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O.G. 46 |
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29.4.2002 |
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BANKING LAW |
OF THE TURKISH REPUBLIC OF NORTHERN CYPRUS
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Law No
:39/2001
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Notification under
articles (5), (6), (8), (10), and (42) |
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The Central Bank of the Turkish Republic of Northern
Cyprus, with the powers entrusted under articles (5), (6), (8), (10), and
(42) of the Banking Law 39/2001, determines the following provisions with
this notification. |
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Short Title |
1- The notification may be cited as “ Establishment, opening of a
branch and licensing of Banks”. |
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Interpretation |
2- Unless required otherwise in the text of this Notification |
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“Law” shall mean the Banking Law of 39/2001, |
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“Central Bank” shall mean the Central Bank of the Turkish Republic of
Northern Cyprus, |
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“Board of Directors” shall mean the Board of Directors of the Central
Bank of the Turkish Republic of Northern Cyprus, |
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Purpose |
3- The purpose of this notification, is to determine the rules and
procedures |
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And |
relating to application for acquiring a permit to establish a bank,
transfer of |
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Scope |
shares, permission for establishment and opening of a branch, acquiring
a banking license and to establish branches and representative offices in
other countries according to articles (5), (6), (7), (8), (10) and (42) of
the Banking Law 39/2001. |
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Provisions For Establishment
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Establishment |
4(1) a- Banks are
established as Limited Company in the TRNC |
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b- Foreign banks which will
operate in TRNC, must be a Corporation,
Limited or of an equivalent statute, depending on the legislation of
their countries. |
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c- The number of shareholders of
the Banks established in TRNC shall not be less than 10. |
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d- For the branches of foreign Banks, limitations of
subsection(c) are not required. |
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Applications for
Establishment and Transfer of Shares
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Documents to be Included in the Application Form |
5- For establishing a
bank, the following documents shall
be enclosed with applications to be submitted to the Central Bank; a) A statement to be prepared
and signed in presence of a notary public by founders according to the sample
documents enclosed within the Regulation (Annex 1 and Annex 2), |
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b) Draft Articles of
Association of the partnership signed by shareholders, |
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c) A detailed
feasibility report analyzing the benefit expected from the establishment of
the bank, and a report including an estimated balance sheet and profit-loss
account indicating targets for 3 (three) years starting from establishment,
the amount and source of money required for increasing the bank’s capital, |
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d) A document to be
issued by a Basic Commercial Court of TRNC or by an Enforcement Court of the
countries that founders are citizens of, and real persons and legal entities holding indirectly 10% (ten
percent) or more shares of the capital are not bankrupt and have not entered
into composition with creditors, |
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e) A record of
convictions to be received in the last six months from the Directorate General
of Judicial Records and Statistics or Public Prosecutor’s Office by real
person founders and other real persons owning indirectly 10% (ten percent) or
more shares of capital, |
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f) A copy of the document
showing the decision rendered by an authorized board of legal entity founders
on becoming a shareholder of the bank to be established, |
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g) A declaration to be
made by founders, real persons and legal entities holding indirectly 10% (ten
percent) or more shares in the capital, to the effect that they had not held
directly or indirectly a share of ten percent or more in the banks until the
date of liquidation or transfer to
the Savings Deposit Insurance Fund, (Annex 3), |
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h) A declaration to be
made by founders, real persons and legal entities holding indirectly 10% (ten
percent) or more shares of capital, to the effect that they do not own
directly or indirectly a share of 10% (ten percent) or more in banks,
insurance companies and institutions operating in money and capital markets
which are subject to liquidation (Annex 3), |
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i) A copy of the
Registrars Office report relating to the establishment of legal entity
founders; lists indicating shareholders, rate and amount of shares and
preference shares if any; detailed explanations about the line of business,
fields of investment and operation; balance sheets and profit-loss accounts
for the last 3 (three years) approved by a certified financial adviser and a report drawn up by an
internationally recognized rating company for legal entity founders which are
banks or other financial institutions including also the rating, if any, |
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j) Schedules showing legal
person partners of legal entity founders and shareholders and number of
shares held by legal persons having shares in the capital of these partners
as an indication of indirect share ownership in the capital, |
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k) Documents to be
