Depositor Compensation Scheme Regulations, 2003

L.N. 369 of 2003

BANKING ACT

(CAP. 371)

Depositor Compensation Scheme Regulations, 2003

IN exercise of the powers conferred by article 3 and article Cap. 371.

28A of the Banking Act, the Minister of Finance and Economic

Affairs, acting on the advice of the Malta Financial Services

Authority, as the competent authority appointed for the purposes

of that Act, has made the following regulations:-

(1) The title of these regulations is the Depositor Citation and date of

commencement.

Compensation Scheme Regulations, 2003.

(2) These regulations shall come into force on the 21st

November, 2003.

In these regulations, unless the context otherwise requires -

Interpretation.

“Act” means the Banking Act;

“branch” shall have the meaning assigned to the word in article

2 of the Act and, for the purposes of these regulations, includes a

place of business which forms a legally dependent part of a credit

institution and from which some or all of the activities for which

the credit institution has been authorised are conducted. All the

places of business set up in any one country by a credit institution

whose head office is in Malta or in another country shall be regarded

as a single branch;

“business of banking” shall have the meaning assigned to the

words in article 2 of the Act;

“Central Bank” means the Central Bank of Malta as defined Cap. 204

by the Central Bank of Malta Act;

“competent authority” means the competent authority under

the Act;

“credit institution” shall have the meaning assigned to the

words in article 2 of the Act;

“deposit” shall have the meaning assigned to the word in

article 2 of the Act;

“depositor” means any individual who otherwise than in the

course of or for the purposes of a business, trade or profession

entrusts a deposit to a credit institution, to the exclusion of the

persons and entities listed in the First Schedule to these regulations;

“eligible deposit” shall have the meaning assigned to it by

regulation 18 of these regulations;

“Financial Services Tribunal” means the tribunal established

in terms of the Malta Financial Services Authority Act;

“Management Committee” means the Compensation Schemes

Management Committee established under regulation 3 and 5 of

the Investor Compensation Scheme Regulations 2003;

“participant” means a credit institution participating in the

Scheme in terms of regulation 11 of these regulations;

“the Scheme” means the Depositor Compensation Scheme

established under regulation 3 of these regulations;

and the words and expressions which are also used in the Act

shall have the same meaning as in the Act.

(1)

There shall be established a Depositor Compensation

Scheme.

(2) The Scheme shall be a body corporate having a distinct

legal personality and shall be capable, subject to the provisions of the

Act and of these regulations, of entering into contracts of borrowing or

otherwise incurring indebtedness for the purposes of its functions, of

acquiring, holding and disposing of any kind of property for the purposes

of its functions, of suing or being sued and of doing all such things and

entering into all such transactions as are incidental or conducive to the

exercise or performance of its functions.

(3) The Scheme shall be managed and administered by and

be under the general control of the Management Committee.

(4) The legal and judicial representation of the Scheme shall

vest in the chairperson of the Management Committee

Provided that, and without prejudice to the foregoing, the

Management Committee may vest any one or more of its members or

of the officers or agents of the Scheme with legal or judicial

representation.

(1) Without prejudice to any other power or function Functions

Scheme.

conferred on it by these regulations or by any other law, it shall be the

function of the Scheme

(a) to maintain a fund or funds out of which payments shall

be made to depositors and to meet such other payments or expenses

as may be paid out of the fund or funds in accordance with these

regulations;

(b) to establish and maintain, after consultations with the

competent authority, arrangements for the making of payments to

depositors in accordance with these regulations;

(c) to process claims for compensation by depositors as

expeditiously as possible and to ensure that compensation is paid

out without undue delay; and

(d) to advise the competent authority on matters relating to

compensation of depositors.

(2) The objective of the Scheme is to provide a means of

protection for private depositors within the framework of these

regulations. All the members of the Management Committee shall work

in the best interest of the Scheme and shall pursue and promote its

objective.

The Management Committee shall be composed and regulated Composition of the

Management

by the provisions of regulations 3 and 5 of the Investor Compensation Committee.

Scheme Regulations, 2003.

L.N. 368 of 2003.

(1) The Management Committee shall have the power to Powers and duties

of the Management

enter into such reasonable administrative and other expenses as may be Committee.

necessary to enable it to fulfil its functions under these regulations.

