Published by the Authority of His Majesty the King

On the advice of the Military Council

Order No. 25 of 1989

MoneyLendersOrder,1989

Supplement No. 1

To Gazette No. 71 of 15thDecember, 1989

143

FailuretocomplywithprovisionsofOrder

Re-openingtransactionsofMoney-Lender Unlawfuluseofmoney-lender’slicence Prohibitionofunauthoriseddealingsinmoney Restrictions of money lending advertisements

12

13

14

15

16

PARTVI–PENALPROVISIONS

PowersofCourt

Limitationoftime forproceedings

10

11

PARTV–LEGALPROCEEDINGS

Obligationtosupplyinformationtoborrower

Money-lendertogivereceipts

8

9

PARTIV–OBLIGATIONSOFMONEY-LENDER

Rate ofInterest,contracts

Harshandunconscionableinterestrate

Formof  money-lender’scontract

5

6

7

PARTIII–RATEOFINTEREST,CONTRACTS

Applicationforandgrantofamoney-lender’slicence

Licencestobetakenoutbymoney-lenders

3

4

PARTII–MONEYLENDER’SLICENCE

Shorttitle andCommencement

Interpretation

1.

2

PARTI–PRELIMINARY

SECTION

ARRANGEMENTOFSECTIONS

MONEYLENDERSORDER,1989

144

Application in respect ofassignees

Insolvencyproceedingsformoney-lenders’loans

Exemptions Savings Regulations

23

24

25

26

27

PART VII – SUPPLEMENTARY AND TRANSITIONAL

PROVISIONS

False statements and representations

Notice and information on assignment of money- lenders Prohibition of compound interest and provision as defaults Prohibition of charge for expenses on loans

Names to be stated on documents issued by money-lenders Taking promissory note where amountis left blank or not truly stated

17

18

19

20

21

22

145

‘licence”meansamoney-lender’slicencegrantedundersection

3:

“interest”includesany  amount,by  whatevername  called  in

excessoftheprincipal,paidorpayabletoamoney-lenderin considerationorotherwiseinrespectofa loan;

“firm”meansanunincorporatebodyofoneormoreindividuals,

andoneormore corporations,whohaveenteredintopartnership withoneanotherwitha viewtocarryingonbusinessforprofit;

“businessname”meansthenameandstyleunderwhichany

businessiscarriedon,whetherinpartnershiporotherwise;

“authorisedname”means thenameunderwhichamoney-lender

isauthorisedbyalicencegrantedunderthisOrdertocarryon businessasamoney-lender;

“authorisedaddress”meansthe addressatwhichamoney-lender

isauthorisedbyalicencegrantedunderthisOrdertocarryon businessasamoney-lender;

Interpretatio

n

2.   In   this   Order,   unless   the   context   otherwise   requires,

“assigned”meansassignedbyanyassignmentintervivos

otherthananassignmentbyoperationoflaw;

Short title

and commencem ent

1.   ThisOrdermaybecitedastheMoney-lendersOrder,1988

andshallcomeintooperationonadateofitspublicationin thegazette.

Part I – Preliminary

To make provision for the regulation of money-lending and for purposes

connectedtherewith.

ORDER NO. 25 OF 1989

MONEY-LENDERS ORDER, 1989

ORDER

146

(3).A money-lender’slicenceshallnotauthoriseamoney-lender

tocarryonbusiness,

Application

forand grant of amoney- lender’s licence

(3)  Apersonwishingtocarryonthe businessofmoney-lending

shallmakeanapplicationtotheCommissionerofFinancial

Institutionsforthegrantofamoney-lender’slicence.

(2)  Anapplicationforamoney-lender’slicenceshallbeinthe

prescribed   form   and   shall   be   accompanied   by   such information,documentsandfeesas maybeprescribed.

PARTII–Money-Lender’sLicence

A.   23 of

1973

“principal”meansinrelationtoaloantheamountactuallylent

totheborrower.

P.47of

1948

enactmenttolendmoneyinaccordancewiththatenactment;

(d)any  credit  institution  defined  in  terms  of  the  Financial

InstitutionsAct,1973;or

(e)  anypersonexemptedfromtheprovisionsofthisOrderby theMinisterundersection25;

(c)

(b)

any  person  bona  fide  carrying  on   financial,  banking

businessorinsurance orbonafidecarrying onanybusiness nothavingforitsprimaryobjectthelendingofmoney,in thecourseofwhichandforthepurpose whether helends money;

any  society  registered  under  the  Co-operative  Societies

Proclamation,1948

anybodycorporate,incorporatedorempoweredbyspecial

(a)

“money-lender”includeseverypersonwhosebusinessisthatof

money-lendingorwhoadvertisesorannounceshimselforholds outinanywayascarrying onthatbusiness whetherornotthat personalsopossesses orearnpropertyormoneyderivedfrom sourcesother  thanthelendingofmoneyandwhetherornotthat person carries onthebusinessasprincipaloragent; butshallnot include,

