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Sponsor: Multi Man, MP
Type: Act of Parliament
Preamble: This Act continues the Bank of Azalea's existence under a new governing law, establishes deposit protection and procedures for financial-institution control and resolution, and amends the criminal law.
1. Short Title and Enactment
(a) This Act may be cited as the "Azalea Banking and Solvency Act."
(b) This Act is enacted when each of the following bills has received Royal Assent: the "Business Act," the "Financial Services Act," the "Azalea Banking and Solvency Act," the Parliamentary Norms and Procedures Act, and the Public Utility Empowerment Act.
2. The Bank of Azalea
(a) The Bank of Azalea (the BoA) shall continue as an entity that is part of the Government of the Azalea Isles and has distinct autonomy.
(b) The Prime Minister appoints the Chairman of the BoA, subject to confirmation by Parliament. The Chairman is appointed for life. Parliament may recall the Chairman by a motion passed by a supermajority of Parliament.
(c) The Chairman leads the Board of Governors. The Board has four members: the Chairman, two appointed Governors, and the Minister of Economic Affairs.
(d) The Chairman nominates the two Governors to Parliament. A nominee is confirmed by a simple majority of votes cast.
(e) If no vote is held on a Governor's nomination within seven days after the Chairman makes it, the nominee is automatically appointed on the eighth day. The term begins on that day. Parliament may later vote to accept or reject the nomination:
(g) The Minister of Economic Affairs is a nonvoting member of the Board and may participate in its debates. The Minister has the same access to information about the BoA's actions as a Governor.
(h) The Chairman operates the BoA, manages Board meetings, and breaks ties. A voting Board member who votes must do so personally.
(j) The Board must approve the BoA's policies, requirements, and loans. At least two voting Board members must participate for the Board to act. The BoA may carry out routine implementation under policies or delegations approved by the Board.
(k) Parliament may provide an endowment to the BoA in its monthly budget to assist its operations.
3. Powers and Functions
(a) The BoA may set a minimum reserve requirement for all financial institutions or for an individual financial institution. The requirement is the minimum percentage of deposits the institution must reserve and must not lend or invest.
(b) The BoA may set a minimum holdings requirement for all financial institutions or for an individual financial institution. The requirement is the minimum percentage of required reserves the institution must hold with the BoA.
(c) The BoA may decide whether institutions may deposit funds with it above the minimum holdings requirement. This policy is the Institutional Deposit Policy.
(d) The BoA may set the interest rate it pays on institutional funds deposited with it. It may set a different rate, including zero, for funds above the minimum holdings requirement or above the minimum reserve requirement.
(e) The BoA may set the period for reserve updates. An institution must report its customer deposits and update its reserves held with the BoA, if needed, at the interval the BoA sets.
(f) The BoA may lend to financial institutions or the Government and set the terms of those loans.
(g) The BoA may regulate financial institutions through policies on interest rates, fees, disclosures, and other matters relating to the operation of the banking industry.
(h) A binding general banking rule or binding general nonbank registration rule made by the BoA does not take effect until the Board has approved it and the BoA has published its full text.
(j) In this section and section 4(a) through (c), "financial institution" means a bank or nonbank financial institution as defined in section 2(d) and (l) of the Financial Services Act.
4. Deposit Insurance and Protection Fund
(a) A financial institution may request optional deposit insurance from the BoA. This insurance is separate from the Deposit Protection Fund under subsections (d) through (q). A policy must include every deposit at the institution. Other policy terms may apply but must not exclude a deposit. The institution's total coverage must not exceed 20% of its total deposits. Coverage must not exceed $20,000 per depositor, whether an individual or a legal entity. For a joint deposit, the balance must be allocated among the owners according to their ownership interests, presumed equal unless different shares are established. Each owner's share must be combined with their other covered deposits at the institution for that owner's limit. For this subsection, "deposit" has the meaning in section 2(b) and (c) of the Financial Services Act.
(b) The BoA must evaluate each institution that requests coverage. It may grant or refuse the request. If it grants the request, it must set a fee for the coverage. The fee may be a flat monthly fee or a percentage of profits.
(c) The BoA may audit an insured institution at any time and may impose different or additional requirements on it, such as higher reserves or additional disclosures to the BoA.
(d) The Deposit Protection Fund (the Fund) is established. The BoA must administer the Fund. Every bank holding a full or valid provisional banking license is a participating bank. Protection begins at enactment. For subsections (d) through (q), "deposit" has the meaning in section 2(b) and (c) of the Financial Services Act, and "bank" has the meaning in section 2(d) of that Act. "Bank" includes a former participating bank to the extent provided in subsection (m).
(e) The Fund receives participating banks' premiums, withdrawal-tax revenue under section 11(j) of the Financial Services Act, proceeds of debt issued under subsection (g) to finance payout shortfalls, and recoveries under subsection (n).
(g) The BoA may issue bonds or other debt securities to finance Fund payment shortfalls and may issue replacement debt to repay or refinance that debt. The debt is a general obligation of the BoA. Proceeds used to repay or refinance Fund debt are not Fund payout resources. The Board must approve a borrowing program stating limits and permitted terms. The Chairman may issue or refinance debt within that program. A change to the program or borrowing beyond it may be made only with Board approval. The BoA must record its decisions and publish the debt terms and results.
(j) Protection covers eligible deposit principal, including interest credited before activation, up to $10,000 for each eligible depositor at each bank. It includes fixed-term savings and certificates of deposit. Interest not credited before activation is not protected. Each depositor's eligible balances at the bank must be combined and, at activation, that limit must be allocated proportionately across them. The amount allocated to an unmatured fixed-term deposit becomes payable at its agreed maturity; maturity does not create another limit.
(k) A director, senior manager, or controlling owner of the failed bank at activation or during the preceding 30 days is not eligible for Fund protection for deposits at that bank. An owner is controlling if the owner has control under section 2(f) of the Financial Services Act. Being an ordinary noncontrolling shareholder or credit-union member alone does not make a person ineligible.
(l) If an arrangement's main purpose is artificially obtaining extra protection, the BoA may combine the relevant balances and refuse or recover the extra payment. Common ownership of registered limited companies or ordinary diversification across banks does not alone establish an artificial arrangement.
(m) The BoA must promptly determine whether a participating bank, or a former participating bank that still owes qualifying deposits, is financially unable to repay deposits when due. If so, it must activate protection for that bank.
If a former participating bank has ended and a qualifying deposit that fell due remained unpaid because of the bank's financial condition, the BoA must activate protection for that bank unless the deposit has been paid or a successor is bound to repay it. A liquidation order or lawful fixed-term restriction alone does not establish financial inability to repay. A qualifying balance covered while a bank holds a full or valid provisional license remains protected after revocation. A new deposit accepted unlawfully is not protected.
(n) The BoA must determine protected amounts from reliable bank records and automatically distribute available Fund money. It may require a participating or former participating bank to provide its own records in its possession that are reasonably necessary to administer the Fund, subject to applicable legal protections and Court orders. A person may claim a missing or incorrectly recorded entitlement. Within 28 days after receiving the claim, the BoA must approve it, explain a refusal, or identify necessary missing information. If information is missing, the BoA must decide within 28 days after receiving the missing information.
