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Table
of Contents
Introduction - Short Title and Commencement
Part I -
Definitions
Part II -
Licenses
1. Authority to Grant Licenses
2. Documents to be Provided with Application
3. Denial of License and/or Revocation Thereof
4. Restriction of Name and Use Thereof - "Bank"
5. Authority to Change/Move Locations
6. Foreign Exchange Transactions
7. Restriction on Change of Control of Bank
8. Diversification of Bank/s
9. Investment in Subsidiaries
10. Unlicensed Transactions/Operations
11. Minimum Capital Requirement
12. Minimum Liquidity
13. Restriction on Dividends
14. Affiliated Transactions
Part III -
Audit and Periodic Filings
1. Eligible Auditors
2. Requirement of Audited Financial Statements
3. Semi-Annual Reports
4. Filing Date/s - Reports
5. Production of Documents
Part IV -
Other Provisions
1. Unsuitable Management Personnel
2. Significant Shareholders'
3. Regulatory Approval of Director Appointment/s
4. Execution and Preparation of Filings
5. Secrecy and Privacy
6. Business Hours of Bank/s
7. Extended Holiday
8. Prosecution of Violations
9. Amendment and Alteration of These Statutes
10. Voluntary Liquidation
11. Regulatory Seizure of Operations and Assets
12. Mandatory Liquidation
13. Escheatment of Abandoned Property
14. Application of the Business Corporation Ordinance
15. Application of These Statutes
16. Authority Hereof
17. Public or Privately Held Status
18. Depositor's Guaranty Fund
19. Application of the Securities Act
20. Minimum Capital Requirement
21. Appeal of Decisions to High Court
22. Client's Statements
23. Securities Underwritings
24. Securities Dealings
25. Trust Operations
26. Investment Advisory Services
27. Foreign Offices and Branches
28. Administrative Services
29. Notification of Wrong Doing
30. Domestic and International Banking
31. International Banking
32. Banks Business Authority
33. Restriction of Business Affairs
34. Banks, Merchant Banks, and Commercial Banks
35. Preparation Hereof
36. Fee's - Collection Thereof
The Republic of New Lemuria
Banking Act of 1991
As Drawn and Approved by the
House of Elders of the
Republic of New Lemuria
Short Title and Commencement
The Banking Act of 1991 of the Republic of New Lemuria, shall be more commonly
known as the "Banking Act of 1991".
Further, the Banking Act of 1991 will commence and shall come into force 90 days
after ratification by the House of Elders of the Republic of New Lemuria. The
Banking Act of 1991 came into force and effect on January 1, 1992, and was
amended in 1994. (see amendment below)
Part I -
Definitions
In this Act, unless the context otherwise requires, the following terms shall
have the meanings so indicated and set forth below.
"Bank" - includes commercial, merchant, trading and savings banks; "Banking
Business" - means the business of accepting deposits of money withdrawable or
repayable on demand or after a fixed period or after notice and the employment
of those deposits in whole or in part by lending or any other means for the
account and at the risk of the person accepting such deposits; "Commercial and
Trading Bank" - means any corporation, foreign corporation, statutory
corporation, body corporate, authority or department of the public service which
carries on banking business in the Republic of New Lemuria, "Republic of New Lemuria", and a
substantial part of whose business in the Republic of New Lemuria consists of the payment of bills
of exchange drawn on it by persons having accounts in credit with it or by
persons who have made arrangements to have their accounts with it debited with
the amounts of bills of exchange drawn by them on it, but a corporation, foreign
corporation, statutory corporation, body corporate, authority or department of
the public service which makes payments for goods or services supplied to it by
honoring bills of exchange drawn on it shall not for that reason only be taken
to be a commercial and trading bank; the business of a commercial and trading
bank shall not include the business of accepting deposits of money in amounts of
less than five thousand dollars to be held, otherwise than for fixed terms, for
the persons making the deposits with interest payable thereon; "Financial
Institutions" - means any corporation, foreign corporation, statutory
corporation, body corporate, authority or department of the public service which
carries on banking business in the Republic of New Lemuria, but which is not a commercial and
trading bank or savings bank.
