What is Full text of Act No. 295 / 2006 Coll.?

Full text of Act No. 295 / 2006 Coll., Act No. 21 / 1992 Coll., on Banks, as resulting from subsequent amendments — Full text of Act No. 21 / 1992 Coll., on Banks, as resulting from subsequent amendments.

When it became Full text of Act No. 295 / 2006 Coll. effectiveness?

Full text of Act No. 295 / 2006 Coll. became effective date not available.

Is Full text of Act No. 295 / 2006 Coll. still valid?

Yes, Full text of Act No. 295 / 2006 Coll. is still valid and effective.

Full text of Act No. 295 / 2006 Coll. - Full text of Act No. 21 / 1992 Coll., on...

295

PRESIDENT OF THE GOVERNMENT

Announces

The full text of Act No. 21 / 1992 Coll., on Banks, as follows from the amendments made by Act No. 264 / 1992 Coll., Act No. 292 / 1993 Coll., Act No. 156 / 1994 Coll., Act No. 83 / 1995 Coll., Act No. 84 / 1995 Coll., Act No. 61 / 1996 Coll., Act No. 306 / 1997 Coll., Act No. 16 / 1998 Coll., Act No. 127 / 1998 Coll., Act No. 57 / 2006 Coll., Act No. 165 / 1998 Coll., Act No. 120 / 2001 Coll., Act No. 239 / 2001 Coll., Act No. 390 / 2001 Coll., Act No. 126 / 2002 Coll., Act No. 453 / 2003 Coll., Act No. 257 / 2004 Coll.

THE LAW

on banks

The Federal Assembly of the Czech and Slovak Federal Republic decided on this law:

ČÁST PRVNÍ

BASIC PROVISIONS

§ 1

(1) This Act regulates certain relations related to the formation, business and demise of banks based in the Czech Republic, including their activities outside the Czech Republic, and also certain relations related to the activities of foreign banks in the Czech Republic. For the purposes of this Act, banks are legal entities established in the Czech Republic, established as equity companies (1), which:

(a) receive deposits from the public; and

(b) grant loans;

and which have a bank licence to carry out the activities referred to in points (a) and (b) (hereinafter referred to as "licences') (Section 4). The provisions of the Commercial Code on public limited liability companies shall not apply to them unless otherwise provided for in that Act.

(2) For the purposes of this Act:

(a) by the deposit of funds which constitute a liability to the depositor for their payment;

(b) by credit in any form of temporary provision of funds.

(3) The Bank may, in addition to the activities referred to in paragraph 1 (a) and (b), carry out such other activities, provided that they are authorised under the licence granted to it,

(a) investment in securities for own account;

(b) financial leasing;

(c) payment and settlement;

(d) the issue and management of means of payment, such as payment cards and travel cheques;

(e) the provision of guarantees;

(f) the opening of letters of credit;

(g) the provision of direct debits;

(h) the provision of investment services under the special regulatory provision (1a), indicating in the licence which main and complementary investment services the bank is entitled to provide and in relation to which investment instruments under the special legislative provision (1a);

(i) financial brokerage;

(j) the performance of the function of depositary;

(k) exchange activities (purchase of foreign exchange funds);

(l) provision of bank information;

(m) trading on own account or on behalf of a client with foreign exchange values and gold;

(n) the hire of safety deposit boxes,

(o) activities directly related to the activities referred to in points (a) to (n) and paragraph 1.

(4) The Bank may not engage in business activities other than those authorised in the licence. This does not apply to activities carried out for another where they are related to the provision of its operations and the operation of other banks, financial institutions and ancillary banking services undertakings under the control of the bank.

(5) The exercise of certain activities referred to in paragraph 3 may be subject by special law to the granting of an authorisation. Where specific legislation makes the exercise of a particular activity conditional on the granting of an authorisation, such activity may be authorised in the licence only after an authorisation under a specific legislation has been granted.

(6) The banking activities referred to in paragraph 1 (a) and (b) and paragraph 3 may also be carried out through their branches by foreign banks licensed in accordance with Article 5.