(o) If a Court-ordered sale transfers qualifying deposits before activation for the transferring bank, each eligible depositor's transferred balances from each originating bank have a separate limit for 30 days after transfer. For a transferred fixed-term deposit, that period lasts until 30 days after its original maturity if later. New deposits use the purchaser's ordinary limit. A transfer does not reset a limit allocated at an earlier activation or extinguish an unpaid Fund claim.
(p) A Fund withdrawal to make protected payments is exempt from the tax under section 11(j) of the Financial Services Act.
(q) The Fund may pay necessary, reasonable administration costs under a Board-approved, published budget. A cost must not be charged twice.
5. Public Notification
(a) The BoA must make its policies accessible in the government agencies Discord server or provide a requested policy through a ticket within seven days after receiving the request.
(b) The BoA must publicly announce each addition, change, or removal of a policy within seven days after it occurs. The BoA must protect information confidential by law when making policies accessible or announcing changes. It should provide a summary of those changes at the end of each month when possible and must provide a summary at least once every two months.
6. Credit Ratings and Oversight
(a) The BoA must research and plan a credit rating system. When it completes that work, it must propose an amendment to replace this subsection with a legislative foundation for the system.
(b) Parliament may order an audit of the BoA and its operations by a simple-majority motion. At least two months must pass between the end of one audit and the beginning of another.
7. Appeals to the BoA
(a) This section applies to an appeal to the BoA under the Business Act or Financial Services Act.
(b) The Chairman must decide the appeal. If the Chairman is unavailable, is prohibited from deciding, or must recuse, or if another law provides for a substitute, eligible Governors must decide the appeal instead.
(c) The BoA must decide within seven days after the appeal is filed unless another law sets a different starting point.
(d) If an incorporation or merger denial, or a banking-license or nonbank-registration refusal, is overturned and approval is required, the MEA must approve within seven days after approval is required. If repayment of a refunded fee is required and has not yet been made, the seven days instead begin when the repayment is made.
8. Continuity
(a) An office, appointment, nomination, requirement, policy, contract, deposit, loan, insurance arrangement, or audit existing under the Better Banking Act 2.0 shall continue under this Act. The requirements in section 4(a) to include every deposit and allocate joint deposits apply to existing insurance arrangements from enactment. A claim that accrued before enactment remains governed by the prior terms. The BoA retains its property, rights, and obligations.
(b) The amendments to the New Criminal Code Act made by this Act do not create criminal liability or increase a penalty for conduct before enactment.
9. Control of a Financial Institution
(a) Terms defined in section 2 of the Financial Services Act have the same meanings in sections 9 through 15. In those sections, "institution" means a bank or a nonbank financial institution. A nonbank financial institution includes a person operating a nonbank financial business without the required registration or legal entity, a lawful nonbank operator during the transition in section 19 of the Financial Services Act, and a former nonbank operator while it owes relevant customer debts.
(b) The MEA may apply to the Court for control of an institution if it faces serious financial difficulty. The MEA may also apply if serious and persistent breaches prevent effective supervision or safe operation after the institution has had a reasonable opportunity to correct the breaches.
(c) For section 15(a), noncompliance must be counted from the day after the applicable notice and compliance period ends. A period during which the disputed demand is stayed does not count as noncompliance.
(d) The MEA must notify the institution and the BoA of its application and give the Court the BoA's written financial assessment. For a bank, the assessment must address its financial condition and the proposed control. The Court must give the institution an opportunity to respond and set the time for its response. For a nonbank financial institution, the Court must give the institution reasonable notice of the hearing, set a reasonable time for the BoA to provide its assessment, and consider the assessment. If the BoA does not provide it by the deadline, the Court may order it to do so.
(e) After receiving the BoA's assessment under subsection (d), the Court may authorize control if a ground in subsection (b) exists, control is necessary and proportionate, and no less intrusive measure would be adequately effective. The Court must specify the powers needed for the authorized purpose; for a bank, it must specify the management and voting powers the MEA may exercise. While the MEA holds a power over a bank under the order, the person who would otherwise hold it must not exercise it. After consulting the BoA, the MEA must appoint a manager to exercise the authorized powers. An affected person may ask the Court to review or replace the manager.
(f) The MEA may take temporary control before applying to the Court if the MEA has a reasonable basis to believe a ground in subsection (b) exists and control is necessary and proportionate, and waiting for Court approval would create an immediate serious risk to customers, the institution's assets, or the financial system.
(g) The MEA must apply to the Court within 24 hours after taking temporary control and obtain the Court's approval within 72 hours after taking temporary control. Temporary control ends if the MEA misses either deadline. Until the Court decides, the MEA may exercise only the powers needed to address the immediate risk; for a bank, those powers are limited to management and voting. The Court must specify the powers authorized if it approves continued control.
(h) When the MEA takes temporary control, it must immediately notify the institution and the BoA, promptly seek the BoA's assessment, and give the institution's owners written notice of the action and reasons as soon as reasonably practicable. The MEA must not restart either period in subsection (g) by taking temporary control again on unchanged grounds.
(j) When control begins, the MEA must publish notice as soon as practicable naming the institution and stating that it is under the MEA's control.
(k) The institution, a displaced director or manager, and a person whose legal rights are directly affected may challenge control in the control proceeding. The institution's displaced board, or its former highest executive if it has no board, may instruct independent counsel for the institution about the authorization, scope, or continuation of control. The Court must resolve a dispute about who represents the institution in that matter. The institution must pay that counsel's reasonable fees as approved by the Court.
(l) The Court must keep the control proceeding open and set a schedule for the MEA to report on the institution's condition, the steps taken, the continued need for control, and the plan to return it to ordinary management. The Court must narrow or end control when its grounds no longer exist or it is no longer necessary and proportionate. The MEA or manager must promptly inform the Court when control is no longer necessary. An affected person may apply to end or narrow control.
(m) Control of an unincorporated financial business reaches its business assets, not unrelated personal property.
10. Court Approval of Rescue Measures
(a) The MEA may apply to the Court for a measure under sections 11 through 14 if an institution faces serious financial difficulty, whether or not it is under control. The MEA may also apply for a sale under section 13 while an institution is under control for serious noncompliance. Section 15 governs liquidation.
(b) Before approving a measure under sections 11 through 15, the Court must receive the BoA's written assessment of its financial effects. The Court may approve the measure only if it is necessary and proportionate and meets the conditions in this Act and the Financial Services Act for that measure.
(c) The MEA must give direct notice of the application to the institution, the BoA, and each identifiable person whose rights or claims the measure would directly affect. The notice must explain how the measure would treat each affected person and provide enough supporting information, including the basis for any valuation, to allow a response. The Court must set a meaningful period for responses and allow those people to participate.
(d) If waiting for the response period to end would create an immediate serious risk, the Court may temporarily pause an institution's payment or delivery and stay related enforcement under section 11 before that period ends. The Court must first receive the assessment required by subsection (b). The MEA must give direct notice when the order is made, and the Court must provide a prompt opportunity to respond. The temporary order expires no later than seven days after it is made unless the Court confirms it after that opportunity.