(2) The Management Committee may place contributions

made by participants in terms of regulation 12 of these regulations and

any other funds managed and administered by it on deposit or may

invest such contributions, having regard to the need for prudence.

(3) The Management Committee may take out insurance

policies, borrow or otherwise incur indebtedness on behalf of the Scheme

for the purposes of the Scheme’s functions, in any way and under any

terms it may consider appropriate, provided that borrowings do not

exceed 30 per cent of the net asset value of the Scheme.

(4) The Management Committee shall cause proper books

of account to be kept so that the financial position of the Scheme can be

ascertained with reasonable accuracy at any time.

(5) In exercising its powers and duties, the Management

Committee shall be bound to safeguard and take into account the general

interests of depositors entitled to claim under these regulations.

Without prejudice to sub-regulation (1) of regulation 6 the

Management Committee shall enter into such investment management

support agreements.

and administrative support agreements as may be approved by the

competent authority.

(1) The Management Committee shall prepare annual

forecast statements of the expected costs and revenues of the Scheme,

and shall make available such forecast statements to all participants

upon request.

(2) The Management Committee shall submit to the

competent authority an annual report on the discharge of its functions

and on the operation of the Scheme within three months from the

financial year end of the Scheme. Such annual report shall include,

inter alia -

(a) a statement showing the payments in and payments out

of the Scheme during its immediate previous financial year; and

(b) annual audited financial statements prepared in

accordance with International Accounting Standards.

(3) The annual report shall be made available on the website

of the competent authority.

(4) The books of accounts shall be kept at such place as the

Management Committee thinks fit.

The meetings of the Management Committee shall be

convened and held in accordance with regulation 9 of the Investor

Compensation Scheme Regulations, 2003.

(1) In terms of regulation 4 of these regulations, the Scheme

shall establish and maintain a fund or a number of funds out of which

payments shall be made in accordance with these regulations.

(2) The sources of funding shall include

(a) contributions levied from participants of the Scheme by

the Management Committee;

(b) money paid as administrative fees by all participants,

as may be prescribed;

(c) money received as income from the investment of the

assets of the fund;

(d) money borrowed by the Management Committee for

the purposes of the Scheme;

(e) money received by the Management Committee on any

insurance policy it takes out; and

(f) any other money required to be paid in to the fund or

funds, received or recovered by the Management Committee for

the purposes of the Scheme.

(3) There shall be paid out of the fund or funds

(a) money determined by the Management Committee as

compensation for depositors;

(b) money required for the repayment of (or interest on or

charges in connection with) any money borrowed or for the

payment of premia on any insurance policies taken out, for the

purposes of the Scheme;

(c) the costs incurred in administering and managing the

Scheme; and

(d) any other money paid out by the Management

Committee for the purposes of the Scheme.

(4) The Management Committee shall hold, manage and

apply the fund or funds in accordance with these regulations.

(1) Every credit institution which is licensed in Malta under Participants.

the Act to accept deposits from depositors in Maltese lira shall participate

in and contribute to the Scheme, including a branch of a credit institution

operating in another country.

(2) In the case of a participant whose head office is situated

in a country outside Malta, as well as branches of a credit institution

having their head office in Malta but operating outside Malta, and where

there is supplementary cover by a corresponding scheme in that other

country, the Management Committee shall enter into a bilateral

agreement with the authority responsible for the management and

administration of the scheme in that other country stipulating, inter alia,

the rules and procedures to be followed for the payment of compensation

to depositors.

(3) Participation in the Scheme does not exclude the

possibility that particular credit institutions may have to participate also

in another compensation or similar schemes set up under a different

law and governed by another competent authority or other body, in Malta

or abroad.

(4) When a credit institution becomes a participant in the

Scheme after the coming into force of these regulations, the Management

Committee shall determine all the relative obligations and conditions

of the new participant as set out in the Third Schedule to these

regulations.

(1) Participants shall pay such contributions to the Scheme

Contributions to the

as prescribed in the Second Schedule to these regulations.

(2) Participants may be requested to pay to the Scheme such

reasonable administrative fees as may from time to time be prescribed

by the Management Committee.

