Section 11: Prohibition of employment of managing agents and restrictions on certain forms of employment

11. Prohibition of employment of managing agents and restrictions on certain forms of employment.--(1) No banking company-- (a) shall employ or be managed by a managing agent; or (b) shall employ or continue the employment of any person-- (i) who is, or at any time has been, adjudicated insolvent, or has suspended payment, or has compounded with his creditors, or who is, or has been, convicted by a criminal court of an offence involving moral turpitude; or (ii) whose remuneration or part of whose remuneration takes the form of commission of a share in the profits of the company: Provided that nothing contained in sub-clause (ii) shall apply to the payment by a banking company of-- (a) any bonus in pursuance of a settlement or award arrived at or made under any law relating to industrial disputes or in accordance with any scheme framed by such banking company or in accordance with the usual practice prevailing in banking business; or (b) any commission to any broker (including guarantee broker), cashier-contractor, clearing and forwarding agent, auctioneer or any other person, employed by the banking company under a contract otherwise than as a regular member of the staff of the company; or (c) shall be managed by any person-- (i) who is a director of any other company not being a subsidiary company of the banking company or a company registered under section 26 of the 1[Companies Ordinance, 1984 (XLVII of 1984)], except with the previous approval of the State Bank; or (ii) who is engaged in any other business or vocation; or (iii) who has a contract with the company for its management for a period exceeding five years at any one time: Provide that any contract with the company for its management may be renewed or extended for a further period not exceeding five years at a time if and so often as the directors so decide: Provided further that nothing in this clause shall apply to a director, other than the managing director, of a banking company by reason only of his being such director. (2) Where a person holding the office of a chairman of director or manager or chief executive officer (by whatever name called) of a banking company is, or has been found by any tribunal or other authority (other than a criminal court) to have contravened the provision of any law and the State Bank is satisfied that the contravention is of such a nature that the association of such person with the banking company is or will be detrimental to the interests of the banking company or its depositors or otherwise undesirable, the State Bank may make an order that that person shall cease to hold the office with effect from such date as may be specified therein and thereupon, that office shall, with effect from the said date, become vacant. (3) Any order made under sub-section (2) in respect of any person may also provide that he shall not, without the pervious permission of the State Bank in writing, in any way, directly or indirectly, be concerned with, or take part in the management of, the banking company or any other banking company for such period not exceeding five years as may be specified in the order. (4) No order under sub-section (2) shall be made in respect of any person unless he has been given an opportunity of making a representation to the State Bank against the proposed order: Provided that it shall not be necessary to give any such opportunity if, in the opinion of the State Bank, any delay would be detrimental to the interests of the banking company or its depositors. (5) Any decision or order of the State Bank made under this section shall be final for all purposes.

Effective date: 1962-06-07

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