(e) The Court must compare each affected creditor's full position after a compulsory measure with what that creditor would have recovered if the institution had been lawfully liquidated immediately before the measure. It must use the same valuation date for both. The Court must not approve the measure unless each affected creditor would receive at least that liquidation value or agrees otherwise.
(f) If an existing bankruptcy order governs property or enforcement affected by a proposed measure, the MEA must seek the necessary relief in that bankruptcy proceeding.
(g) If a timely review in the proceeding establishes that a measure did not meet subsection (e) when approved, the Court must correct the measure where practicable. The institution or old operator owes any remaining proven shortfall as a claim with the priority and subordination of the affected claim. A later fall in value alone does not establish that a shortfall existed when the measure was approved. A creditor must not recover the same shortfall more than once.
11. Payment and Delivery Pauses
(a) The Court may pause an identified payment or delivery owed by the institution when necessary to stabilize it. The Court may include an identified payment already overdue or one that becomes due during the pause. Each order must state when it ends, no later than seven days after the order is made. The Court may renew the order if the pause remains necessary.
(b) A duty owed to the institution in exchange for the paused payment or delivery is paused for the same period. Other duties under the contract shall continue.
(c) A paused payment or delivery is due when the pause ends unless the Court orders a payment schedule under subsection (d). The pause does not reduce the amount owed or erase a prior breach.
(d) The Court may set a schedule for the institution to pay identified amounts whose payment has been postponed. The schedule must set the final payment no later than 30 days after the pause covering that payment ends. Changing the schedule does not restart that period.
(e) Lawful ordinary interest shall continue during the pause and any payment schedule, subject to applicable bankruptcy limits. No new late fee or additional default-rate interest accrues on a paused payment during the pause or while the institution complies with its payment schedule. Lawful charges accrued earlier remain payable.
(f) During the pause and while the institution complies with its payment schedule, the Court may stay collection, execution of a judgment, foreclosure, or other enforcement of security for an identified payment that has been postponed. For the same period, the Court may restrain a lender from accelerating debt or a commercial supplier from ending its contract because of that payment default or the authorized delay.
(g) A restriction under subsection (f) must not prevent an individual from leaving employment or other personal work. It does not undo a termination or acceleration that had already taken legal effect or restrict rights based on an unrelated breach. A stay does not prevent a creditor from filing a claim, including a claim for foreclosure, within the applicable filing period. A pause or payment schedule does not stop or restart a filing period already running for the postponed payment or its foreclosure. It does not revive an expired claim.
(h) A party to a contract with an institution must not terminate it, demand early payment, set off balances, or enforce security solely because Court-approved control or a rescue measure under sections 9 through 15 occurs.
12. Converting Debt to Shares
(a) The Court may convert eligible debts of a limited company that is a commercial bank or nonbank financial institution into its ordinary voting shares without the creditors' consent. The Court may order the conversion only if demonstrated losses make it necessary and the proposed measure offers a credible prospect of a viable rescue.
(b) The Court must not convert:
(c) An unsecured shortfall on a secured debt may be converted if it otherwise qualifies. Eligible subordinated debts must be converted before other eligible debts. Debts in the same rank must be converted proportionately.
(d) The Court may cancel existing shares that have no residual value. If existing shares are shown to have positive value, their owners shall retain a proportionate ownership interest reflecting that value after conversion and dilution.
(e) A bank that receives shares through a conversion under this section may hold them for 30 days without the BoA's prior permission. Within that period it must apply for permission or dispose of the shares. If it submits a complete application within that period, it may retain the shares until the BoA decides. If permission is refused, it must dispose of the shares within 30 days after the refusal.
13. Sale of a Financial Institution or Its Business
(a) The Court may order the sale of identified shares in a commercial bank that is a limited company, or of selected assets and liabilities of a bank, to a willing purchaser. Owner and creditor consent is not required for a bank sale except as provided in subsection (h). For a nonbank financial institution, the Court may order the sale of its assets and liabilities or its owners' shares or ownership interests to a willing purchaser without the owners' consent.
(b) The Court may approve a sale of shares or ownership interests only if the price is fair and is paid to their owners. The Court may approve an asset sale only if the overall consideration is fair, taking account of liabilities assumed and the other material terms. Proceeds for assets must be paid to their owner. The sale may provide for a payment by either party. Any payment by a bank must come from its available resources.
(c) Before approving a sale, the Court must require a public invitation for offers that stays open for at least 24 hours. The Court may permit a negotiated sale instead if competition would jeopardize the rescue or only one credible purchaser is available. The Court must give written reasons for that decision.
(d) The purchaser must hold the license, authority, and permissions needed for the business it will operate and obtain any applicable BoA approval for acquiring control or shares. A purchaser acquiring control in a nonbank ownership sale must obtain the BoA's approval. The purchaser becomes bound when the Court approves the sale, all required permissions and approvals have been obtained, and any applicable waiting period has ended. The required approvals include any Cabinet approval required by the Government Contracts Act 2.0 and, for a covered direct agreement, parliamentary approval under section 18 of the Financial Services Act.
(e) The Court must publicly identify the purchaser, price, and operative terms when it approves the sale, without disclosing customer-identifying information. For a nonbank sale, it must also protect other legally confidential information. The Court must consider any known change to optional BoA insurance under section 4(a) affecting a person whose deposit, or nonbank customer balance, will be transferred. The notice required by section 10 must identify that change.
(f) The Court may transfer a customer balance, including a deposit, without the customer's consent. The purchaser replaces the institution as debtor for each transferred customer balance, and the institution is released from that balance. For other transferred debts, the purchaser becomes liable and the institution remains liable. A transferred amount owed is not reduced. A purchaser takes a transferred loan or other payment claim subject to its existing terms, payments, credits, and lawful defenses.
(g) A sale must preserve an existing valid right to set off obligations affected by the transfer. The Court may preserve the right by transferring the related obligations together or by requiring an equally effective arrangement. When a setoff is used, the corresponding claim must be reduced by the amount applied.
(h) A credit union's deposit business may be transferred to another credit union. A transfer to a commercial bank may occur only if the members approve it under the credit union's ordinary deposit-weighted voting rules.
(j) When a customer balance transfers from a nonbank financial institution, the purchaser must meet the applicable backing and available-cash requirements at transfer. A sale of an exchange must preserve customers' existing share interests and related rights.
14. Raising New Capital
(a) The Court may authorize a limited company that is a commercial bank or nonbank financial institution to issue ordinary voting shares to a willing investor as a rescue measure. The Court may authorize the issue without the approval of existing owners that the institution's formation documents, bylaws, or company law would otherwise require. The investor must transfer the agreed money or assets to the institution.
(b) As part of a rescue under subsection (a), the Court may cancel existing shares without the owners' consent. The issue and cancellation remain subject to section 10 and the approvals required for the investor's acquisition.
15. Liquidation
(a) The MEA may apply to the Court to liquidate an institution that faces serious financial difficulty. The MEA may also apply if the institution fails to provide information required in a report or cooperate with an audit for 60 days after the notice and compliance period under section 12(b) or (c) of the Financial Services Act. The period must be counted under section 9(c). The application may be made in an existing control proceeding.
