Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697642342425.pdf (Bahamas)
GUARANTEE OF LOANS (TOURISM DEVELOPMENT) [CH.346– 1 GUARANTEE OF LOANS (TOURISM DEVELOPMENT) CHAPTER 346 GUARANTEE OF LOANS (TOURISM DEVELOPMENT) ARRANGEMENT OF SECTIONS SECTION 1.

2.

3.

Short title.

Interpretation.

Power of Government to guarantee loans for new and existing hotel resorts in the Family Islands.

Minister to be a corporation sole.

Approval of lender.

Approval for guaranteed loan.

Functions of approved lender.

Conditions of a guaranteed loan.

Loan guarantee premium fee.


Loan guarantee fund.

4.

5.

6.

7.

8.

9.

10.

11.

Minister to give directions to approved lender.

12.

13.

14.

15.

16.

Misrepresentation.

17.

18.

19.

20.

Discharge of Government’s liability as a guarantor.

Guaranteed loan settlement.

Offences in respect of guarantee.

Regulations.

Restriction on borrowing powers of the borrower if guarantee outstanding.

Limit on amount to hotel resorts.

Audit and accounts.
Audit and accounts.

Borrower to repay to Government sums paid under guarantee.
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– STATUTE LAW OF THE BAHAMAS [Original Service 2001] GUARANTEE OF LOANS (TOURISM DEVELOPMENT) [CH.346– 3 CHAPTER 346 GUARANTEE OF LOANS (TOURISM DEVELOPMENT) An Act to provide for the guarantee by the Government of the Commonwealth of The Bahamas of loans by financial institutions for Family Island touristic development and for purposes connected thereto.

33 of 1998 [Assent 12th August, 1998] [Commencement 14th August, 1998] 1.
This Act may be cited as the Guarantee of Loans Short title.

(Tourism Development) Act, 1998.

2.

In this Act — “approved lender” means — Interpretation.
(a) The Bahamas Development Bank estab- lished under section 3 of The Bahamas Development Bank Act; (b) a domestic bank licensed under the Banks and Trust Companies Regulations Act; (c) an insurance company registered under the Insurance Act; or (d) any other financial institution approved by the Minister in accordance with the provi- sions of section 5; Ch.

357.

Ch.

316.

Ch.

347.
“borrower” has the meaning assigned to it in section 8(b); “company” includes any body of persons, whether corporate or unincorporate; “existing hotel resort” means any premises in the Family Islands which prior to the coming into force of this Act are licensed as a hotel under the provisions of the Hotels Act, or any premises in which at any time during the said period is carried on the business of a hotel and which has not less than five bedrooms for the accommoda- tion of guests and contains suitable public rooms for the entertainment of guests and includes all Ch.
288.
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– STATUTE LAW OF THE BAHAMAS [Original Service 2001] CH.346 – 4] GUARANTEE OF LOANS (TOURISM DEVELOPMENT) other buildings, utility services, docks and other amenities and conveniences in connection with the site upon which the premises are situated; “Fund” means the Loan Guarantee (Family Island Touristic Development) Fund established under section 10; “guaranteed loan” has the meaning assigned to it in section 3(1); “interest” means simple interest calculated on the declining balance; “Minister” means the Minister responsible for Loan Guarantee Schemes; “new hotel resort” means any premises in the Family Islands completed after the coming into force of this Act for use as a hotel or residential club having not less than five bedrooms for the accommodation of guests and containing suita- ble public rooms for the accommodation and entertainment of guests and includes all other buildings, utility services, docks and other amenities and conveniences necessary or desir- able in connection with the construction and the improvement of the site upon which the premises are situated; “property” means real and personal property; “security or collateral” means any personal guarantee or property pledged by a borrower to protect the interest of the approved lender.
(1) The Government may in such manner and on such terms and subject to such conditions as may be agreed between it and an approved lender — 3.
(a) guarantee the discharge by a borrower of its obligations under any agreement (in this Act referred to as a “guaranteed loan”) which may be entered into by the borrower with an approved lender in respect of any borrowing or under any bond, promissory note or other instrument issued pursuant to any such agree- ment; and (b) assume such other obligation as may be agreed between the Minister and an approved lender in relation to or pursuant to any such agreement, bond, promissory note or instrument.
Power of Government to guarantee loans for new and existing hotel resorts in the Family Islands.
STATUTE LAW OF THE BAHAMAS [Original Service 2001] GUARANTEE OF LOANS (TOURISM DEVELOPMENT) [CH.346– 5 (2) A guarantee or undertaking given under this section shall be given in writing in the name of the Government of the Commonwealth of The Bahamas and any guarantee or undertaking or any endorsement or any bond, promissory note or other instrument of guarantee or undertaking given under this section may be signed on behalf of the Government of the Commonwealth of The Bahamas by the Minister or by any person authorised in writing by the Minister on that behalf.
(3) Section 17 of the Financial Administration and Audit Act shall not apply to any guarantee made by the Minister under subsection (1).