(1) Where

(a) it appears to the competent authority that a participant is

unable, for the time being, for reasons which are directly related to

its financial circumstances to meet its obligations arising from

claims by its depositors and to have no early or foreseeable prospect

of being able to do so, or has otherwise suspended payment; or

(b) in respect of a credit institution which has its head office

in Malta an order has been made by the Courts of Malta for its

winding-up or liquidation under the laws of Malta;

whichever is the earlier, the competent authority shall make a

determination to that effect within 21 days of the occurrence of such

circumstances.

(2) The competent authority may, by way of banking

directives, establish those circumstances or criteria which it may consider

in arriving at a decision as to whether it will make a determination in

terms of sub-regulation (1) of this regulation.

(3) As soon as practicable after a determination is made,

the competent authority shall inform the Management Committee in

writing of such determination. The Management Committee may take

additional measures it deems necessary or appropriate within its powers

under these regulations.

(4) The competent authority shall, as soon as possible,

inform any other compensation scheme relating to financial services

activities, as may be established under any other law and regulated by

other competent authority or other body, which it believes may be

effected by such determination.

(5) In making a determination in accordance with sub-

regulation (1) of this regulation, the competent authority shall have

regard to any report of officers or agents authorised by it on the state of

affairs of the credit institution, and any other information in its

possession.

(1) On being informed by the competent authority that a Application for

Compensation.

determination has been made under sub-regulation (1) of regulation 13,

the Management Committee shall publish a notice in at least two local

newspapers, informing depositors of the credit institution concerned of

such determination and of the manner in which claims supported by

documentary evidence are to be submitted.

(2) The right of a depositor for compensation shall not be

forfeited if the depositor is able to prove that he was unable to assert his

right to compensation within any prescribed time-limits as may be

provided by the Management Committee.

(3) The Management Committee may, following an

application for compensation being made to it by a depositor, accept or

refuse to provide compensation in accordance with these regulations.

(4) The Management Committee shall proceed to pay

compensation for verified claims within three months of the date of the

determination given in terms of sub-regulation (1) of regulation 13

Provided that the Management Committee may, in exceptional

circumstances, apply to the competent authority for an extension of

this period by a further period of up to three months, and up to two

further periods of up to three months each thereafter.

(1) The Management Committee shall make its own

administrative arrangements for verifying claims. These arrangements

shall include

(a) providing an application form for claimants both in

English and in Maltese;

(b) providing for the exercise of the Management

Committee’s right of subrogation under regulation 22 of these

regulations; and

(c)

requiring claimants to give

(i) their identity and address;

(ii) the capacity in which they claim;

(iii) evidence of the eligible deposits as defined in

regulation 18 of these regulations; and

(iv) any other information as may be required by the

Management Committee.

(2) The Management Committee may refuse to make a

payment for compensation until the claimant informs the Management

Committee as to the capacity in which he is the beneficial owner of the

deposit and provides satisfactory documentary evidence and information

to allow the Management Committee to determine the amount of

compensation payable.

(3) The Management Committee may decide to delay

payment to a claimant until determination of any criminal charge brought

against the claimant, depositor, or any person entitled to or interested in

respect of an eligible deposit under the provisions of the Prevention of

Money Laundering Act or a corresponding law of a country outside

Malta.

(4) Where in the opinion of the Management Committee

circumstances so warrant, the Management Committee may effect part

payments to claimants eligible for compensation under these regulations.

Whenever it appears to the Management Committee that

the funds for the time being held by the Scheme are inadequate for the

Management Committee to exercise its functions, the Management

Committee may require a Special Contribution to be made to the Scheme

by participants in accordance with the Second Schedule to these

regulations. Such Special Contribution shall be provided to the Scheme

within 30 calendar days of their being requested.

The total amount of compensation that may be paid out to a Limit

compensation.

depositor shall be the lesser of ninety per cent (90%) in respect of that

depositor’s eligible deposits, or up to the Maltese liri equivalent of 20,000

euro converted on the basis of the official closing middle rate issued by

the Central Bank of Malta prevailing on the date of settlement of the

claim.

Provided that where the funds of the Scheme are insufficient to

satisfy the claims in full, payments to claimants shall be made pro rata.

(1) For the purposes of these regulations, “eligible Eligible Deposits.

deposits”, in relation to a depositor with a credit institution, means the

total aggregate liability of the credit institution to such depositor,

including, as the case may be, any interest or premium accrued thereon

in an account or accounts denominated in Maltese lira held in Malta or

in a branch of a licensed credit institution other than in Malta.