(b) The Court may order liquidation on the BoA's recommendation. Without that recommendation, it may do so only if there is no reasonable prospect of a viable rescue. The MEA must appoint a liquidator after consulting the BoA. The Court must supervise the liquidation and may review or replace the liquidator if an affected person challenges the appointment.
(c) For a bank, the Bankruptcy and Debt Relief Act governs notice, claims, preservation, sales, and distributions. An order under subsection (b) authorizes that procedure without a debtor's petition or a separate finding that the bank meets that Act's insolvency test. If a bankruptcy proceeding for the bank is pending, the MEA must apply for the order in that proceeding and the original petition date continues to apply. Otherwise, the date the MEA files its application for liquidation is treated as the petition date.
(d) For a nonbank financial institution, the Bankruptcy and Debt Relief Act governs notice, claims, preservation, sales, and payment priorities, with the adaptations needed for this section. This does not itself create a bankruptcy property pool. The Court must apply section 3(d) of that Act to assets distributed in the liquidation, treating reasonable, necessary Court-approved liquidation costs as administration expenses. If a bankruptcy proceeding is pending, the liquidator must follow its orders and priorities for property in the bankruptcy pool, and its original petition date applies. Otherwise, the date the MEA files its liquidation application is treated as the petition date.
(e) The following rules apply to liquidation:
(f) If an asset of an entity ended under this section is later discovered, or a claim against it survives, the Court may reopen the liquidation. Valid unpaid claims may be asserted against a later-discovered asset despite discharge, under the applicable priorities. Proper completed payments are not automatically reversed.
16. Amendments
(a) The New Criminal Code Act is amended as follows:
(c) The Government Contracts Act 2.0 is amended as follows:
(d) Amend section 3(b)(i) of the Modern Contracts Act by appending the following:
(e) Add a new section 15(f) to the Judiciary Act:
17. Repeals
(a) The Better Banking Act 2.0 is repealed.
Type: Act of Parliament
A
BILL
TO
AMEND THE NEW CRIMINAL CODE ACT, THE JUDICIARY ACT, THE GOVERNMENT CONTRACTS ACT 2.0, AND THE MODERN CONTRACTS ACT; CONTINUE THE BANK OF AZALEA AND ITS POWERS AND DUTIES; ESTABLISH A DEPOSIT PROTECTION FUND; AND ESTABLISH PROCEDURES FOR FINANCIAL INSTITUTION CONTROL, RESCUE, AND LIQUIDATION
BILL
TO
AMEND THE NEW CRIMINAL CODE ACT, THE JUDICIARY ACT, THE GOVERNMENT CONTRACTS ACT 2.0, AND THE MODERN CONTRACTS ACT; CONTINUE THE BANK OF AZALEA AND ITS POWERS AND DUTIES; ESTABLISH A DEPOSIT PROTECTION FUND; AND ESTABLISH PROCEDURES FOR FINANCIAL INSTITUTION CONTROL, RESCUE, AND LIQUIDATION
Preamble: This Act continues the Bank of Azalea's existence under a new governing law, establishes deposit protection and procedures for financial-institution control and resolution, and amends the criminal law.
1. Short Title and Enactment
(a) This Act may be cited as the "Azalea Banking and Solvency Act."
(b) This Act is enacted when each of the following bills has received Royal Assent: the "Business Act," the "Financial Services Act," the "Azalea Banking and Solvency Act," the Parliamentary Norms and Procedures Act, and the Public Utility Empowerment Act.
2. The Bank of Azalea
(a) The Bank of Azalea (the BoA) shall continue as an entity that is part of the Government of the Azalea Isles and has distinct autonomy.
(b) The Prime Minister appoints the Chairman of the BoA, subject to confirmation by Parliament. The Chairman is appointed for life. Parliament may recall the Chairman by a motion passed by a supermajority of Parliament.
(c) The Chairman leads the Board of Governors. The Board has four members: the Chairman, two appointed Governors, and the Minister of Economic Affairs.
(d) The Chairman nominates the two Governors to Parliament. A nominee is confirmed by a simple majority of votes cast.
(e) If no vote is held on a Governor's nomination within seven days after the Chairman makes it, the nominee is automatically appointed on the eighth day. The term begins on that day. Parliament may later vote to accept or reject the nomination:
(i) If Parliament rejects the nomination, the Governor immediately leaves office.
(ii) If Parliament accepts the nomination, the Governor is confirmed and the term continues from the eighth day.
(f) An appointed Governor serves a three-month term. A person appointed to a vacancy serves a new three-month term beginning on confirmation or automatic appointment, as applicable.(g) The Minister of Economic Affairs is a nonvoting member of the Board and may participate in its debates. The Minister has the same access to information about the BoA's actions as a Governor.
(h) The Chairman operates the BoA, manages Board meetings, and breaks ties. A voting Board member who votes must do so personally.
(j) The Board must approve the BoA's policies, requirements, and loans. At least two voting Board members must participate for the Board to act. The BoA may carry out routine implementation under policies or delegations approved by the Board.
(k) Parliament may provide an endowment to the BoA in its monthly budget to assist its operations.
3. Powers and Functions
(a) The BoA may set a minimum reserve requirement for all financial institutions or for an individual financial institution. The requirement is the minimum percentage of deposits the institution must reserve and must not lend or invest.
(b) The BoA may set a minimum holdings requirement for all financial institutions or for an individual financial institution. The requirement is the minimum percentage of required reserves the institution must hold with the BoA.
(c) The BoA may decide whether institutions may deposit funds with it above the minimum holdings requirement. This policy is the Institutional Deposit Policy.
(d) The BoA may set the interest rate it pays on institutional funds deposited with it. It may set a different rate, including zero, for funds above the minimum holdings requirement or above the minimum reserve requirement.
(e) The BoA may set the period for reserve updates. An institution must report its customer deposits and update its reserves held with the BoA, if needed, at the interval the BoA sets.
(f) The BoA may lend to financial institutions or the Government and set the terms of those loans.
(g) The BoA may regulate financial institutions through policies on interest rates, fees, disclosures, and other matters relating to the operation of the banking industry.
(h) A binding general banking rule or binding general nonbank registration rule made by the BoA does not take effect until the Board has approved it and the BoA has published its full text.
(j) In this section and section 4(a) through (c), "financial institution" means a bank or nonbank financial institution as defined in section 2(d) and (l) of the Financial Services Act.
4. Deposit Insurance and Protection Fund
(a) A financial institution may request optional deposit insurance from the BoA. This insurance is separate from the Deposit Protection Fund under subsections (d) through (q). A policy must include every deposit at the institution. Other policy terms may apply but must not exclude a deposit. The institution's total coverage must not exceed 20% of its total deposits. Coverage must not exceed $20,000 per depositor, whether an individual or a legal entity. For a joint deposit, the balance must be allocated among the owners according to their ownership interests, presumed equal unless different shares are established. Each owner's share must be combined with their other covered deposits at the institution for that owner's limit. For this subsection, "deposit" has the meaning in section 2(b) and (c) of the Financial Services Act.
(b) The BoA must evaluate each institution that requests coverage. It may grant or refuse the request. If it grants the request, it must set a fee for the coverage. The fee may be a flat monthly fee or a percentage of profits.
