What legal entities can operate as banks? What legal forms are generally used to operate as banks?
Banking & Finance (2nd edition)
Under the Banking Law, the BoI is authorized to grant various bank licenses to Israeli corporations except for foreign bank licenses which can be granted to a corporation incorporated outside of Israel, acting as a bank in its origin location. Currently, Israeli banks are organized as limited liability companies. In theory, a bank may take the forms of other types of corporations such as a cooperative society. When a Non-Israeli bank obtains a foreign bank license from the BoI, it is not required to incorporate a legal entity in Israel. Typically, the license is granted to the foreign bank entity, and allows it to open a branch in Israel.
A banking license may be grated to (i) a limited-liability corporation (“GmbH”), (ii) a stock corporation (“AG”), (iii) an European public company (“SE”), (iv) a cooperative society (“Genossenschaft”), (v) an European cooperative society (“SCE”) or a savings bank (“Sparkasse”). However, most banks choose the legal form of a stock corporation for operating their business.
Companies that have been incorporated in the Republic of Cyprus under the Companies Law (CAP 113), or a credit institution that is established in another Member State, or in a third country, may be granted authorisation by the CBC.
Credit institutions may be organised as commercial banks, co-operative banks, savings banks, mortgage credit institutions or as branches of foreign credit institutions. Commercial banks are either public or non-public limited liability companies. Local banks are generally co-operative banks or savings banks, which typically operate in a limited geographic area. Mortgage credit institutions issuing covered bonds (i.e. bonds secured mainly by housing loans) are defined as credit institutions having the form of a limited company and engaged only in mortgage credit bank operations under a licence granted by the FFSA.
Investment banks are generally investment firms organized as limited liability companies and authorised to provide investment services, engage in investment activities and provide any ancillary services as defined in the MiFID II and implemented by the Investment Services Act or fund management companies authorised to provide portfolio management and investment advice.
Banks, mutual or cooperative banks, specialised credit and municipal credit banks can operate as banks following the credit institution license.
In order to issue a credit institution license, the ACPR control the suitability of the legal form for the pro-posed activity.
French credit institutions are incorporated under the form of unlimited companies by shares, that is to say under the form of SA (public limited company), SAS (simplified joint-stock company) or sometimes under the form of limited partnership.
The variety of legal entities that operate as banks in Germany is extremely broad and range from public law entities and cooperatives to stock corporations. There are little limitations as to which legal forms can be used to operate a bank and, in principle, even single merchants (Einzelkaufmann), ie natural persons, can operate a bank, if they have received their licence prior to 1976. Today single merchants are excluded from operating a bank, but this is the only explicit exemption with regard to credit institutions and securities trading firms (Wertpapierhandelsunternehmen) can however, in principle, be operated by single merchants. The minimum capital requirements that have to be complied with to obtain a licence safeguard the protection of the customers in situations where legal forms are chosen that do not per se require certain amounts of equity.
The bank may have only a legal form of joint stock company (in Slovak akciová spoločnosť).
An application for a bank licence can only be made by a company. However, for this purpose, the term “company” is defined in the BA to include unincorporated bodies that are formed or established outside Singapore. Therefore, it is theoretically possible for a foreign unincorporated association to apply to MAS for a bank licence. However, because the regulatory framework is largely predicated on a bank taking the form of an incorporated entity (and thus having paid up capital, shareholders and directors, etc), in practice it would be unusual for a bank licence to be awarded to an entity that is constituted other than as an incorporated entity.
In terms of local legal form, banks in Singapore would typically be Singapore incorporated companies or locally registered branches of foreign incorporated companies.
All of the local full banks are incorporated in Singapore. In addition, MAS encourages foreign banks that have a sizable share of the local retail banking market to form a locally incorporated subsidiary, through which to provide retail banking services. Several foreign banks have already done so.
To obtain a banking license in Japan, the applicant must be a kabushiki kaisha (a stock company) with a minimum stated capital of 2 billion yen. The kabushiki kaisha is a common form of business entity in Japan. Some foreign financial institutions have used kabushiki kaisha as the corporate entity for their banking subsidiaries in Japan.
However, most foreign banks establish a branch in Japan. The branch must hold assets of 2 billion yen or more in Japan in the form of Japanese government bonds, deposits with the Bank of Japan or other Japanese banks, or other assets designated by the Enforcement Ordinance of the Banking Act.
Omani joint stock companies may apply for a banking licence to carry out banking business. Further, an existing foreign bank that is regulated in one or more other jurisdictions by the relevant authority in those jurisdictions may apply to carry out banking business in Oman.