“Minister”meanstheMinisterresponsibleforFinance;

147

ApersonaggrievedbythedecisionoftheCommissionerof

FinancialInstitutionstorefusetograntamoney-lender’s licence  may  appeal  in  writing  to  the  Minister  and  the

(6)

TheCommissionerofFinancialInstitutionsshallnotrefuse

tograntamoney-lender’slicenceexceptononeormoreof thefollowinggrounds;

(a)  thatsatisfactoryevidencehasnotbeenproduced ofthe good  character  of  the  applicant,  and  in  the  case  of  a company,of  the  person  responsiblefor  the  management thereof;

(b) thatsatisfactoryevidencehasbeenproducedthatthe applicant,oranypersonresponsibleorproposedtobe

responsibleasamoney-lenderisnotafitandproper persontoholdthemoney-lender’slicence;

(c)  thattheapplicanthasnotcomplied withanyregulations madeunderthisOrderwithrespect toamoneylender’s licence.

(5)

A. 25 of

1967

Amoney-lender’slicenceshallremaininforceforaperiod

ofoneyearbeginning onthedaywhenitisissuedandmay berenewed fromtimetotime,andshallbesubject tosuch conditionsasmaybeattachedthereto.

(4)

(iii)

histruename;

thenameofa firminwhichheisa partner,other thanafirmexemptedbythe Ministerintermsof section25;or

underabusiness name,whether ofanindividual ora firminwhichheisa partnerunderwhichhe orthe firmhas, the cominginto operationofthis Orderhasbeenregistered fornotlessthanthree years,undertheCompanies Act,1967,orany lawrelatingtobusinessnames.

(i)

(ii)

otherwise  implies  that  he  carries  on  banking  or  financial

businessunderanynameexcept,

atmorethanoneaddress;

undermorethanonename;

under  the  name  which  includes  the  word  “bank”  or

(a)

(b) (c)

148

6.   (1)Whereinanyproceedingsinrespectof,

(a)  anymoneylentbyamoney-lender afterthecoming intooperationofthisOrder;or

(b)anyagreement orsecuritymadeortakenafterthe comingintooperation ofthisOrderinrespectof moneylenteitherbefore orafterthecoming into operationofthisOrder,

Harshand

unconsciona ble interest rates

Schedule

5.   Wherebyacontractfortheloanofmoneybyamoney-

lendertheinterestchargedontheloanisnotexpressedin termsofa rate,

(a)  anyamountpaidorpayabletothemoney-lender under   the   contract,   other   than   simple   interest chargedin accordancewithsection19(2)(a) shallbe appropriatetoprincipal;and

(b)interestintheproportionthattheprincipalbearsto the  total  amountof  the  interest  and  the  rate  per centumrepresented bytheinterestchargedas calculated inaccordance withtheScheduleshallbe deemedtobetherateofinterestchargedontheloan.

Rate of

interest

PARTIII–RateofInterest,Contracts

(3).Amoney-lender’slicenceshallbetakenoutbyamoney-

lender inhistruename, andshallbevoidifitistakenoutinany othername,buteverymoney-lender’slicenceshallalsoshow themoney-lender’sauthorisednameandauthorisedaddress.

(2).Whereonepartnerinafirmofmoney-lendershasduly

takenoutamoney-lender’s licence,everyotherpartnerinthe firm shall,subject tosection3,beissuedwithamoney-lender’s licencefreeofchargeforthebusinessofthefirmforsuchtime asheshallremainamemberofthefirm.

4.   (1)SaveasotherwiseprovidedinthisOrder,everymoney-

lendershalltakeoutannuallyamoney-lender’slicencein respectofeveryaddressat whichhecarrieshisbusiness.

Licencesto

betaken out by money- lenders

decisionoftheMinistershallbefinal.

149

(2)Thenoteormemorandumshallcontainallthetermsofthe

contractandinparticularshallshow,

(a)  thedateonwhichtheloanismade;

(b)theamountoftheprincipaloftheloan;and

(b)

(a)

(1)Nocontractfortherepaymentbyaborrowerofmoney

lenttohimortoanyagentonhisbehalfbyamoney-lender orforthepayment byhimofinterestonmoneysolent,and nosecuritygivenbytheborrower orbyanysuchagentin respectofanysuchcontractshallbeenforceable,unless,

anoteormemoranduminwritingofthecontractismade andsignedpersonallyby theborrower;and

acopythereofisdelivered orsenttotheborrower within sevendaysofthemakingofthecontract,and

nosuchcontractor  securityshallbeenforceableif  it  is provedthatthenoteormemorandum wasnotsignedbythe borrower beforethemoneywaslentorbeforethesecurity wasgiven,asthecasemaybe.

7.

