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  • The Central Bank Board of Directors’ Resolution No. 57/3/1996

    REGARDING THE REGULATION FOR REPRESENTATIVE OFFICES
     
    The Chairman of the Board of Directors,
     
    Having perused Union Law No. (10) of 1980, regarding the Central Bank, the monetary system, and organization of the banking profession, particularly Articles 11, 12, 18, 77, 120, 121, 122 and 123,
     
    And Union Decree No. (80) of 1995, regarding the formation of the Board of Directors of the Central Bank,
     
    And the Board of Directors’ resolution, taken in its meeting on 14/4/1996,
     
    The following has been decided:
     

    • Article (1) Definitions

      1.1
             		For the purpose of this resolution:
       
       a)
             		‘Board of Directors’ shall mean the Board of Directors of the Central Bank.
       
       b)
             		‘Governor’ shall mean the Governor of the Central Bank.
       
       c)
             		‘Representative Office’ shall mean the Office which represents a foreign bank or any other foreign financial establishments in the country.
       
       d)
             		‘Licence’ shall mean the licence issued by the Central Bank, allowing the licensee to conduct the business of representative office.
       
       e)
             		‘Licensed Financial Establishment’ shall mean the foreign bank or any other foreign financial establishment licensed to open a representative office in the country.
       
       f)
             		‘Relevant Authority’ shall mean the monetary or supervisory authority in the country where the applicant is incorporated, or in the country in which the applicant maintains a Head Office to conduct the business.
       
       g)
             		‘Applicant’ shall mean the Head Office of the foreign bank or any other foreign financial institution which wishes to open a representative office in the country.
       
      1.2
             		The terminology mentioned in Union Law No. (10) of 1980 shall carry the same meanings referred to in that Law, whenever used in this resolution.
       

    • Article (2) Obtaining a Licence - An Imperative

      2.1
             		No person is allowed to conduct the business of representative offices mentioned in Article (6) of this resolution, unless licensed to do so in writing by the Governor in accordance with a decision from the Board of Directors.
       
      2.2
             		If the Central Bank finds out that a person is conducting the business of a representative office without a valid licence, the Central Bank may investigate the matter in the appropriate means and take the necessary legal action.
       

    • Article (3) Conditions for Obtaining a Licence

      3.1
             		No licence shall be granted unless the following conditions are met by the applicant:
       
       a)
             		The applicant should be a bank or another financial establishment incorporated outside the country, and authorized by the relevant authority and is directly subject to the supervision and examination of that authority in the country of origin and/or the head office as per the laws of that country; the licence should as well be a valid one.
       
       b)
             		The applicant should have completed a period of no less than ten (10) continuous years of conducting the business in the country of origin or the head office. This period cannot be reduced without a decision by the Board of Directors.
       
       c)
             		The bank applicant’s paid-up capital and reserves should not be less than AED 183.7 Mn. The Board of Directors shall decide on the capital of any other financial establishment in view of the size of its business and the kind of its activity.
       
       d)
             		The relevant authority, to whose supervision the applicant is subject to, should exercise the required control on the banking and/or financial system in the country of incorporation of the applicant. Furthermore, this authority should issue an approval or no-objection letter to opening a representative office in the country. However, in cases where the relevant authority does not issue such letter, it should state this clearly in its official documents, or confirm it in writing.
       
       e)
             		The applicant should undertake to fully comply with the relevant provisions of laws, regulations and instructions issued in the country, particularly those issued by the Central Bank. The applicant should also undertake to submit the records and documents of the representative to the Central Bank for examination. The applicant should conduct his business as per the licence granted to him and in a proper manner.
       
       f)
             		The person assigned to manage the representative office should be characterized by good conduct and behaviour. He should as well be properly qualified, theoretically and practically, in the areas of banking and financial business, as determined by the Central Bank.
       
      3.2
             		In deciding on granting or denying the licence, the Central Bank shall take into consideration any matters related to the financial position of any other company within the group of the applicant.
       

    • Article (4) Submitting a Licence Application

      4.1
             		Foreign banks or other foreign financial establishments, wishing to obtain a licence to open a representative office in the country, should submit an application to the Central Bank, using the form prepared by the Central Bank from time to time.
       
      4.2
             		The applicant should attach the following documents:
       
       a)
             		The Articles and Memorandum of Association which identify the nature and scope of business to be conducted;
       
       b)
             		The names of principal shareholders and ownership percentage of each;
       
       c)
             		A statement identifying the kind of business intended to be conducted through the potential office, as well as the purposes to be achieved by that office;
       
       d)
             		Name and address of the relevant monetary or supervisory authority to whom the applicant is subject to.
       
       e)
             		A copy of the audited annual accounts for the last 3 years.
       
       f)
             		A list of the names of any other companies or establishments owned by the applicant, or in which he is a principal shareholder identifying the percentage of his ownership.
       