(2) For the avoidance of doubt, “eligible deposits” shall not

include the following

(a) an “interbank deposit”, that is a deposit with a credit

institution by other credit institutions on its own behalf and on its

own account;

(b) part of the participant’s own funds within the meaning

of any banking directive issued by the competent authority to

regulate own funds; and

(c) a deposit made by a person or persons listed in the First

Schedule to these regulations.

(1) In calculating the amount of eligible deposit, the Compensation paid

to be deducted from

Management Committee shall take account of any legal and contractual compensation

conditions attached to the respective deposits and shall deduct from the payable.

total liability of the credit institution

(a) any payments made to the depositor from a depositor

compensation scheme elsewhere in respect of such liability;

(b) any payments made to the depositor under a policy of

professional indemnity insurance held by the credit institution in

respect of such liability;

(c) the amount of any liability of the depositor to that credit

institution in respect of which a right of set-off against the said

deposit existed immediately before the notice of determination

issued in terms of regulation 13 of these regulations or in respect

of which such a right would have existed had the said deposit been

repayable on demand and such liability fallen due immediately

before the issue of such a notice of determination; and

(d) any payments made under any other law, whether in

Malta or abroad, in respect of such liability.

(2) Without prejudice to the aforesaid

(a) any right of set-off shall only be possible where claims

are properly documented, can be settled easily, are not subject to

dispute and were established well before the notice of determination

issued in terms of regulation 13 of these regulations.

(b) any compensation in respect of an eligible deposit shall

only be payable as and when the deposit becomes due.

(1) Only persons being individuals falling within the

definition of “depositor” in regulation 2 of these regulations may make

a claim against the Scheme in terms of these regulations. A depositor

may only submit one claim in respect of all his deposits taken in

aggregate with the credit institution concerned.

(2) The following individuals are excluded from claiming

under the Scheme

(a) directors and managers of the relevant credit institution

and members of the credit institution with personal liability, persons

holding five percent or more of the capital of such credit institution,

the auditors of the credit institution and persons of the same

description with respect to a company forming part of the same

group of companies as the credit institution;

(b) close relatives, that is ascendants, descendants or the

spouse of the persons referred to in paragraph (a) of this sub-

regulation;

(c) depositors who, in the view of the Management

Committee, have any responsibility for or have taken advantage

of certain facts relating to a credit institution which gave rise to a

credit institution’s financial difficulties or contributed to the

deterioration of its financial situation;

(d) depositors in respect of transactions in connection with

which a criminal conviction has been obtained for money

laundering in terms of the Prevention of Money Laundering Act; Cap. 373

and

(e) nominees or other third parties acting on behalf or in

the interest of the persons referred to in paragraphs (a) to (d) of

this regulation.

(3) The categories listed in the First Schedule to these

regulations are also excluded from claiming under the Scheme.

(4) The Scheme shall provide for the payment of

compensation in respect of claims arising out of a participant’s inability

to repay money owed to or belonging to depositors and held on their

behalf in connection with banking business.

(5) A depositor may not claim against more than one scheme

in respect of a single claim. Where a claim has been made under two or

more compensation schemes, the Management Committee shall

conclusively determine under which scheme the claimant is eligible for

compensation.

(6) Claims shall be made in such form, and shall be accompanied

by such documentation or information, as the Management Committee

may determine and make public from time to time.

Where the Management Committee is of the opinion that a Claims.

depositor is not eligible for compensation in whole or in part in terms

of these regulations, the Management Committee shall give notice in

writing to such depositor of that opinion and the reasons therefor.

(1) Where the Scheme has made a payment to a claimant, Subrogation.

the Scheme shall be subrogated to the rights and remedies of that

claimant against the credit institution.

(2) Prior to payment, depositors shall confirm in writing to

the Management Committee that

(a) they have not received any payment from any other

scheme or from the credit institution concerned in respect of the

same loss;

(b) they will provide any assistance the Management

Committee may require to enable the Management Committee to

exercise its rights and remedies against the credit institution; and

(c) their rights and remedies against the credit institution in

respect of the claims paid shall be subrogated in favour of the

Management Committee.

