BANK OF PAPUA NEW GUINEA

FINANCIAL SYSTEM SUPERVISION DEPARTMENT

APPLICATION for LICENSE to CONDUCT BANKING BUSINESS

Section 10, Banks and Financial Institutions Act 2000

Date of application:

Name of applicant company or group:

Contact information:

Name:

Position or Title:

Address:

Telephone & Fax:

e-mail:
 INSTRUCTIONS

A. GENERAL
The Banks and Financial Institutions Act 2000 (Act) requires that a body corporate which
desires authority to carry on banking business must apply in writing to the Central Bank for a
licence as either a bank or a licensed financial institution. The Act further requires that an
application be submitted in a form prescribed by the Central Bank, include certain prescribed
information, and be accompanied by the required application fee. An application will not be
considered received nor will it be processed until the filing fee and all supporting information
are received.

This application is provided to assist you in preparing and submitting an application that
provides all the required information and satisfies the criteria for approval of an application.
The application is divided into three parts, each relating to a different aspect of the proposed
institution. Specifically, information is requested about the:

Part Covered Area

I Proposed Institution
II Directors, Executive Officers, and Shareholder Controllers
III Corporate Shareholders

When completing this application and the supporting attachments, you should be guided
by the following terms and requirements listed below.

B. TERMS
1. Affiliate – means any person or company that controls the proposed institution; any sister
company that is controlled by the same company that controls the proposed institution;
and any other company which is owned or controlled by a majority of the directors or
shareholders who own or control the proposed institution.

2. Bank – means a commercial bank which conducts the activities described in Section 9.

3. Corporate Shareholder – means any corporation, partnership, joint venture, association or

other form of organization other than a natural person.

4. Executive Officer – includes the chief executive officer (CSO), the chief accounting
officer (CAO or CFO), and all other officers who are responsible for major functional
areas of the institution including, but not limited to, the following areas: (a) lending and
credit administration; (b) operations and internal controls; (c) investments; (d) treasury
and foreign exchange operations; and (e) trust and fiduciary activities.

5. Finance Company – means a licenced financial institution which carries on banking

business other than those activities exclusively reserved to banks by Section 9.

6. Person – means any person or legal entity including a corporate, partnership, joint
venture, association or other form of organisation other than a natural person.

7. Shareholder Controller – means any person who owns or controls, directly or indirectly,
either now or upon licencing, 15% or more of the voting stock of the proposed institution.
Shareholder Controller may also be referred to as a principal shareholder.

C. REQUIREMENTS
1. Responses – no application will be considered until complete information is submitted.
 all responses and documentation submitted with this application must be typewritten or
printed clearly in ink. All questions must be answered; no question may be left blank. If
an appropriate answer is "No", "None", "Not Applicable", or "Not Known", so indicate.
Additional pages may be added if response space is not enough. Inaccurate or incomplete
information will result in delays for the processing of an application.

2. Fees – a certified check for the prescribed fee and payable to the "Bank of Papua New
Guinea" must accompany the application. The application fee covers the administrative
costs of review and evaluation of the application and is not refundable. An application
will not be considered received or evaluated until the Central Bank has received collected
funds for the required application fee and all supporting information. Failure to submit
the required fee and full information will delay processing and may result in rejection and
return of the application.

In addition to the application fee, a licence fee and an annual renewal fee must be paid to
the Central Bank. Failure to pay the required fees within the time limits specified in
Section 60 of the Act will result in withholding approval to commence operations or
suspension of licence, as the case may be.

The prescribed fees (from June 2000) are –

Bank Finance Co.
Application fee K25,000 K15,000
Licence fee K25,000 K15,000
Renewal licence fee K25,000 K15,000

3. Disclosure – the Central Bank, at its discretion, may disclose to other regulatory
authorities, either domestic or foreign, any information contained in this application or
obtained from other sources if the Central Bank considers it necessary and relevant for
properly evaluating and deciding on this application.

4. Inquiries – any inquiries concerning the preparation, documentation, required fees, or

status of this application should be addressed to: The Manager, Financial System
Supervision Department, Bank of Papua New Guinea.

5. Submission – the Central Bank will only consider an application to be complete and
officially submitted when all required information and the application fee have been
received. If all required information and the fee are not received within six months of the
date when the application is first submitted, the application will be denied and returned,
and the filing fee will be forfeited. Any further consideration will require submission of a
fresh application and a new application fee.

An original plus one duplicate of the application and all supporting attachments must be
submitted in one complete package to:

Office of the Governor

Bank of Papua New Guinea
P O Box 121, Douglas Street
Port Moresby, NCD
Papua New Guinea
 CHECKLIST

The following checklist is intended to assist applicants in preparing and submitting a

complete application. At a minimum, all questions in the application form and all supporting
documentation must be submitted in the form and detail requested. Additional information
may be submitted if believed appropriate to clarify or supplement the requested information.

Does this application include ALL of the following items?

1. ___ Declaration in respect of Application for Licence (signed by all applicants or the
authorized agent for applicant/s).

