CHAPTER 19

Penalties
 

Article 55:    In addition to the penalties provided for in case of violation of provisions of ordinary law or of the legal statute of noncommercial societies, the following penalties may be applied under this law:

1.   Any person who, acting either for his own account or for the account of a legal person, as his regular business and on behalf of the general public carries out banking operations, without a license, shall be liable before the courts to imprisonment from 1 year to 5 years and a fine from 5 million to 250 million Riels, or to either of these penalties, without prejudice to the closure of the concerned establishment. 

2.   Any person or entity who infringes any of the provisions of Articles 9, 11, 18, 19, 27, 30, and 47, shall be liable before the courts to the penalties provided for in Article 55‑1 above. 

3.   Any person, acting either for his own account or for the account of a legal person, shall be liable before the courts to imprisonment from one year to five years and a fine from 1 million to 10 million Riels, or to either of these penalties:

  • if he infringes any of the provisions of Articles 8, 13, 23, 24, 28, 38, 39, 44, 45, 46 and 51;

  • or if, after formal demand from the supervisory authority, he fails to respond to request for information provided for in Article 40‑7;

  • or if he knowingly provides the supervisory authority with inaccurate information;

  • or if he hinders examinations implemented by the supervisory authority or by the external auditors of a covered entity or hinders the missions of a provisional administrator or of a liquidator appointed by the supervisory authority.

Article 56:    The penalties provided for in Article 55 shall be imposed by the courts, in particular after a prior complaint or action for damages by the supervisory authority or by the covered entities' professional association provided for in Article 72 hereafter.
 

CHAPTER 20

Provisional Administration- Liquidation
 

Article 57:    If a serious and confirmed threat is weighing on the solvency of a covered entity and if appeals for reconstitution of own funds as provided for in Articles 14, 19, 27 and 30 remain without effect, the supervisory authority may, on its own initiative or at request from the executives or shareholders, appoint, at the covered entity's expense, a provisional administrator for an initial period not exceeding 3 months. If circumstances so warrant, the provisional administrator's mission can be extended for another period of 3 months. 

Article 58:    As soon as he is appointed, a provisional administrator has exclusive powers to manage, direct and represent the covered entity. 

Article 59:   The provisional administrator's main duties are immediately to make an assessment of whether or not the covered entity is solvent, and to administer the current activities in order to preserve as far as possible the covered entity's solvency and maintain the rights of depositors and creditors. 

Article 60:    If the assessment concludes that the covered entity is considered solvent, and is furthermore in a position to abide by all legal and regulatory prudential norms, the administrator shall so report to the supervisory authority who shall lift the protective measures. 

Article 61:    If the assessment concludes that the covered entity is solvent but is not in a position to abide by, within a period not exceeding 3 months, the prudential norms relating to net worth and liquidity, the license may be withdrawn and the provisional administration converted into a voluntary liquidation, at the expense of the covered entity. 

The liquidator, who may be the provisional administrator, shall liquidate all the assets and meet all liabilities of the establishment under the control of the supervisory authority. 

Article 62:   If the assessment concludes that the covered entity is not solvent, the license is immediately withdrawn and the provisional administration is converted into a liquidation by order of the court, at the expense of the covered entity. 

The provisional administrator shall declare the suspension of payments and the case is referred to the court, which shall appoint a liquidator, who may be the provisional administrator. 

The liquidator shall liquidate the assets and meet the liabilities under the control of the court and in compliance with bankruptcy proceedings under ordinary law. Any banking or financial operations carried out during the liquidation remain subject to this law. 

Article 63:    A liquidation, voluntary or by order of the court depending on the solvency or insolvency of the covered entity, shall be undertaken following a license withdrawal pronounced as a disciplinary sanction imposed in accordance with Article 52. 

Article 64:    Given the particularities of banking and financial business, balance sheet and off‑balance sheet liabilities, after having been admitted, shall be met in the following order:

  1. fees or other charges for the provisional administration and for the liquidation, voluntary or by order of the court;

  2. taxes and fees due to the National Treasury;

  3. salaries owed to the staff of the covered entity for a period of up to three months preceding the date of the liquidator's appointment;

  4. preferential or secured claims if sureties have not been taken during the suspect period;

  5. deposits, in cash, gold, or securities, or other claims of creditors other than banks and financial institutions, with the proviso that each depositor holding one or several accounts denominated in Riels shall receive an equal amount up to two million Riels;

  6. other deposits, in cash, gold, or securities, or other claims of banks and financial institutions;

  7. subordinated debts and equity-type loans.