Formof

money- lenders contracts

insolvency,notwithstandingthathemaynotbea

personliableinrespectofthetransaction;and

(b)be  exercised  notwithstanding  the  money-lender’s rightofactionfortherecovery   ofmoneylentis barred.

be

in

Thepowersofthecourtundersection13.2may,

(a)  in  the  event  of  insolvency  of  the  borrower, exercised,               at    the                  instanceof            the  trustee

(2)

is

although   not    exceeding   25%   per   annum,

excessive.

itisfoundthattheinterestchargedexceedstherate

of  25%  per  annum,  or  the  correspondingrate  in respect ofanyotherperiod, thecourtshallpresume forthepurposes ofsection13thattheinterest chargedisexcessiveandthatthetransactionisharsh andunconscionable, butthissubsectioniswithout prejudicetothe powersofthe courtundersection13 wherethecourtissatisfiedthattheinterestcharged,

150

(2)Amoney-lendershall,onanyreasonabledemandinwriting

bytheborrower, andonpaymentofM1.00(oneLoti)for expenses,supplyacopyofanydocumentrelatingto a loanmade by  him  or  any  security  thereof,  to  the  borrower,  or  if  the borrowerso requires,to anypersonspecifiedin thatbehalfin the demand.

(f)

(e)

(d)

(c)

thedateonwhichtheloanwasmade;

theamountoftheprincipal oftheloanandtherate percentumperannumoftheinterestcharged;

the   amount   of   any   payment   already   received bythemoney-lenderinrespectoftheloanand

thedateonwhichit wasmade;

theamountofanypayment alreadyreceived bythe money-lender inrespectoftheloanandthedateon whichit wasmade;

theamountofeverysumduetothemoney-lender butunpaidandthedateuponwhichitbecame due, andtheamountofinterestaccrued,dueandunpaid inrespectofeverysuchsum;and

theamount ofeverysumnotyetduewhichremains outstanding andthedateuponwhichitwillbecome due.

(a)

(b)

Obligation

tosupply information toborrower

(1)Inrespectofeverycontractfortherepaymentofmoney

lentbyamoney-lender, whethermadebeforeorafterthe comingintooperationofthisOrder,themoney-lendershall, onanyreasonable demandinwritingbeingmadebythe borroweratanytimeduringthecontinuance ofthecontract supplyfreeofchargetotheborrower or,iftheborrower so requires,  to  any  person  specified  in  that  behalf  in  the

demand,  a  statement  signed  by  the  money-lenderor  his

agentshowing,

8.

PARTIV–ObligationsofMoney-Lender

(c)  eithertheinterestchargedontheloanexpressedintermsof

aratepercentum perannum ortheratepercentumperannum represented bytheinterestchargedascalculatedinaccordance withtheSchedule.

151

Amoney-lenderwhofailstocomplywithany

oftherequirements ofthissectionshallnotbe entitled toenforce anyclaiminrespectofany transaction  in  relation  to  which  the  default

(4)

Theentriesinthesaidbookshallbemadeon

themakingoftheloanoronthereceiptof sumspaidinrespectthereof,asthecasemay be.

(3)

thedateonwhichtheloanwasmade;

theamountoftheprincipal;

therateofinterest;and

allthesumsreceived   inrespectofthe loanortheinterest thereonwiththedates ofpayment thereof, andshallproduce suchbookwhenrequired todosobyany court.

(a)

(b) (c) (d)

Amoney-lendershallkeepabook,whichshall

be  securelyboundandpagedso  thatleaves cannot                be   removed  or              inserted           without apparent damage, inwhichheshallenterin connectionwitheveryloanmadebyhim,

(2)

(1)Amoney-lendershallgiveareceiptforeverypayment

madetohimonaccount ofaloanorofinterest thereon and everysuchreceiptshallbe givenimmediatelythepaymentis made.

9.

Money–

lender to

givereceipts and keep records

Ifamoney-lendertowhomademandhasbeenmadeunder

thissectionfailswithoutreasonable excusetocomply therewith  within  one  month  after  the  demand  has  been made,

(a)  heshallnot,solongasthedefaultcontinues, beentitled tosuefor,orrecover anysumdueunderthecontracton accounteitherofprincipalorinterest;and

(b)  interestshallnotbechargedinrespectoftheperiodof thedefault

(3)

152

11.(1)Subjecttosubsection(2),andtosection23(2)©no

proceedingsshalllie fortherecoverybyamoneylender,

(a)  ofanymoneylentbyhimafterthecominginto operation ofthisOrderorofanyinterestinrespect thereof,or

(b)for  the  enforcement  of  any  agreement  made  or security taken afterthecomingintooperationofthis Order,inrespectofanyloanmadeby him,

Limitation

of time for proceedings

(b)

Nothingin thissectionshall,

affecttherightsofanybonafideassigneeorholder forvaluewithoutnotice;or

beconstrued asderogating fromtheexistingpowers ofjurisdictionofanycourt.

(2)

(a)

(3)Subsections(1)and(2)shallapplytoanytransactionwhich,

whateverits formmaybeissubstantiallyoneofmoney-lending.