2. ___ Certified bank check for full amount of the required application fee.

3. ___ Part I – Proposed Institution. All questions must be answered in full and all
required supporting information must be included.

4. ___ Part II – Directors, Executive Officers and Shareholder Controllers. All questions
must be answered in full and all required supporting information must be
provided including, in particular, a detailed personal financial statement for each
person who will be a director, executive officer or shareholder controller.

5. ___ Part III – Corporate Shareholders. All questions must be answered in full and all
required supporting information must be provided including, in particular,
detailed audited financial statements for each corporate shareholder who will own
5% or more of the outstanding shares of the proposed institution.

6. ___ Detailed business plan including, at a minimum, the following information:

a) ___ specific identifying information as required.
b) ___ market and economic analysis information as required.
c) ___ business strategy, objectives, services, and assumptions.
d) ___ organizational structure, schedules of officers and compensation, and
any agreements or arrangements with insiders.
e) ___ source/s and amount of capitalizing funds, growth plans, and source/s of
additional capital.
f) ___ pro forma financial statements for the proposed institution.
 CRITERIA
to be satisfied for
APPROVAL of LICENCE to CONDUCT BANKING BUSINESS

In deciding whether to approve an application for a licence, the Central Bank may grant a
licence, pursuant to Section 10(3) of the Act, if satisfied the minimum criteria have been met.
The minimum criteria are listed under Schedule 2 of the Act and are summarized below:
(a) applicant must be a corporate entity in Papua New Guinea
(b) applicant must have sufficient capital
(c) directors and officers must be fit and proper
(d) applicant must show a viable business plan
(e) applicant must conduct its business in a prudent manner and with integrity and skill
(f) the proposed name of the applicant must be acceptable

The Central Bank will also consider the following factors:

(a) Borrowed Funds. The use of borrowed funds to satisfy the minimum paid-up equity
capital requirements will not be allowed. Evidence that borrowed funds have been used
for initial capitalization will be grounds for denial of an application.

(b) Single Shareholder Limitation. No one person, or group of persons so closely-related that
they effectively comprise a single person, will be allowed to own or control, directly or
indirectly, more than 25% of the voting shares of the proposed institution. Evidence of a
shareholding structure intended to circumvent this limitation will be grounds for denial.

(c) Commercial or Non-Financial Shareholder Limitation. No commercial or non-financial

company will be allowed to own or control, directly or indirectly, more than 10% of the
voting shares of the proposed institution. Evidence that this limitation has been
circumvented will be grounds for denial.

(d) Interlocking Directorship. No person will be allowed to be a director of an institution if

he/she is also a director of any non-affiliated financial institution. For purposes herein,
the term "financial institution" includes insurance companies, mortgage companies,
securities firms, and any other firm that provides financial services in Papua New Guinea.
Evidence that this limitation has been circumvented will be grounds for denial.

(e) Executive Officers. Each institution must have a chief executive officer (CSO), a chief
accounting or financial officer (CAO or CFO), and other officers responsible for all major
functional areas including, but not limited to: (a) lending and credit administration, (b)
operations and internal controls, (c) investments and asset-liability management, (d)
treasury and foreign exchange operations, and (e) trust and fiduciary activities. No one
person may be appointed to hold two or more such offices at the same time.

(f) Competition. An application will generally not be considered in the best interests of the
economy of Papua New Guinea if the institution will hold more than 40% of the total of
all deposits held by all banks and finance companies operating in Papua New Guinea.

(g) Good Faith. All applications will be presumed to be submitted in good faith. If it is
found that an application was not submitted in good faith, misrepresents the facts and
intentions, or contains misleading or materially inaccurate information, the application
will be denied and the application fee will be forfeited.

Section 12 of the Act requires an institution to have net assets as specified in Schedule 3.
For purposes of this requirement, the Central Bank will require that an institution has and
maintains, at all times, net assets (i.e. paid-up equity capital plus earned capital; revaluation
reserve will not be counted) equal to the following amounts:

Commercial Banks K15,000,000

Finance Company K1,500,000
 DECLARATION
in respect of
APPLICATION for LICENCE to CONDUCT BANKING BUSINESS

I/We, the undersigned, acting for and on behalf of the applicant, do hereby certify that:

(a) all information given in response to and in support of the questions in this application
is true and correct to the best of my/our knowledge and belief; and

(b) the personal data and financial statements submitted with respect to each director and
executive officer are true and correct to the best of my/our knowledge and belief; and

(c) this application is made in good faith with the purpose and intent that the affairs and
business of the proposed institution will be conducted, at all times, prudently in accordance
with sound business principles and in full compliance with all applicable laws and directives.

I/We further certify that to the best of my/our knowledge and belief there are no other
facts or information relevant to this application of which the Central Bank should be aware,
and I/we pledge to promptly inform the Central Bank of any changes material to this
application which may arise while it is being considered by the Central Bank.

