CROSS RIVER – SMALL SCALE INDUSTRIES (CREDIT SCHEME) LAW
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LAWS OF CROSS RIVER STATE
SMALL SCALE INDUSTRIES (CREDIT SCHEME) LAW
ARRANGEMENT OF SECTIONS
CHAPTER S7
PART 1
Establishment, aims and operation of the Fund
SECTION
- Establishment, aims and operation of the Small Scale Industries (Credit Scheme) Fund.
PART 2
Establishment, Composition and Functions of the Management Committee
- Establishment and composition of the Management Committee.
- Appointment and functions of Secretary.
- Functions of the Management Committee.
PART 3
Conditions for Loans
- Application for loan from the Fund.
- Maximum amount that may be lent.
- Loan from the Fund to bear interest.
- Application for bank guarantee.
- Guarantee not to preclude bank from giving short-term advances to an industrial enterprise.
- Provisions relating to security.
- Terms guarantee and moratorium.
- Secondary liability of the Management Committee on guarantee.
- Special powers of the Management Committee in the case of misuse of loans.
- Provisions relating to the death of a borrower, to the dissolution of a partnership, or the winding up of a company.
PART 4
Miscellaneous Provisions
- Industrial enterprise to execute mortgage of its assets to the Management Committee.
- Charge on property and priority of loans.
- Power of scrutiny and inspection.
- When misuse of loan to be deemed.
- Misuse of loan.
- Recovery of overdue loans.
- Offence by applicant for a loan or a guarantee.
- Corruption in connection with loans.
SECTION
- Special provisions.
- Legal representation.
- Service of process.
- Interpretation.
- Citation.
CHAPTER S7
SMALL SCALE INDUSTRIES (CREDIT SCHEME) LAW
A Law to establish a fund for the purpose of financing the establishment, expansion or modernisation of industrial enterprises in the State and to provide for the management of the fund.
(19th October, 1973)
[Commencement.]
PART 1
Establishment, Aims and Operation of the Fund
- Establishment, aims and operation of the Small Scale Industries (Credit Scheme) Fund
(1) There is hereby established a fund to be known as the Small Scale Industries (Credit Scheme) Fund (hereafter in this Law referred to as “the Fund”) for the purpose of financing the establishment, expansion or modernisation of industrial enterprises which in the opinion of the Management Committee—
(a) are or are likely to be viable; and
(b) are making or are likely to make some contribution to the State economy by way of production of needed commodities, utilisation of local raw materials and provision of employment opportunities.
(2) Financing of an industrial enterprise within the meaning of subsection (1) above shall be in the form of supplementary financial assistance to such industrial enterprise and shall not extend to the entire financing of the establishment, expansion or modernisation of any such industrial enterprise.
(3) There shall be paid into the Fund—
(a) all grants made for the purpose by the Federal Government;
(b) all sums provided for the purpose by the State Government;
(c) all grants, donations, subventions and other sums of money made or given for the purpose by any person corporate or unincorporated.
(4) All moneys comprised in the Fund and not immediately required for the purpose of the Fund shall be deposited in a bank approved by the Commissioner.
PART 2
Establishment, Composition and Functions of the Management Committee
- Establishment and composition of the Management Committee
(1) There is hereby established a management committee to be know as the Small Scale Industries (Credit Scheme) Management Committee (hereafter in this Law referred to as “the Management Committee”) which shall consist of the following members—
(a) the Permanent Secretary of the Ministry or his representative who shall be the chairman;
(b) the Permanent Secretary of the Ministry of Finance or his representative;
(c) the Director of the Industrial Development Centre at Owerri charged with responsibility for industrial development in the State or his representative;
(d) such other persons as the State Governor may from time to time appoint.
(2) At a meeting of the Management Committee three members, including the Chairman or other person presiding shall constitute the quorum, and in the absence of the Chairman, the members of the Management Committee present may appoint one of their member to preside thereat.
(3) The Management Committee may co-opt not more than two suitable persons experienced in the development of small scale industries to participate in the deliberations of the Management Committee; and the persons so co-opted shall have all the rights and privileges of members save the right to vote and to count towards the quorum.
- Appointment and functions of Secretary
The Chairman may appoint a person in the Ministry to be Secretary to the Management Committee and it shall be the duty of the Secretary to—
(a) record minutes of the proceedings of the Management Committee;
(b) attend to the Management Committee and carry out the lawful directives of the Management Committee or of the Chairman;
(c) cause to be kept by a duly qualified officer of his staff proper account of financial transactions undertaken by the Management Committee; and
(d) do all such things as may be necessary for the due and efficient discharge of the functions of the Management Committee as the Management Committee may from time to time assign to him.
- Functions of the Management Committee
(1) The functions of the Management Committee shall be the organisation, co-ordination and administration, in accordance with the provisions of this Law, of financial assistance to industrial enterprises in the State that are or are likely to be viable.