"Savings Bank" - means any corporation, foreign corporation, statutory
corporation, body corporate, authority or department of the public service which
carries on banking business in the Republic of New Lemuria and whose business consists of accepting
deposits of moneys to be held, otherwise than for fixed terms, for the persons
making the deposits, accumulating the interest payable on the deposits, so far
as not withdrawn and returning the deposits and the interest payable thereon to
the depositor, in the case of depositors who have died, to their personal
representatives or the beneficiaries of their estates;
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Part II -
Licenses
Authority to Grant Licenses
2.01 The Minister of Finance has the sole right to grant Bank License/s,
regardless whether domestic or international, provided the applicant meets the
following prerequisites:
a. The applicant bank must be lawfully organized and licensed under the laws of
an internationally recognized nation, in good standing with the United States,
United Kingdom or European Union; and
b. Solvent, as that term is defined by the qualifying regulatory agency required
under section 2.01(a) above.
c. Any nation formally recognized by the United Nations shall be deemed
hereunder to be internationally recognized.
Documents to be Provided with Application
2.02 The following list comprises supporting documents that must accompany
applications for Banking License/s.
1. Articles of Incorporation
2. Bylaws
3. Audited Financial Statements Prepared in Accordance with Generally Accepted Accounting Principles for the most Recent Fiscal Year End.
4. Unaudited Financial Statements for the most recent quarterly period, within 45 days of the end thereof, must also be submitted.
5. Biographical Information / Resume of each member of senior management and the Board of Directors.
6. Business Plan.
7. References including Bank Reference, Legal Counsel, Auditor/Accountant, and Three Business References.
8. Disclosure of Past and Concurrent Legal Actions, including both civil and
criminal proceedings.
9. Executed Application Document.
10. Any other Materials reasonably requested by the Minister of Finance.
Denial of License and/or Revocation Thereof
2.03 The Minister of Finance may deny a license application or revoke any such
license only with cause. Licensee may request a judicial hearing in the High
Court regarding this matter, should Licensee believe that any such action was
unwarranted. The High Court shall have the final decision in overturning any
revocation or denial action by the Minister of Finance.
Restriction of Name "Bank" etc...
2.04 The use of the word "Bank", "Thrift", "Savings & Loan", "Banc", "Banque",
or any derivation or abbreviation thereof, is prohibited without authority from
the Minister of Finance. Such authority is automatically extended with the
extension of a Bank License.
Authority to Change/Move Locations
2.05 Any Bank may after 30 day prior notice being given to the Minister of
Finance, change or move its place/s of business. A Bank may close a location
upon 14 day prior notice. A Bank may open a new location provided the Minister
of Finance is given notice of such location within 14 days of the establishment
thereof.
Foreign Exchange Transactions
2.06 Banks may deal and participate in Foreign Exchange Transactions.
Restriction on Change of Control of Bank
2.07 Changes in Control of a licensed Bank, whether it be by change in
stockholder/s or by change in directorship, is subject to prior approval of the
Minister of Finance.
Diversification of Bank/s
2.08 Banks desiring to diversify into industries other than Banking related
businesses, are required to seek prior approval of the Minister of Finance. Such
authority shall not be unreasonably withheld.
Investment in Subsidiaries
2.09 Banks may invest up to 85% of their capital in the equity securities of
subsidiary corporations.
Unlicensed Transactions
2.10 Any corporation or party doing business as a Bank without a license or
authority is subject to both civil and criminal actions and penalties at the
discretion of the Minister of Finance.
Minimum Capital
2.11 Banks are required to maintain an equity, exclusive of redeemable preferred
stock due in less than five years, equal to at minimum, 8% of deposits including
both time and demand deposits. Banks are also required to maintain an overall
equity of at minimum, three percent, (3%) of gross capital/ assets.
Minimum Liquidity
2.12 Banks are required to maintain liquid Asset/Demand deposit/liability ratio
of 15% minimum. Liquid Assets for this purpose shall be defined as readily
marketable investments inclusive of commercial paper, certificates of deposits,
bankers acceptances, cash, investment grade debt securities and other
investments due in less than 90 days.
Restriction on Dividends
2.13 Banks are prohibited from declaring or paying any dividends, whether on
preferred or common stock, if the result of which would impair the Banks
capital.
Affiliated Transactions
2.14 Banks must obtain prior Minister of Finance approval for any transactions
with affiliates which individually would exceed 45% of Assets. Circumvention by
means of technicality is prohibited.
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Part III -
Audit and Periodic Filings
Eligible Auditors and Examination
3.01 Banks are to employ only auditors approved by the Minister of Finance, for
public and governmental filings. Further, the Minister of Finance is empowered
to audit the accounts, books, and records of any Bank, with or without prior
notice being given.
Requirement of Audited Annual Reports
3.02 Banks are to file Audited Annual Financial Statements, prepared in
accordance with generally accepted accounting principles, (International
Accounting Principles as drawn and prescribed by the American Institute of
Certified Public Accountants.)