Ch.

359.

4.

The Minister shall, as respects the functions assigned to him under this Act, be a corporation sole, with power to acquire, hold, lease and dispose of property, to enter into contracts, to sue and to be sued and to do all things necessary for the purposes of this Act.

Minister to be a corporation sole.

5.


(1) The Minister may, subject to such conditions as he sees fit, approve any financial institution as a lender for the purposes of this Act.

Approval of lender.

(2) The Minister may at any time terminate the approval given to a lender under this section by not less than six months’ notice in writing.
(3) No notice of termination under subsection (2) shall affect the rights or obligations of any person under any guarantee which is made or entered into before the date on which such termination takes effect.

6.

(1) An approved lender desirous of obtaining a guarantee for a loan under this Act shall apply to the Minister in the prescribed form.

Approval for guarantee loan.


(2) Before an approved lender makes an application under subsection (1), it shall evaluate the loan proposal of the borrower and indicate to the Minister, the extent of its participation in granting the borrower a loan.

(1) An approved lender shall — 7.

(a) obtain proof of the eligibility of the borrower for the grant of a guaranteed loan; Functions of approved lender.
(b) at all times exercise due diligence to ensure that the proceeds of the guaranteed loan is being applied to the purposes for which the loan was made; ––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– STATUTE LAW OF THE BAHAMAS [Original Service 2001] CH.346 – 6] GUARANTEE OF LOANS (TOURISM DEVELOPMENT) (c) obtain the approval of the Minister before modifying any guaranteed loan under this Act; and (d) scrutinize and check the application for the loan and the statements contained therein with the care required by the approved lender in the conduct of its ordinary business.
(2) An approved lender shall submit quarterly declarations to the Minister commencing from the date on which such loan would have been approved, in such form as may be prescribed and otherwise required under this Act, listing all guaranteed loans administered by it and which are in arrears at the end of that quarter and advising the Minister of the steps taken to recover such arrears.

Conditions of a guaranteed loan.

8.
A loan may be guaranteed under this Act if all the following conditions are satisfied, that is to say — (a) the loan is made by an approved lender; (b) the loan is made to an individual or a company (in this Act referred to as the “borrower”) who provides evidence satisfactory to the Minister that such individual or persons forming the company are — (i) not less than eighteen years of age; (ii) not under any liability to an approved lender under any loan previously made by an approved lender and guaranteed under section 3; (c) the purpose of such loan is to establish a new hotel resort or other touristic facility or to refurbish or extend an existing hotel resort or touristic facility; (d) the loan does not exceed five hundred thousand dollars; (e) the loan is made on terms that all moneys borrowed under the loan shall be repaid within a period of fifteen years following the date on which the last advance is made under the loan or such other date as may be determined by the Minister; the aggregate amount guaranteed shall not exceed seventy-five per centum of the loan amount; (f) STATUTE LAW OF THE BAHAMAS [Original Service 2001] GUARANTEE OF LOANS (TOURISM DEVELOPMENT) [CH.346– 7 (g) the loan is made — (i) to an individual who provides evidence satisfactory to the Minister that there is a valid policy of insurance on his life with an insurance company registered under the Insurance Act for such an amount as is sufficient to cover the full amount of the loan or to an individual who takes out a mortgage
 redemption policy with an insur- ance company registered under the Insur- ance Act and undertakes to maintain the policy by regular payment of premiums and assigns the benefits of the policy to the approved lender and deposits it with the approved lender; registered under (ii) to a company who provides evidence satisfactory to the Minister that there is a valid policy of insurance on the lives of the principal owners and manager of the company, with an insurance company the Insurance Act, the aggregate of which is sufficient to cover the full amount of the loan or to a company that has taken out a mortgage redemption policy with an insurance company registered under the Insurance Act and under- takes to maintain the policy by regular payment of premiums and assigns the benefits of the policy to the approved lender and deposits it with the approved lender; Ch.
347.