(1) Where two or more persons are jointly entitled to an

eligible deposit, each of these persons shall be treated as having a

separate deposit of an amount produced by dividing the amount of the

deposit to which such persons are jointly entitled by the number of

persons so entitled, unless there exists specific evidence or special

contractual provisions determining the particular entitlements of such

persons in which case such evidence shall be taken into account in

determining their entitlements.

(2) Where a person is acting as trustee or nominee for one

or more persons under a deed of trust or other similar agreement, the

eligible deposit comprising the claim shall be deemed to belong to the

beneficial owners equally, unless there exists specific evidence or special

contractual provisions determining the beneficial interests of such

persons in which case such evidence shall be taken into account in

determining their entitlements, and provided in any event that ownership

is proved to the entire satisfaction of the Management Committee.

The Management Committee shall ensure that the general

public is adequately informed about the operation of the Scheme

arrangements.

(1) Credit institutions shall make available to current and

prospective depositors adequate and clear information concerning the

applicability of the Scheme together with such other particulars as may

from time to time be specified by the competent authority in a manner

and form specified by the competent authority

Provided that a credit institution shall not advertise or cause

to be advertised the fact that deposits placed with a credit institution are

protected by or through the Scheme except with the prior written consent

of the competent authority.

(2) The competent authority may from time to time, specify

the information that credit institutions are to provide to depositors

regarding the Scheme and its operations, as well as the manner and

form in which such information should be provided.

(1) The Management Committee may request participants,

either directly or through the competent authority, to provide such

Committee to obtain

information which the Management Committee may consider relevant

for the proper administration of the Scheme, within a period of time as

may be established by the Management Committee. The request may

be addressed to the participant or to any of its directors or officials who

are in possession of such information.

(2) Without prejudice to any other provision of these

regulations, a participant or any director or official thereof, who fails to

comply with the Management Committee’s request for information

within the period of time established by the Management Committee in

terms of sub-regulation (1) of this regulation, or who knowingly or

recklessly furnishes information, or makes a statement which is

inaccurate, false or misleading in any material respect, shall be liable to

an administrative penalty not exceeding Lm1,000 as may be imposed

by the competent authority by means of a notice in writing and without

recourse to a court hearing.

(3) Where an administrative penalty has been imposed by

the competent authority in terms of sub-regulation (2) of this regulation,

an appeal shall lie to the Financial Services Tribunal in accordance with

articles 10 and 35A of the Act.

(1) Members of the Management Committee and persons Confidentiality.

appointed under sub-regulation (1) of regulation 6 shall be subject to

the provisions of the Professional Secrecy Act and shall keep confidential Cap. 377

any information obtained by them in the course of performing their

duties under these regulations, and shall not reveal any information to

any person, credit institution, association or entity except as may be

allowed by these regulations or any other law or by Court order.

(2) The duty of confidentiality shall not be contravened in

the case of

(a) exchange of information between the Management

Committee and competent authorities in other countries, or the

competent authorities for the management and administration of

corresponding schemes in other countries, provided that the

relevant information is necessary for the discharge of their duties

under these regulations; and

(b) any use or disclosure as may be required to enable the

Management Committee and its officers or agents to perform their

duties and carry out their functions under these regulations.

Failure to comply

(1) Where a credit institution fails to comply with its with obligations.

obligations under these regulations, the Management Committee shall

notify and consult with the competent authority and shall agree on the

appropriate measures to be taken by the competent authority, including

the imposition of penalties, to ensure that the credit institution complies

with such obligations.

(2) If these measures fail to secure compliance on the part

of the credit institution, the Management Committee shall report the

matter to the competent authority for any further measures to be taken

at law, including the possible restriction or withdrawal of the credit

institution’s licence.

(3) After the restriction or withdrawal of a licence, cover

shall continue to be provided in respect of eligible deposits effected up

to the date of restriction or withdrawal.

The Management Committee shall establish and maintain

adequate internal procedures to investigate complaints against it by credit

institutions and by depositors.

(1) The competent authority may issue banking directives

to credit institutions for the purposes of these regulations.

(2) Such banking directives may contain such incidental,

supplementary and consequential provisions as appear to the competent

authority to be expedient for the purpose of these regulations.