(2)Whereinanysuchproceedings,

(a)  there  is  evidence  which  satisfies  the  court  that defaultinpayment ofanysumduetotheplaintiff underacontractfortheloanofmoneyhasbeen madeby theborrower;and

(b)itisproved thatanyfurtheramount isoutstanding underthecontract butnotyetdue,thecourtmay determine thecontractandordertheprincipal outstandingto  be  paid  to  the  plaintiffwith  such interestthereon, ifany,asthecourtmayallowupto thedateofpayment.

10.(1)Whereproceedingsaretakeninanycourtby anyperson.

(a)  fortherecoveryofanymoneylent; or

(b)fortheenforcementofanyagreementorsecurity madeortakeninrespectofmoneylent,

theplaintiffshallproduceastatementofhisaccountas prescribedinsection8.

Powersof

court

PartV–LegalProceedings

shallhavebeenmade.

153

(4)  Withoutprejudicetothepowersofcourtundersection13,if

undertakingisgivenbythedebtor,thedebtorisout

ofLesotho,thetimelimitedby subsection(1)forthe commencementof  proceedingsshallnotbeginto rununtilhereturntoLesotho.

and

acknowledgement

such

any

which

on

(d)

undertaking  is  given  by  the  debtor,  the  person

entitledtotaketheproceedings innoncompos mentis,thetimelimitedbysubsection (1)forthe commencementof theproceedingsshallnotbeginto rununtil that personceasestobenoncomposmentis ordies,whicheverfirstoccurs;and

ifatthedate onwhich thecause ofaction accruesor

and

such           acknowledgement

which    any

on

(c)

runinrespectofanypaymentsfromtimetotime

becomingduetoamoney-lenderunderacontract fortheloanofmoneyuntilacause ofaction accrues inrespectofthelastpaymentbecoming dueunder thecontract;

ifatthedate onwhich thecause ofaction accruesor

for   the

beginto

(b)

acknowledgementandundertaking;

the   time   limited   by   subsection   (1)

commencementof  proceedingsshallnot

of     the

date

the

from

months

twelve

ifduringtheperiodoftwelvemonthsreferredtoin

subsection (1)oratanytimewithinanysubsequent periodduringwhichproceedings may,byvirtueof thissubsection bebrought,thedebtoracknowledges inwriting theamount dueandgivesawritten undertakingtothemoney-lender topaythatamount theproceedings fortherecoveryoftheamountdue may  be  brought  at  any  time  within  a  period  of

(a)

(2)Notwithstandingsubsection(1)

unless  the  proceedings  are  commenced  before  the

expirationoftwelvemonthsfromthedateonwhichthe causeofactionisaccrued.

154

renewalsoranyothercharges,areexcessive,and

that,in  eithercase,thetransactionis  harshand unconscionable,orisotherwisesuchthatacourt of equitywouldgiverelief.

premium,

bonus,

fines,

inquiries,

expenses,

13.(1)Where,

(a)    proceedingsaretakeninanycourtbyamoney- lenderfortherecovery ofanymoneylentafterthe comingintooperation ofthisOrder,orthe enforcementofanyagreement,orsecuritymadeor takenafterthecomingintooperation ofthisOrder; and

(b)   thereisevidencewhichsatisfiesthecourtthatthe interestchargedinrespectofthesumactuallylent is  excessive,  or  that  the  amounts  charged  for

Re-opening

transactions of money- lenders

(a)  withoutreasonablecause,defaultstosupplyinformation

to  the  borrower  or  to  a  person  authorized  by  the borrower relatingtoaloanmadebyhimoranysecurity thereof,totheborrower asrequiredbysection8,andif suchdefaultismadeor continuedafterproceedingshave ceasedtolie inrespectoftheloan;

(b)failstocomplywithanyoftherequirementsofsection

9,

commitsanoffenceandisliableonconviction toafine ofM2,000ortoimprisonmentfora periodof2years.

12.Amoney-lender

Failure to

comply with provisions

of Order

PartVI–PenalProvisions

at thetimewhenproceedingsaretakenby amoney-lenderin

respectofa  defaultinthepayment ofanysumduetohim undercontract fortheloanofmoney,anyfurtheramount is outstanding underthecontractbutnotyetdue,thecourse maydetermine thecontractandordertheprincipal outstanding  to  be  paid  to  the  money-lender  with  such interestthereon,ifany,asthecourtmayallowuptothedate ofpayment.