obtained from relevant tax departments and Social Insurance Institutions to
the effect that founders and real persons and legal entities indirectly holding a share of 10%
(ten percent) or more in the capital, have no tax and premium debts that have
become due, |
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l) Income and
corporation tax returns and annexes thereof for the last five years filed by
founders and approved by tax departments; real estate tax returns filed for real estate owned by founders and
approved by relevant units of municipalities; real estate register entries relating to these real estates to
be obtained from real estate registration offices and a document indicating
the annotations and restrictions on such real estate, |
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m) Documents issued by the
relevant banks and addressed to the Central Bank of TRNC, bearing the same
date each, to substantiate the information provided about deposit and credit
accounts in declarations made by founders subscribing 10% (ten percent) or
more of the capital, including also the date on which these accounts were
opened, |
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n) A report to be drawn
up by certified financial advisers on the financial standing of founders
subscribing 10% (ten percent) or more of the capital, |
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o) Detailed curriculum vitae
of real person founders, holders of preference shares, other real persons
owning indirectly 10% (ten percent) or more of the capital, and members of
the board of directors and the general director if appointed, including also
information about whether or not they have been employed in a financial
institution in the last 10 (ten) years, |
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p) Copies of powers of
attorney issued to person(s) authorized to represent real persons or legal
entity founders, |
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r) A letter of undertaking
to be issued and signed according to the sample document in (Annex 4) by
founders subscribing 10% (ten percent) or more shares of the capital, to the
effect that they have provided the necessary capital from their commercial,
industrial and other legal operations free of any simulation. |
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Documents Regarding Transfer of Shares |
6 - For the
transfer of shares according to article 6(2) of the Banking Law, the
real persons and corporate bodies who will acquire the capital shares of a
bank should also include the following documents in addition to article 5 of
this notification. |
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a) Information of the
source of money in acquiring the shares. |
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b) A copy of the
agreement between the buyers and sellers
for the transfer of shares. |
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Establishment of a bank or Taking Over the Shares of an Existing |
7 - The following documents should be
enclosed with the application to be filed with
the Central Bank of TRNC by banks and
financial institutions incorporated abroad in order to establish a bank or to
take over the shares of an existing bank in TRNC or to establish the first branch in TRNC of a
bank established abroad; |
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Bank in |
a) Articles of
Association of the Bank or financial institution, |
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TRNC by |
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Banks or Financial Institutions Established Abroad |
b) A copy of the
document showing the decision taken by their authorized board on the
establishment of a bank or taking over the shares of an existing bank in TRNC
or the establishment of a branch in TRNC, |
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c) A detailed
feasibility report analyzing the benefit expected from the establishment of
the bank or taking over the shares or opening of a branch and a report
indicating targets for 3 (three) years and including an estimated balance
sheet and profit-loss accounts, and the amount and source of money required
for increasing the bank’s capital if necessary, |
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d) Balance sheet and profit-loss
accounts of the bank or financial institution for the last five years and
independent auditors reports issued by authorized agencies, |
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e) Detailed information
and documents about the shareholders of the bank or financial institution, organization
and organizational structure outside the country where it is established and
operations in international financial markets and a report drawn up by an
internationally recognized rating company about the bank or financial
institution including also the rating envisaged, |
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f) A document obtained
from the relevant official authorities to the effect that the bank or
financial institution has not been prohibited from accepting deposits or conducting
banking transactions and/or that no restrictions have been placed on its
operations in the country where it is established or operates, |
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g) Minutes of the most
recent general assembly meeting of the bank or financial institution and a list
of shareholders holding an interest of more than 10% (ten percent) in the
capital, approved by competent authorities of the country where the head
office of the bank or financial institution is located, |
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h) A letter of undertaking
shall be submitted to the Central Bank of TRNC which reports the examinations
to be made annually by an authorized independent auditing company pursuant to
the legislation of the country where the head office of the bank or financial
institution is located. |
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Additional Documents |
8 - The Central Bank of
TRNC shall be authorized to demand additional information and documents it
may deem necessary, according to articles 5, 6, and 7 of this notification. The article 5 of this notification
is comparatively applicable to the information and documents presented by
foreign nationals. |
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Establishment, Opening