Finally, I/we give my/our consent that the Central Bank, at its discretion, may disclose to
other regulatory authorities, either domestic or foreign, any information contained in this
application or obtained from other sources if the Central Bank considers it necessary and
relevant for properly evaluating and deciding on this application.

Signatures:

__________________________________ _________________________________
Applicant or Agent (print name)

__________________________________ _________________________________
Applicant or Agent (print name)

__________________________________ _________________________________
Applicant or Agent (print name)

__________________________________ _________________________________
Applicant or Agent (print name)

__________________________________ _________________________________
Applicant or Agent (print name)

Date: _____________________________
 PART I: PROPOSED INSTITUTION

This section requests information about the proposed institution. Respond fully to all of
Questions 1-25. The Central Bank may require submission of other information as necessary
to adequately assess the merits of this application.

1. Name, Address, Other Activities. Provide the legal name, mailing address, and primary
business location of the proposed institution. Indicate any other name/s the institution plans
to use or has previously used in connection with any business conducted by it. Indicate also
whether the proposed institution is licensed to and/or conducts banking or other business
activities in any country or territory other than Papua New Guinea. If so, provide details of
such activities including authorisations or licenses held and the names and addresses of the
authorising or licencing agencies.

2. Contact Person. Provide the name, address, and telephone number of the person/s to be
contacted regarding this application.

3. Legal Form. Provide the legal form of the proposed institution: (check one)
_____Corporation
_____Other (specify__________________________)

4. Incorporation. Date of incorporation of proposed institution:____________________

Provide a copy of the Act, charter, deed of settlement, constitution or other document by
which the body corporate is, or is to be, constituted.

5. Directors and Officers. Provide the names, addresses, and occupations of the persons
who will be directors and executive officers of the proposed institution.

Director Name Address Occupation

______________________ ________________________ ______________________
______________________ ________________________ ______________________
______________________ ________________________ ______________________
______________________ ________________________ ______________________
______________________ ________________________ ______________________

Officer Name Address Position to be held

______________________ ________________________ ______________________
______________________ ________________________ ______________________
______________________ ________________________ ______________________
______________________ ________________________ ______________________
______________________ ________________________ ______________________

6. Business Relationships: (a) Describe all business relationships, if any, which any
director or executive officer has, or may have, with the proposed institution. Be specific.

(b) Borrowings. To what extent will any director or executive officer borrow from or be
indebted to the proposed institution?
(c) Guarantees, etc. Is any business or obligation of any director or executive officer of the
proposed institution or of any of his related interests directly or indirectly guaranteed,
underwritten, secured, or otherwise expected to be by the proposed institution? If so, provide
details.

(d) Consulting, Management or Service Contracts. To what extent will any director or
executive officer, or any of his/her related interests, provide consulting, management
advisory, or other types of services under contractual arrangement or otherwise to the
proposed institution? Provide details.

7. Auditors. Provide the name, address, telephone number and responsible partner/s of the
independent accounting firm that will be engaged by the proposed institution to conduct its
annual audit as required by Section 28 and Schedule 4 of the Act.

8. Affiliates. Provide the name, address, and type of business of any company which is, or
will be affiliated in any way with the proposed institution. (See Instructions for Affiliates.)

9. Principal Shareholder of Any Other Financial Institution. Will the proposed

institution own or control 10% or more of the voting shares of any other financial institution?
If so, provide details including percentage and form of ownership held.

10. Membership in Professional or Trade Associations. If the proposed institution, or any

affiliate thereof, is now or will be a member of any professional or trade association for
financial activities in Papua New Guinea or elsewhere, provide details including whether
such membership has ever been refused or terminated.

11. Censures. Has the proposed institution or any affiliate thereof ever been censured,
prosecuted, warned as to conduct, disciplined, or publicly criticized by, or made subject to a
court order by any governmental department or agency, professional association, or
regulatory body in Papua New Guinea or elsewhere? If so, provide details.

12. Convictions or Administrative Orders. Has the proposed institution or any affiliate
thereof ever been convicted of any offense, or has a petition for an administrative order been
served on the proposed institution or any affiliate thereof in Papua New Guinea or elsewhere,
within the last 10 years? If so, provide details.

13. Investigations. Has the proposed institution or any affiliate thereof ever been or is it now
subject to an investigation, in Papua New Guinea or elsewhere, by or at the instigation of any
governmental department or agency, professional association, or other regulatory body? If
so, provide details.

14. Litigation. Is the proposed institution or any affiliate thereof engaged or expecting to be
engaged in litigation, in Papua New Guinea or elsewhere, which may have a material adverse
effect on the resources of the proposed institution or its promoters? If so, provide details.

15. Judgments. Has the proposed institution or any affiliate thereof within the last 10 years,
failed to satisfy within one year a judgment of debt under a court order in Papua New Guinea
or elsewhere? If so, provide details.

