Banking Regulatory Act

Amendment of the Banking Regulatory Act

Chamber of Deputies
Long title	An Act to establish a central bank and to regulate the operation of the banking system in Gotzborg.
Number	ST 16/004
Introduced by	George Guelph
Extent	Kingdom of Gotzborg
Dates
Royal Assent	20 December 2005
Other legislation
Text of statute as originally enacted
Amendments	Amendment of the Banking Regulatory Act
Repealing legislation	Currency, Exchange and Banking Act

An Act to establish a central bank and to regulate the operation of the banking system in Gotzborg.

Whereas a banking system is essential for the functioning of a sound financial system and such a banking system requires regulation and supervision by the central authorities;

Be it decreed by His Royal Majesty, King August Charles II, by and with the advice and consent of the Government and Peoples of Gotzborg, in this Chamber of Deputies here assembled, and by the authority of the same, as follows:

Short Title

1. This Act may be cited as the Banking Regulatory Act.

Royal Bank of Commerce

2. The government will continue to operate the Royal Bank of Commerce which will also function as the Central Bank.

3. The Central Bank shall be headed by a governor who shall be appointed by the King upon the recommendation of the government. If the King disapproves the choice of governor, the government must recommend a second candidate. The King is obliged to accept the second recommendation of the government.

4. The functions of the Central Bank shall be inter alia:

1. The sole issuer of the national currency;
2. Granting licenses to private banks; and,
3. Setting interest rates within Gotzborg and formulating monetary policy (this shall be done in connection with the Home Office). These interest rates shall apply only to transactions with the Central Bank and the public sector. Private banks shall be free to set their own rates.

Private Banks - Domestic Shareholders

5. Any citizen or legal entity in Gotzborg may apply to establish a private bank. A private bank is one defined as a bank owned by private share capital.

6. The application to establish a private bank shall be made in a form to be prescribed by the Central Bank. This notwithstanding the application must state the following:

1. The proposed owner of the bank;
2. The amount of the share capital (the minimum amount of share capital shall be specified by the Central Bank from time to time in its official circulars); and,
3. The proposed management of the bank;

7. If the Central Bank is satisfied of the respectability, standing and competence of the applicant and is satisfied as to all other matters pertaining to the application, the Central Bank may grant a banking license for a period of one year to be renewed upon annual application thereafter.

8. The Central Bank may revoke the banking license at any time if in its opinions there are grounds to do so. Those grounds must be published in any circular revoking the license.

Private Banks - Foreign Shareholders

9. Any citizen or legal entity of a foreign state recognized by Gotzborg shall be entitled to apply to establish a bank or branch of a foreign bank in Gotzborg.

10. The application shall be subject to the same conditions as specified in Article 3(ii) and (iii) in respect of domestically owned private banks. Additionally the foreign applicant must also:

1. Provide a written statement from his own government stating that he is considered by them to be a proper and respectable person to open a bank; and,
2. Provide the share capital in a freely exchangeable foreign currency which must be converted and maintained in the national currency of Gotzborg.

11. The banking license for a foreign bank or branch shall be granted, renewed and revoked in the same way as for a domestically owned bank.

Banking Activities

12. Private banks are authorized to:

1. Take deposits in Gotzborg and freely exchangeable foreign currencies.
2. Grant loans in Gotzborg and freely exchangeable foreign currencies.
3. Buy and sell in Gotzborg and freely exchangeable foreign currencies.

Share Capital

13. No part of a bank's share capital may be withdrawn without the prior permission of the Central Bank.

Audit

14. All banks shall be obliged to produce quarterly balance sheets and profit/loss accounts for public inspection. All banks are obliged to have their accounts audited by an independent company of financial auditors recognized by the Central Bank. The Central Bank shall be free to inspect the records of all banks whenever it deems the need to do so and to request information. Banks failing to comply with the requirements of this clause shall be liable to have their licences revoked and to be subject to legal proceedings.

Fines and Liquidation of Assets

15. Where a bank had had its licence revoked under the authority of this Act, it shall be liable to fines as per Schedule 1.

1. The Royal Government shall have the authority to amend fine amounts in Schedule 1 without requiring the Chamber of Deputies' approval.
2. Where a bank has had its licence revoked under the authority of this Act, it shall be liable to having its total holdings frozen by the Royal Bank of Commerce.

16. Following the deduction of required fine amounts under V.1.1., the Royal Bank of Commerce shall ensure that creditors of the bank are given the opportunity to file statements of claim.

1. The bank's total holdings follow the deduction of the required fines shall be used to reimburse creditors who file statements of claim.
2. The Royal Bank of Commerce shall have the authority to provide reimbursements at amounts lower than those claimed, or to reject reimbursement in any (c) amount, when it is determined that:
1. The total holdings after the deduction of required fines does not provide enough monies to cover the total value of the claims; or,
2. The Royal Bank of Commerce determines that a creditor has filed a fraudulent statement of claim.
3. A creditor shall have a period of sixty-days, from the time of licence revocation, in which to file a statement of claim. Following this peroid, all unclaimed holdings of the bank shall become the property of the Royal Kingdom of Gotzborg.

Definitions

16. Banking venture total holdings (or total holdings) - the total value of assets and monies held by a banking institution as determined through a Royal Bank of Commerce audit or through a Royal Bank of Commerce recognized auditor.

17. Central Bank - all references to the Central Bank in this Bill shall mean the Royal Bank of Commerce in its capacity as the national bank.

18. Domestically owned private bank - A domestically owned private bank is one in which 50% or more of the share capital is subscribed by Gotzborg citizens or legal entities.

19. A foreign capital owned bank is defined as a bank where foreign individuals and legal entities own more than 50% of the share capital. A foreign state may not own a bank, branch or part thereof within this definition.

20. A freely exchangeable foreign currency is one considered by the Central Bank to be freely convertible.

21. Statement of Claim - a statement by a creditor, including account holders, as per Royal Bank of Commerce guidelines and directions, citing the total amount of monies owed to that creditor by a bank that has had its licence revoked.

Schedule 1: Fine Amounts for Revocation of Banking Licence

Amounts as decreed by the Royal Government on 2006-06-27:

Banking Venture Total Holdings	Fine Amount
Less than 15,000 Thalers	15% of total holdings
15,001 to 30,000 Thalers	20% of total holdings
30,001 to 60,000 Thalers	25% of total holdings
60,001 or more	30% of total holdings

Notes

Chamber of Deputies Hansard Record
Introduction Date:	2005-12-03
Tabled By:	George Guelph
Vote Outcome:	In Favour: 6; Against: 0
Royal Assent Date:	2005-12-20