155

(3)Whereacourtreopensatransactionofamoney-lenderunder

(a)  attheinstanceoftheborrowerorsuretyorother

person liable,exercise thelikepowers asmaybe exercisedunderthissection,whereproceedings are takenfortherecoveryofthemoneylent; and

(b)notwithstanding anyprovisionoragreementtothe contrary,entertainanyapplication underthisOrder by theborrowerorsurety,orotherpersonliable,

notwithstanding thatthetimeforrepaymentoftheloan,

oranyinstallment,thereof,maynotbedue.

the

(2)  Any  court  in  whichproceedingsmight  be  taken  for

recoveryofmoneylentbya money-lendermay,

the

the

the   money-lender   has   parted   with

security,may  orderhimto  indemnity borrowerorotherpersonsued.

ifanysuchexcesshasbeenpaidorallowed

inaccount bythedebtor,mayorderthe creditor torepayitandmaysetasideeither wholly orinpart,orrevise oralterany securitygivenoragreement madeinrespect ofmoneylentbythemoney-lenderandif

(iv)

the

to

adjudge

circumstances,    may

reasonable;and

(iii)

(ii)

reopenthetransaction,andtakeanaccount

betweenthemoney-lender andtheperson sued;

notwithstanding anystatementorsettlement ofaccountoranyagreement purporting to close  previousdealingsand  create  a  new obligation,   reopen   any   account   already

takenbetweenthem;

relievethepersonsuedfrompaymentof any suminexcessofthesumadjudged bythe courttobefairlydueinrespect ofsuch principal, interestandcharges,asthecourt, having   regard   to   the   risk   and   all   the

(i)

Thecourtmay,

156

carries  on  business  as  such  in  any  name

otherthanhisauthorizedname,oratany

(i)

(c)

(b)

takesoutamoney-lender’slicenceinanynameother

thanhistruename;

carriesonbusinessasamoney-lenderwithouthavingin forceamoney-lender’slicenceauthorizinghimtodoso; beinglicensedasamoney-lender

(a)

14.Apersonwho

(5)  Subsections(1)to(4)shallapplytoanytransactionwhich,

whateveritsformmaybeissubstantiallyoneofmoney- lendingby amoney-lender.

(6)  Nothingin thissectionshall,

(a)  affecttherightsofanybona-fideassigneeorholderfor valuewithoutnotice;or

(b)beconstruedasderogatingfromtheexistingpowersor jurisdictionofanycourt.

(4)Onanyapplicationrelatingtotheadmissionoramountof

proofby  a  money-lenderin  anyinsolvencyproceedings,the courtmayexercisethelikepowersasmaybeexercisedunder thissectionwhenproceedingsaretakenforrecoveryofmoney.

(3)Whereacourt reopensatransactionofamoney-lenderunder

subsection(1),thecourtmay,

(a)  requirethemoney-lendertoproduce  thelicencegranted tohiminaccordancewiththisOrder;and

(b)causesuchparticularsasthecourtthinksdesirable tobe endorsed onanysuchlicence,andacopyofthe particularstobesenttotheCommissioner ofFinancial Institutions.

subsection(1),thecourtmay,

(a)  requirethemoney-lender toproducethelicencegranted tohiminaccordancewiththisOrder;and

(b)causesuchparticularsasthecourtthinksdesirable tobe endorsed onanysuchlicence,andacopyofthe particularstobesenttotheCommissioner ofFinancial Institutions.

157

(2)  Save  as  hereinafterprovided,no  person  shall  publishor

causetobepublished inanynewspaper orotherprintedpaper issuedperiodically forpubliccirculation, orbymeansofany posterorplacard,anadvertisement advertisinganysuch particulars,orcontaining anysuchinvitations,asmentionedin subsection(1):

(c)

toborrowmoneyfromamoney-lender;

to enterintoany transactioninvolvingtheborrowing ofmoneyfromamoney-lender;or

toapply toanyplace withaviewtoobtaining information oradviceastoborrowinganymoney fromamoney-lender

(a)

(b)

Unlawful

useof money- lender’s licence

16.(1)Nopersonshallknowingly sendordeliver  orcausetobe

sentordeliveredtoanypersonexceptinresponse tohiswritten requestanycircularorotherdocumentadvertising thename, addressortelephonenumberofamoney-lender,orcontaining aninvitation.

15.Apersonwhodealsinorparticipatesinanybusinessor

activitybyway of obtainingfromor advancingmoneyto the generalpublicwhichbusiness oractivityisnotspecifically authorizedbythisOrderoranyotherwrittenlawcommits anoffenceandisliableonconvictiontoafineofM2,000or toimprisonmentfora periodof2years.

commitsanoffenceandisliable.

(a)  onafirstconvictiontoafineofR500orto imprisonmentfora periodof6months;and

(b)onasecondorsubsequentconviction,toafine ofM2,000ortoimprisonmentof2years.

(iii)

(ii)

otherplacethanhisauthorizedaddress;

entersintoanyagreementinthecourseof hisbusinessasamoney-lenderwithrespect to  the  advance  or  repayment  of  money otherwisethaninhisauthorizedname;or takesanysecurityformoneyinthecourse ofhis businessasamoney-lender,otherwise thaninhisauthorizedname,

158

(4)Whereanydocumentissued orpublishedbyoronbehalfofa

money-lenderpurportstoindicatethetermsof  interestupon whichheiswillingtomakeloansoranyparticular loan,the document shallexpresstheinterestproposedtobechargedin termsofa  ratepercentumperannumorshowtherateper centumperannumrepresented bytheinterestproposedtobe chargedascalculatedinaccordancewiththeSchedule.