16. Fraud. Has the proposed institution or any affiliate thereof ever been judged by a court,
in Papua New Guinea or elsewhere, to be civilly liable for fraud, malfeasance, or any other
misconduct? If so, provide details.
17. Bankruptcy or Debt Compromise. Has the proposed institution or any affiliate thereof
been judged bankrupt by a court, in Papua New Guinea or elsewhere, or has a bankruptcy
petition ever been served on the proposed institution or any affiliate thereof within the last 10
years, or has the proposed institution or any affiliate thereof made any compromise or
otherwise failed to satisfy its creditors in full within the last 10 years? If so, provide details.

18. Receiver. Has a receiver of any property of the proposed institution or any affiliate
thereof been appointed within the last 10 years in Papua New Guinea or in any other
jurisdiction? If so, provide details including whether the receiver is still acting under the
appointment.

19. Liquidation: (a) Voluntary. Has a notice of resolution for the voluntary liquidation of
any affiliate of the proposed institution been issued within the last 10 years in Papua New
Guinea or in any other jurisdiction? If so, provide details including whether the liquidation
has been fully resolved.

(b) Compulsory. Has a petition for the compulsory liquidation of any affiliate of the
proposed institution been served within the last 10 years in Papua New Guinea or in any other
jurisdiction? If so, provide details including whether the petition has been fully resolved.

20. Income Taxes. (a) To what date have the tax computations of the applicant been agreed
by the Internal Revenue Commission in Papua New Guinea or in any other jurisdiction?

(b) To what date have the assessments as noted above been satisfied or otherwise settled?

(c) Are material matters in dispute between the applicant and the Internal Revenue
Commission in Papua New Guinea or in any other jurisdiction? If so, provide details.

21. Capital Structure. Indicate the capital structure of the proposed institution.
Authorized capital K______________
Paid-up capital K______________
Total authorized shares ______________
Total issued shares ______________
Par value per share K______________

22. Shareholder List. Provide a complete list of the initial shareholders of the proposed
institution. Indicate the shareholder name, address, nationality, and number of shares to be
owned. If any shareholder or group of related shareholders will own or control 15% or more
of the shares of the proposed institution, so indicate and include the percentage to be owned.

23. Acquisition Debt. To what extent will borrowed or encumbered funds be used by the
initial shareholders, either directly or indirectly, to purchase their shares? Provide full details
on the amounts, sources, collateral, and repayment terms for any such borrowed funds.

24. Premises and Equipment. Describe the premises and equipment to be used by the
proposed institution. Indicate whether the premises and equipment will be owned or leased,
from whom purchased or leased, and the costs of acquisition or the lease payments.

25. Business Plan. Submit a detailed business plan for the proposed institution using the
format provided with these forms. At least three years projections must be included, and
assumptions used in preparing the plan and the projections must be realistic and based on
comparative data for the market/s to be served and the existing economic conditions.
 Provide any other information regarding the proposed institution or any affiliate
thereof which may assist the Central Bank in evaluating this application.
 PART II: DIRECTORS, EXECUTIVE OFFICERS and
SHAREHOLDER CONTROLLERS

This section requests biographical and financial information on natural persons who are
or will be directors, executive officers, or shareholder controllers of the proposed institution.
A complete Section II must be filled out and submitted for each such person.

Respond fully to all Questions 1-25. A detailed personal financial statement and a CV
must be provided for each person who is or will be director, executive officer, or shareholder
controller using the form provided. Supporting schedules must be included to explain
aggregated data and for all real estate, notes and accounts receivable, and proprietary interests
in unlisted shares or closely held companies. Methods and assumptions used in establishing
values for real estate, unlisted shares, or closely held companies must be fully disclosed.
Dates and amounts shown in the supporting schedules must correspond to those shown in the
financial statement. If unlisted shares are shown as an asset and if such shares represent 10%
or more of the net worth of the person submitting the financial statement, then financial
statements for the underlying company/ies must be provided for the most recent two full
years.

The Central Bank may require submission of additional information, including real
estate or business valuations, in order to accurately assess financial strength and capacity.

1. Name, Address. Provide the full name and physical address (current and permanent or
immediate past) of the person who will be a director, officer, or shareholder controller of the
proposed institution.

2. Position. Provide the position and/or title the above person will hold in the proposed
institution.

3. Nationality. Provide the citizenship and national identity or passport number of the
above person.

4. Birth date. Provide the date and place of birth of the above person.

5. Role, Responsibilities, and Reporting. Discuss the role the above person will have in
organizing and managing the affairs of the proposed institution. Indicate to whom the person
will report and/or from whom he will receive directions or instructions. If the person will be
an executive officer, describe the specific duties and responsibilities for the position(s) to be
held. If the person will be a director and will also have executive officer responsibilities
within the proposed institution, indicate the nature and extent of such responsibilities.

6. Qualifications. Provide a current CV (less than one year old) listing the professional and
academic qualifications of the above person.

7. Employment History. Provide in the CV the following information regarding the

employment history and professional experience of the above person for the past 10 years.
(a) Name and address of employer
(b) Nature or type of business
(c) Title and duties/responsibilities
(d) Date employed, and date and reason for leaving
 Provide complete details regarding positions held in financial institutions, the number of
employees and/or assets supervised, lending authority, etc. and the performance of the
institution or department for which responsible. If the person has ever been dismissed or
otherwise terminated from any office or employment, been subject to disciplinary
proceedings, or barred from entry to any profession or occupation, provide details.

