimate of the amount necessary to meet the obligations of the Fund in the year next succeeding and the Minister on the advice of the Bank after consultation with the member institutions, may by order require that special contributions be levied on them.

(9) Where the Corporation determines that the Fund has reached a satisfactory level it may refund any excess moneys to the member institutions pro rata.

(2) Deposit Insurance coverage is limited to fifty thousand dollars or such greater amount as the Minister may, by order, prescribe on the advice of the Bank after consultation with the member institutions save that where a depositor maintains deposits in more than one institution or in different capacities and rights, the limit shall apply to the principal amounts including interest up to the date of closure less any amounts owed to the institution by the depositor, and maintained on deposit in each institution in each capacity and right.

(3) A depositor is protected by deposit insurance only when the member institution in which he has a deposit is closed.

(4) Payment to the person prima facie entitled under this section by the Corporation in respect of any deposit insured discharges the Corporation from liability in respect of that deposit.

(5) When payment is made by the Corporation under this section in respect of a deposit with a member institution the Corporation is subrogated up to the insured limit to all the rights of the depositor as against that member institution and may maintain an action in respect of such rights in the name of the depositor or in the name of the Corporation.

(6) Subject to subsection (7) the benefit of insurance cover shall not be extended to any depositor who is shown to have been a party to or profited from the circumstances giving rise to the member institution's failure.

(7) Subsection (6) shall not apply to depositors who are professional advisors of the member institution and whose bona fides are not in question.

(8) Payments to depositors of closed institutions shall commence not later than six months after closure of the member institution.

(9) The Corporation shall in respect of rights to which it is subrogated have priority over other insured unsecured creditors of the closed institution.

(2) The Corporation shall be a body corporate having perpetual succession and a common seal.

(2) Members of the Board shall be paid such remuneration (whether by way of honorarium, salary or fees) as the Minister may determine.

(2) The Chairman shall in the event of an equality in the voting, in addition to his original vote, have a casting vote.

(2) Notwithstanding section 28 of the Central Bank of The Bahamas Act, upon the establishment of the Corporation there shall be paid-up by the Bank in respect of the capital a sum of five hundred thousand dollars.

(3) The paid-up portion of the authorised capital may be increased by such amount as the Minister on the recommendation of the Bank may approve.

(4) Any increase in the authorised or paid-up capital shall be notified by publication in the Gazette.

(2) No payment may be made unless a depositor produces satisfactory evidence of his deposit to the Corporation and that evidence shall be surrendered to the Corporation on receipt of payment.

(3) Persons who have deposits in excess of the insured limit shall be paid the insured portion of their deposits less any amounts owed to the institution by the depositor, and shall be issued with a certificate for the amount in excess of the limit.

(4) Depositors may submit claims for deposit insurance up to one year after closure of the institution with which the deposit was made.

(5) Claims made after the time specified in subsection (4) shall be made against the assets of the institution and shall be paid pro rata as the assets of the institution are collected and sold.

(6) Claims shall be supported by evidence of deposit ownership and may be made by depositors in person or in writing supported by affidavit.

(2) Demand loans become due as soon as an institution is closed.

(2) Such accounts shall be audited annually by an auditor appointed by the Corporation with the approval of the Minister.

(3) The Minister shall cause a copy of the statement of accounts and the auditor's report to be laid on the table of both Houses of Parliament.

the Corporation, for the protection of depositors, shall, in addition to any other powers conferred on it by any other law, have power-

(2) Pursuant but without prejudice to its powers under subsection (1), the Corporation may appoint any person or persons to act as Receiver or Receiver-Manager of the institution and such appointment shall take effect as though made by the depositors and other creditors of the institution pursuant to a charge over all the fixed and floating assets of the institution and without prejudice to any other powers vested in such Receiver or Receiver-Manager the Receiver or Receiver-Manager shall exercise his powers in accordance with sections 139 to 151 of the Companies Act.

(2) The notification shall state-

and shall give such particulars as the Corporation considers necessary for the information of persons having business dealings with the institution.