(7) The licence contains a nominal definition of the authorised activity and may contain a definition of the scope of the authorised activity, but not in the sense of limiting the number of individual commercial cases, and may also contain a definition of the conditions which a bank or branch of a foreign bank must comply with before any authorised activity is started or comply with in the performance of any authorised activity.

(8) The legal status of the Czech National Bank is governed by special Act 2).

§ 2

(1) No person may accept deposits from the public without a licence unless otherwise provided for in the Special Act.

(2) Continuous issuance of bonds and other comparable securities shall also be considered to receive deposits where:

(a) constitutes a single or one of the main activities of the issuer;

(b) the business of the issuer is the provision of loans; or

(c) the issuer's business is one of the activities referred to in Paragraph 1 (3).

§ 3

(1) The word "bank" or "savings bank," its translation or the words derived thereof, may only be used in a trading firm by a legal person licensed, unless it is apparent from the context in which the word "bank" or "savings bank" is used that that person is not engaged in the activities referred to in § 1 (1).

(2) Paragraph 1 shall not apply to persons whose business name or name is established or recognised by law or under an international agreement approved by Parliament, ratified and declared and bound by the Czech Republic, or under a similar international agreement which entered into force before 1 January 1993 (hereinafter referred to as the "International Treaty ').

(3) The Czech National Bank may require:

(a) the change of the proposed trading firm of the established bank in cases where there is a risk of confusion with the trading firm of another existing legal entity or its organisational component;

(b) a change in the business of a branch of a foreign bank consisting of the addition of a distinguishing supplement in cases where there is a risk of confusion with another existing legal entity or its organisational component.

ČÁST DRUHÁ

LICENCES

§ 4

(1) Licence applications are submitted to the Czech National Bank. The draft statutes shall be submitted with the licence application. The bank's minimum capital amount is CZK 500 000 000 and must at least consist of cash deposits. The Czech National Bank shall determine the details of the licence application by decree.

(2) The Czech National Bank decides to grant the licence.

(3) Before taking a decision on a licence application, the Czech National Bank shall request the opinion of the supervisory authority of the Member State of the European Union, supervising banks, securities dealers or insurance undertakings where the person to be granted the licence is controlled by:

(a) a foreign bank located in a Member State of the European Union;

(b) by a person authorised by the competent supervisory authority of a Member State of the European Union to provide investment services;

(c) an insurance undertaking authorised by the competent supervisory authority of a Member State of the European Union;

(d) the person who controls the person referred to in (a), (b) or (c).

(4) The Czech National Bank will request that the opinion referred to in paragraph 3 include in particular information suitable for assessing whether the conditions referred to in paragraph 5 (c) and (d) are met.

(5) The following conditions shall be met for the granting of the licence:

(a) the transparent and safe origin of the bank's capital and other financial resources, their adequacy and satisfactory composition;

(b) full repayment of the capital;

(c) the eligibility of persons with qualifying holdings (Paragraph 17a (4)) to a bank to exercise shareholder rights in the bank's business;

(d) the competence, credibility and experience of persons proposed in the Bank under a contract of employment or other contracts for executive management functions with which the powers and responsibilities laid down in the Statutes are attached, (hereinafter referred to as "senior staff of the Bank"),

(e) technical and organisational assumptions for the performance of the proposed activities of the Bank, the Bank's functional management and control system, including the risk management system;

(f) a business plan based on the proposed strategy of the Bank's activities based on real economic calculations;

(g) transparency of a group of persons with close links with the bank;

(h) close links within the group referred to in (g) shall not prevent the exercise of banking supervision;

(i) in the State in whose territory the group referred to in (g) has close links, there shall be no legal or factual barriers to the exercise of banking supervision;

(j) the seat of the future bank must be in the Czech Republic.

(6) For the purposes of this Act, close links shall mean:

(a) a relationship between two or more persons in which one person has a direct or indirect share of the capital, the sum of which is at least 20%;

(b) the relationship between two or more persons in which one person has a direct or indirect interest in voting rights, the sum of which shall be at least 20%;

(c) the relationship between two or more persons in which one person controls the other; or

(d) the relationship between two or more persons controlled by the same person.