(3)Nomoney-lenderoranypersononhisbehalfshallemploy

anyagentorcanvasser forthepurposeofinvitinganypersonto borrowmoneyortoenterintoanytransaction involvingthe borrowingofmoneyfromamoney-lender, andnopersonshall actassuchagentorcanvasser, ordemandorreceive,directlyor indirectlyanysumorothervaluableconsideration bywayof commission orotherwiseforintroducing orundertaking orto introducetoamoney-lender anypersondesiringtoborrow money.

(iv)

(iii)

(ii)

Restrictions

on money- lendingads.

any  authorized  address  at  which  he  carries  on

businessasamoney-lender; thetelegraphicaddress andtelephonenumberthereof;

the   address   at   which   he   formerly   carried   on business;

a  statementthathelendsmoneywithorwithout security,andofthehighestandlowestsumsthathe ispreparedtolend;and

astatementofthe dateonwhichthe businesscarried onbyhimwasfirstestablished.

(i)

Prohibition

of unauthorize

d dealings in money

Provided   that,   an   advertisement   in   conformity   with   the

requirements  of  this  Order  relating  to  the  use  of  names  on money-lenders’documentsmaybepublishedbyoronbehalfof amoney-lender,

(a)  inanynewspaperorinanysuchpaperasaforesaid;or

(b)by  means  of  a  poster  or  placard  exhibited  at  any authorizedaddressofthemoney-lender,

ifitcontainsnoadditiontotheparticulars necessarytocomply with   the   said   requirements  except   any   of   the   following particulars,

159

18.(1)Whereanydebtinrespectofmoneylentbyamoney-

lenderwhether beforeorafterthecomingintooperation ofthis Orderorinrespect ofinterest onanysuchdebtorthebenefit or anyagreementmadeorsecuritytakeninrespectofanysuch debtorinterestisassignedtoanyassignee,the assignor,whether heisthemoney-lender bywhomthemoneywaslentorany persontowhom thedebthasbeenpreviously assigned shall, beforetheassignmentismade,

(a)  givetotheassigneenoticeinwritingthatthedebts, agreement orsecurityisaffectedbytheoperationof thisOrder;and

(b)supplytotheassigneeallinformation necessaryto enablehimtocomplywiththeprovisions ofthis Order   in   relation   to   the   obligation   to   supply

(a)  anymoney-lender oranymanager,agentorclerkof

amoney-lender;or

(b)any personbeingadirector,managerorotherofficer of  any  corporationcarryingon  the  businessof  a money-lender,

byafalse,misleading,ordeceptivestatement,representation or promise,  or  by  any  dishonestconcealmentof  material  facts, fraudulently inducesorattemptstoinduceanypersontoborrow money toagreetotheterms onwhich money isoristobe borrowed,hecommitsanoffenceandisliableonconvictiontoa fineofM2,000ortoimprisonmentforaperiodof2years.

17.If

(6)Where  it  is  shown  that  a  money-lending  transaction  was

brought  about  by  a  contravention  of  any  provision  of  this section,thetransactionshall,notwithstanding thatthemoney- lenderwasdulylicensed underthisOrder,bevoidand unenforceable        unless                      the         money-lender              proves  that   the contraventionoccurredwithouthisconsentorconnivance.

(5)Apersonwhocontravenesthissectioncommitsanoffence

andis,inrespectofeachoffenceforwhichheisconvicted, liabletoafineofM2,000ortoimprisonment foraperiodof2 years.

160

20.(1)Anyagreementbetweenamoney-lenderandborroweror

intendingborrowertothemoney-lenderoranysumonaccount ofcosts,chargesorexpensesincidental toorrelatingtothe negotiationsfororthegrantingoftheloanorproposedloanshall bevoidandunenforceable.

(3).Apersonwhocontravenesanyoftheprovisionsofthis

sectioncommitsanoffenceandisliableonconvictiontoafine ofM2,000ortoimprisonmentfora periodof2years.

Prohibition

of chargefor expenseson loans

(2)Provisionmayhoweverbemadebyanysuchcontractthatif

defaultismadeinthepayment upontheduedateofanysum payabletothemoney-lender underthecontract,whetherin respectoftheprincipalorinterest,

(a)  the  money-lender shallbeentitledtochargesimple intereston thatsumfromthedateof thedefaultuntil thesumispaid,ataratenotexceeding therate payableinrespectoftheprincipal partfromany default;and

(b)any  interestso chargedshallnotbe reckonedforthe purposesofthisOrderaspartoftheinterest charged inrespectoftheloan.

19.(1)SaveasotherwiseprovidedinthisOrder,anycontract

madeafterthecomingintooperationofthisOrderfortheloan ofmoneybyamoney-lender shallbevoidandunenforceablein sofarasit providesdirectlyorindirectlyforthepaymentof compound  interestorfortherateoramount,ofinterestbeing increasedbyreason ofdefaultinthepaymentofsumsdueunder thecontract.