(3) Upon the publication of the notification the property and the powers of control stated therein shall vest in the Corporation.

(4) A notification under this section may be amended or supplemented from time to time by subsequent notification in the Gazette and the notification shall have effect as so amended or supplemented.

(2) Where the Corporation is exercising powers under section 21, in relation to any institution, that institution, its affiliate and their directors, officers and agents other than their auditors shall give every assistance to the Corporation for the purpose of facilitating the performance of functions under section 21, including the supply of information or explanation in such form as may be required the production of books, documents, minutes, cash, securities and vouchers, and generally the provision of all necessary facilities required for the performance of any function under section 21, save that in the case of their auditors they shall only be required to supply any information which is in their possession or knowledge.

(3) Any person appointed under section 21 shall have all the powers of a commissioner under the Commissions of Inquiry Act to summon and examine persons required under subsection (2) to assist the Corporation in the performance of its functions, and the provisions of section 13 of the Commissions of Inquiry Act shall apply in all respects to persons summoned under this subsection.

(4) In any particular case, the Corporation may appoint the Bank to perform any or all of its functions under section 21 subject to such conditions as may be specified in the appointment.

(2) The Corporation shall relinquish control and shall not continue to carry on the business of an institution where-

(3) Upon publication of a notification under subsection (1) and subject to such conditions as may be specified therein, all property not sold or otherwise disposed of by the Corporation and all powers of control over the affairs of the institution vested in the Corporation by or in consequence of the previous notification published under subsection (1) of section 22 shall vest in the institution if it still subsist as a corporate entity and be deemed to have been transferred from the Corporation to the institution.

(4) Where the Corporation has, in pursuance of section 21, assumed control of an institution, the Supreme Court may, upon the application of the directors of the institution acting independently of the Corporation if it is satisfied that it is no longer necessary for the protection of the depositors or creditors of the institution that the Corporation should remain in control of the business of that institution, order that the Corporation cease to control the business of that institution as from a date specified in the Order.

is guilty of an offence and shall be liable on conviction on information to a fine of fifty thousand dollars or to imprisonment for five years or to both.

(2) While the Corporation is in control of the business of an institution, any person who, without the approval or authority of the Corporation or in a manner contrary to the directions of the Corporation, receives, disposes of or otherwise deals with any assets of the institution, or who tampers whether by making entries in or otherwise, with any books, records or documents of the institution is guilty of an offence and shall be liable on conviction on information to a fine of fifty thousand dollars or to imprisonment for five years or to both.

(3) Any person to whom subsection (2) of section 23 applies who fails to comply with a requirement or demand by the Corporation to do or refrain from doing any act or to assist or to facilitate the Corporation in any function vested in it by section 21 is guilty of an offence an shall be liable on conviction on information to a fine of fifty thousand dollars or to imprisonment for five years or to both.

(2) Where a director, agent, servant, employee (including a former director, agent, servant or employee) of a member institution deliberately conceals from the Corporation any material information regarding the financial affairs of the member institution or provides false or misleading information to the Corporation or falsifies or tampers with the books, records, accounts, papers or documents of the institution, so as to mislead the Corporation, that director, agent, servant or employee is guilty of an offence and shall be liable on conviction on information to a fine of fifty thousand dollars or to imprisonment for five years or to both.

(3) Where a depositor falsifies any passbook, certificate of deposit, bank statement or any document claiming title to a deposit with a failed member institution or where a person fraudulently claims to be a depositor either for payment or for the purpose of claiming an insured deposit, that depositor or person is guilty of an offence and shall be liable on summary conviction to a fine of ten thousand dollars or to imprisonment for one year or to both.

(2) In this section, "Gulf Union Bank (Bahamas) Ltd" means the institution known by that name which was granted a licence by the Minister on December 27, 1985 and which licence was suspended by the Minister on October 2, 1997 and which was put into liquidation by the court on December 12, 1997.

(2) Every person who contravenes the provisions of subsection (1) is guilty of an offence and shall be liable on summary conviction to a fine of two thousand dollars or to imprisonment for three months or to both.