(7) The Czech National Bank is entitled to request a copy of the Register of Penalties for natural persons who are the founders of the Bank or who are proposed to the senior staff of the Bank. In the past, a person legally convicted of a intentional offence may not act as a senior employee of the Bank.

§ 5

(1) A foreign bank intending to establish a branch in the Czech Republic is submitting a licence application to the Czech National Bank.

(2) The foreign bank shall, at the same time as the licence application, submit to the banking supervisory authority from the country of the foreign bank's registered office the intention to establish a branch in the Czech Republic and its declaration that the branch will be subject to banking supervision.

(3) The Czech National Bank shall decide on the grant of the licence referred to in paragraph 1.

(4) In order to grant the licence referred to in paragraph 1, the following conditions shall be met:

(a) sufficient volume and transparency of the origin of the financial resources provided by the foreign bank to its branch, taking into account the extent and risk of the branch's business;

(b) the credibility of the foreign bank and its sufficient financial strength with regard to the extent of the branch's business;

(c) the competence, credibility and experience of persons proposed to lead the branch;

(d) technical and organisational conditions for the performance of the proposed branch activities, the functional management and control system of the branch, including the risk management system;

(e) a business plan based on the proposed branch strategy based on real economic calculations;

(f) transparency of the close link group to which the foreign bank belongs;

(g) close links within the group referred to in point (f) shall not prevent the exercise of banking supervision;

(h) in the State in whose territory the group referred to in (f) has close links, there shall be no legal or factual impediment to the exercise of banking supervision;

(i) a foreign bank intending to operate through its branch in the Czech Republic must have its registered office and its registered office in the same State.

(5) The formalities for the application referred to in paragraph 1 as well as the minimum amount of financial resources provided shall be determined by the Order of the Czech National Bank.

(6) The reason for rejecting a licence application cannot be that the legal form of a foreign bank does not correspond to the legal form of a public limited company.

(7) The procedure laid down in paragraphs 1 to 5 shall not apply to cases referred to in § 5a.

§ 5a

(1) Banks established in the Member States of the European Union may, through their branches, carry out activities under this Act without a licence, provided that they have been authorised to exercise them in the country of their registered office and that the foreign bank has complied with the procedure laid down by the law of the European Communities under § 5c to 5m. These branches are subject to the registration obligation of tax entities under the special legislation3). Furthermore, banks located in the Member States of the European Union shall be entitled, under the same conditions, to pursue such activities without the establishment of a branch, provided that their operation does not constitute a permanent economic activity.

(2) The provisions of paragraph 1 shall not apply in the case of banks which do not enjoy the benefits of a single licence under the law of the European Communities or of banks having their registered office in a State which does not enjoy the benefits of a single licence under the law of the European Communities.

(3) The Czech National Bank may, in accordance with an international treaty, extend the scope of the States whose banks enjoy the same advantages in their business in the Czech Republic as banks established in the Member States of the European Union.

(4) The branches of foreign banks which, pursuant to paragraph 1, may carry out activities within the territory of the Czech Republic under this Act without a licence granted to them by the competent foreign bank are not subject to this Act, with the exception of the provisions of § 11 (5), the obligation to provide data pursuant to § 38 (2) to (6), the provisions relating to the liquidity of the bank, the conduct of monetary policy, the rectification of banks (§ 20c) and the provisions of § 41m (1) and (2).

(5) If the branch of a foreign bank as referred to in paragraph 1 decides to participate in the payment system operated by the Czech National Bank (§ 20b), it shall be subject to the legislation governing the operation of that system. If a branch of a foreign bank decides to make use of the option under Paragraph 38a (1), it shall be subject to the provisions of Section 38a.