The Management Committee and officers or agents of the

Scheme shall not be liable in damages for anything done or omitted in

the discharge of functions under these regulations unless it is shown

that the act or omission was in bad faith.

The financial year end of the Scheme shall be an accounting

period of twelve months ending on the thirty-first day of December of

each year.

The accounts of the Scheme shall be audited in accordance

with International Standards on Auditing by auditors appointed by the

Management Committee from among persons who are qualified to be

appointed as auditors of a company under the law for the time being in

force in Malta.

The competent authority and the Management Committee

shall consult the relevant competent authorities and the persons

responsible for compensation schemes in other countries outside Malta

and seek to reach agreement with those authorities and persons about:-

(a)

the procedures to be followed if a participant defaults;

(b) the amounts of compensation payable, after deductions

if any, under each scheme; and

(c) any other aspect which is deemed appropriate for the

proper management and administration of the schemes.

(1) The Management Committee established under Transitory

regulation 3 of the Investor Compensation Scheme Regulations, 2003 provisions

and the Management Committee referred to in these regulations are L.N. 368 of 2003

one and the same. The Management Committee referred to in these

regulations shall continue in the personality of the Management

Committee established immediately before the coming into force of

these regulations and accordingly shall succeed to all its rights and

obligations.

(2) All appointments, decisions, contributions, claims, payments

or other acts made or taken under the Deposit Guarantee Scheme L.N. 7 of 2003

Regulations, 2003 before the coming into force of these regulations

shall continue in force and shall be deemed to have been made or taken

under these regulations, and any reference in any law to the Management

Committee shall be deemed to be a reference to the Management

Committee established under regulation 3 of the Investor Compensation

Scheme Regulations, 2003.

The Deposit Guarantee Scheme Regulations, 2003 published Repeals.

L.N. 7 of 2003

on 3rd January, 2003, are hereby repealed.

First Schedule

Exclusions

(Regulations 18, 20)

For the avoidance of doubt, the following are excluded from claiming under the

Scheme and shall not be deemed to be depositors for the purpose of these regulations

(1) Sole traders, companies and other commercial partnerships;

(2) Professional and institutional depositors, including

(a) Persons holding an investment services licence under article 6 of the

Investment Services Act;

(b) Credit institutions carrying on the business of banking under the Act;

(c) Financial Institutions as defined in article 2 of the Financial Institutions

Act;

(d) Companies authorised to carry on the business of insurance under the

Insurance Business Act;

(e) Collective investment schemes as defined in article 2 of the Investment

Services Act;

(f) Retirement funds as defined in the Special Funds (Regulation) Act; and

(g) Other categories of local and/or foreign professional and institutional

investors, whether resident or non-resident in Malta, as may be determined by the

competent authority from time to time;

(3) National and international institutions, governments and administrative

authorities;

(4) Local and municipal councils or authorities; and

(5) Debt securities issued by the same institution and liabilities arising out of

own acceptances and promissory notes.

B

Second Schedule

Contributions

in terms of regulation 12 of these regulations

All credit institutions participating in the Scheme shall make contributions to the

Scheme as follows

(a) Initial Contribution;

(b) Supplementary Contributions;

(c) Special Contributions.

The minimum amount held by the Scheme and which should be available for

compensation shall be Lm1 million, established over a period of time not exceeding

five years from the coming into force of the Deposit Guarantee Scheme Regulations,

2003.

1. Initial Contribution

(a) An Initial Contribution shall be paid by participants within 30 calendar

days from the coming into force of these regulations.

(b) The minimum amount of the Initial Contribution shall be of Lm10,000

per participant.

(c) The Management Committee may, in consultation with the competent

authority, postpone part or all of the payment of the Initial Contribution and

determine a time schedule for the payment thereof.

(d) This paragraph shall not apply to participants who have paid the Initial

Contribution prior to the coming into force of these regulations.

2. Supplementary Contributions

(a) The level of Supplementary Contributions for each participant shall

be calculated by applying the percentage determined by the Management

Committee on the eligible deposits held by the participant as at its most recent

financial year end.

(b) The minimum amount of Lm1 million shall be contributed

proportionately in accordance with the participants’ share of total eligible deposits

over a period not exceeding five years, commencing from the date on which the

Deposit Guarantee Scheme Regulations, 2003 came into force.

