28 June 2018

The Monetary Authority of Singapore (Amendment) Act 2017 (“Amendment Act”) was gazetted on 1 August 2017. Among other things, the Amendment Act will amend the Monetary Authority of Singapore Act (“MAS Act”) to strengthen the powers of the Monetary Authority of Singapore (“MAS”) to resolve distressed financial institutions (“FIs”) in an orderly manner.

Only some of the provisions of the Amendment Act have come into force. Among these, new provisions in the MAS Act on recovery and resolution planning came into force on 5 June 2018. Amendments to section 53 of the MAS Act on moratoriums also came into force on 5 June 2018.

The provisions of the Amendment Act for the establishment of the framework for a statutory bail-in regime for distressed FIs are not yet in force.

Recovery and resolution planning

Under the new Division 2 of Part IVA, MAS will have express powers to require pertinent FIs to prepare, review and keep up-to-date a recovery plan, i.e. a plan to restore an FI’s financial strength or viability should it become distressed. This requirement will apply to FIs that are systemically important or that maintain critical functions in Singapore.

Among other things, MAS is empowered as follows:

  • Notice concerning recovery and resolution plans: MAS may issue a notice to pertinent FIs (“Notice”) requiring them to prepare, in the form and manner and containing the information specified in the Notice, a plan to restore the financial strength and viability of the FI in the event it suffers financial pressure or stress (“Recovery Plan”);
  • Direction for recovery plan and its implementation: MAS may issue a direction to a pertinent FI requiring it to comply with the requirements of the Notice.
  • Resolution planning: MAS may prepare plans for the orderly resolution of a pertinent FI, and may for that purpose issue a direction to the pertinent FI requiring it to furnish any information or document that MAS may reasonably require for that purpose.
  • Power to direct removal of impediments: If MAS is of the opinion that an impediment exists to the orderly resolution of a pertinent FI in accordance with a plan prepared by MAS, it may issue a direction to the pertinent FI, requiring it to take, within the time specified in the direction, specified measures for the purpose of addressing or removing the impediment. This may entail the pertinent FI making changes to its practices, organisation and structure (including its operational, legal and financial structures).

Amendments to section 53 on “Moratoriums”

Under section 53 of MAS Act, MAS may, if it considers it to be in the interests of the affected persons of a specified FI, make an order prohibiting that specified FI from carrying on its significant business or from doing or performing any act or function connected with its significant business or any aspect thereof that may be specified in the order.

Section 53 has been amended to provide that a specified FI that contravenes the MAS’ order will be guilty of an offence punishable with a fine not exceeding S$250,000 and, in the case of a continuing offence, to a further fine not exceeding S$25,000 for every day that the offence continues after conviction.

Reference materials

The following materials are available on the Singapore Statutes Online website sso.agc.gov.sg:

 

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