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Prohibition of chit funds conducted in contravention of this Act
18. Any person who promotes or conducts, or aids, assists, or takes any part in the promotion or conduct of any chit fund otherwise than in accordance with the provisions of this Act shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 3 years or to both.
When scheme or arrangement deemed to be chit fund
19. Any scheme or arrangement which is based wholly on the essential terms and conditions set out in section 24 or has all the attributes and incidents of a chit fund within the scope and intent of that section is, even though it is called by any other name, deemed to be a chit fund for the purposes of this Act.
Scheme or arrangement which is deemed only to partake of nature of chit fund prohibited
20.—(1) Every scheme or arrangement by whatever name called —(a) which is not based wholly on the essential terms and conditions set out in section 24; or (b) which is based on terms and conditions inconsistent wholly or in part with those essential terms and conditions, is, for the purposes of this Act, deemed only to partake of the nature of a chit fund. (2) Regulations made under this Act may describe or define what schemes or arrangements are deemed only to partake of the nature of a chit fund for the purposes of this section. (3) Any person who promotes or conducts, or aids, assists, or takes any part in the promotion or conduct of any scheme or arrangement which only partakes of the nature of a chit fund within the meaning of this Act shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 3 years or to both. (4) No right or claim under any scheme or arrangement which only partakes of the nature of a chit fund within the meaning of this Act or the regulations made under this Act is, without affecting subsection (1), enforceable by action in any court.
Security
21. The licensing of any company under this Act is not to be regarded as authorising the promotion or formation of any chit fund or the acceptance by that company of any instalment or interest from any subscriber until such security as is provided in the regulations made under this Act in respect of that chit fund has been deposited by the chit fund company in accordance with those regulations.
Receipt of contributions
22. A chit fund company may receive contributions due from intending subscribers at the time of the signing of the agreement pursuant to section 24(3) but if within 14 days after the expiry of one month of the signing of the agreement the chit fund does not commence, the contributions received must be returned to the subscribers.
Formation of chit funds
23. Every chit fund must be formed by the execution of a written agreement between the chit fund company on the one part and the intending subscribers severally on the other part.
Essential terms and conditions of chit fund
24.—(1) Every agreement made under section 23 must contain all the following terms and conditions with the actual amounts, dates and other particulars necessary in each case:(a) that the chit fund is for a specific amount and for a specified number of subscribers only; (b) that the subscribers are to contribute equal portions of the amount; (c) that the contribution of each subscriber is to be paid to the chit fund company in money in equal amounts of a specified value during a specified period; (d) that each contribution is payable on a date specified for that contribution or within such number of days of grace after that date as may be specified; (e) that on or after each date on which the contributions are payable, the chit fund amount is to be put up for sale by the chit fund company among the subscribers either by auction or by way of sealed tenders; (f) that each of the subscribers is entitled to purchase the chit fund amount once and not more often during the period of that chit fund, and that no subscriber who has been declared the purchaser at any such sale is to be entitled or permitted to bid or tender at any subsequent sale; (g) that every bid or tender of a subscriber at a sale is to indicate the sum which the subscriber is willing to forego as interest for the privilege of obtaining the prize on that occasion; (h) that of the subscribers entitled to bid at any sale, the subscriber who offers the highest interest is to be declared the purchaser; (i) that the purchaser is entitled to receive the prize consisting of the chit fund amount less the interest offered by him or her, on producing guarantors to stand surety for the due payment of his or her future contributions in respect of that chit fund; (j) that the chit fund company is to deduct for commission and working expenses a specified sum or a sum bearing a specified proportion to the prize amount or to the chit fund amount; (k) that the interest is to be distributed in equal proportion among all the subscribers; (l) that a subscriber, who has not yet purchased a chit fund amount and who defaults in either the payment of a contribution or the production of guarantors is entitled to a refund of actual contributions already paid by the subscriber in accordance with section 31(2) and (3) or 32(2), as the case may be. (2) The agreement mentioned in subsection (1) must also contain —(a) the full name and address of the chit fund company and of each of the subscribers; (b) the business address of the chit fund company or the exact location of the place where the records of the chit fund are to be kept and where its business is to be transacted; (c) the number of the subscriber’s identity card issued by the Government or in the case of a subscriber who has not been issued with a Singapore identity card any other record of identification that may be prescribed; and (d) any other terms and conditions not inconsistent with this Act, or with the essential terms and conditions referred to in subsection (1), that are considered necessary for the better management and control of the chit fund. (3) In respect of every chit fund, the agreement must be signed in original and duplicate by the chit fund company and each intending subscriber, either in person or by a duly authorised agent, and each signature must be attested by a witness present at the time of signing.