Semi-Annual Reports
3.03 Banks are required to file with the Minister of Finance, Semi-Annual
unaudited Financial Statements, prepared in accordance with generally accepted
accounting principles.
Filing Dates of Reports
3.04 Annual Reports and Semi-Annual Reports required to be filed by Banks with
the Minister of Finance are required to be so filed within 120 days of fiscal
year end and within 90 days of the end of the Banks Semi-Annual period.
Production of Documents
3.05 The Minister of Finance may require production of any documentation related
to the Banks' operations or otherwise.
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Part IV. -
Other Provisions
Unsuitable Management
4.01 The Minister of Finance may compel the resignation of any officer or
director of a Bank, upon presentation of cause, only in the protection of
depositors.
Significant Shareholders'
Stockholders' owning directly or indirectly more than
2 % of the voting securities of a Bank must give notice on
prescribed form/s within 45 days thereof, to the Minister of Finance. In the
event that such shares are held in the name of a Nominee, the ultimate holder
need not be disclosed should such Nominee be a licensed Attorney/Solicitor
representing such person.
Regulatory Approval of Director Appointment/s
4.03 The Minister of Finance requires the prior approval of the appointment of
new directors of any existing Bank. Such approval may not be unreasonably
withheld.
Execution of Filings
4.04 All filings with the Minister of Finance must be signed by the secretary,
treasurer, and President of the respective Bank and must be prepared in the
English Language.
Secrecy and Privacy
4.05 Pursuant to constitutional law and rights thereunder, Banks are prohibited
from extending or providing in any manner, disclosures of information regarding
any client or such clients accounts or business affairs, unless prior approval
of and from such client is given to the Bank for the specific purpose. Violation
hereof is subject to criminal prosecution.
Business Hours of Bank/s
4.06 The Minister of Finance only requires a Bank to be open for Business One
day, (12 Hours), during any single 10 day period. The Minister of Finance
requires that all Bank/s publish their respective hours for which they are open
to conduct business. This publication is to be made available to all depositors
and to all other interested parties. All Banks are required to file a copy of
this publication with the Minister of Finance.
Extended Holiday
4.07 Banks may close for extended holiday beyond 10 days, upon 10 day prior
written notice having been given to the Minister of Finance.
Prosecution of Violations Hereunder
4.08 The Minister of Finance may prosecute violations hereof in any court of law
in the Republic of New Lemuria.
Amendment and Alteration of These Statutes
4.09 The Minister of Finance may amend or alter these statutes only upon
approval of the House of Elders.
Voluntary Liquidation
4.10 Banks may voluntarily liquidate upon 30 day prior notice to the Minister of
Finance. Such Bank will be required to file dissolution documents on prescribed
forms or in prescribed format, and to file final financial statements.
Regulatory Seizure of Operations and Assets
4.11 Minister of Finance may seize or take possession of any licensed Bank if it
violates the statutes as promulgated hereunder flagrantly or violated minimum
capital requirements and failed to cure such within a reasonable period of time.
Mandatory Liquidation
4.12 The Minister of Finance may require a Bank to liquidate on a finding of due
cause meriting the action.
Escheatment of Abandoned Property
4.13 All abandoned property, asset bearing accounts, dormant for more than five
years, securities with no current address for holder and any other "Lost" or
"Abandoned" assets is/are to be transferred to the Minister of Finance for
disposition.
Other Matters
4.14 This Act is drawn to supplement the Corporation Ordinance of the Republic of New Lemuria. Any conflict is in favor of this Act.
Application of These Statutes
4.15 All Banks having been previously licensed by the Minister of Finance or its
predecessor agency, shall be subject to the provisions of this Act, 120 days
after implementation. Only those Banks whose original Charters and Licenses
granted them exclusive authority and rights to "Grandfathering" under future
legislation shall be entitled to such privilege, unless the Minister of Finance,
at his sole discretion, determines otherwise on a case by case basis.
Authority Hereof
4.16 Only licensed Banks are subject to these statutes. Unlicensed Banks and
corporations deemed to be conducting business which would otherwise be subject
hereunder if so licensed, shall be deemed subject to these statutes.
Public or Privately Held
4.17 The Capital Stock of Banks may be Publicly or Privately Held (owned). For
this purpose, Publicly Held is defined as a Bank having more than 50
shareholders of its capital stock.