(2) In the performance of its functions, the Management Committee may—
(a) operate a loans scheme whereby the Management Committee grants loans to approved industrial enterprises or guarantees to a bank the repayment of loan advances given by the bank to approved industrial enterprises;
(b) ensure generally the proper use of such loans and particularly that money lent out by, or on the guarantee of, the Management Committee is used for the purpose for which the loans were made or guaranteed;
(c) ensure generally the proper use and timely recovery of such loans;
(d) supplement the amount provided for under section 1 (3) of this Law for the Management Committee’s use by borrowing money from the commercial banks or other sources in furtherance of the aims of the Management Committee;
(e) take all such other actions as may be necessary for the furtherance of the aims of the Management Committee in the effective discharge of its functions.
PART 3
Conditions for Loans
- Application for loan from the fund
(1) Every industrial enterprise which desires to obtain a loan from the Fund shall apply to the Management Committee.
(2) An application for a loan shall be made in a form prescribed by the Management Committee.
(3) Where an application prima facie discloses viability of an industrial enterprise or the likelihood thereof, the Management Committee shall direct the applicant to appear before it.
- Maximum amount that may be lent
The Management Committee shall not, except with the express approval of the Commissioner, grant a loan exceeding the sum of ten thousand naira to an industrial enterprise which applies to the Management Committee for a loan.
- Loan from the Fund to bear interest
Every loan from the Fund shall bear interest at a rate prescribed by the Management Committee.
- Application for bank guarantee
(1) Every industrial enterprise which desires credit from a bank under the guarantee of the Management Committee shall apply to the Management Committee.
(2) Where an application prima facie discloses viability of an industrial enterprise or the likelihood thereof, the Management Committee shall direct the applicant to appear before it.
(3) The Management Committee may co-opt the District or Branch Manager of the bank from which credit facility is sought, but such District or Branch Manager shall not vote at such meeting or count towards the quorum thereof.
- Guarantee not to preclude bank from giving short-term advances to an industrial enterprise
The guarantee of a bank credit by virtue of this Law shall be without prejudice to the right of the bank entirely at its own discretion to make available to the industrial enterprise concerned such additional short-term advances, by way of overdrafts or otherwise, which the bank in the course of ordinary banking business and apart from this Law would make available, as the bank considers necessary having regard to the State of the industrial enterprise.
- Provisions relating to security
(1) No loan shall be made or guarantee given under this Law unless the applicant offers security acceptable to the Management Committee; and such security may include land or building or both, machinery, equipment, or other fixed assets or any combination thereof including those created out of the loan:
Provided that livestock, household goods or personal effects and real property of the applicant or of his family immediate or remote shall not be accepted as security.
(2) Such assets as are accepted as security by the Management Committee shall be secured as provided in section 15 of this Law.
(3) If on account of the default of the borrowers or the breach of any condition of the loan by the borrower it is expedient so to do, the Management Committee may recall the loan; and to that end the Management Committee or its agents may enter the premises of the borrower and remove any or all of the assets acquired out of the loan and may at its discretion dispose of the same and any shortage between the value of the assets when acquired and when disposed of shall be a debt owing by the borrower and recoverable as such.
(4) Any asset or assets removed in pursuance of subsection (3) of this section shall be deemed to be asset or assets acquired out of the loan; and the onus of proving the contrary shall be on the borrower.
- Terms of guarantee and moratorium
(1) Subject to a moratium to be prescribed by the Management Committee, every guarantee of bank credit and every loan from the Fund shall be given by the Management Committee on terms of instalment repayment at fixed periods.
(2) In prescribing a moratorium period the Management Committee shall take into consideration the nature of the industrial enterprise and ensure that in any event the period does not exceed seven years.
- Secondary liability of Management Committee on guarantee
(1) Every guarantee given by the Management Committee by virtue of this Law shall be in the form of a written undertaking by the Management Committee to pay to the bank giving credit facilities under this Law any instalment due from an industrial enterprise upon one month’s notice in writing from the bank to the Management Committee of default by the industrial enterprise to pay the sum.
(2) For the purpose of subsection (1) above, the undertaking of the Management Committee shall be in a form prescribed or authorised by the Management Committee.
- Special powers of Management Committee in the case of misuse of loans
(1) If on examination it appears to the Management Committee that the whole or any part of a loan made by the Management Committee or by a bank under a guarantee to a borrower has not been used for the purpose for which the loan or the guarantee was made, the Management Committee may, in the case of a loan made by it to the borrower, by notice in writing demand that the loan be repaid to the Management Committee within the time specified in such notice, and a sum so ordered to be repaid shall thereupon become a debt to the Management Committee from the borrower; and the Management Committee shall, in the case of a loan guarantee, by notice in writing inform the bank accordingly.