Duty of chit fund company to acknowledge subscriber’s rights
25. As soon as possible after the agreement has been signed by each intending subscriber, the chit fund company must give the subscriber a written acknowledgment that the subscriber is entitled to participate in the chit fund.
Meetings of subscribers
26.—(1) Where the provisions of this Act or the regulations made under this Act or the terms and conditions of the agreement require any matter to be decided by a meeting of the subscribers, the chit fund company must convene a meeting for the purpose within 7 days of its becoming aware of the event requiring a meeting and must serve written notice on each of the subscribers not less than 5 days before the date selected by the chit fund company for the meeting. (2) The notice must state the time, date and place at which the meeting is to be held, and the business to be transacted at the meeting. (3) The notice may either be served personally on each subscriber or sent to the subscriber by registered or certified post; and any notice sent to a subscriber by registered post is deemed to have been duly served if it was addressed to the registered address of that subscriber or to any other address notified by that subscriber in writing to the chit fund company.
Minutes of meeting
27.—(1) The chit fund company must enter in a book to be kept for that purpose the minutes of the proceedings of every meeting of the subscribers. (2) The minutes must in every case contain the following particulars:(a) the place, date, time and duration of the meeting; (b) the names of the subscribers who were present; (c) the items of business transacted at the meeting, and in the case of a meeting at which a chit fund amount is auctioned, the following additional particulars: (d) the serial number of the auction; (e) the name of each bidder and the amount of each bid; (f) the name of the purchaser; (g) the amount of the interest.
Alteration of agreement
28. Subject to the provisions of this Act and the regulations made under this Act and subject also to any terms or conditions contained in the agreement as to the matters or the mode in which alterations of the agreement may be made, any alteration of the figures, amounts, dates or other particulars which are not likely to affect the intention or the legal effect of the essential terms and conditions, or any alteration of the additional terms and conditions contained in any agreement, may be made only at any meeting of the subscribers, duly convened for the purpose, by the votes of a majority, the aggregate of whose contributions is not less than three-quarters of the chit fund amount.
Receipts for contributions paid and entry of payments in passbook
29.—(1) Every subscriber must receive a receipt issued by or on behalf of the chit fund company for each contribution paid by the subscriber. (2) Every subscriber must be issued with a passbook into which each payment made by the subscriber must be entered by the chit fund company.
Production of guarantors by purchaser of chit fund amount
30. Every subscriber who is declared the purchaser of a chit fund amount must, as a condition precedent to the payment of the prize amount to him or her by the chit fund company, produce at least 2 guarantors to stand surety for the payment of the contributions due from him or her for the remainder of the chit fund period.
Effect of failing to produce guarantors
31.—(1) If a subscriber purchasing the chit fund amount fails to produce the guarantors required under section 30 within 2 weeks of the auction, the chit fund company must either —(a) within 7 days of the expiry of those 2 weeks, declare the next highest bidder, who has not purchased the chit fund amount, to be purchaser of the chit fund amount according to that bidder’s bid on his or her producing the guarantors as required under section 30; or (b) within 2 weeks after the expiry of those 2 weeks, conduct a fresh sale of that chit fund amount and give not less than 7 days’ notice of the date to each of the subscribers then entitled to bid at the sale. (2) Where a subscriber is unable to produce the guarantors as required under section 30, the subscriber has the right to a refund of the actual amount of the earlier contributions paid by him or her to the chit fund company, without any deduction whatsoever. (3) The refund must be paid by the chit fund company within 3 weeks from the date of the auction. (4) In the event of a refund to a subscriber under subsection (2) by a chit fund company, the chit fund company is entitled to remove the name of that subscriber from the register of subscribers kept under section 37 and to substitute therefor the name of the new subscriber.
Substitution of new subscriber for defaulting subscriber who has not purchased any chit fund amount
32.—(1) Where default in the payment of any contribution is made by any subscriber who has not purchased a chit fund amount, the chit fund company is entitled to remove the name of the defaulting subscriber from the register of subscribers kept under section 37 and to substitute in the register the name of a new subscriber. (2) The removal of the defaulting subscriber’s name from the register is not to be deemed to prejudice the right of the defaulting subscriber to a refund of the actual amount of any earlier contributions paid by him or her, at such time and with such deductions by way of penalty as may be prescribed by regulations made under this Act. (3) All the rights and liabilities that would under the agreement have accrued to or been incurred by the defaulting subscriber after the date of the substitution if he or she had not made default, are deemed to be transferred to the new subscriber. (4) No collateral undertaking, as to mutual rights and obligations entered into by the chit fund company and the new subscriber for the purposes of the substitution of the new subscriber, is deemed to affect in any respect the duties and liabilities of the new subscriber under the terms and conditions of the agreement.