Pursuant to Article 2.1 of the Law of Georgia on the Activities of Commercial Banks, only a joint stock company established under Georgian law can operate as a bank.
Under Liechtenstein law banks may be organised as a stock company (AG) or as a European company (Societas Europea - SE). Under certain circumstances, the FMA can approve of other legal forms. The commonly used legal form is the stock company.
A banking license may only be granted to a legal person incorporated under the Luxembourg law in the form of a public law institution, a société anonyme (a public limited liability company), a société en commandite par actions (a partnership limited by shares) or a société coopérative (a cooperative).
Only legal entities adopting the legal form of a limited company (“sociedade anónima”) can operate as banks. Their object shall only be restricted to banking activities.
Only a ‘company’ in possession of a licence granted under the Banking Act by the MFSA can operate as a bank in Malta. For the purpose of the Banking Act, ‘company’ means a limited liability company constituted in Malta in accordance with the Commercial Partnerships Ordinance or the Companies Act, or any law which may from time to time be in force, or a company registered, licensed or holding an equivalent authorisation in another country outside Malta under the laws of any country provided that such company, if not constituted in Malta, would qualify to be so registered or licensed under the laws of Malta.
Article 79 of the QCB Law provides that, without prejudice to the provisions of the Commercial Companies Law and to Law No. 13 of 2000 Regulating the Investment of non-Qatari Capital in the Economic Activity, the QCB shall grant licenses to undertake financial services and activities in accordance with the conditions and regulations provided under this Law, to the following financial institutions:
- Banks, provided that they take the form of joint-stock companies that offers its shares for public offers, and in accordance with the conditions and restrictions specified by the Central Bank, and after submission to the Council of Ministers;
- Investment and financial companies, provided that they take the form of joint-stock companies;
- Insurance and reinsurance companies, joint-liability companies and other companies engaged in insurance that take the form of joint-stock companies and offer their shares for public offers in accordance with the conditions and restrictions specified by the Central Bank;
- Exchange companies, in accordance with the conditions and restrictions specified by the Central Bank;
- Financial consulting and investment firms, in accordance with the conditions and restrictions specified by the Central Bank;
- External units and representation offices, in accordance with the conditions and restrictions specified by the Central Bank;
- Any other financial institutions as determined by the Central Bank, and in accordance with the conditions and restrictions specified by the board of directors of the Central Bank.
The Bank may grant a license to any type of business other than a joint-stock company, subject to the approval of the Council of Ministers.
Banking activities may be carried out by Romanian banks, by branches of foreign credit institutions or through the direct provision of services through passporting by credit institutions authorized and supervised in EU/EEA member states (art. 1, NBR Reg. 11/2007).
Romanian banks are required to be incorporated as joint-stock companies (art. 287, EGO 99/2006).
The bank is a joint stock company seated in the Republic of Serbia with an operating license issued by the National Bank of Serbia performing deposit and lending transactions and may perform other activities in accordance with the law. Therefore, the bank is founded only in the form of the joint stock company with prior consent granted by the National Bank of Serbia. Apart from the banks, the National Bank of Serbia issues licenses for the provision of payment services and for the issuance of e-money to the payment insti-tutions and e-money institutions founded in the form of legal entity (joint stock company or limited liability company).
Only the entities incorporated as joint stock (anonim şirket) companies are allowed to operate as banks in Turkey.
A bank may primarily be established in the form of a corporation (Aktiengesellschaft), but may also be a cooperative (Genossenschaft, with certain special requirements), a sole proprietorship (Einzelfirma, for private bankers), a general partnership (Kollektivgesellschaft), or a partnership limited by shares (Kommanditaktiengesellschaft). Cantonal banks may take the form of an establishment (Anstalt) or a corporation (Aktiengesellschaft) on the basis of Cantonal law.
Most banks take the form of limited companies, with larger banks typically being public limited companies and smaller ones being both public companies and private companies. There are some institutions formed by Royal Charter or special act of parliament for historical reasons.
Banks are generally specially chartered corporations, similar associations or limited liability companies. In most cases, they are chartered by the OCC, in the case of a national bank, or by a state banking regulator. As described above, an organizer or organizers of a bank may select a specific type of bank charter, and the bank is organized in corporate form as that type of institution.
Italian banks must be incorporated under the legal form of a joint stock company (società per azioni) or limited liability cooperative company (società cooperativa per azioni a responsabilità limitata).
See response in item 7 above.
A bank can only be organised as a public limited company or a European public limited company. In practice, banks operate as a public limited company.