(6) The provisions of this Act relating to the insurance of deposit claims apply to these branches only if they make use of the option provided for in § 41m. The procedure provided for in Article 26 may be applied to branches of foreign banks under paragraph 1 only on condition that the branch fails to remedy itself at the invitation of the Czech National Bank and, at the request of the Czech National Bank, at the request of the Czech National Bank, neither after prior information has been made by the banking supervisory authority of the country of the seat of the relevant foreign bank, and on condition that the illegal situation persists. This does not apply in the event of a breach of the provisions of Section 11 (5), the provisions on the correct settlement of banks, in the case of an infringement of the legislation governing the operation of the payment system operated by the Czech National Bank (§ 20b), if the branch is a participant in that system, in the event of a breach of the provisions of Section 38a and the obligation to provide data pursuant to § 38 (2) to (6), or if it does not accept a delay and is necessary in the interests of depositors. The procedure provided for in Article 26 applied on the grounds that the case cannot be delayed and, if necessary in the interests of depositors, the Czech National Bank must, without undue delay or within a time limit set by the Commission of the European Communities, reassess if the Commission of the European Communities so decides in accordance with Article 5k (4).

(7) The Czech National Bank may carry out on-the-spot inspections on the territory of the Czech Republic without a licence granted to it by the competent foreign bank or in persons forming a consolidation unit of which the foreign bank is a member under paragraph 1, if requested by the supervisory authority of the country of residence of the foreign bank. The supervisory authority of the country of the bank's registered office referred to in paragraph 1 may, following prior notification to the Czech National Bank, carry out an on-the-spot check in the Czech Republic in the branch of a foreign bank referred to in paragraph 1 or in a financial institution meeting the conditions laid down in § 5e (1).

§ 5b

A licence may not be granted if this would be contrary to an international agreement.

Principle of single licence

§ 5c

(1) Banks having their registered office in the territory of a Member State of the European Union (hereinafter referred to as "home State") may be engaged in the territory of another Member State of the European Union (hereinafter referred to as "host State") through their branch of activity listed in § 5d without a licence, provided that they have been authorised to exercise them in their home State. The same authorisation, with the exception of the activity referred to in § 5d (a), shall apply to financial institutions fulfilling the conditions set out in § 5e (1) (hereinafter referred to as authorised financial institutions).

(2) The banks referred to in paragraph 1 are further entitled to carry out the activities listed in § 5d without the establishment of a branch, provided that their operation does not constitute a permanent economic activity. The same shall apply to the authorised financial institutions referred to in paragraph 1, except for the activity referred to in Section 5d (a).

(3) A bank or financial institution which does not enjoy the benefits of a single licence under the law of the European Communities, or a bank or financial institution having its registered office in a State which does not enjoy the benefits of a single licence under the law of the European Communities, may not carry out activities in the territory of the host State through its branch without a licence.

§ 5d

Banks or authorised financial institutions may carry out the following activities within the territory of the host State, subject to the conditions laid down by the law of the European Communities and laid down in that law:

(a) receiving deposits from the public;

(b) lending;

(c) financial leasing;

(d) payment and settlement,

(e) the issue and management of means of payment;

(f) the provision of guarantees;

(g) trading on own account or on behalf of a client

1. money market instruments;

2. with funds in foreign currencies,

3. futures and options, including exchange rate and interest rate transactions;

4. transferable securities,

(h) participation in the issue of securities and the provision of related services;

(i) advice on capital structure, industrial strategy and related issues and advice and services in the field of mergers and purchases of enterprises;

(j) cash brokerage;

(k) the management of client securities on its behalf, including portfolio management;

(l) deposit and management of securities,

(m) the provision of banking information;

(n) custody of valuables.

§ 5e

(1) A financial institution wishing to benefit from the benefits referred to in § 5c must comply at the same time with the following conditions:

(a) the bank or banks referred to in Article 5c (1) must have at least 90% of the voting rights and share capital in that financial institution and must be governed by the law of the same State as that financial institution;

(b) the activities it intends to carry on in the territory of the host State must also be carried on in the territory of its home State;

(c) they must be included in the consolidated supervision of the bank or banks referred to in Article 5 (1) in accordance with European Community rules;

(d) the bank or banks referred to in Article 5c (1) jointly and severally, with the agreement of the home supervisory authority, guarantee its liabilities;

(e) the bank or banks referred to in Article 5c (1) comply with the requirements of the home supervisory authority regarding the prudent management of the financial institution.

(2) Compliance with the conditions referred to in paragraph 1 shall be verified by the supervisory authority of the home State that issues the certificate.