(2)Apersonwhocontrivesanyoftheprovisionsofsubsection

(1)isliabletoindemnityanyotherpersonwhoisprejudiced by thecontravention and,inaddition,commitsanoffenceandis liableonconvictionto afine ofM2,000ortoimprisonmentfor a periodof2years.

informationastothestateofloansandcopiesof

documentsrelatingthereto.

161

22.  A  money-lenderwho  takes,  as  security  for  any  loan,  a

promissorynoteorothercontractfortherepaymentofmoney lentinwhichtheprincipalis,totheknowledgeofthelender,not trulystated,orisleft blank,commitsan offenceandisliable,

of

to

(a)  on   a   first   conviction   to   a   fine   of   M550   or

imprisonmentfora periodof6months;and

(b)on  a  second  or  subsequent  conviction  to  a  fine

M2,000ortoimprisonmentfora periodof2years.

Taking

promissory notewhere amount is

left blank of

notetruly stated

21.(1)WithoutprejudicetotheprovisionsoftheCompanies

Act,1967,oranylawrelatingtotheregistration ofbusiness- names,amoney-lendershall not,forthepurposeofhisbusiness, issueorpublish,causetobeissuedorpublished any advertisement,circular,businessletter orothersimilardocument which doesnotshow insuchmanner astobenotless conspicuous thantheothername,theauthorizednameofthe money-lender.

(2)Amoney-lenderwhocontravenessubsection(1)commitsan offenceandisliable  onconvictiontoa  fineofM550orto imprisonment  for  a  period  of  6  months  in  respect  of  each offence.

(3)Ifamoney-lender, forthepurposesofhisbusiness,issues, publishes,            or   causes          to    be                   issued          or   published,    any advertisement,circular  or  document  of  any  kind  whatsoever containing expressionswhichmightreasonably beheldtoimply thathe carrieson bankingor financialbusiness,he isguiltyof an offenceandisliable ona firstconviction,

(3).A  person  who  contravenesany  of  the  provisionsof  this

sectioncommitsanoffenceandisliableonconvictiontoafine orM2,000ortoimprisonmentfora periodof2years.

Namestobe

stated on documents

issued by

money- lenders A 25 of

1967

(2)ifasumispaidto amoney-lenderby aborroweror intending

borrower asfororonaccountofanysuchcosts,chargesor expenses,thatsumshallberecoverable asadebtduetothe borrowerorintendingborrower,orintheeventoftheloanbeing completed,shall,  if  not  so  recovered,be  set  off  against  the amount actually lentandthatamount shallbedeemed tobe reducedaccordingly.

162

(c)

(b)

anyagreementwith,orsecuritytakenby amoney-lender

inrespect ofmoneylentbyhimafterthecominginto operation ofthisOrdershallbevalidinfavourofany bonafideassignee orholderforvaluewithoutnoticeof anydefectduetotheoperation ofthisOrderandofany personderivingtitleunderhim;

any  paymentor  transferof  moneyor  propertymade

bonafidebyanyperson whether actinginafiduciary capacityorotherwise, onthefaithofthevalidityofany suchagreement orsecurity,withoutnoticeofanysuch defectshall,infavourofthatperson, beasvalidasit wouldhavebeeniftheagreement orsecurityhadbeen valid;and

theprovisions ofSection11limitingthetimefor proceedingsinrespectformoneylentshallnotapplyto

(a)

(2)NotwithstandinganythinginthisOrder,

inrespectof  anysuchdebtorinterest,notwithstandingthatthe

debtorthebenefitoftheagreement orsecuritymayhavebeen assignedtoanyassignee,and exceptwherethe contestotherwise requires,referenceinthisOrdertoamoney-lender shall accordingly beconstruedasincludinganysuchassigneeas aforesaid.

(a)  anydebttoamoney-lenderformoneylentbyhimafter

thecomingintooperationofthisOrder;or

(b)interest  on  money  so  lent  or  of  the  benefit  of  any agreementmadeorsecuritytaken,

23.(1)Saveashereinafterprovided,thisOrdershallapplyin

respectof,

Part VII – Supplementary and Transitional Provisions

Application

in respectof assignee

(a)   on   a   first  conviction  to   a   fine   of   M550  or   to

imprisonmentfora periodof6months;and

(b)  forasecondtimeorsubsequentconviction,toafineof

M2,000ortoimprisonmentfora periodof2years.

163

(4).Noproofofadebtduetoamoney-lenderinrespectofa

loanmadebyhimshallbeadmittedforanyofthepurposesof theInsolvencyProclamation 1957,unlesstheaffidavitverifying thedebtisaccompaniedbya statementshowingindetail.

(a)  theamountofthesumsactuallylenttothedebtor,the

(3).Subsections(1)and(2)shall,inrelationtosuchadebt,have

effect  in  substitution  for  section  50  (1)  of  the  Insolvency

Proclamation,1957.