Depositor's Guaranty Fund
4.18 The Minister of Finance may implement a program to insure depositors'
monies. Banks may voluntarily apply for such insurance/guarantee. Such insurance
is not required or compulsory.
Application of the Securities Act of 1991
4.19 Banks are required to comply with the Securities Act of the Republic of New Lemuria of 1991. Any conflict therewith shall be in favor of this Act.
Minimum Capital Requirement
4.20 Banks must possess minimum shareholders' capital/equity of $25,000 USD,
prior to conducting any business. Further, a given Bank's investment in
non-tangible assets may not exceed 15% of total capital.
Appeal of Decisions to High Court
4.21 Banks may appeal any Minister of Finance decision to the High Court of the
Republic of New Lemuria for review.
Client's Statements
4.22 Banks are required to provide account holders the option of receiving
monthly account statements.
Securities Underwritings
4.23 Banks may underwrite securities offerings. Any such Underwriting must not
exceed 200% of the respective institutions most recently reported Shareholders'
Equity Capital, subject to Section 4.24 below.
Securities Dealings
4.24 Banks who possess Shareholders' Equity Capital in excess of $1,000,000 USD
may deal in securities
Trust Operations
4.25 Banks may conduct trust services, provided such services are conducted in
accordance with applicable statutes.
Investment Advisory Services
4.26 Banks may provide Investment Advisory Services.
Foreign Offices/Branches
4.27 Banks may open foreign representative offices in addition to foreign
branches. The Minister of Finance is to be notified within 30 days of the
establishment of any such foreign facility. Such notice should include the
address, name of the manager, synopsis of intended business at such location.
Administrative Services of Bank
4.28 Banks may conduct administrative services and operations elsewhere outside
of the Republic of New Lemuria.
Notification of Wrong Doing
4.29 Banks must notify the Minister of Finance of any violation or conviction of
wrong doing in any jurisdiction.
Domestic and International Banking
4.30 Banks licensed for domestic operations are prohibited from conducting
international business without first obtaining a license therefore.
International Banking
4.31 Banks licensed for international Banking may conduct both domestic and
international banking.
Banks Business Authority
4.32 Banks may make and do the following:
Commercial Loans, Mortgage Loans, Demand Loans, Accept Deposits, Issue Securities, Invest In Stocks, Bonds, Real Estate, and Other Tangible Assets, among other things.
Banks may issue letters of credit, financial performance guarantees, and may issue insurance contracts upon receipt of authority from the Insurance Commissioner of the Republic of New Lemuria.
Restriction of Business Affairs
4.33 Banks may not conduct any business which may from time to time be
prohibited by the Minister of Finance.
Banks, Definition Thereof and Application Hereof
4.34 "Banks" include all Commercial Banks, Merchant Banks, Private Banks, and
other common forms of "Banks".
Preparation Hereof
4.35 This Act has been drawn and prepared by order of the House of Elders.
Fees - Collection Thereof
4.36 The Minister of Finance shall possess the authority to charge and collect
fees for the purpose of granting licenses hereunder in addition to charging
other fees necessary to fund the administration hereof. The Minister shall have
the authority to set fee rates and to prepare such fee schedules.
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1994 AMENDMENT TO BANKING ACT OF 1991 (Became effective March 15, 1995)
Part I
Definitions
Class A banks shall be defined as banks having international and retail banking
powers. Class B banks shall be defined as banks having limited and offshore
banking powers.
1.01 Class A Banks
Class A Banks incorporated after December 31, 1991 shall be required to maintain
a minimum paid in capital of $5,000,000 USD or its equivalent in other
currencies.
Part II
2.01 Class B Banks
Any bank that is licensed by the Minister of Finance as a Class B bank shall be
prohibited from taking deposits from Republic of New Lemuria and may not conduct its
business within the Republic of New Lemuria.
2.02 Class B conversion to Class A
Any Class B bank may apply for a Class A license upon meeting the requirements
of the Banking Act of 1991, including the $5,000,000 paid in capital requirement
of this Amendment after first paying an additional licensing fee of $10,000 USD.
Class B bank application for Class A license will be treated as a priority with
a maximum of 30 day approval or denial period.
2.03 Class B exemptions
Class B banks shall otherwise be exempt from the Banking Act of 1991.
2.04 Class B minimum capital
Class B banks shall maintain a minimum paid in capital of $25,000 USD within 90
days after the commencement of business. The $25,000 shall be deposited with the
Central Monetary Reserve of Republic of New Lemuria or a Class A bank approved by the
Minister of Finance.
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