Bank of Tonga Act

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1	Short title.......................................................................	5
2	Interpretation...................................................................	5
3	Incorporation of Bank of Tonga.............................................	6
4	Capital and shareholders.....................................................	6
5	Commencement of business..................................................	7
6	Acquisition of business of savings bank...................................	7
7	Functions and powers of the Bank..........................................	8
8	Board of Directors.............................................................	12
9	Accounts and dividends.......................................................	13
10	Furnishing periodical returns to Treasurer.................................	14
11	Audit............................................................................	14
12	Articles of Association.......................................................	14
13	Dissolution.....................................................................	15

AN ACT TO PROVIDE FOR THE ESTABLISHMENT OF THE BANK OF TONGA AND FOR THE PURCHASE BY THE BANK OF THE SAVINGS BANK OF THE KINGDOM ESTABLISHED UNDER THE SAVINGS BANK ACT 1936

"Articles" means the Articles of Association of the Bank provided for under section 12 of this Act;

"Bank of Hawaii International Inc." means the Bank of Hawaii International Inc. as constituted under Hawaii Revised Statutes Chapter 405 Act 191 Session Laws of 1967;

“Bank of New South Wales” means the Bank of New South Wales as constituted by an Act of the Governor and Legislative Council of the Colony of New South Wales passed on 23rd September 1850;

“Bank of New Zealand” means the Bank of New Zealand as constituted by the New Zealand Bank Act 1861 of the New Zealand Parliament;

“Directors” or “Board of Directors” means the Directors for the time being of the Bank;

“participating bank” means each of the Bank of Hawaii International Inc., Bank of New South Wales, or Bank of New Zealand;

(1) There is hereby constituted for the purposes of this Act a corporation to be called the Bank of Tonga which shall have its head office at Nuku’alofa, Tonga.

(2) The Bank is a body corporate having perpetual succession and a common seal with power from time to time to make, alter, and renew the same and with power to sue and with power for the purposes of this Act to require, hold, manage, turn to account, and to sell, let, lease, and dispose of real and personal property of all kinds in any manner in any part of the world, and further with such constitution, objects, and powers as are contained in this Act and subject to such Articles for the Government of the Bank and the management of its business and other matters as are provided for in the Act or as may from time to time be lawfully altered.

(1) The authorised capital of the Bank is three million pa’anga (T$3,000,000) divided into 300,000 shares of ten pa’anga (T$10) each. (Amended by Act 13 of 1986)

(2) The initial subscribed capital of the Bank shall be two hundred thousand pa’anga (T$200,000) divided into 20,000 ordinary shares each of ten pa’anga (T$10) and into five parcels of shares each of 4,000 shares called A shares, B shares, C shares, D shares, and E shares respectively, such shares being initially held as follows:

Such subscribed shares shall be fully paid up on a date to be determined on behalf of the Bank by each participating bank and the Government. (Amended by Act 46 of 1988.)

(3) The said shares shall entitle the holders thereof to participate pari passu in proportion to the capital paid up on their shares respectively in all sums distributed by way of dividend, and in a winding up all surplus assets shall belong to and be divided amongst the holders of the said shares pari passu in proportion to the amounts paid up on such shares at the commencement of the winding up.

(4) No shareholder shall be liable to contribute to the debts or liabilities of the Bank any sum exceeding the amount (if any) for the time being unpaid on the shares held by such shareholder.

(5) Subject to the provisions of the Articles, every new share issue shall be divided into five equal parts and one such part shall be added to and form part of each of them the A shares, B shares, C shares, D shares and E shares.

(1) It shall not be lawful for the Bank to commence any business or exercise any of its borrowing powers until all the shares in the initial subscribed capital of the Bank have been allotted and fully paid up in cash in terms of the last preceding section and until the Articles provided for in section 12 of this Act have been made.

(2) Any contract made by the Bank before the date at which it is entitled to commence business shall be provisional only and shall not be binding upon the Bank until that date, and on that date it shall become binding.

(3) A certificate in writing by the Bank certifying what is or was the date upon which the Bank is or was entitled to commence business (hereinafter referred to as "the commencement date") shall be conclusive evidence thereof. A copy of the certificate shall be published in the Gazette and the production of the Gazette containing that publication shall be proof for all purposes of the original certificate.

(1) As on a date to be proclaimed not being prior to the commencement date the Bank shall acquire and take over from the Savings Bank of the Kingdom of Tonga (in this section called the “Savings Bank”) constituted or deemed to have been constituted under the Savings Bank Act the business of the Savings Bank and shall assume the following liabilities and acquire the following assets:

(a) the Bank shall assume all deposit liabilities of the Savings Bank including interest accrued payable up to the commencement date; and

(b) the Bank shall acquire sufficient securities of the Savings Bank acceptable to the Bank to equal in value at fair market valuation the amount arrived at under the last preceding paragraph, and such securities shall be force of this Act and, without the necessity for any instrument of assurance, pass to and vest in the Bank.