(3) Where an authorised financial institution ceases to fulfil one of the conditions referred to in paragraph 1, the home supervisory authority shall immediately inform the host supervisory authority thereof and the financial institution shall cease to benefit from the single licence.

§ 5f

A bank or an authorised financial institution wishing to establish its branch in the territory of the host State shall inform the supervisory authority of the home State accordingly and shall provide it with the following information in writing:

(a) in the territory of which the Member State intends to establish a branch;

(b) a business plan containing in particular a list of the activities envisaged;

(c) the organisational structure of the branch;

(d) the address in the host State at which documents may be obtained;

(e) the names of the persons responsible for managing the branch;

(f) in the case of an authorised financial institution, also supporting documents for verifying the facts referred to in Article 5e (1).

§ 5g

(1) The supervisory authority of the home State, in so far as it has no doubts as to the organisational structure and financial position of the bank or financial institution in relation to the envisaged activities, shall, within 3 months of receipt of the information referred to in Article 5f, transmit that information together with information on the amount of the capital of the bank or the authorised financial institution, with details of its capital adequacy, details of the deposit guarantee and the transmission of the confirmation referred to in Article 5e (2) to the supervisory authority, which it shall inform the bank or financial institution.

(2) Where there are doubts as referred to in paragraph 1, the supervisory authority of the home State shall inform the bank or financial institution within the time limit referred to in paragraph 1 that its notification has not been transmitted to the host supervisory authority and shall justify its action. In such a case and where the bank or financial institution is not informed by the supervisory authority of the home State within the period referred to in paragraph 1, the bank or financial institution may seek redress in court.

§ 5h

(1) Within 2 months of the receipt of the information referred to in Article 5g (1), the supervisory authority of the host State shall prepare for the supervision of the bank or financial institution and, if necessary, communicate to it the provisions of the legislation of the host State governing the conditions for the exercise of their activities in the territory of the host State on the basis of an authorisation granted by the supervisory authority of the home State.

(2) Upon receipt of the information referred to in paragraph 1 or after a futile expiry of 2 months, the bank or the authorised financial institution may start business in the territory of the host State.

(3) Changes in the data referred to in Sections 5f and 5g (1) shall be notified by the bank or the authorised financial institution in advance of the supervisory authority of the home and host State.

§ 5i

Where a bank or an authorised financial institution intends to operate in the territory of the host State without the establishment of a branch, it shall notify the intended activities to the home supervisory authority prior to the first provision of the service, which shall forward the notification to the host supervisory authority within one month.

§ 5j

(1) Supervision of a branch of a bank or an authorised financial institution shall be exercised by the supervisory authority of the home State. The supervision of the liquidity of a branch of a bank or an authorised financial institution shall be exercised by the supervisory authority of the host State. The branch shall be subject to measures taken by the host State in its monetary policy; in the case of States which have introduced the euro as their currency, by a measure adopted by the European Central Bank. Such measures shall not be discriminatory.

(2) In exercising its competence under paragraph 1 and in the area of monitoring risks arising from open positions in the financial market in the territory of that State, the host State may request the same information from a branch of the bank or authorised financial institution as from banks or financial institutions located in its territory. The host State may require a bank or authorised financial institution having a branch in its territory to report regularly on its business activities in its territory in the form of statistical data.

§ 5k

(1) Where the competent authority of the host State finds that a bank or an authorised financial institution, when providing services within its territory, is in breach of the provisions of law in areas falling within the jurisdiction of the host State, it shall request the bank or the authorised financial institution to terminate that illegal situation.

(2) If a bank or an authorised financial institution does not take the necessary measures, the competent authority of the host State shall request the supervisory authority of the home State, which shall immediately take the necessary measures to ensure the cessation of the illegal situation and inform the competent authority of the host State thereof.

(3) Where, despite the measures referred to in paragraph 2, a bank or an authorised financial institution persists in the state of infringement referred to in paragraph 1, the competent authority of the host State may, after informing the supervisory authority of the home State, take the necessary measures to put an end to the unlawful situation and, if necessary, to put an end to the activities of the bank or the authorised financial institution in the territory of the host State.