8. Affiliations. Provide the name of any other financial institution with which the above
person is now or will be affiliated as a director or executive officer. Indicate his title or
official capacity, duties/responsibilities in the other bank, and describe any relationship which
now exists or will exist between the other institution and the proposed institution.

9. Shareholder Controller of Any Other Financial Institution. If the above person is now
or ever has been a shareholder controller (owning 15% or more of voting shares) of any other
financial institution, provide details thereof including any relationship which now exists or
will exist between the other financial institution and the proposed institution.

10. Membership in Professional or Trade Associations. If the above person is now or will
be a member of any professional or trade association concerned with financial activities in
Papua New Guinea or elsewhere, provide details including whether such membership has
ever been refused or terminated.

11. Censures. Has the above person ever been censured, prosecuted, warned as to conduct,
disciplined, or publicly criticized by, or made subject to a court order by any governmental
department or agency, professional association, or regulatory body in Papua New Guinea or
elsewhere? If so, provide details.

12. Convictions or Administrative Orders. Has the above person ever been convicted of
any felony offense, or has a petition for an administrative order been served on him, in Papua
New Guinea or elsewhere, within the last 10 years? If so, provide details.

13. Investigations. Has the above person ever been or is he now subject to an investigation,
in Papua New Guinea or elsewhere, by or at the instigation of any governmental department
or agency, professional association, or other regulatory body? If so, provide details.

14. Litigation. Is the above person engaged or expecting to be engaged in litigation, in

Papua New Guinea or elsewhere, which may have a material effect on his resources or his
ability to financially support the proposed institution? If so, provide details.

15. Judgments. Has the above person, within the last 10 years, failed to satisfy within one
year a judgment of debt under a court order in Papua New Guinea or elsewhere? If so,
provide details.

16. Fraud. Has the above person ever been judged by a court, in Papua New Guinea or
elsewhere, to be civilly liable for fraud, malfeasance, or any other misconduct? If so, provide
details.

17. Bankruptcy or Debt Compromise. Has the above person been judged bankrupt by a
court, in Papua New Guinea or elsewhere, or has a bankruptcy petition ever been served on
him within the last 10 years, or has he made any compromise arrangement or otherwise failed
to satisfy his creditors in full within the last 10 years? If so, provide details.

18. Receiver. Has a receiver of any property of the above person been appointed within the
last 10 years in Papua New Guinea or in any other jurisdiction? If so, provide details
including whether the receiver is still acting under the appointment.
19. Liquidation: (a) Voluntary. Has a notice of resolution for the voluntary liquidation of
the above person been issued within the last 10 years in Papua New Guinea or in any other
jurisdiction? If so, provide details including whether the liquidation has been fully resolved.

(b) Compulsory. Has a petition for the compulsory liquidation of the above person been
served within the last 10 years in Papua New Guinea or in any other jurisdiction? If so,
provide details including whether the petition has been fully resolved.

20. Income Taxes. Is the above person in good standing with the Internal Revenue
Commission in Papua New Guinea or in any other jurisdiction, or does he/she have any tax
liabilities which are unpaid or in dispute?

21. Share Registrations. How many shares in the proposed institution are or will be
registered in the name of the above person or in the name of a related party? Provide the
name(s) in which the shares will be registered and the class of shares if not ordinary shares.

22. Beneficial Interest. How many shares in the proposed institution, which are not
registered in the name of the above person or in the name of a related party, will the above
person have a beneficial interest in? Provide the name(s) in which the shares will be
registered and the nature of the beneficial interest.

23. Trustee or Nominee. Does or will the above person or any party related to him hold
shares in the proposed institution as a trustee or nominee? If so, provide details.

24. Assignments or Pledges. Are or will any of the shares in response to Questions 21-23 be
equitably or legally assigned or pledged to any other party? If so, provide details.

25. Voting Authority. (a) Direct. What proportion of the voting shares at any general
meeting of the proposed institution, or of any other organization of which the proposed
institution is a subsidiary, is or will the above person be entitled to vote or exercise control
over? Provide details of such voting authority or control.

(b) Indirect. If the exercise of voting power at any general meeting of the proposed
institution, or of any other organization of which the proposed institution is a subsidiary, is or
may be controlled or influenced by someone other than the above person, provide the identity
of such other person and the proportion of voting power so controlled or influenced.

Provide any other information regarding the proposed director, executive officer or
shareholder controller which may assist the Central Bank in evaluating this application.
 PART III: CORPORATE SHAREHOLDERS

This section requests background and financial information on entities that are or will be
corporate shareholders (CS’s) of the proposed institution. A complete Section III must be
filled out and submitted for each CS that owns or controls, or will own or control, 15% of
more of the outstanding shares of the proposed institution.