(c) The BoA may audit an insured institution at any time and may impose different or additional requirements on it, such as higher reserves or additional disclosures to the BoA.
(d) The Deposit Protection Fund (the Fund) is established. The BoA must administer the Fund. Every bank holding a full or valid provisional banking license is a participating bank. Protection begins at enactment. For subsections (d) through (q), "deposit" has the meaning in section 2(b) and (c) of the Financial Services Act, and "bank" has the meaning in section 2(d) of that Act. "Bank" includes a former participating bank to the extent provided in subsection (m).
(e) The Fund receives participating banks' premiums, withdrawal-tax revenue under section 11(j) of the Financial Services Act, proceeds of debt issued under subsection (g) to finance payout shortfalls, and recoveries under subsection (n).
(i) Within 30 days after each month ends, the Ministry of Economic Affairs (MEA) must pay into the Fund the fees it collected that month under sections 6 and 16 of the Business Act, less refunds already made from those fees. By the same deadline, the MEA must pay into the Fund the administrative fines it collected that month under the Business Act or Financial Services Act. This applies to amounts collected on or after enactment. The MEA must make any refund required by law. The Fund must return to the MEA any amount previously paid into the Fund that is needed for a required refund.
(f) The BoA must set participating banks' premiums based on their covered deposits, adjusted for financial risk under Board-approved, published criteria. For a bank with covered deposits, other things being equal, a greater covered-deposit base or greater financial risk must increase the premium. For each assessment, covered deposits are the principal that would qualify under subsections (h) through (m) if protection were activated on the assessment date, including any separate limit under subsection (o). The Board must approve and the BoA must publish premium rates and assessment and payment dates. A participating bank must pay its assessed premium when due.(g) The BoA may issue bonds or other debt securities to finance Fund payment shortfalls and may issue replacement debt to repay or refinance that debt. The debt is a general obligation of the BoA. Proceeds used to repay or refinance Fund debt are not Fund payout resources. The Board must approve a borrowing program stating limits and permitted terms. The Chairman may issue or refinance debt within that program. A change to the program or borrowing beyond it may be made only with Board approval. The BoA must record its decisions and publish the debt terms and results.
(i) If the BoA imposes a recurring recovery fee, every participating bank, including a credit union, must pay it in proportion to its deposit liabilities. The fee finances the principal, contractual interest, and necessary issuance and refinancing costs of debt under this subsection, and continues until those obligations and costs, including replacement financing, are paid.
(ii) The Board must approve and publish rules setting recovery-fee rates, assessment dates, and collection periods. A participating bank must pay its assessed fee when due.
(h) An eligible depositor is a citizen, a registered limited company, the BoA, or a public body, including the Government, a ministry, or a district. A separately constituted company of a public body is eligible. A licensed deposit-taking bank or credit union is not eligible as a depositor. Accounts belonging to one depositor do not receive separate limits because different departments operate them. A nonprofit legal entity with separate legal personality other than a partnership or noncorporate association is also eligible, subject to the bank and credit-union exclusion.(j) Protection covers eligible deposit principal, including interest credited before activation, up to $10,000 for each eligible depositor at each bank. It includes fixed-term savings and certificates of deposit. Interest not credited before activation is not protected. Each depositor's eligible balances at the bank must be combined and, at activation, that limit must be allocated proportionately across them. The amount allocated to an unmatured fixed-term deposit becomes payable at its agreed maturity; maturity does not create another limit.
(i) A sole proprietorship's deposits must be treated as its owner's deposits. A registered limited company has its own limit, including when it has one shareholder.
(ii) A noncorporate association's or partnership's deposit must be attributed through any nested noncorporate associations or partnerships to the underlying owners or members according to their interests, and subsection (h) must be applied to each. Ownership must not be traced through a registered limited company. Each eligible attributed share must be combined with that person's other deposits. The same balance must not be insured twice.
(iii) A jointly owned deposit must be divided according to actual ownership, presumed equal unless different shares are established. Each owner's share must be combined with that owner's other deposits. An ineligible owner's share is not reassigned to other owners.
(iv) An exchange's or payment service provider's bank account is covered under subsection (h) and this subsection. Its customers do not receive separate Fund protection for that account.
(k) A director, senior manager, or controlling owner of the failed bank at activation or during the preceding 30 days is not eligible for Fund protection for deposits at that bank. An owner is controlling if the owner has control under section 2(f) of the Financial Services Act. Being an ordinary noncontrolling shareholder or credit-union member alone does not make a person ineligible.
(l) If an arrangement's main purpose is artificially obtaining extra protection, the BoA may combine the relevant balances and refuse or recover the extra payment. Common ownership of registered limited companies or ordinary diversification across banks does not alone establish an artificial arrangement.
(m) The BoA must promptly determine whether a participating bank, or a former participating bank that still owes qualifying deposits, is financially unable to repay deposits when due. If so, it must activate protection for that bank.
If a former participating bank has ended and a qualifying deposit that fell due remained unpaid because of the bank's financial condition, the BoA must activate protection for that bank unless the deposit has been paid or a successor is bound to repay it. A liquidation order or lawful fixed-term restriction alone does not establish financial inability to repay. A qualifying balance covered while a bank holds a full or valid provisional license remains protected after revocation. A new deposit accepted unlawfully is not protected.
(n) The BoA must determine protected amounts from reliable bank records and automatically distribute available Fund money. It may require a participating or former participating bank to provide its own records in its possession that are reasonably necessary to administer the Fund, subject to applicable legal protections and Court orders. A person may claim a missing or incorrectly recorded entitlement. Within 28 days after receiving the claim, the BoA must approve it, explain a refusal, or identify necessary missing information. If information is missing, the BoA must decide within 28 days after receiving the missing information.
(i) The Fund alone owes protected payments. An unpaid protected amount remains owed by the Fund and is payable from later Fund resources. A claimant may bring a claim against the BoA in its capacity as Fund administrator.
(ii) The BoA must distribute available payout money in proportion to all outstanding verified protected amounts then payable, including unpaid amounts from earlier failures. An amount allocated to an unmatured fixed-term deposit is not yet payable.
(iii) For an entitlement established from reliable records by activation or a later fixed-term maturity, the BoA must distribute available money within 14 days after that date. It must distribute additional money available for unpaid payouts within 14 days after receiving it. If an entitlement is verified after the applicable date, the BoA must distribute available payout money for outstanding verified amounts then payable within 14 days after verification.
(iv) Protection is limited to eligible principal still uncompensated. A payment for excluded interest does not reduce protected principal. Payments and recoveries must not compensate the same loss twice or reallocate unused protection between balances.
(v) When the Fund pays a protected depositor, the BoA acting for the Fund takes the paid portion of the depositor's deposit claim against the bank or a successor debtor, including any right against later-discovered assets of an ended bank, at its existing priority. The depositor retains the unpaid portion. The BoA must credit recoveries on those claims to Fund payout resources.
(vi) For a deposit owned by a partnership or held for a noncorporate association, the BoA must calculate protection under subsection (j)(ii), then pay the person who owns the deposit claim or an authorized representative on that person's behalf. Under paragraph (v), the Fund takes only the corresponding paid portion of that person's actual claim against the debtor.
