Section 12, The Banking Act, 1964

(1) A licensed bank shall not in Sierra Leone 11. No licensed bank shall pay any dividend on its shares Restriction until all its capitalised expenditure (including preliminary expenses on divi organisation expenses, share selling commission, brokerage, amounts dends. of losses incurred and any other item of expenditure not represented by tangible assets) has been completely written off. Provided that the provisions of this paragraphshall not apply (a) grant to any person any advance or credit facility or activities give any financial guarantee or incur any other lia- by licensed bility on behalf of such person so th¡t the total value banks in of the advances, credit facilities, financial guarantees Sierra Leone. and other liabilities in respect of such person is at any time more than twenty-five per cent of the sum of the paid up capital and published reserves of the bank: (i) to transactions between banks or between the branches of abank; (i) to the purchase of, or advances made against, any of the following provided that the holder thereof is entitled to payment outside Sierra Leone for exports from Sierra Leone that is to say (aa) clean or documentary bills of exchange, (bb) telegraph transfers, (cc) documents of title to goods; A 159 (it) to advances or credit facilities granted to, or established on behalf of, any Marketing Board establishedby legislation in Sierra Leone, or to the purchase ofbills of exchange payable 1n Sierra Leone andaccepted by any such Board or to advances madeagainst such bills where such advances or creditfacilities or bills are for the purpose of financingthe movement in Sierra Leone of produce deliveredto any such Board; (iv) in respect of any bank while all the banking liabilities it may from time to time incur are the subjectof an irrevoçable guarantee given by another bankoutside Sierra Leone, if the form and substance ofthat guarantee have been approved by the Ministerupon an express recommendation by the Governorof the Central Bank; Restriction on certain (6) grant any advance or credit facility against the securityof its own shares; A 160 Cap. 249 (c) grant or permit to be outstanding unsecured advances or unsecured credit facilities of an aggregate amount in excess of five hundred pounds (1) to any one of its directors whether such advances or facilities are obtained by its directors jointly or severally; (i) to any firm, partnership or private company or other association of persons corporate or unincorporated in which it or any one or more of its directors is interested as a director, partner, managor, agent or member, or to any individual firm, partnership or private company of whom or of which any one or more of its directors is a guarantor. For the purposes of this paragraph a private company means a private company as defined in section 27 of the Companies Act; (Gi) to any body of persons in which it or any one or more of its directors jointly or severally maintains a controlling interest; () grant or permit to be outstanding to its officials and employees unsecured advances or unsecured credit facilities which in aggregate amount for any one official or employee exceed one year's emnoluments of such oficial or employee; (e) engage, whether on its own account or on a commission basis, in the wholesale or retail trade, including the import or export trade, except in so far as may exception ally be necessary in the course of the banking operations and services of that bank or in the course of the satis faction of debts due to it; ) acquire or hold any part of the share capital of any financial, commercial, agricultural, industrial or other undertaking except such share holding as a bank may acquire in the course of the satisfaction of debts due to it which share holding shall, however, be disposed of at theearliest suitable moment: Provided that this paragraph shall not apply ) in respect of any share holding approved by theCentral Bank in any corporation set up for thepurpose of promoting the development of a moneymarket or securities market in Sierra Leone or of improving the financial machinery for the financingof economic development; (ii) to all share holdings in other undertakings theaggregate value of which does not at any timeexceed twenty-five per cent of the sum of the paidup capital and publ1shed reserves of that bank; Provided that (e) purchase, acquire or lcase rcal estate except as may be necessary for the purpose of conducting its business including provision for future expansion or housing its staff or in other exceptional circumstances where the agreement of the Central Bank is obtained: (i) in respect of any real estate held or leased by a bank at the commencement of this Act for purposes other than those referred to herein, that bank shal| be allowed a period of three years in which to comply with this paragraph; and (i) a bank may secure a debt on any real or other property and in default of repayment may acquire such property for resale by the bank as soon as possible thereafter. (2) In paragraphs (c) and (d) of subsection (1), the ex pression unsecured advances or unsecured credit facilities means advances or credit facilities made without security, or in respect of any advance or credit facility made with security, any part thereof which at any time exceeds the market value of the assets constituting that security or, where the Minister is satisfied there is no established market value, the value as established on the basis of a valuation approved by the Central Bank. (3) Any licensed bank which, prior to the commencement of this Act, entered into any transactions incompatible with the provisions of paragraphs (a) to () of subsection (1), shall so soon as may be after the commencement of this Act submit a statement thereof to the Central Bank and shall, within one year from the said date, finally liquidate all such transactions.