(2)Notinginthissectionshallprejudicetherightofthecreditor

toreceive outoftheestateafterallthedebtsproved intheestate havebeenpaidinfull,anyhigherrateofinteresttowhichhe maybeentitled.

P.51of

1957

thepresentationofa petitionforsequestrationofestates;

votingat meetings;

compositionandschemesofarrangementanddividend, becalculatedat a ratenotexceeding25%perannum.

(a)

(b) (c)

24.(1)Whereadebtduetoamoney-lenderinrespectofaloan

made  by  him  after  the  coming  into  operationof  this  Order includes interest, thatinterestshall,forthepurpose ofthe provisionsoftheInsolvencyProclamation,1957relatingto,

(3)Nothinginthissectionshall rendervalid foranypurposeany

agreement,security,orothertransaction,whichwould,butfor thisOrder,havebeenvoidorunenforceable.

A

Insolvency

proceedings formoney-

lenders

loans

P.57 of 1957

but  in  every  such  case,  the  money-lendershall  be  liable  to

indemnifytheborroweroranyotherpersonwhoisprejudiced byvirtueofthissection,andnothinginthissubsection shall rendervalidanagreement orsecurityinfavouror,orapplyto proceedingscommencedbyanassigneeorholderforvaluewho ishimselfamoney-lender.

anysuchagreementorsecuritycommencedbyabona

fideassignee orholderforvaluewithoutnoticethatthe assignment orsecuritywasaffectedbytheoperationof thisOrder,orby anypersonderivingtitle underhim,

164

Regulations

(c)

(b)

anymoney-lendingtransactionwherethesecurityfor

repaymentoftheloanandinterestthereonis effectedby execution ofachattelstransferinwhichtheinterest providedfor  is  not  in  excessof  25  per  centumper annum;

anytransactionwhereabillofexchangeisdiscounted atarateofinterestnotexceeding25percentum per annum;

Anymoney-lending transactionwherethesecurityfor repaymentoftheloanandinterestthereonis effectedby

execution  of  a  legal  or  equitable  mortgage  upon

immovable propertyorofachargeuponimmovable property  or  of  any  bona  fide  transactionof  money- lendinguponsuchmortgageorcharge.

(a)

26.(1)ThisOrdershallnotapplyto,

25.TheMinistermay,bynoticeinthegazette,inconsultation

withthe  Commissionerof  FinancialInstitutions,exemptany personfromtheprovisionsofthisOrder.

(5).Forthepurposesofthissection,regulationsmadeunder

section158oftheInsolvencyProclamation,1957shallapply

mutatismutandis.

Savings

Exemption

dateson  whichthey  were  lent,  the  amountof  every

payment  already  received  by  the  money-lender  in respect oftheloanandthedateonwhich everysuch paymentwasmade;

(b)the    amount   of    the    balance   remaining    unpaid, distinguishing   the  amountof  the  principalfromthe amountofinterestincludedtherein, theappropriation betweenprincipalandinterestbeing madeinaccordance withthisOrderwheretheinterestisnotexpressedby the contractfortheloanintermsofa rate;and

(c)  wheretheamount ofinterestincluded inunpaidbalance represents aratepercentum perannumexceeding 25%, theamountofinterestwhichwouldbesoincluded ifit werecalculatedat therateof25%perannum.

165

one

3.  The  total  amountof  the  interestshall  be  dividedby

the

are be

payments  are  made  shall  be  multipliedin  each  case  by

numberof  calendarmonthsduringwhichthoseamounts takentoberespectively outstanding andthereshall ascertainedtheaggregateamountofthesumsoproduced.

2.Severalamountstakentobeoutstandingbywayofprincipal

during  the  several  periods  ending  on  the  dates  on  which

1. Theamountof principaloutstandingatany timeshall be taken

tobethebalanceremainingafterdeductingfromtheprincipal thetotaloftheportionsofanypaymentsappropriated tothe principalinaccordancewiththisOrder.

CalculationofInterestWheretheInterestCharged

onLoanisnotExpressedintermsofarate

SCHEDULE(Section5(b)

(d)

(b)

(c)

prescribingthe proceduretobefollowedand formstobe

completed  by  applicants  for  money-lender’s  licenses grantedunderthisOrder;

prescribingthefeespayableunderthisorder;

prescribingtheinformationtobe givenor thedocuments tobeproducedunderthisOrder

providingforanyothermatternecessaryforcarrying intoeffecttheobjectsofthisOrder.

(a)

27.TheMinistermay makeregulations,

(3).Apersonwholendsmoneyonlybymeansofthetypeof

transactionsetoutinsubsection(1)andbymeansofnoother typeoftransactionshallbedeemednottobeamoney-lenderfor thepurposeofthisOrder.

(2)  The  exemption  provided  for  in  this  section  shall  apply

whetherthetransactionsreferredtoareeffectedbyamoney- lenderornot.

166