(vii) If an individual who owned a deposit, a share of one, or an interest to which a deposit is attributed under subsection (j)(ii) became legally deceased before activation and remains legally deceased at activation, and that deposit, share, or interest remains part of the individual's estate, the BoA must determine the individual's eligibility under subsection (h) as of legal death. The eligible amount remains subject to that individual's limit. The BoA must apply subsection (k) as of legal death instead of activation.
(viii) If a deposit, share, or attributed interest is lawfully transferred before activation and no longer forms part of the deceased individual's estate, the BoA must assess eligibility and the limit for its current owner under this section.
(ix) If an individual who owns a protected deposit or share becomes legally deceased, the BoA must pay the protected amount to the individual's estate or the person lawfully entitled to receive it under applicable estate or requisition law.
(o) If a Court-ordered sale transfers qualifying deposits before activation for the transferring bank, each eligible depositor's transferred balances from each originating bank have a separate limit for 30 days after transfer. For a transferred fixed-term deposit, that period lasts until 30 days after its original maturity if later. New deposits use the purchaser's ordinary limit. A transfer does not reset a limit allocated at an earlier activation or extinguish an unpaid Fund claim.
(p) A Fund withdrawal to make protected payments is exempt from the tax under section 11(j) of the Financial Services Act.
(q) The Fund may pay necessary, reasonable administration costs under a Board-approved, published budget. A cost must not be charged twice.
5. Public Notification
(a) The BoA must make its policies accessible in the government agencies Discord server or provide a requested policy through a ticket within seven days after receiving the request.
(b) The BoA must publicly announce each addition, change, or removal of a policy within seven days after it occurs. The BoA must protect information confidential by law when making policies accessible or announcing changes. It should provide a summary of those changes at the end of each month when possible and must provide a summary at least once every two months.
6. Credit Ratings and Oversight
(a) The BoA must research and plan a credit rating system. When it completes that work, it must propose an amendment to replace this subsection with a legislative foundation for the system.
(b) Parliament may order an audit of the BoA and its operations by a simple-majority motion. At least two months must pass between the end of one audit and the beginning of another.
7. Appeals to the BoA
(a) This section applies to an appeal to the BoA under the Business Act or Financial Services Act.
(b) The Chairman must decide the appeal. If the Chairman is unavailable, is prohibited from deciding, or must recuse, or if another law provides for a substitute, eligible Governors must decide the appeal instead.
(c) The BoA must decide within seven days after the appeal is filed unless another law sets a different starting point.
(d) If an incorporation or merger denial, or a banking-license or nonbank-registration refusal, is overturned and approval is required, the MEA must approve within seven days after approval is required. If repayment of a refunded fee is required and has not yet been made, the seven days instead begin when the repayment is made.
8. Continuity
(a) An office, appointment, nomination, requirement, policy, contract, deposit, loan, insurance arrangement, or audit existing under the Better Banking Act 2.0 shall continue under this Act. The requirements in section 4(a) to include every deposit and allocate joint deposits apply to existing insurance arrangements from enactment. A claim that accrued before enactment remains governed by the prior terms. The BoA retains its property, rights, and obligations.
(b) The amendments to the New Criminal Code Act made by this Act do not create criminal liability or increase a penalty for conduct before enactment.
9. Control of a Financial Institution
(a) Terms defined in section 2 of the Financial Services Act have the same meanings in sections 9 through 15. In those sections, "institution" means a bank or a nonbank financial institution. A nonbank financial institution includes a person operating a nonbank financial business without the required registration or legal entity, a lawful nonbank operator during the transition in section 19 of the Financial Services Act, and a former nonbank operator while it owes relevant customer debts.
(b) The MEA may apply to the Court for control of an institution if it faces serious financial difficulty. The MEA may also apply if serious and persistent breaches prevent effective supervision or safe operation after the institution has had a reasonable opportunity to correct the breaches.
(c) For section 15(a), noncompliance must be counted from the day after the applicable notice and compliance period ends. A period during which the disputed demand is stayed does not count as noncompliance.
(d) The MEA must notify the institution and the BoA of its application and give the Court the BoA's written financial assessment. For a bank, the assessment must address its financial condition and the proposed control. The Court must give the institution an opportunity to respond and set the time for its response. For a nonbank financial institution, the Court must give the institution reasonable notice of the hearing, set a reasonable time for the BoA to provide its assessment, and consider the assessment. If the BoA does not provide it by the deadline, the Court may order it to do so.
(e) After receiving the BoA's assessment under subsection (d), the Court may authorize control if a ground in subsection (b) exists, control is necessary and proportionate, and no less intrusive measure would be adequately effective. The Court must specify the powers needed for the authorized purpose; for a bank, it must specify the management and voting powers the MEA may exercise. While the MEA holds a power over a bank under the order, the person who would otherwise hold it must not exercise it. After consulting the BoA, the MEA must appoint a manager to exercise the authorized powers. An affected person may ask the Court to review or replace the manager.
(f) The MEA may take temporary control before applying to the Court if the MEA has a reasonable basis to believe a ground in subsection (b) exists and control is necessary and proportionate, and waiting for Court approval would create an immediate serious risk to customers, the institution's assets, or the financial system.
(g) The MEA must apply to the Court within 24 hours after taking temporary control and obtain the Court's approval within 72 hours after taking temporary control. Temporary control ends if the MEA misses either deadline. Until the Court decides, the MEA may exercise only the powers needed to address the immediate risk; for a bank, those powers are limited to management and voting. The Court must specify the powers authorized if it approves continued control.
(h) When the MEA takes temporary control, it must immediately notify the institution and the BoA, promptly seek the BoA's assessment, and give the institution's owners written notice of the action and reasons as soon as reasonably practicable. The MEA must not restart either period in subsection (g) by taking temporary control again on unchanged grounds.
(j) When control begins, the MEA must publish notice as soon as practicable naming the institution and stating that it is under the MEA's control.
(k) The institution, a displaced director or manager, and a person whose legal rights are directly affected may challenge control in the control proceeding. The institution's displaced board, or its former highest executive if it has no board, may instruct independent counsel for the institution about the authorization, scope, or continuation of control. The Court must resolve a dispute about who represents the institution in that matter. The institution must pay that counsel's reasonable fees as approved by the Court.
(l) The Court must keep the control proceeding open and set a schedule for the MEA to report on the institution's condition, the steps taken, the continued need for control, and the plan to return it to ordinary management. The Court must narrow or end control when its grounds no longer exist or it is no longer necessary and proportionate. The MEA or manager must promptly inform the Court when control is no longer necessary. An affected person may apply to end or narrow control.
(m) Control of an unincorporated financial business reaches its business assets, not unrelated personal property.
10. Court Approval of Rescue Measures
(a) The MEA may apply to the Court for a measure under sections 11 through 14 if an institution faces serious financial difficulty, whether or not it is under control. The MEA may also apply for a sale under section 13 while an institution is under control for serious noncompliance. Section 15 governs liquidation.