Voluntary reduction of membership in lieu of substitution of new subscriber
33.—(1) In any case referred to in section 32, the chit fund company may, before substituting a new subscriber in place of the defaulting subscriber whose name is removed from the register under that section, convene a meeting of the remaining subscribers for the purpose of obtaining their consent to a reduction of the number of subscribers and of the chit fund amount by refraining from substituting a new subscriber in place of the defaulting subscriber. (2) If at the meeting so convened the subscribers by a majority representing not less than two-thirds of the chit fund amount consent to such reduction and to the necessary alteration of the agreement, the chit fund company must record that fact in the minute book kept under section 27. (3) Upon the recording of the alteration made for the purposes of a voluntary reduction under this section, every subscriber who was the purchaser of a chit fund amount sold at any auction prior to the date of the reduction, is liable to continue the payment of the contributions specified in the agreement until the aggregate amount so contributed by him or her becomes equal to the chit fund amount at the time of the sale at which he or she was declared the purchaser.
Liability of defaulting subscriber who has already purchased chit fund amount
34.—(1) Where default in the payment of any contribution is made by a subscriber who has already purchased a chit fund amount, the subscriber and his or her guarantors are liable to make immediate payment to the chit fund company of the aggregate of all the contributions payable by him or her to the end of the chit fund period. (2) Upon receiving the contributions pursuant to subsection (1), the chit fund company must immediately deposit those contributions in any bank that is approved by the Authority. (3) Any money received under subsection (1) exceeding the amount required to cover the contribution of the defaulting subscriber must be returned forthwith by the chit fund company to the defaulting subscriber or his or her guarantors, as the case may be. (4) A chit fund company may charge interest on any money due under subsection (1) at the rate and by the method prescribed in the regulations made under this Act.
Transfer of subscriber’s rights
35.—(1) Any subscriber who has not purchased a chit fund amount may make over his or her rights in the chit fund by a transfer in writing to any person approved by the chit fund company. (2) Notice of every transfer made under subsection (1) must be given forthwith to the chit fund company in writing, signed by the transferor and the transferee. (3) On receipt of the notice of any transfer made under subsection (1), the chit fund company must make the appropriate entries in the register of subscribers kept under section 37. (4) Where the transfer of the rights of any subscriber under subsection (1) is proved to have been made to any person who was insolvent at the time of the transfer or to have been made with the intention of defeating the provisions of any written law in force in Singapore, the transfer is not to be deemed to operate as a discharge to that subscriber from his or her duties and liabilities under the terms and conditions of the agreement. (5) Despite anything in any other written law to the contrary, the stamp duty payable on any transfer under this section must be in accordance with the provisions of the Stamp Duties Act 1929.
Transfer of right of chit fund company to recover contributions to be voidable
36. Any transfer made by the chit fund company of its right to recover the contributions payable by subscribers, who have purchased chit fund amounts, does not defeat or delay the rights of any subscriber who has not purchased a chit fund amount and is voidable at the instance of the subscriber if the transfer is likely to defeat or delay the rights of that subscriber under the terms and conditions of the agreement.
Books to be kept by chit fund company
37. The chit fund company must keep and from day to day regularly post up the following books:(a) a register of subscribers containing —(i) the names and addresses of all subscribers with the respective dates on which the subscribers signed the agreement, and the date on which any subscriber ceased to be a subscriber by reason of a transfer of rights or of a substitution in case of default; (ii) in the case of any transfer of rights by a subscriber, the name and address of the person to whom the rights are transferred with the date of the transfer and the date on which notice of the transfer is given to the chit fund company; and (iii) the name and address of any person substituted in place of a defaulting subscriber, with the date on which that person is so substituted; (b) the minute book required under section 27; (c) an account book containing separate accounts of —(i) the contributions paid by each subscriber and the respective dates of those payments; (ii) the prize amounts paid to purchasers of the chit fund amount and the respective dates of those payments; (iii) the amount of the commission or remuneration received by the chit fund company and the registration fees paid by it; and (iv) the amount of the rebate paid to each subscriber on each occasion and the date of the payment.