Respond fully to all of Questions 1-25. Detailed, audited financial statements (balance
sheet, income statement and cash flow statement) must be included. Supporting information
must be included as necessary to explain aggregated data and must be included for real estate,
notes and accounts receivable, and proprietary interests in unlisted shares or closely held
companies. Methods and assumptions used in establishing values for real estate, unlisted
shares, or closely held companies must be fully disclosed. Dates and amounts used in the
supporting schedules must correspond to those in the financial statements. If unlisted shares
are shown as an asset and represent 10% or more of net worth, financial statements for the
underlying company(ies) must be provided for the most recent two full years.

The Central Bank may require submission of additional information, including real
estate or business valuations, in order to accurately assess financial strength and capacity.

1. Name, Address. Provide the name, address, and business activities of the CS that is or
will be a shareholder of the proposed institution. Indicate also any other corporate, business,
or trade name used by the CS.

2. Manner of Control. Provide the manner in which the CS will exercise control or
otherwise exert influence over the affairs of the proposed institution.

3. Legal Form. Provide the legal form of the CS: (check one)
_____ Corporation
_____ Partnership
_____ Other (specify____________________)

4. Incorporation. Provide the date and country of incorporation or formation of CS and a

certified copy of the document evidencing incorporation.

5. Directors, Officers, and Shareholder Controllers. Provide the following information

for each director, executive officer, and shareholder controller of the CS.

Name Address Title/Position in CS % shares owned

_________________ _____________ __________________ ________
_________________ _____________ __________________ ________
_________________ _____________ __________________ ________
_________________ _____________ __________________ ________
_________________ _____________ __________________ ________

6. Registered Address. Provide the registered/legal address of the Head Office and
principal place of business of the CS, if different from that shown in Question 1 above.
7. Auditors and Bankers. Provide the names and addresses of the CS's auditors and
bankers during the past 10 years. Indicate a contact person for each such audit firm and bank.

8. Affiliates. Provide the name, address, and type of business for any organization which is
or will be in any way affiliated with the CS.

9. Shareholder Controller of Any Other Financial Institution. If the CS is now or ever

has been a shareholder controller (owning 15% or more of the voting shares) of any other
financial institution, provide details thereof including any relationship which now exists or
will exist between the other financial institution and the proposed institution.

10. Membership in Professional or Trade Associations. If the CS is now or will be a

member of any professional or trade association for financial activities in Papua New Guinea
or elsewhere, provide details including whether such membership has ever been refused or
terminated.

11. Censures. Has the CS ever been censured, prosecuted, warned as to conduct, disciplined,
or publicly criticized by, or made subject to a court order by any governmental department or
agency, professional association, or regulatory body in Papua New Guinea or elsewhere? If
so, provide details.

12. Convictions or Administrative Orders. Has the CS ever been convicted of any felony
offense, or has a petition for an administrative order been served on the CS, in Papua New
Guinea or elsewhere, within the last 10 years? If so, provide details.

13. Investigations. Has the CS ever been or is it now subject to an investigation, in Papua
New Guinea or elsewhere, by or at the instigation of any governmental department or agency,
professional association, or other regulatory body? If so, provide details.

14. Litigation. Is the CS engaged or expecting to be engaged in litigation, in Papua New

Guinea or elsewhere, which may have a material effect on its resources or ability to
financially support the proposed institution? If so, provide details.

15. Judgments. Has the CS, within the last 10 years, failed to satisfy within one year a
judgment of debt under a court order in Papua New Guinea or elsewhere? If so, provide
details.

16. Fraud. Has the CS ever been adjudged by a court, in Papua New Guinea or elsewhere, to
be civilly liable for fraud, malfeasance, or any other misconduct? If so, provide details.

17. Bankruptcy or Debt Compromise. Has the CS been judged bankrupt by a court, in
Papua New Guinea or elsewhere, or has a bankruptcy petition ever been served on the CS
within the last 10 years, or has the CS made any compromise or otherwise failed to satisfy its
creditors in full within the last 10 years? If so, provide details.

18. Receiver. Has a receiver of any property of the CS been appointed within the last 10
years in Papua New Guinea or in any other jurisdiction? If so, provide details including
whether the receiver is still acting under the appointment.

19. Liquidation: (a) Voluntary. Has a notice of resolution for the voluntary liquidation of
the CS been issued within the last 10 years in Papua New Guinea or in any other jurisdiction?
If so, provide details including whether the liquidation has been fully resolved.
(b) Compulsory. Has a petition for the compulsory liquidation of the CS been served within
the last 10 years in Papua New Guinea or in any other jurisdiction? If so, provide details
including whether the petition has been fully resolved.

20. Income Taxes. Is the CS in good standing with the Internal Revenue Commission in
Papua New Guinea or any other jurisdiction, or does the CS have any tax liabilities which are
unpaid or in dispute?

21. Share Registrations. How many shares in the proposed institution are or will be
registered in the name of the CS or in the name of a related party? Provide the name/s in
which the shares will be registered and the class of shares if other than ordinary shares.