(b) Before approving a measure under sections 11 through 15, the Court must receive the BoA's written assessment of its financial effects. The Court may approve the measure only if it is necessary and proportionate and meets the conditions in this Act and the Financial Services Act for that measure.
(c) The MEA must give direct notice of the application to the institution, the BoA, and each identifiable person whose rights or claims the measure would directly affect. The notice must explain how the measure would treat each affected person and provide enough supporting information, including the basis for any valuation, to allow a response. The Court must set a meaningful period for responses and allow those people to participate.
(d) If waiting for the response period to end would create an immediate serious risk, the Court may temporarily pause an institution's payment or delivery and stay related enforcement under section 11 before that period ends. The Court must first receive the assessment required by subsection (b). The MEA must give direct notice when the order is made, and the Court must provide a prompt opportunity to respond. The temporary order expires no later than seven days after it is made unless the Court confirms it after that opportunity.
(e) The Court must compare each affected creditor's full position after a compulsory measure with what that creditor would have recovered if the institution had been lawfully liquidated immediately before the measure. It must use the same valuation date for both. The Court must not approve the measure unless each affected creditor would receive at least that liquidation value or agrees otherwise.
(i) The Court must assess the economic value of any shares, not merely their nominal value. The Court may require an independent valuation when needed. The institution must pay reasonable valuation fees approved by the Court.
(f) If an existing bankruptcy order governs property or enforcement affected by a proposed measure, the MEA must seek the necessary relief in that bankruptcy proceeding.
(g) If a timely review in the proceeding establishes that a measure did not meet subsection (e) when approved, the Court must correct the measure where practicable. The institution or old operator owes any remaining proven shortfall as a claim with the priority and subordination of the affected claim. A later fall in value alone does not establish that a shortfall existed when the measure was approved. A creditor must not recover the same shortfall more than once.
11. Payment and Delivery Pauses
(a) The Court may pause an identified payment or delivery owed by the institution when necessary to stabilize it. The Court may include an identified payment already overdue or one that becomes due during the pause. Each order must state when it ends, no later than seven days after the order is made. The Court may renew the order if the pause remains necessary.
(b) A duty owed to the institution in exchange for the paused payment or delivery is paused for the same period. Other duties under the contract shall continue.
(c) A paused payment or delivery is due when the pause ends unless the Court orders a payment schedule under subsection (d). The pause does not reduce the amount owed or erase a prior breach.
(d) The Court may set a schedule for the institution to pay identified amounts whose payment has been postponed. The schedule must set the final payment no later than 30 days after the pause covering that payment ends. Changing the schedule does not restart that period.
(e) Lawful ordinary interest shall continue during the pause and any payment schedule, subject to applicable bankruptcy limits. No new late fee or additional default-rate interest accrues on a paused payment during the pause or while the institution complies with its payment schedule. Lawful charges accrued earlier remain payable.
(f) During the pause and while the institution complies with its payment schedule, the Court may stay collection, execution of a judgment, foreclosure, or other enforcement of security for an identified payment that has been postponed. For the same period, the Court may restrain a lender from accelerating debt or a commercial supplier from ending its contract because of that payment default or the authorized delay.
(g) A restriction under subsection (f) must not prevent an individual from leaving employment or other personal work. It does not undo a termination or acceleration that had already taken legal effect or restrict rights based on an unrelated breach. A stay does not prevent a creditor from filing a claim, including a claim for foreclosure, within the applicable filing period. A pause or payment schedule does not stop or restart a filing period already running for the postponed payment or its foreclosure. It does not revive an expired claim.
(h) A party to a contract with an institution must not terminate it, demand early payment, set off balances, or enforce security solely because Court-approved control or a rescue measure under sections 9 through 15 occurs.
12. Converting Debt to Shares
(a) The Court may convert eligible debts of a limited company that is a commercial bank or nonbank financial institution into its ordinary voting shares without the creditors' consent. The Court may order the conversion only if demonstrated losses make it necessary and the proposed measure offers a credible prospect of a viable rescue.
(b) The Court must not convert:
(i) the secured portion of a debt, determined by the enforceable security and its value;
(ii) a genuine deposit, including a deposit held by an insider, another financial institution, or the BoA, or an exchange or payment-provider customer's operational balance;
(iii) a debt owed to the BoA, the Azalea Isles Government, a ministry, or a district;
(iv) a debt owed to a public utility company within the meaning of the Public Utility Empowerment Act; or
(v) accrued salary or fixed pay owed to an employee, unless the employee is a director, senior manager, or controlling owner of the institution.
(c) An unsecured shortfall on a secured debt may be converted if it otherwise qualifies. Eligible subordinated debts must be converted before other eligible debts. Debts in the same rank must be converted proportionately.
(d) The Court may cancel existing shares that have no residual value. If existing shares are shown to have positive value, their owners shall retain a proportionate ownership interest reflecting that value after conversion and dilution.
(e) A bank that receives shares through a conversion under this section may hold them for 30 days without the BoA's prior permission. Within that period it must apply for permission or dispose of the shares. If it submits a complete application within that period, it may retain the shares until the BoA decides. If permission is refused, it must dispose of the shares within 30 days after the refusal.
13. Sale of a Financial Institution or Its Business
(a) The Court may order the sale of identified shares in a commercial bank that is a limited company, or of selected assets and liabilities of a bank, to a willing purchaser. Owner and creditor consent is not required for a bank sale except as provided in subsection (h). For a nonbank financial institution, the Court may order the sale of its assets and liabilities or its owners' shares or ownership interests to a willing purchaser without the owners' consent.
(b) The Court may approve a sale of shares or ownership interests only if the price is fair and is paid to their owners. The Court may approve an asset sale only if the overall consideration is fair, taking account of liabilities assumed and the other material terms. Proceeds for assets must be paid to their owner. The sale may provide for a payment by either party. Any payment by a bank must come from its available resources.
(c) Before approving a sale, the Court must require a public invitation for offers that stays open for at least 24 hours. The Court may permit a negotiated sale instead if competition would jeopardize the rescue or only one credible purchaser is available. The Court must give written reasons for that decision.
(d) The purchaser must hold the license, authority, and permissions needed for the business it will operate and obtain any applicable BoA approval for acquiring control or shares. A purchaser acquiring control in a nonbank ownership sale must obtain the BoA's approval. The purchaser becomes bound when the Court approves the sale, all required permissions and approvals have been obtained, and any applicable waiting period has ended. The required approvals include any Cabinet approval required by the Government Contracts Act 2.0 and, for a covered direct agreement, parliamentary approval under section 18 of the Financial Services Act.
(e) The Court must publicly identify the purchaser, price, and operative terms when it approves the sale, without disclosing customer-identifying information. For a nonbank sale, it must also protect other legally confidential information. The Court must consider any known change to optional BoA insurance under section 4(a) affecting a person whose deposit, or nonbank customer balance, will be transferred. The notice required by section 10 must identify that change.
(f) The Court may transfer a customer balance, including a deposit, without the customer's consent. The purchaser replaces the institution as debtor for each transferred customer balance, and the institution is released from that balance. For other transferred debts, the purchaser becomes liable and the institution remains liable. A transferred amount owed is not reduced. A purchaser takes a transferred loan or other payment claim subject to its existing terms, payments, credits, and lawful defenses.