Ch.

347.

Ch.

347.

Ch.

347.
(h) the loan is secured by a first legal mortgage on property or by a debenture in favour of the approved lender and, where there is no property available, by any other collateral or security equal to the value of the loan; and (i) any premises which is security for the loan is insured against all insurable risks as defined in the Second Schedule to the Guarantee of Loans (Tourism Development) Regulations, for the full amount of the value of the property at the date of the making of the loan, or for such greater or lesser amount, as the Minister may, from time to time having regard to any fluctuations in the cost of building, require by notice in writing to the approved lender.
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– STATUTE LAW OF THE BAHAMAS [Original Service 2001] CH.346 – 8] GUARANTEE OF LOANS (TOURISM DEVELOPMENT) Loan guarantee premium fee.

9.

(1) The approved lender shall pay a loan guarantee premium fee to the Minister in respect of each loan guaranteed under this Act.

Loan guarantee fund.

(2) The loan guarantee fee mentioned in subsection (1) shall be in a sum equal to two per centum of the amount guaranteed.

10.
10.

(1) For the purposes of section 3, the Minister shall establish a fund to be known as the Loan Guarantee (Family Island Touristic Development) Fund (in this Act referred to as “the Fund) out of which all payments required to be made by the Government pursuant to section 3 shall be made and into which all loan guarantee premium fees received under this Act shall be paid.
(2) The fulfilment of all obligations of the Government under section 3 of this Act shall be guaranteed out of the Consolidated Fund and accordingly, there shall be paid into the Fund from time to time out of the Consolidated Fund by warrant under the hand of the Minister of Finance such sums as may be necessary to increase the Fund to an amount which will enable the Minister to discharge these obligations.
(3) Whenever any sum the Consolidated Fund under subsection (2) of this section, the Minister shall prepare a statement and lay it before the House of Assembly.
is paid out of to (4) Without prejudice the provisions of subsection (2) of this section, where the Fund at the end of any financial year exceeds ten percent of the total amount of guaranteed loans in force, the Minister shall apply the surplus towards repaying to the Consolidated Fund all sums paid therefrom into the Fund in accordance with subsection (2) of this section.
(5) The Minister may from time to time invest any of the liquid assets of the Fund in securities which are obligations of the Government, as well as securities approved by the Governor-General.

(6) No payments shall be made out of the Fund except such payments as are authorised to be made by this Act.

11.
11.

The Minister may give directions in writing to the approved lender as may from time to time be necessary or desirable for the purpose of administering the Fund and the approved lender shall comply with the directions.

Minister to give directions to approved lender.

STATUTE LAW OF THE BAHAMAS [Original Service 2001] GUARANTEE OF LOANS (TOURISM DEVELOPMENT) [CH.346– 9 12.
So long as the Government shall continue to be liable under any guarantee or other undertaking given in exercise of the powers under section 3(1) in respect of any borrowing, the borrower shall not, without the consent of the approved lender and the Minister, exercise any other power to borrow additional funds for the project except the power to borrow by way of overdraft or otherwise for a period not exceeding twelve months.

13.
13.