(c) The formula applicable for participants for the yearly contribution for

the first five years to attain the minimum amount of the Scheme shall be as shown

hereunder. For the sake of clarification, Year 1 shall be deemed to be the year in

which the Deposit Guarantee Scheme Regulations, 2003 came into force.

Year

Formula

0.1% of Eligible Deposits (as at the most recent financial year end)

(0.1% of Eligible Deposits as at financial year end of Year 1)

less (Year 1 contribution)

(0.1% of Eligible Deposits as at financial year end of Year 2)

less (Year 1 + Year 2 contributions)

(0.1% of Eligible Deposits as at financial year end of Year 3)

less (Year 1 + Year 2 + Year 3 contributions)

(d) As from Year 5 onwards, participants shall need to ensure that their

aggregate proportional contribution amounts to 0.1% of their respective eligible

deposits as at the previous financial year end.

(e) If the amount contributed in any subsequent year (i.e. from Year 5

onwards) is less than 0.1% minimum, the participant shall be required to make an

additional Supplementary Contribution.

(f) A participant shall not be eligible for a refund if the 0.1% of eligible

deposits for a particular year represent an amount which is less than the aggregate

amount contributed.

(g) Payment of Supplementary Contributions shall be made within 21

calendar days from service to each participant of a request in writing by the

Management Committee.

Provided that the Management Committee may authorize the contribution to be

paid in two equal instalments; if such authorization is granted, the first instalment shall

be paid on the day indicated in this subparagraph and the second instalment shall be

paid by not later than six months thereafter.

B

3. Special Contributions

(a) The Management Committee may, at any time during the financial year

of the Scheme, levy Special Contributions from participants in order to meet

commitments of the Scheme.

(b) The Management Committee may, at the end of its financial year during

which Special Contributions have been levied, refund part or all of such Special

Contributions not utilised, or not expected to be utilised for the following 12

months, to participants pro rata and according to the amounts of Special

Contributions made. No interest shall be payable on Special Contributions refunded

to participants.

(c) Payment of Special Contributions shall be within 30 calendar days from

service to each participant of a written notice specifying the amount due.

4. Maximum limit for contributions

(a) When the amount held by the Scheme (and which is available for

compensation) is about to reach, or has reached, Lm3 million, the Management

Committee shall, with the approval of the competent authority, consider whether

current and future circumstances merit a revision of the Supplementary

Contributions made by participants and whether participants are to cease further

cash payments of Supplementary Contributions to the Scheme.

(b) Participants shall not be required to make any Supplementary or Special

Contributions, if the total of its contributions to date (Initial, Supplementary and

Special), after deducting any refund of Special Contributions, exceeds 0.3% of

the total eligible deposit liabilities.

(c) After Year 5, the difference between the “capped” level of 0.3% and

the amount paid in Supplementary Contributions (as at the date from which

participants have ceased payment of Supplementary Contributions on a decision

of the Management Committee), shall be considered by the Management

Committee to be funds “on call” and shall either be held as a capital reserve by

the participant or as a contingent liability.

(d) In this respect and upon further consultation with participants, the

competent authority shall issue banking directives to participants determining

how such funds “on call” should be treated.

(e) In any case, participants shall ensure that such funds are made available

to the Scheme within 30 calendar days from the time when a call is made on such

funds.

5. Other conditions

A credit institution which has ceased to be a participant of the

Scheme shall not be entitled to a refund of any contributions made from

the date it became a participant of the Scheme except where otherwise

stated in this schedule.

Third Schedule

New participants

(regulation 11(4))

(1) When a credit institution becomes a participant in the Scheme

after the coming into force of these regulations, the Management

Committee shall levy as soon as practicable an Initial Contribution of

an amount to be determined in terms of this Schedule but which shall

be no less than the amount established in the Second Schedule to these

regulations..

(2) Where a credit institution which becomes a participant has a

deposit base, the amount of the Initial Contribution shall be calculated

on the total Eligible Deposit liabilities at the time it becomes a participant

with such a percentage as the Management Committee considers

appropriate in order for the participant to reach the levels of

compensation with the other participants, taking into account any Initial

and Supplementary Contributions up to the date when the credit

institution becomes a participant.

(3) The Management Committee shall determine a time schedule

for the payment of the Initial Contribution taking into consideration the

particular circumstances of the new participant.