Cap 581 s 38 Subrogation (DEPOSIT PROTECTION SCHEME ORDINANCE)

Contents of Section

Chapter:	581	Title:	DEPOSIT PROTECTION SCHEME ORDINANCE	Gazette Number:	11 of 2010
Section:	38	Heading:	Subrogation	Version Date:	01/01/2011

(1) If the Board makes a payment of compensation to a depositor of a Scheme member from the Fund—

(a) subject to subsection (2), the Board is, notwithstanding any rule of law, subrogated, to the extent of the net amount of that payment and, where the amount of that payment is calculated on the basis of a quantification date within the meaning of section 25(1)(a), any interest, calculated in accordance with subsection (5), accrued on the net amount of that payment, to all the rights and remedies of the depositor in relation to all his deposits, whether or not protected deposits, with the Scheme member, in priority over—

(i) the rights and remedies of the depositor in relation to those deposits; and

(ii) the rights and remedies of any person who is subrogated, whether or not before the Board’s subrogation, to the rights and remedies of the depositor in relation to those deposits; and

(b) until the Board has been reimbursed in full the net amount of that payment and any interest accrued on that net amount in accordance with this section, the depositor, or any person who is subrogated, whether or not before the Board’s subrogation, to the rights and remedies of the depositor in relation to those deposits, has no right in bankruptcy or winding up or by legal proceedings or otherwise to receive in respect of those deposits any amount from, or out of the assets of, the Scheme member.

(2) The Board is not subrogated to any rights and remedies of the depositor in respect of compensation payable out of the Investor Compensation Fund established under section 236 of the Securities and Futures Ordinance (Cap 571).
(3) The Board may maintain an action in respect of the rights and remedies of a depositor to which it is subrogated in the name of the depositor or in its own name.
(4) For the avoidance of doubt, the rights and remedies of a depositor to.which the Board is subrogated include the rights and remedies of the depositor in respect of so much of his deposits as the depositor would, on the winding up of the Scheme member, be entitled to priority under section 265(1)(db) of the Companies Ordinance (Cap 32).
(5) For the purposes of subsection (1)(a), the net amount of a payment of compensation to a depositor accrues interest, at the rate set out in subsection (6), for the period beginning with the date of the payment and ending with—

(a) in the case where the Court of First Instance has made a regulating order in respect of the Scheme member under section 227A of the Companies Ordinance (Cap 32) and the Official Receiver or the liquidator has not required the depositor to make a formal proof of debt under section 227E of that Ordinance, the date of appointment of a provisional liquidator, or if no such appointment is made, the date of the winding-up order made by the Court of First Instance;

(b) in the case where no regulating order has been made or where a regulating order has been made but the Official Receiver or the liquidator has required the depositor to make a formal proof of debt, the date of the winding-up order made by the Court of First Instance;

(c) in any other case, the date on which the Board receives full reimbursement in respect of the net amount of that payment and the interest accrued on that net amount in accordance with this section.

(6) The interest rate referred to in subsection (5) is—

(a) the rate at which interest is for the time being payable in respect of a Hong Kong dollar savings account with deposit amount of $500000, quoted by the note-issuing banks within the meaning of section 2 of the Legal Tender Notes Issue Ordinance (Cap 65); or (Amended 11 of 2010 s. 8)

(b) if different rates are quoted by different note-issuing banks, the rate determined by the Board as the average of those rates.

(7) In this section, “net amount” (淨額), in relation to a payment of compensation made to a depositor of a Scheme member from the Fund, means the amount of the payment less the amount of excess, if any, that is recoverable by the Board from the depositor under section 37(3).