Liability of chit fund company to subscribers
38.—(1) The chit fund company is liable to each subscriber for any amount due to that subscriber in respect of the chit fund. (2) The chit fund company is not entitled to withdraw from the management of the chit fund without the written consent of all the subscribers. (3) Where the chit fund company is in liquidation or is being wound up, whether voluntarily or otherwise, any debt owing by the company to any subscriber under the terms and conditions of the agreement relating to the chit fund is, despite anything in any other written law to the contrary, to be a first charge upon any property acquired or held by it for the purposes of that chit fund, including property held by the Authority as security pursuant to the regulations made under this Act.
Prohibition of bid or tender by chit fund company
39.—(1) No chit fund company licensed under section 7 is entitled to bid or submit a tender or may bid or submit a tender either directly or indirectly at any sale of a chit fund amount held by auction or by tenders in connection with any chit fund formed or conducted by that company. (2) Any chit fund company licensed under section 7 may, in lieu of substituting a new subscriber in the place of each defaulting subscriber, take up the share of one or more defaulting subscribers, and in every such case the chit fund company is entitled to take, without an auction or other sale and without any interest, the successive chit fund amounts available after the last of the continuing eligible subscribers has purchased his or her prize amount.
Termination of chit fund
40.—(1) A chit fund is deemed to terminate upon the occurrence of any of the following events:(a) on the expiry of the chit fund period as specified in the agreement or where it is curtailed by reason of any voluntary reduction of membership duly effected under section 33; (b) on the failure of the chit fund company to conduct the chit fund in accordance with the provisions of this Act, the regulations made under this Act or the terms and conditions of the agreement; (c) on the chit fund company going into liquidation or being wound up, whether voluntarily or involuntarily or otherwise being dissolved; (d) on steps being taken for the winding up of the company either voluntarily or by order of the Authority or the Minister; (e) on the licence being revoked by the Authority under section 14. (2) Upon the termination of a chit fund otherwise than by the expiry of the chit fund period as specified in the agreement or by a voluntary reduction of a chit fund under section 33, every subscriber who has not purchased a chit fund amount is entitled —(a) to recover from the chit fund company the aggregate of the actual amounts contributed by each subscriber as contributions under the agreement prior to the termination of the chit fund; or (b) to apply to a court of competent jurisdiction for an order —(i) directing each subscriber who has drawn a prize amount in that chit fund to deposit in court upon the due dates the several contributions which, if the chit fund had not terminated, would have been payable by the subscriber to the chit fund company, until the aggregate of the amounts paid to the chit fund company by that subscriber before the termination of the chit fund and of the amounts so deposited in court become equal to the chit fund amount at the time of the sale at which that subscriber was declared the purchaser; and (ii) declaring that all amounts so deposited in court are to be divided rateably among the subscribers who have not drawn a prize amount in that chit fund, and setting out for that purpose any scheme of distribution that may be necessary. (3) Where any action is instituted by a subscriber for the enforcement of a claim under subsection (2)(a), the chit fund company may apply for an order of court under subsection (2)(b) in like manner as a subscriber and any sum of money that may be received under such an order by the subscriber instituting the action, is to be set off against the amount claimed in the action.
Sale by sealed tender as alternative to auction
41.—(1) The sale of the chit fund amounts may, if the terms and conditions of the agreement provided therefor, be effected by way of sealed tenders as an alternative to an auction if, at a duly convened meeting of the subscribers held before the sale of the first chit fund amount, the subscribers by a majority representing three-quarters of the chit fund amount resolve to adopt the method of sealed tenders; and the method adopted for the sale of the first chit fund amount must be followed at each subsequent sale in connection with that chit fund. (2) However, in every case where the tenders of 2 or more subscribers are of the same value, the chit fund amount must be put up for sale by auction among those subscribers, and the initial bid at every such auction must be the amount set out in the tenders of those subscribers.
Financial limits to be observed by chit funds
42.—(1) The total value of the chit fund to be conducted at any one time by a chit fund company must be as prescribed by regulations made under this Act. (2) For the purposes of this section, the “total value of the chit fund” means the aggregate of the chit fund amounts that are to be collected and put up for sale during the period of that chit fund.
Limits on lending powers of chit fund company
43.—(1) A chit fund company must not lend to any person other than to a subscriber who has not purchased the chit fund amount. (2) A chit fund company may lend to a subscriber who has not purchased the chit fund amount but the amount so lent must not exceed 75% of the aggregate contributions already paid by that subscriber or any other percentage that may be specified in regulations made under this Act. (3) A chit fund company that lends to a subscriber under subsection (2) is not to be deemed to be a moneylender under the Moneylenders Act 2008 and that Act does not accordingly apply to any transaction under this section.
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Compiled from an official source version. Later amendments or repeals may not be reflected; the official text prevails. Read the official text ↗
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