(4) The competent authority of the host State may take measures to protect the bank's clients if it does not accept the case. The competent authority of the home State shall inform the Commission of the European Communities and the national supervisory authorities concerned of the adoption of such measures. After consulting the supervisory authorities of the States concerned, the Commission of the European Communities may order the host State authority to repeal or amend the measures taken.

(5) The authorities of the host State may take the necessary measures to prevent or penalise acts in the territory of that State in breach of the law of that State in the field of public interest, including measures to put an end to the activities of the bank or financial institution in that State. The provisions of the preceding paragraphs shall not apply in this case.

§ 5l

(1) In the event of withdrawal of a licence, the home supervisory authority shall immediately inform the bank or the authorised financial institution of the host supervisory authority. The host supervisory authority shall take the necessary measures to put an end to the activities of the bank or the authorised financial institution in its territory and to protect the interests of depositors.

(2) The supervisory authorities shall inform the Commission of the European Communities of the number and nature of cases in which they have refused to forward to the host State authority information on the establishment of the branch, or where they have used their authorisation to terminate the infringement pursuant to § 5k (1) to (3).

§ 5m

Banks and authorised financial institutions may freely advertise their services in the European Union States, while respecting the legislation on advertising adopted by the State concerned.

§ 6

The licence shall be granted for an indefinite period and shall not be transferable to another person.

§ 7

A full list of banks and branches of foreign banks operating in the Czech Republic is managed by the Czech National Bank. The list is available at the headquarters and branches of the Czech National Bank.

§ 7a

(1) The licence shall expire on a date,

(a) which has the legal power to decide on the withdrawal of a licence;

(b) to which the Bank shall be abrogated if it is abrogated with liquidation;

(c) from which, according to the decision of the General Meeting, the current bank will no longer pursue the activity for which the licence is required,

(d) the removal of the bank from the Commercial Register if it ceases without liquidation.

(2) The licence granted to a foreign bank for its branch also expires on the date on which the foreign bank ceases to operate its branch in the Czech Republic and on the date on which the foreign bank ceased to operate as a bank in the State of its registered office.

ČÁST TŘETÍ

ORGANISATION OF THE BANK

§ 8

(1) The Bank must have a statutory body (1) and a Supervisory Board.

(2) The statutory body must be at least three members and be composed of senior staff of the Bank.

(3) A member of the statutory body of a bank may not be a member of a statutory body or a member of a statutory body or of a supervisory board of another legal entity that is an entrepreneur. A bank employee who is not a member of the statutory body of the bank may not be a member of the statutory body of such a legal person. This does not apply to membership

(a) a member of the statutory body of the bank in the statutory body or supervisory board of a financial institution or bank, or of a foreign bank under the control of the bank, a financial institution or bank or a foreign bank exercising control over the bank, as well as legal persons authorised to organise the demand and supply of securities and of an ancillary banking services undertaking (§ 17a (5));

(b) staff members in the statutory body of an ancillary banking service undertaking or for the function of statutory authority in that undertaking.

(4) The powers of the statutory body and the supervisory board must be laid down in the Statutes.

(5) The powers conferred by the Commercial Code on the Board of Directors of a public limited company shall not be transferred to the Supervisory Board of the Bank.

(6) The Bank is required to establish an internal audit service which shall examine and evaluate in particular:

(a) the functionality and effectiveness of the Bank's management and control system;

(b) a risk management system and compliance with the principles of prudent business of the Bank.

(7) The head of the internal audit service shall not be a member of the bank's statutory body or a member of the Bank's supervisory board.

(8) Following notification to the statutory body of the Bank, the Head of the Internal Audit Service shall inform the Supervisory Board of the findings and, in the event of findings that may adversely affect the Bank's management, shall initiate an extraordinary meeting of the Supervisory Board.

Citation	Full text of Act No. 295 / 2006 Coll., Act No. 21 / 1992 Coll., on Banks, as resulting from subsequent amendments
Regulation Type	Declared full text
Author	-
Collection	Code of Laws

Date of Promulgation	20.06.2006
Effective from	-
Effective until	-
Status	Valid

Full text of Act No. 295 / 2006 Coll.

Full text of Act No. 21 / 1992 Coll., on Banks, as resulting from subsequent amendments

Contents