(2) If in the opinion of the Management Committee, a loan made under this Law or under a guarantee given under this Law has been misused, the Management Committee may in the case of a loan made by it, by notice in writing addressed to the borrower, recall, the entire loan or any part thereof, and may require the loan or that part to be repaid on a date specified in the notice and may thereafter, if the loan is secured by a mortgage, foreclose the mortgage and such notice shall be served or be deemed to be served on the borrower if it is delivered personally to the borrower or sent by registered post to the last known address of the borrower;
and the Management Committee shall, in the case of a loan guarantee, by notice in writing inform the bank accordingly.
- Provisions relating to the death of a borrower, to the dissolution of a partnership or to the winding up of a company
(1) On the death of an individual, the dissolution of a partnership or the winding up of a company whose loan made by the Management Committee or by a bank under a guarantee has not been fully repaid to the Management Committee or to the bank, an officer or other authorised agent of the Management Committee, in the case of a loan made by the Management Committee, may, at a reasonable and convenient hour of the day, enter any premises where chattels purchased or deemed to have been purchased in whole or in part with the loan made under this Law are stored and take inventory of the chattels with the person who has custody thereof, and no person acting by himself or on behalf of the borrower shall thereafter remove or otherwise meddle with such chattels without the consent of the Management Committee.
(2) The Management Committee may seize and sell or cause to be seized and sold any or all of the chattels shown in the inventory taken under subsection (1) above and out of the proceeds of such sale there shall, in the first instance be defrayed any expenses arising from such seizure and sale, and in the second instance there shall be paid the amount due in respect of the loan; and the balance (if any) shall be payable to the borrower upon demand being made by him or on his behalf within six months after the date of the sale.
(3) Before taking an inventory and before the seizure and sale of chattels by virtue of subsections (1) and (2) respectively of this section, the Management Committee shall, in the case of a loan made by a bank under the guarantee of the Management Committee, inform the bank accordingly.
(4) Any person who removes or otherwise meddles with any of the chattels on the inventory taken in terms of subsection (1) of this section shall be guilty of an offence under the Law and shall be liable on summary conviction by a magistrate’s court to four months imprisonment or to a fine of one hundred naira or to both.
PART 4
Miscellaneous provisions
- Industrial enterprise to execute mortgage of its assets to the Management Committee
(1) Where the Management Committee decides to guarantee a bank credit or make a loan from the Fund, the Management Committee shall communicate the decision to the industrial enterprise in writing including a request that the said industrial enterprise should within the period prescribed, not exceeding one month, execute a mortgage deed to the Management Committee charging its assets with the repayment of the sum to be borrowed.
(2) The value of the assets charged under subsection (1) shall not be less than one hundred percent of the bank credit or loan from the Fund applied for, and if the assets of the industrial enterprise fall short of the said minimum value the industrial enterprise shall furnish further security in the same or another mortgage deed so as to provide the aforesaid percentage.
- Charge on property and priority of loans
(1) Subject to subsection (2) below, where a loan is guaranteed or made by the Management Committee, the property of the industrial enterprise, the subject matter of the mortgage executed as hereinbefore stated, shall from the date of the mortgage be charged with the repayment of such loan and interest as in the mortgage mentioned, in priority, save so far as is otherwise specified in the mortgage, over every other debt, mortgage or charge whatsoever affecting the property, except any loan due to any creditor not assenting to such priority which has been made in good faith before the loan guaranteed or made by the Management Committee and which has been secured by a duly registered mortgage of the property executed to a person who is entitled as a bona fide creditor to the repayment thereof with interest.
(2) Where there are two or more of such creditors as are mentioned in subsection (1) above and some of them representing not less than four-fifths in value of the total debt consent in writing that the said charge should have priority over the loans and mortgages of all the creditors, then the loans and mortgages of all the creditors, as well as those who have not agreed as those who have agreed, shall be postponed to the loan guaranteed or made by the Management Committee and to the security for the same.
- Power of scrutiny and inspection
(1) Where a bank has given credit facilities by virtue of this Law or the Management Committee has made a loan from the Fund, the Management Committee shall, from time to time and until the amount of the credit facilities or the loan from the Fund is fully repaid, have power to make or cause to be made such examination or scrutiny and periodic inspection of the borrower’s industrial enterprise, its books of account, premises and assets as may be necessary to ensure that the credit facilities are or have been or the loan is or has been used for the purpose for which they were or it was given and that the assets upon which the loan is secured are intact.
(2) For the purpose of the said examination or scrutiny and without prejudice to the general powers of the Management Committee under subsection (1) above, the industrial enterprise shall forward monthly to the Management Committee the transcript of its cash book and bank statement and the Management Committee shall after scrutiny thereof return the same.