The aggregate amount of all borrowings by hotel resorts and other touristic facilities that are guaranteed by the Government under this Act shall not exceed fifteen million dollars or such greater sum as may from time to time be specified by resolution of the House of Assembly.

14.
14.

(1) The Minister shall cause to be kept proper accounts and other records relating to the Fund and shall prepare in respect of each financial year a statement of the accounts of the Fund in compliance with generally accepted accounting principles.

(2) The accounts of the Fund shall be audited annually under such arrangements and in such manner as may be approved by the Minister.
(3) The Minister shall cause a copy of the annual statement of accounts and the auditor’s report thereon to be laid on the table of both Houses of Parliament not later than six months after the end of each financial year.

(4) Copies of the annual statements of accounts and the auditor’s report on those statements of accounts of the Fund shall be published in such manner as the Minister may direct and shall be made available to the public at a reasonable price.

15.
15.

If any sum is paid out of the Consolidated Fund or other Fund referred to in section 10(1) in respect of any liability incurred by the Government under a guarantee or other undertaking given in exercise of the powers conferred by section 3(1), the borrower shall repay such sum (together with interest thereon at such rate as the Minister may prescribe) to the Consolidated Fund or to the Fund referred to in section 10(1), as the case may be, in such manner and at such time as the Minister may direct.
Restriction on borrowing powers of the borrower if guarantee outstanding.

Limit on amount to hotel resorts.

Audit and accounts.

Borrower to repay to Government sums paid under guarantee.

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– STATUTE LAW OF THE BAHAMAS [Original Service 2001] CH.346 – 10] GUARANTEE OF LOANS (TOURISM DEVELOPMENT) Misrepresentation.

Discharge of Government’s liability as a guarantor.

16.
16.

Where an approved lender discovers that any statement in an application for a loan is false in any material respect or that a borrower has used or is using the proceeds of a loan otherwise than for a purpose specified in the application for a loan, the approved lender may take any action it considers proper in the circumstances and shall immediately make a full report in respect of the matter to the Minister.

17.
Without prejudice to any other rights or remedies of the Government as a guarantor, the Government shall be discharged from all liability in respect of a guaranteed loan under this Act — (a) if the approved lender fails to disclose any fact known to the approved lender which may reasonably have affected the decision of the Minister in granting the guaranteed loan; (b) if the approved lender fails to disclose to the Minister any defect in the title of the borrower to collateral or security for the loan; being a defect which the approved lender has discovered or ought with reasonable diligence to have discov- ered, and if the defect is one which might reasonably have affected the decision of the Minister in granting the guaranteed loan; (c) if the approved lender assigns or conveys, otherwise than with the approval of the Minister to another approved lender, any of the rights of the approved lender under the loan or under any other charge or lien by which the loan is secured; (d) if the approved lender varies or waives any of the obligations of the borrower under the loan without the approval of the Minister; (e) if the approved lender, otherwise in accordance with the terms of the loan, releases any security or collateral taken as a security for the loan without the approval of the Minister; or if the approved lender has failed to comply with any provision of section 7. than (f) Guaranteed loan settlement.
18.

