Exceptions for certain transactions

(1) Subject to section 71 and sub-sections (3), (4), (5) and (6), a licensee may make a loan, advance or extension of credit 123 to, a guarantee on behalf of, or an investment in the securities of, or take an assignment of or otherwise acquire a loan, advance or extension of credit to, a related party. (2) For the purposes of this section, “related party group” means– (a) in the case where a related party has a substantial investment in the licensee but does not control the licensee– (i) the related party; (ii) a related party who is the spouse, parent, child or dependent of the related party referred to in sub- paragraph (i); and (iii) a related party that is an entity controlled by any related party referred to in sub-paragraphs (i) and (ii); (b) in the case where the related party controls a (i) the related party; (ii) a related party who is the spouse, son, daughter, mother or father of the related party referred to in sub- paragraph (i); and (iii) a related party that is an entity in which any related party referred to in sub-paragraphs (i) and (ii) has a substantial investment; or 124 (c) in the case where the related party is a director or officer of the licensee or of a holding body corporate of the licensee or is acting in a similar capacity in respect of any other entity that controls the licensee– (i) the related party; (ii) a related party who is the spouse, parent, child or dependent of the related party referred to in sub- paragraph (i); and (iii) a related party that is an entity controlled by any related party referred to in sub-paragraphs (i) and (ii). (3) A licensee shall not make or permit to be outstanding unsecured loans, advances or extensions of credit to, or guarantees on behalf of, a related party or a related party group, in an aggregate amount that exceeds two per cent of– (a) the aggregate of the fully paid-up capital and reserves in the case of a local licensee, or (b) the aggregate of the assigned capital and reserves in the case of a foreign licensee. (4) A licensee shall not make or permit to be outstanding secured loans, advances or extensions of credit to, guarantees on behalf of, or investments in the securities, of a related party or related party group in an aggregate amount that exceeds fifteen per cent of– (a) the aggregate of the fully paid-up capital and reserves in the case of a local licensee, or 125 (b) the aggregate of the assigned capital and reserves in the case of a foreign licensee, (5) A licensee shall not make or permit to be outstanding unsecured and secured loans, advances or extensions of credit to, or guarantees on behalf of, all related parties and related party groups in an aggregate amount that exceeds fifty per cent of– (a) the aggregate of the fully paid-up capital and reserves in the case of a local licensee, or (b) the aggregate of the assigned capital and reserves in the case of a foreign licensee. (6) The aggregate limits referred to in sub-sections (3) to (5) shall not include any loan referred to in section 70 (1).