(g) A sale must preserve an existing valid right to set off obligations affected by the transfer. The Court may preserve the right by transferring the related obligations together or by requiring an equally effective arrangement. When a setoff is used, the corresponding claim must be reduced by the amount applied.
(h) A credit union's deposit business may be transferred to another credit union. A transfer to a commercial bank may occur only if the members approve it under the credit union's ordinary deposit-weighted voting rules.
(j) When a customer balance transfers from a nonbank financial institution, the purchaser must meet the applicable backing and available-cash requirements at transfer. A sale of an exchange must preserve customers' existing share interests and related rights.
14. Raising New Capital
(a) The Court may authorize a limited company that is a commercial bank or nonbank financial institution to issue ordinary voting shares to a willing investor as a rescue measure. The Court may authorize the issue without the approval of existing owners that the institution's formation documents, bylaws, or company law would otherwise require. The investor must transfer the agreed money or assets to the institution.
(b) As part of a rescue under subsection (a), the Court may cancel existing shares without the owners' consent. The issue and cancellation remain subject to section 10 and the approvals required for the investor's acquisition.
15. Liquidation
(a) The MEA may apply to the Court to liquidate an institution that faces serious financial difficulty. The MEA may also apply if the institution fails to provide information required in a report or cooperate with an audit for 60 days after the notice and compliance period under section 12(b) or (c) of the Financial Services Act. The period must be counted under section 9(c). The application may be made in an existing control proceeding.
(b) The Court may order liquidation on the BoA's recommendation. Without that recommendation, it may do so only if there is no reasonable prospect of a viable rescue. The MEA must appoint a liquidator after consulting the BoA. The Court must supervise the liquidation and may review or replace the liquidator if an affected person challenges the appointment.
(c) For a bank, the Bankruptcy and Debt Relief Act governs notice, claims, preservation, sales, and distributions. An order under subsection (b) authorizes that procedure without a debtor's petition or a separate finding that the bank meets that Act's insolvency test. If a bankruptcy proceeding for the bank is pending, the MEA must apply for the order in that proceeding and the original petition date continues to apply. Otherwise, the date the MEA files its application for liquidation is treated as the petition date.
(d) For a nonbank financial institution, the Bankruptcy and Debt Relief Act governs notice, claims, preservation, sales, and payment priorities, with the adaptations needed for this section. This does not itself create a bankruptcy property pool. The Court must apply section 3(d) of that Act to assets distributed in the liquidation, treating reasonable, necessary Court-approved liquidation costs as administration expenses. If a bankruptcy proceeding is pending, the liquidator must follow its orders and priorities for property in the bankruptcy pool, and its original petition date applies. Otherwise, the date the MEA files its liquidation application is treated as the petition date.
(e) The following rules apply to liquidation:
(i) After the Court has decided claims and the required sales and distributions are complete, it must discharge a bank legal entity's remaining covered debts under the Bankruptcy and Debt Relief Act and dissolve it if it is a company. The discharge is subject to that Act's rules on notice, omitted claims, and surviving liens.
(ii) An individual operating an unlicensed deposit-taking business may be discharged only as provided by the Bankruptcy and Debt Relief Act.
(iii) After a registered nonbank legal entity's claims and required distributions are complete, the entity ends and its remaining covered debts are discharged as to it. A claim omitted without the required notice survives, subject to its applicable filing period. A lien on a plot not sold or otherwise released in accordance with law survives.
(iv) Liquidation of an individual's financial business reaches its business assets, not unrelated personal property. The individual's debts may be discharged only as provided by the Bankruptcy and Debt Relief Act.
(f) If an asset of an entity ended under this section is later discovered, or a claim against it survives, the Court may reopen the liquidation. Valid unpaid claims may be asserted against a later-discovered asset despite discharge, under the applicable priorities. Proper completed payments are not automatically reversed.
16. Amendments
(a) The New Criminal Code Act is amended as follows:
(i) Section 9(b)(iii) is amended:
(ii) Add a new section 9(b)(v):
(iii) Redesignate the paragraph headed "Extortion" added by section 2(a)(i) of the Anti-Extortion Act as follows:
(iv) Add a new section 9(k):
(v) Add a new section 9(l):
(vi) Section 3(a) is amended:
(vii) Section 11(e)(ii)(1) is amended:
(viii) Add a new section 13(f):
(ix) Add a new section 13(g):
(x) Add a new section 13(h):
(xi) Section 17(f)(i), added by section 2(b) of the Ancillary Offenses and Public Integrity Act, is amended:
(xii) Section 11(e)(iii) is amended:
(xiii) Add a new section 17(b)(iv):
(xiv) Amend section 3(c) as follows:
(xv) Amend section 3(h) as follows:
(xvi) Amend section 3(s) as follows:
(xvii) Amend the introductory text of paragraph (iii), before subparagraph (1), in the offense headed "Bankruptcy Fraud," added by section 6(a) of the Bankruptcy and Debt Relief Act as follows:
(xviii) Amend the introductory text of paragraph (iii), before subparagraph (1), in the offense headed "Criminal Evasion of Government Debt," added by section 6(a) of the Bankruptcy and Debt Relief Act as follows:
(xix) Amend the introductory text of paragraph (iii), before subparagraph (1), in the offense headed "Extortion," added by section 2(a)(i) of the Anti-Extortion Act and redesignated by section 16(a)(iii) of this Act as follows:
(xx) Amend paragraph (iii)(9) of the offense headed "Extortion," added by section 2(a)(i) of the Anti-Extortion Act and redesignated by section 16(a)(iii) of this Act as follows:
(xxi) Amend paragraph (iv)(1) of the offense headed "Extortion," added by section 2(a)(i) of the Anti-Extortion Act and redesignated by section 16(a)(iii) of this Act as follows:
(xxii) Amend paragraph (v)(2) of the offense headed "Extortion," added by section 2(a)(i) of the Anti-Extortion Act and redesignated by section 16(a)(iii) of this Act as follows:
(xxiii) Amend section 11(g)(iii)(1) as follows:
(xxiv) Amend section 11(g)(iii)(2) as follows:
(xxv) Amend section 12(c)(iv)(1) as follows:
(xxvi) Amend section 12(e)(iv)(1) as follows:
(xxvii) Amend section 12(e)(iv)(2) as follows:
(xxviii) Amend section 3(g) as follows:
(xxix) Amend section 5(a)(iii)(1) as follows:
(xxx) Amend section 9(d)(iii)(1) as follows:
(xxxi) Add to section 17(e)(ii), as added by the Ancillary Offenses and Public Integrity Act:
(xxxii) Add a new section 9(m):
(b) Add a new section 18(d) to the Judiciary Act:
(c) The Government Contracts Act 2.0 is amended as follows:
(i) Add a new section 2(c):
(ii) Add a new section 2(d):
(iii) Section 5(h) is amended as follows:
(iv) Section 6(b) is amended as follows:
(d) Amend section 3(b)(i) of the Modern Contracts Act by appending the following:
(e) Add a new section 15(f) to the Judiciary Act:
17. Repeals
(a) The Better Banking Act 2.0 is repealed.
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