(1) Subject to the provisions of this section, an approved lender, who is the creditor in respect of a guaranteed loan which is secured by a mortgage on premises or chattels may, where default has occurred STATUTE LAW OF THE BAHAMAS [Original Service 2001] GUARANTEE OF LOANS (TOURISM DEVELOPMENT) [CH.346– 11 under the mortgage, realise his security by selling those premises or chattels in accordance with the provisions of this section.
(2) A sale of premises or chattels in accordance with the provisions of this subsection shall, whether or not in exercise of the powers of sale conferred on a mortgagee by any written law, be effected by public auction or otherwise, and such sale shall only take place at a price which shall not be less than a sum equal to seventy five percent of the aggregate of the following sums (hereinafter referred to as the “settlement value”) — (a) the balance of the principal sum of the loan owing on the date when the security is realised; (b) the interest owing on the said date under the loan in respect of the period of twelve months immediately preceding the said date; (c) such reasonable costs of realising the security and of selling the premises as are incurred by the approved lender as the Minister may approve or as the Minister may have agreed as a term of the guaranteed loan.
(3) If the sale shall not take place in accordance with subsection (2), the approved lender shall forthwith notify the Minister and the Minister shall either — lender to sell (a) authorise the approved the property at the best price reasonably obtainable (whether by public auction or otherwise) and if upon sale such price is less than the settlement value of the loan, the Minister shall pay to the approved lender a sum equal to the settlement value after deducting there from the price at which the premises or chattels were sold; or (b) require the approved lender to transfer to him or his nominee, all rights to and in respect of the guaranteed loan and all collateral or other securities therefor on payment of the settlement value of the property by the Minister to the approved lender calculated in accordance with subsection (2); or (c) require the approved lender to sell the property to the Minister or his nominee at the settlement value and to convey title to the Minister or his nominee free and discharged from all liability to the approved lender or the borrower.
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– STATUTE LAW OF THE BAHAMAS [Original Service 2001] CH.346 – 12] GUARANTEE OF LOANS (TOURISM DEVELOPMENT) (4) If the Minister shall authorise the sale of property under paragraph (a) of subsection (3) and such sale shall not take place in accordance with that paragraph, the Minister shall give further directions in accordance with either paragraph (b) or (c) of subsection (3).
(5) The payment by the Minister to an approved lender in respect of a guaranteed loan of the sum provided for in subsection (3)(a) shall discharge the Government from all liability to the approved lender in respect of the guaranteed loan.
(6) In every sale of mortgaged premises or chattels in accordance with the provisions of subsection (2) — (a) such premises or chattels shall be sold for the same estate or interest as the mortgagor would have therein but for the mortgage, and subject to such conditions respecting title or evidence of title, or other matters, as it is necessary or proper to impose on the sale of such premises or chattels as the Minister may permit to be imposed; and (b) in the case of sale by public auction, notice of intention to sell the mortgaged premises or chattels by public auction and of the time, date and place of such auction, shall be published in two issues of any newspaper published and circulating in The Bahamas, at intervals of not less than two days.
(7) Where, in addition to being secured by a mortgage on any premises or any chattel, a guaranteed loan is secured by a mortgage or charge on other premises or chattels subsection (1), shall have effect as if references to a security included references to all securities for the guaranteed loan, and as if references to premises and chattels included references to all premises and chattels on which the loan is secured.
(8) For the purposes of this section default occurs where ninety days has elapsed after the amount of the loan becomes due and payable.

19.

(1) Any person who — (a) wilfully applies any proceeds of a guaranteed loan to any purpose other than the purpose for which the loan was made; or Offences in respect of guarantee.
STATUTE LAW OF THE BAHAMAS [Original Service 2001] GUARANTEE OF LOANS (TOURISM DEVELOPMENT) [CH.346– 13 (b) having obtained a guaranteed loan, wilfully destroys or misappropriates any security given in relation to such guaranteed loan, shall be guilty of an offence and shall be liable on summary conviction to a fine of five thousand dollars, or to imprisonment for a term of one year or to both such fine and imprisonment.
(2) If any person, in giving any information, making any application or claim for the purposes of this Act, makes any statement which he knows to be false in a material particular, or recklessly makes any statement which is false in a material particular, that person shall be liable on summary conviction to imprisonment for a term of six months or to a fine of two thousand five hundred dollars or to both such fine and imprisonment.
(3) Where an offence under this section has been committed by a body corporate, every person who at the time of the commission of the offence was a director, general manager, secretary of the company or other similar officer of the body corporate, or was purporting to act in any such capacity, shall be deemed to be guilty of that offence, unless he proves that the offence was committed without his consent or connivance and that he exercised all such diligence to prevent the commission of the offence as he ought to have exercised having regard to the nature of his functions in that capacity and to all the circumstances.
20.

The Minister may make regulations for the purpose of giving effect to this Act, and in particular for prescribing anything by this Act required to be prescribed.

Regulations.

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– STATUTE LAW OF THE BAHAMAS [Original Service 2001]