(2) The Government shall indemnify the Bank against any outstanding claims in respect of the deposit liabilities.

(3) As on the proclaimed date the Savings Bank shall cease to carry on the business of a savings bank and thereafter shall not carry on any such business:

Provided however that the Savings Bank shall be entitled by agreement with the Bank to carry on such business as agent of the Bank.

(a) to establish, carry on, extend and develop in Tonga or any other part of the world the business of banking in all its branches and departments and to transact and do all business, matters and things incidental thereto or which may at any time hereafter or at any place where the Bank shall carry on business be usually carded on as part of or in connection with or which may be conducive to or be calculated to facilitate or render profitable the transaction of the businesses of banking or dealing in money or any kind of securities for money;

(b) to acquire in any mode and take over the whole or any part of the business, property, goodwill and liabilities of any other company or corporation having objects altogether or in part similar to those of the Bank;

(c) to act as agents, attorneys or correspondents for any other bank, company, corporation, firm, government or other authority of for any persons;

(d) to receive money on deposit, current account, loan or otherwise with or without security and upon such terms as may from time to time seem expedient: to obtain the use and control of money and securities and to employ and use the same;

(e) to act as executor, trustee, custodian trustee, administrator, nominee, agent, receiver, manager, committee, liquidator, treasurer, registrar, or secretary and to undertake and execute any trusts or obligations the undertaking whereof may seem desirable;

(f) to hold, administer, carry on as a going concern, turn to account, sell, realise, invest, dispose of, and deal with all assets, business and property of the Bank, and within the limit of its authority, all assets, business and property which the Bank may hold on behalf of other persons in any capacity whatsoever;

(g) to make deposits, enter into recognisances and bonds, and otherwise give security for the due execution and performance whether by the Bank or by any officer of the Bank or by any other person of the duties of executor, administrator, trustee, receiver, manager, committee or liquidator;

(h) to guarantee or become liable for the payment of money or for the performance of any obligations and generally to carry on guarantee and indemnity business of all kinds and to effect counter guarantees;

(i) to purchase, take on lease or in exchange, hire or otherwise acquire and hold any real and personal property and any rights, privileges, or interests which the Bank may think necessary or convenient for the purposes of its business and in particular any banking houses and other houses, lands, tenements, and hereditaments, and to sell, let, lease, manage, develop, turn to account, dispose of, or otherwise deal with the same or any of them;

(j) to promote and support schemes for the provision of pensions and of guarantee and other funds for or in connection with the employees of the Bank and others;

(k) to carry on the business of and to act as managers of provident, benefit, superannuation or retirement funds or trusts and of fixed or flexible trusts and of unit trusts and investment trusts, and of any other trust or fund or common interest whatsoever whether of a similar or dissimilar nature and to act generally as a trust management company;

(l) to take and otherwise acquire and hold shares, stock, mortgages, bonds, obligations, securities, and investments of all kinds;

(m) to lend money either with or without security and if with security upon such security and upon such terms as may from time to time seem expedient;

(n) to borrow or raise or secure the payment of money in such manner as the Bank may think fit and to secure the same or the repayment or performance of any debt, liability, contract, guarantee or other acknowledgement incurred or to be entered into by the Bank in any way and in particular by the issue of debentures perpetual or otherwise charged upon all or any of the Bank’s property (both present and future) including its uncalled capital: and to purchase, redeem or pay off any such securities;

(o) to buy, sell, and in bullion, specie, precious metals, currencies, and exchange of and with all countries;

(p) to lend and advance money to or negotiate loans or discount promissory notes or other negotiable instruments for on behalf of or otherwise financially assist persons, firms, or companies concerned in any way whatever in the sale or purchase of any property (real or personal) for cash or on credit or on hire purchase, hire agreement, time payment, instalment system, or otherwise, and generally to transact or engage in any class of business commonly undertaken by financiers;

(q) to carry on business as travel agents and contractors and to provide or promote or facilitate the provision of travel services, accommodation, guides, enquiry and tourist bureaus and other services and facilities for travellers and tourists;

(r) to establish agencies or connections in relation to the business of the Bank in any part of the world;

(s) to give letters of credit on agents and banking connections in any part of the world;

(t) to buy, sell, discount, and rediscount bills of exchange, promissory notes, and treasury bills;

(u) to buy and sell securities issued by any Government, supreme, municipal, or otherwise;