22. Beneficial Interest. How many shares in the proposed institution, which are not
registered in the name of the CS or in the name of a related party, will the CS have a
beneficial interest in? Provide name/s in which the shares will be registered and nature of
beneficial interest.

23. Trustee or Nominee. Does or will the CS or any party related to it hold shares in the
proposed institution as a trustee or nominee? If so, provide details.

24. Assignments or Pledges. Are or will any of the shares in response to Questions 21-23 be
equitably or legally assigned or pledged to any other party? If so, provide details.

25. Voting Authority. (a) Direct. What proportion of the voting shares at any general
meeting of the proposed institution, or of any other organization of which the proposed
institution is a subsidiary, is or will the CS be entitled to vote or exercise control over?
Provide details of such voting authority or control.

(b) Indirect. If the exercise of voting power at any general meeting of the proposed
institution, or of any other organization of which the proposed institution is a subsidiary, is or
may be controlled or influenced by someone other than the CS, provide the identity of such
other person and the proportion of voting power so controlled or influenced.

Provide any other information regarding the proposed director, executive officer or
shareholder controller which may assist the Central Bank in evaluating this application.
INDIVIDUAL FINANCIAL STATEMENT

To be completed by each natural person who is or will be a director, executive officer, or shareholder
controller of the institution for which this application is being submitted.

Name and Address of Proposed Institution:

Name and Proposed Position of Person:

Date of Financial Statement:

ASSETS LIABILITIES & NET WORTH

Cash & Bank Balances /1 Accounts Payable
Marketable Shares /2 Notes Payable /10
CSV Life Insurance /3 Mortgages Payable /11
Debtors – good Interest Due and Unpaid /12
Debtors – doubtful Taxes Due and Unpaid /13
Other Shares & Investments /4 Judgments /14
Vehicles & Equipment /5 Other Liabilities /15
Personal Property /6 Total Liabilities
Real Estate /7
Business Interests /8 Net Worth
Other assets /9
Total Liabilities & Net
Total Assets
Worth
NOTES
(1) Provide name/s of banks, account numbers, and contact officers at banks.
(2) Provide number of shares of listed companies, where held, date acquired, cost, current market value, and
certified copy of the share certificates or other evidence of ownership if value exceeds 10% of net worth.
(3) Provide number, face amount and type of policy, name and address of company, names of insured and
beneficiary, evidence of current cash value and certified copy of policy if value exceeds 10% of net worth.
(4-9) Indicate kinds of shares or investments, vehicles and equipment, property, real estate, business interests or
other assets; indicate date acquired, cost, current value, and method of valuation if value exceeds for any
category that exceeds 10% of net worth.
(10-11) Indicate to whom debts are payable, original and current balances, repayment terms, and security.
(12-13) Indicate the amount/s of any accrued interest or taxes that are due and unpaid, and to whom owed.
(14) Provide details of any judgments currently outstanding.
(15) Provide details of other liabilities if amount exceeds 10% of net worth.

I hereby certify that the information provided in the financial statement above and in the
supporting schedules is true and correct to the best of my knowledge and belief, and that there
are no material omissions or misrepresentations of facts. I also authorize the Central Bank to
request and receive any information necessary to verify the accuracy of information contained
in this financial statement.

Signature: ___________________________ Date: _____________

 BUSINESS PLAN

A. INTRODUCTION
Organizing groups applying for a license must submit a detailed business plan as part of
the application process. In addition, when establishing a branch or making a significant
change in operations such as an amalgamation, an institution will be requested to submit an
amended business plan. The business plan should set forth the objectives and strategies of
the institution and provides guidance for management. It should be flexible and allow for
change as circumstances require. Changes in the objectives or strategic goals should be
approved by the board of directors and incorporated into an amended plan. The Central Bank
will review an institution's business plan at periodic examinations or when other regulatory
issues arise.

A suggested format for a business plan is shown below; alternative formats may be used
provided that all relevant information is included. The plan must identify the proposed
market/s to be served and products and services to be offered, must demonstrate adequate
capital and managerial resources for the kinds and levels of activities, and show compliance
to regulatory requirements. The plan must include operating projections for at three years and
contain sufficient information to demonstrate a reasonable likelihood of success. Suggested
formats for balance sheet and income statement are provided on pp. 20-21.

The Central Bank may require submission of additional information after review of the
business plan originally provided.

B. SUGGESTED FORMAT

1. Identifying Information.
(a) Name and location. Provide the name and location of the institution including the
location/s of any branches.
(b) Corporate structure. Provide a diagram of the institution's corporate structure
including any parent company, subsidiaries, or affiliated entities.
(c) Origin and basis. Briefly discuss how the organizing group came together and the
reasons for wanting to start a financial institution.

2. Market Analysis.
(a) Market. Identify the market/s to be served by the proposed institution.
(b) Economy. Describe the economic characteristics of the target market/. Include any
anticipated changes in the economy or market, factors influencing such changes, and
probable positive or negative impact on the institution.