Article 65:    The supervisory authority, the provisional administrator or the liquidator shall submit the case to the court if they observe grave, penalty reprehensible violations of any legal or regulatory provision. 

Article 66:    Provisional administrators and liquidators shall be chosen by the supervisory authority from a list of qualified professionals drawn up beforehand by the latter and the Ministry of Justice. 

Article 67:    If a provisional administrator or a liquidator is in some way hindered from performing his duty by the concerned covered entity, he may refer the matter to the court. 

Article 68:    The shareholders of a solvent covered entity, gathered for an extraordinary general meeting, may decide to liquidate the entity, in accordance with provisions of ordinary law. 

Advised of that decision, the supervisory authority shall appoint a liquidator who shall liquidate the entity under the control of the supervisory authority. 

Article 69:    Remuneration to be paid and other expenses to be reimbursed for provisional administration or liquidation shall be established according to prevailing regional professional scales and charged automatically to the concerned covered entity, in compliance with Articles 57, 61, 62, 63, and 64 of this law.
 

CHAPTER 21

Customer Protection

 

Article 70:    The supervisory authority shall define, after having consulted the profession, a corpus of rules of good conduct aimed at ensuring customer protection, in particular concerning:

  1. transparency, openness and the level of charges and remuneration for banking or financial operations;

  2. the opening and termination of credit lines;

  3. and the renegotiation of loans.

Article 71:    Credit balances of customer accounts or of accounts with other banks or financial institutions which have been dormant for 10 consecutive years, shall be transferred to the National Bank of Cambodia, which shall be accountable thereafter for administering such deposits.
 

CHAPTER 22

Organization of the Profession

 

Article 72:    Whatever its legal form or its specialization, any covered entity shall be required to belong directly ‑ or, in the case of noncommercial societies, through the central body referred to in Article 11 - to a single professional association whose Articles of Association shall have been endorsed by the supervisory authority. 

The association shall be directed by a single chairman elected by all its members pursuant to its Articles of Association. However, within the body, members having same professional specialization can band together into separate subdivisions. 

Article 73:   The aims of the professional association shall be to:

  1. represent the collective interests of the covered entities, particularly in relations with the government authorities and with the supervisory authority;

  2. provide its members and the public with information concerning every aspect of banking and financial operations;

  3. conduct research into any questions of mutual interest;

  4. promote professional interbank training;

  5. organize and manage all interbank services, in agreement with the supervisory authority and under its control;

  6. lodge a complaint before the courts in compliance with the provisions of Article 56 of this law.


CHAPTER 23

Transitional Provisions
 

Article 74:

1.   Previously licensed institutions shall bring their Articles of Association, activities, and financial structure, into line with the provisions of this law within 6 months from its entry into force, and shall apply for a new license within the same period. 

After having examined these applications, the National Bank of Cambodia shall publish a list of licensed institutions in accordance with the provisions of this law in the Bulletin of the National Bank of Cambodia and in the Official Gazette of the Kingdom of Cambodia. 

At the close of the six month period, any institution failing to abide by the provisions of this law and its implementing regulations shall cease doing business and be liquidated. 

2.   Institutions which carry out without a license the banking and financial activities referred to in Articles 2, 3 and 4 of this law shall immediately cease undertaking any new operations and apply for a license to the relevant supervisory authority within three months from the date of promulgation of this law. 

3.   Any entity carrying out banking activity in particular so as to promote banking intermediation in the sectors of agriculture, handicrafts, small scale trade, and services to households, may operate under conditions waiving provisions of this law, as defined by special regulation issued by the National Bank of Cambodia regarding their:

  • minimum capital;

  • licensing process;

  • applicable prudential rules;

  • conditions of establishment.


CHAPTER 24

Final Provisions
 

Article 75:    All provisions contrary to this law are hereby repealed. 

Article 76:    This law has been declared as urgent. 

Phnom Penh, November 18, 1999
Signature 

NORODOM SIHANOUK 

Submitted for the signature of H.M. the King
The Prime Minister
Signature

HUN SEN 

 

Submitted for information
to Samdech the Prime Minister
The Governor of the National Bank of Cambodia
Signature

CHEA CHANTO 

No. 218 C.L.
For certified copy
Phnom Penh, November 19, 1999
The General Secretary of the Royal Government
Signature

NADY TAN

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