- When misuse of loan to be deemed
If an industrial enterprise obstructs or impedes the Management Committee in the performance of its functions or otherwise makes it impossible for the Management Committee to perform its functions under subsection (1) of section 17, or if the industrial enterprise fails or neglects to discharge its obligations under subsection (2) of section 17, the industrial enterprise shall be deemed to have misused the loan guaranteed or made by the Management Committee.
- Misuse of loan
If in the opinion of the Management Committee a loan guaranteed or granted from the Fund has been misused, or if such loan is deemed under the provisions of section 18 to be misused, the Management Committee may by notice in writing addressed to the borrower recall the whole loan or part thereof, and may require the loan or that part to be repaid on the date specified in the notice.
- Recovery of overdue loans
(1) Any loan or part thereof guaranteed or made by the Management Committee which is overdue for repayment, or in respect of which the Management Committee has given notice under section 19 of this Law, shall be deemed to be money payable under a judgment of court within the meaning of section 2 (1) of the Law.
(2) An industrial enterprise by which such a sum as is referred to in subsection (1) above is payable is deemed to be a judgment debtor within the meaning of section 2 of the Law.
(3) The Management Committee is deemed to be a judgment creditor within the meaning of section 2 (1) of the Law.
(4) The Chairman has all the powers of a magistrate in respect of the signing of a writ of attachment and sale issued under the Law and of a registrar and sheriff under the Law in respect of the issue and execution of the writ.
(5) Subject to subsection (6) below all the provisions of the Law relating to the seizure of goods and securities and custody thereof and to the sale of goods shall apply to the Chairman or to any officer authorised by him to execute such a writ of attachment or sale.
(6) Notwithstanding anything contained in Part 6 of the Law, the Management Committee may make rules and prescribe forms and to other provisions of this Law.
(7) In this section the expression “the Law” means the Sheriff and Civil Process Law.
- Offence by an applicant for a loan or a guarantee
Any applicant for a loan or bank guarantee under this Law who—
(a) makes to the Management Committee a material statement which he knows to be false or which he does not believe to be true or which he makes carelessly not minding whether it is true or false; or
(b) with intent to defraud, fails to disclose to the Management Committee a material information within his knowledge, is guilty of an offence and liable on summary conviction by a magistrate’s court to a fine of two hundred naira, or to imprisonment for one year or to both such fine and imprisonment.
- Corruption in connection with loans
Any person who—
(a) being a member, servant or agent of the Management Committee corruptly accepts or agrees to accept or obtains or agrees to obtain from any person any money, property or benefit of any kind for himself or for any other person in respect of or in connection with a loan guaranteed or made or an application therefor under this Law; or
(b) corruptly gives or promises or offers to give any money, property or benefit of any kind to a member, servant or agent of the Management Committee in respect of or in connection with any loan guaranteed or made or an application therefor under this Law, is guilty of an offence and liable on summary conviction by a magistrate’s court to a fine of two hundred naira or to imprisonment for one year, or to both such fine and imprisonment.
- Special provisions
A loan relating to an industrial enterprise to which this Law applies or guaranteed under any written law that had effect in the State prior to the commencement of this Law shall be deemed to be a loan made or guaranteed under this Law and the Management Committee shall have the necessary powers to recover or otherwise deal with any such loan.
- Legal representation
The Management Committee may sue or be sued in that name in respect of a loan or a loan guarantee or security for a loan or a loan guarantee granted under this Law, and the Management Committee shall be represented by the Chairman or any officer of the Fund authorised by the Management Committee in writing to represent the Management Committee.
- Service of process
Service upon the Management Committee of any notice, order or other process may be effected by delivering it, or sending it by registered post, to the Chairman.
- Interpretation
In this Law, unless the context otherwise requires—
“bank credit” means short or long-term advances, overdrafts, credit facilities or loans made by a bank to any of its customers;
“the Chairman” means the Chairman of the Management Committee;
“the Commissioner” means the State Commissioner charged with responsibility for industries and tourism;
“financial year” means the period of twelve calendar months ending on the thirty-first day of March;
“the Fund” means the Small Scale Industries (Credit Scheme) Fund established by section 1 of this Law;
“industrial enterprise” means a small scale industry to which this Law applies;
“the Management Committee” means the Small Scale Industries (Credit Scheme) Management Committee established under section 2 of this Law;
“the Ministry” means the Ministry of Industries and Tourism;
“prescribed” means prescribed by regulations;
“small scale industry” means an industry with a total paid employment strength of not less than five and not more than fifty persons with a maximum fixed capital of sixty thousand naira;
“the State” means the Cross River State of Nigeria.
- Citation
This Law may be cited as the Small Scale Industries (Credit Scheme) Law.
CHAPTER S7
SMALL SCALE INDUSTRIES (CREDIT SCHEME) LAW
SUBSIDIARY LEGISLATION
No Subsidiary Legislation