3. Business Strategy and Objectives.

(a) Strategy. Briefly describe the vision, mission, business strategy and objectives of the
institution. For strategy and objectives, indicate goals that are specific and measurable.
(b) Services. Briefly describe the services to be offered by the institution and the type of
banking activities the proposed institution plans to engage in? (check all that apply)
_____ Current accounts (i.e. checking deposits)
_____ Time and savings accounts
_____ Commercial and industrial loans
_____ Mortgage loans (commercial and residential)
_____ Installment/consumer loans and credit cards
_____ Hire finance and equipment leasing
_____ Export-import/trade financing
_____ Foreign exchange dealer/broker
 _____ Underwriting securities
_____ Management advisory services
_____ Other (specify)__________________________

(c) Assumptions. List the major assumptions upon which projections are based.
Include, at a minimum: market growth rates, competition, interest rates, cost of funds,
overhead, asset-liability mix, returns on assets and equity, dividend pay-out rate, and
capital ratios (both leverage and risk based ratios).
(d) Pro forma statements. Provide pro forma balance sheets and income statements for
three years. Show expected asset-liability mixes, volumes of each type of service to be
offered, fixed asset investment, and compensation for management and staff. Adequate
provisions for loan losses and annual external audit must also be included.

4. Leadership and Management.

(a) Officers and compensation. Provide a list of officers showing the fees, salaries, and
all other forms of compensation or benefits to be paid to or for each person.
(b) Insider agreements. Describe any agreements for leases or services the institution
intends to enter into with any of its directors, executive officers, or principal shareholders,
or with any organization or affiliate controlled by a director, executive officer, or
principal shareholder. Provide copies of any such agreements including specific details
of rates and terms and comparative market data upon which the rates and terms are based.

5. Capitalization and Additional Sources.

(a) Initial capital. Describe the amount and source of initial capitalizing funds.
(b) Capital growth. Describe plans for financing growth, internally or externally, over
the first three years of operation.
(c) Additional capital sources. Describe what sources of additional capital are available
should the need arise.
 PRO FORMA FINANCIAL STATEMENTS

BALANCE SHEET (K 000’s)

Year 1 Year 2 Year 3
Assets
Balances at Central Bank
Balances at Banks in PNG
Balances at Banks Abroad
Treasury Bills and Gov’t Securities
Loans to Financial Institutions
Commercial, Industrial, Agricultural Loans
Real Property Mortgage Loans
Personal, Consumer, Hire Purchase Loans
FX Loans
Other Loans
Gross Loans
Less: Provisions for Loan Losses
Less: Suspended Interest
Net Loans
Other Securities & Investments
Interest Receivable
Building & Equipment
Foreclosed Assets
Other Assets
Total Assets

Liabilities & Capital

Demand Deposits
Savings Deposits
Term Deposits
FX Deposits
Total Deposits
Liabilities to Central Bank
Liabilities to Other Banks
Borrowed Funds
Interest Payable
Other Liabilities
Total Liabilities

Subordinated Debt Capital

Paid-In Capital
Retained Earnings
Revaluation Reserves
Total Capital Funds
Total Liabilities & Capital

Memoranda:
Contingent Liabilities
Total Earning Assets
Total Risk-Weighted Assets
Equity-to-Assets Ratio
Tier 1 Capital-to-Risk Weighted Assets
Total Capital-to-Risk Weighted Assets
Gross Loans-to-Total Deposits
Liquid Assets-to-Total Deposits+ST Liabilities
INCOME STATEMENT (K 000’s)
Year 1 Year 2 Year 3
Interest Income
Loans and Leases
Securities and Investments
Deposit Balances
Total Interest Income
Interest Expense
Interest on Deposits
Interest on Borrowed Funds
Total Interest Expense
Net Interest Income
Provisions Expense for Loan Losses
Net Income from Lending & Investing
Non-Interest Income
Fees, Commissions & Service Charges
FX Fees and Transactions Charges
FX Revaluations
Other Non-Interest Income
Non-Interest Expense
Staff Salaries and Benefits
Officers’ Salaries and Benefits
Directors Fees and Benefits
Administrative and Overhead Expenses
Advertising and Promotion
Depreciation Expense
Dues and Subscriptions
Licence Renewal Expense
Lease and Rental Expenses
Travel and Entertainment Expenses
Other Non-Interest Expenses
Net Operating Income Before Taxes
Taxes
Net Operating Income After Taxes
Extraordinary Items (net of taxes)
Net Income (Loss)
Other Additions (Deductions) to Capital
Less: Cash Dividends
Net Change in Capital Accounts
Capital Accounts – Beginning of Period
Capital Accounts – End of Period

Ratios:
Return on Average Assets
Return on Average Equity
Average Yield on Earning Assets (a)
Average Cost of Funding Liabilities (b)
Net Interest Spread (a-b)
Net Interest Income / Average Earning Assets
Asset Growth (yr-on-yr)
Loan Growth (yr-on-yr)
Deposit Growth (yr-on-yr)
Capital Growth (yr-on-yr)