(v) to form or assist in forming any company for the purpose of carrying on any business which the Bank is authorised to carry on, or any other business which may seem conducive to any of the interests of the Bank or to acquire by purchase or otherwise the whole or any part of the business, property, and liabilities, or the whole or any part of the shares or stock of any company carrying on or proposing to carry on any such business as aforesaid and to hold shares, stock, debentures, debenture stock, or any interest in any such company and to dispose of such shares, stock, debentures, debenture stock, or interest and to make or carry out arrangements for giving the Bank the entire or partial control and management or benefit of the business of any such company and to guarantee dividends and interest on shares, stock, debentures, debenture stock, mortgages, bonds or securities of any such company;

(w) to enter into and carry into effect any arrangements with any bank or banks or other corporation or corporations which the Bank may think necessary or convenient for the purposes of its business and in particular (but without in any way limiting the generality of the foregoing) with regard to management, supervision, staffing and pension rights, and to remunerate or reimburse the said bank, banks, corporation or corporations as the case may be for any services rendered or expenses incurred or liabilities assumed by it or them as the case may be in connection with any such arrangements;

(x) to establish, subsidise, assist, promote and concur in the promotion and establishment of companies, syndicates, joint ventures and partnerships for any purpose whatsoever and to manage or take part in the management of, supervise, conduct or control the business and affairs of any company, syndicate, joint venture, partnership, undertaking or person whatsoever and whether promoted by the Bank or not, and whether the Bank is a member thereof or not;

(y) to keep for any company, government, authority, or body any register relating to any stocks, funds, shares, or securities, and to undertake any duty in relation to the register of transfers, the issue of certificates or otherwise, and to undertake any kind of agency business;

(z) to procure the Bank to be registered or recognised in any country, state, or place outside Tonga, and to comply with any condition necessary or expedient in order to enable the Bank to carry on business in any such country, state, or place and to establish or guarantee local companies or branch offices constituted or regulated under or by local laws for carrying on any business which the Bank is authorised to carry on;

(aa) to establish and carry on a saving bank department and to make such regulations in respect thereof as may from time to time seem expedient;

(bb) to establish a development department with such functions, powers, and authorities and upon such conditions as may from time to time be agreed upon between the Bank and the Government;

(cc) to hold, manage, conduct and advise on property and investment of any kind either solely or jointly with others, for any person or corporation including a trustee of any fund trust or interest and to conduct the business of an investment consultant and manager;

(dd) to establish and manage pools of investment and to manage and control blended or common funds of any kind relating to property of any kind whatsoever;

(ee) to provide services of all kinds relating to the investment of moneys or other property or relating to the acquisition, holding, dealing in, control or recording of investments and securities of all kinds and all other matters incidental thereto;

(ff) to arrange or provide computer services of all kinds for any purpose whatsoever;

(gg) to acquire from any foreign states or authorities in Tonga or elsewhere any concessions, grants, decrees, rights, powers and privileges whatsoever which may seem capable of being turned to account by the Bank and to work, develop, carry out, exercise, and turn to account the same;

(hh) to do all or any of these things in any part of the world and either as principals, agents, trustees, contractors, or otherwise, and either alone or in conjunction with others and either by or through agents, sub-contractors, trustees, or otherwise;

(ii) to obtain any Act of Parliament or Ordinance or any Order in Council or any judicial or other legal sanction for enabling the Bank to carry any of its objects into effect or for introducing any modification into the constitution of the Bank or for any other purpose which may seem expedient; and

(jj) to do all such other things as may be deemed incidental or conducive to the attainment of the above objects or any of them.

(2) The objects specified in each of the paragraphs of subsection (1) shall be regarded as independent objects and shall in no wise be limited or restricted (except where otherwise expressed in such paragraphs) by reference from the terms of any other paragraph or the name of the Bank.

(1) The Board of Directors of the Bank shall consist of 5 persons, one each to be appointed or elected by the holders for the time being of the A shares, B shares, C shares, D shares, and E shares respectively.

(2) No person shall be a Director of the Bank if he is at the same time a member of any legislative body of any state or territory:

Provided however that this restriction shall not apply to a Director appointed or elected by the holders of the D shares during such time as the Government holds a majority of such shares.

(3) Subject to the provisions of this Act and the Articles and of such regulations (not being inconsistent with any such provisions or the Articles) as may from time to time be prescribed by the shareholders, the business of the Bank shall be controlled and managed by the Directors, who may pay all expenses incurred in promoting and establishing the Bank and may exercise all the powers conferred on the Bank by this Act or the Articles or by law.

(4) In the exercise of their functions and powers the Board of Directors shall give effect to any regulation that may from times to time be made by the shareholders in respect of the business of the Bank and to any decision of the shareholders in relation thereto conveyed to the Board in writing under the hand of the Secretary to the Bank.