of a Branch in TRNC, Banking License |
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Permission To Establish a Bank or to Open a Branch in TRNC |
9- Permission to
establish a bank or open a branch in TRNC shall be given by a decision taken
by an affirmative vote of at least 4 (four) members of the Board of the
Central Bank. After obtaining all the necessary documents for application and
the decision for establishment is taken by the Board of the Central Bank,
with request of the Central Bank, the minimum capital must be blocked in an
account within the Central Bank. With this procedure completed, the Central
Bank seals its decision in a week and removes the blockage. A permission so
granted will be notified to the persons concerned and published in the
Official Gazette by the Central Bank. A banking license to operate should
also be received following the consummation of establishment or branch opening
transactions, in order to start receiving deposits and/or conducting banking
transactions. A permission granted to establish a bank or to open a branch in
the TRNC shall be invalid in the event of failure to operate within six
months from the date on which permission is given. |
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License |
10- a) Following the
consummation of transactions for establishment and opening of a branch in
TRNC according to the provisions of pertinent legislation and completion of transactions
relating to registration with the Registrars Office, an application shall be
filed with the Central Bank submitting a statement to be issued according to
the sample document in (Annex 5) to receive authorisation to accept deposits
and/or to conduct banking transactions. An application to receive a Banking
License should be filed , by taking into consideration of the six month
period, starting from the date on which persons concerned are notified of the
Board’s Decision in the Official Gazette and by the end of 3. (third) month
at the latest after granting the permission for establishment and opening of
a branch in TRNC. |
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b) The Central Bank shall examine whether the
capital of applying bank to receive a Banking License has been paid in cash,
free of any simulation, whether it has technical equipment and adequate
personnel to conduct the transactions relating to accepting of deposits or
conducting banking activities, whether executive personnel meet the legal
requirements and are adequate in number, whether necessary arrangements have
been made relating to the management of the bank and internal audit, and
following an evaluation, the Board shall grant a Banking License for
accepting deposits and/or to conduct banking transactions. Permissions so
granted shall be valid as of the date of publication in the Official Gazette. |
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c) A document must be
included in the application form,
indicating that the $20.000.- (twenty thousand US Dollars) equivalent
of Turkish Lira as the License fee,
has been deposited into a treasury
account opened within the Central Bank. |
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d) For the renewal of Banking
Licenses, Each Bank should deposit a $10.000.- (Ten thousand US dollars)
equivalent of Turkish Lira into a Treasury account opened within the Central
Bank by the end of January of each year. |
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Opening of Branches or
Representative Offices, Forming of or Participating in Partnerships Abroad by
Banks established in TRNC |
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Permission And Requirements Of Opening Of Branches Representative Offices and Participating In Partnerships Abroad |
11- Opening of branches or representative
offices, forming of or participating in partnerships abroad by banks
established in TRNC shall be subject to the permission of the Central Bank.
Applications to receive permission shall be filed with the Central Bank
accompanied by a report including a detailed statement of reasons for opening
of a branch or representative office, forming or participating in a
partnership abroad. Applications to be made by banks failing to meet the
requirements of standard ratios currently in force, having inadequate capital
and reserve, or those which have restrictions imposed on their organisational structures, shall be
rejected. |
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Provisional Article |
1- As from the date
this notification comes into force, those banks already operating in TRNC, unless
they increase their Capital and Reserve according to article 12 of the Law,
must get the permission of the Central Bank to open a new branch. |
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17.6.76 O.G. 133 Number 46 |
12- As from the date
this notification comes into force, the
notification published under article 4. (2) (b) of the Law 11/76, shall be repealed. |
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Coming Into Force |
13- This Notification
shall be effective as from the date of its publication in the Official
Gazette. |
ANNEX-1
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Declaratýon
for bank founders/share assIgnees
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(Corporate bodies) |
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CORPORATE
BODY’S: |
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TRADENAME : |
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HEAD
OFFICE & DATE OF ESTABLISHMENT : |
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CAPITAL (with
explanation) |
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ADDRESS : |
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FIELD OF
ACTIVITY : |
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Some balance sheet fýgures FOR the LAST FIVE YEARS
(tl BILLION) |
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YEARS
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NET PROFIT (LOSS) (1) |
OWN FUNDS |
TOTAL ASSETS |
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PARTICIPATIONS/SUBSIDIARIES (2) |
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TRADENAME OF
COMPANY
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FIELD OF ACTIVITY |
CAPITAL |
AMOUNT OF SHARE |
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