Mutual Banks Act, 1993 (Act No. 124 of 1993)Chapter VI : Provisions relating to Aspects of the Conduct of the Business of a Mutual Bank56. Restriction on investments with, and loans and advances to, certain associates |
| (1) | A mutual bank that invests money in debt instruments or preference shares of any of its associates (excluding any such associate that is a subsidiary referred to in section 55(1), a mutual bank or a bank), or that lends or advances money to any such associate, or that provides guarantees in respect of liabilities of such associates, shall manage its transactions in such investments, loans, advances or guarantees in such a way that the sum of the amounts invested by it in debt instruments or preference shares of such associates (excluding debt instruments or preference shares that are convertible into ordinary shares), taken at the price at which they were acquired; |
| (a) | owing to it by such associates in respect of loans or advances granted by it; and |
| (b) | of such guarantees, |
| (c) | does not at any time exceed 10 per cent of its liabilities, excluding its liabilities in respect of capital and reserves. |
| (2) | The sum of the amounts referred to in paragraphs (a), (b) and (c) of subsection (1) shall be calculated for the purposes of that subsection by deducting therefrom the amount by which the sum of the issued primary share capital and primary unimpaired reserve funds, referred to in section 48(1), of the mutual bank exceeds the sum of the amounts referred to in paragraphs (a), (b) and (c) of section 55(1). |