(5) The Articles shall provide for the appointment of alternate directors, the term and cessation of office of directors and such other matters relating to Directors not inconsistent with the preceding subsections of this section as the shareholders consider appropriate.

(1) The financial year of the bank ends on the thirty-first day of December in each year.

(2) The Board shall at the end of each financial cause proper accounts to be prepared in respect of the operations of the Bank for that year.

(3) In the preparation of such accounts adequate and proper provision shall be made for bad and doubtful debts, contingencies, depreciation of assets, and all such other matters as shall in the judgment of the Board be necessary or desirable to take into account having regard to normal banking practice.

(4) Dividends shall from time to time be declared at the discretion of the Board having regard to the profits earned by the whole of the Bank's undertaking, the economic circumstances prevailing, and the future prospects and general financial stability of the Bank.

(6) Within 3 months after the expiration of every financial year the Bank shall transmit to each of the share holders a copy of its accounts for that year certified as correct under the hands of at least 3 Directors and of the Manager and Auditor of the Bank.

(7) The Bank shall also as soon as practicable after the close of business on the last weekly balance day of each of the months of March, June, September and December in every year make up and transmit to the Treasurer of the Kingdom of Tonga for publication in the Gazette a statement showing the respective aggregate amounts of the Bank's advances, deposits and reserves as at the close of business on that day.

(1) The Bank shall from time to time make up and transmit to the Treasurer of the Kingdom of Tonga in such form as the Treasurer may reasonably require -

(a) a return of the assets and liabilities of the Banks as at the close of business on the last weekly balance day of each month;

(b) a return of the overseas exchange reserves of the Bank as at the close of business of the second and last weekly balance days, respectively of each month;

(c) a return showing, as at the close of business on the last business day of each month, the respective amounts of receipts and payments relating to overseas exchange transactions of the Bank during that month.

(2) Each of such respective return shall be signed by the manager and the Accountant of the Bank, or by other competent officers of the Bank acting on their behalf, and shall be furnished to the Treasurer not more than 30 days from the date hereinbefore prescribed as the date at which the same is to be prepared.

The Bank shall make suitable provision for the accounts of the Bank to be audited in the manner customary among banks, such audit to be conducted by some fitting person (who may be an officer of one of the participating banks) to be appointed from time to time by the Bank and whose salary or remuneration shall be paid by the Bank.

(1) Subject to this Act the shareholders of the Bank shall provide for Articles of Association of the Bank to govern and regulate the operation and management of the Bank, and a copy of such Articles subscribed by the initial shareholders shall be lodged with the Registrar of Companies.

(2) When registered the Articles shall bind the Bank and the shareholders thereof to the same extent as if they respectively had been signed and sealed by each shareholder and contained covenants on the part of each shareholder to observe all the provisions of the Articles.

(3) The Bank may at any time by resolution passed by the holders of not less than three-fourths of the subscribed shares for the time being alter or add to its Articles and such alteration or addition shall be notified to the Registrar of Companies.

(4) Subject to this act, any alteration or addition to the Articles shall be as valid as if originally contained therein and be subject in like manner to alteration.

(1) If at any time it should appear from the books of the Bank that the Bank has lost more than one-half of its paid-up capital any shareholder may by notice in writing to the secretary of the Bank call for negotiations to be commenced between the shareholders for the purpose of determining the future existence of the Bank. If within 3 months after the giving of such notice, or within such extended period or periods as may be agreed upon in writing by the holders of not less than 80 per cent. in value of the paid up capital of the Bank, the holders of not less than 80 per cent. in value of the paid up capital of the Bank shall fail to reach agreement as to the continued existence of the Bank, the business of the Bank shall as soon as practicable thereafter be wound up and the Bank dissolved.

(2) If the Bank shall be wound up and the assets available for distribution to the shareholders shall be insufficient to repay the whole of the paid up capital such assets shall be distributed so that as nearly as may be the losses shall be borne by the shareholders in proportion to the capital paid up or which ought to have been paid up at the commencement of the winding-up on the shares held by them respectively.

(3) If in a winding-up the assets available for distribution to the shareholders shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding-up the excess shall be paid to the shareholders in the like proportion as aforesaid.

(4) If in a winding-up assets are available for distribution to shareholders any holder of any of the A, B, C or D shares not being the Government, a statutory board of the Kingdom of Tonga or a Tongan national shall be entitled to transfer such assets overseas:

Provided that should any such assets be in the form of Tongan currency the Government shall exchange such Tongan currency for overseas currency.

Tonga Consolidated Legislation

Bank of Tonga Act