      4.3
             		The Central Bank reserves the right to request any other additional information, statements or documents deemed necessary for the purposes of deciding on an application.
       

    • Article (5) Notification of Approval or Denial

      The Central Bank shall notify the applicant in writing of its approval or denial of an application during a period not exceeding 6 months from the date of fulfilling the licence requirements as per the provisions of this resolution.
       

    • Article (6) Representative Office Activities

      The representative office is allowed to engage in the following activities:
       
      a)
             		Representing the licensed financial establishment in conducting business inside the country, including contacts with relevant parties as well as promoting its services in the local market.
       
      b)
             		Providing its Head Office with information regarding the economic developments in the country.
       
      c)
             		Providing its customers with information regarding the local market.
       
      d)
             		Providing information to any local party which intends to develop its activities in countries where the licensed financial establishment operates.
       
      e)
             		Providing customers with banking, financial and investment consultation services.
       

    • Article (7) Prohibitions

      A representative office operating in the country is prohibited from conducting any business activities other than those mentioned in Article (6) above, particularly the following:
       
      a)
             		Accepting deposits in any form whatsoever;
       
      b)
             		Opening accounts of any kind to clients;
       
      c)
             		Extending loans or advances to any party whatsoever;
       
      d)
             		Performing and/or participating in any other normal banking operations, such as issuing Letters of Guarantee, opening Letters of Credit, etc.
       
      e)
             		Dealing in foreign currencies, securities and metals.
       

    • Article (8) Dealing with Resident Banks

      The representative office may open accounts in its name with banks operating in the country. Such accounts, however, should be used solely for the payment of its administrative expenses.
       

    • Article (9) Continuous Commitments

      The licensed financial establishment must strictly adhere to the following:
       
      a)
             		Indicating clearly the expression ‘representative office’, alongside the commercial name under which it conducts its business in the country of origin or the Head Office, in its address as well as in all advertisements and official papers used by the office.
       
      b)
             		Managing its business by persons against whom the Central Bank has no objection.
       
      c)
             		Conducting the business activities mentioned in Article (6) above at independent and appropriate premises, approved by the Central Bank, and refraining from conducting any other business of any kind at the same premises; relocation of premises or its closure is not allowed without prior approval from the Central Bank.
       
      e)
             		Not merging, unifying or consolidating with any other financial establishment or other entity in the country without prior approval from the Central Bank.
       
      f)
             		Notifying the Central Bank immediately of any principal changes related to the status of the licensed financial establishment.
       
      g)
             		Providing the Central Bank with any statements, information or statistics it may request at any time and for any period.
       
      h)
             		Obtaining the relevant licenses from the concerned local authorities before commencing its business. This should be done within (6) months from the date of issuance of the licence from the Central Bank as per the provisions of this resolution.
       
      i)
             		The licence of the local authorities should be restricted to conducting the business of representative offices only; the representative office should provide the Central Bank with copies of the licence as soon as it is received from the concerned authorities.
       
      j)
             		Complying with all prevailing laws in the country, including civil laws, commercial companies’ law and criminal laws. It should as well comply with the ethical standards which governs its business as per the provisions of this resolution.
       

    • Article (10) Name of Representative Office

      10.1
             		The Central Bank shall have the right to object to the name under which the licensed representative office operates, if the licensed financial establishment underwent fundamental changes in its Articles of Association and in the nature of its business; the Central Bank may as well object to the name as a result of new information indicating that the used name is causing ambiguity, misguidance or confusion among the public. In this event, the Central Bank shall have the right to notify the concerned financial establishment in writing of its disapproval of the name that the said establishment uses.
       
      10.2
             		Any licensed financial establishment operating in the country is prohibited from using a name that has been objected to by the Central Bank to conduct its business in the country.
       
      10.3
             		The commercial name mentioned in the licence under which the representative office of a licensed financial establishment operates cannot be changed without the prior approval, in writing, of the Central Bank.
       

    • Article (11) Suspension of Licence

      Every financial establishment operating in the country and which intends to suspend its operation should notify the Central Bank beforehand. Such notification should be no less than 2 months in advance; the Central Bank may approve to reduce the notification period.
       

    • Article (12) Scope of Licence

      12.1
             		The licence issued by the Central Bank shall be valid for 2 years from the date of its issuance.
       
      12.2
             		The licence shall include the terms deemed necessary by the Central Bank for the operation of the business.
       

    • Article (13) Canceling, Restricting or Changing a Licence

      13.1
             		The Central Bank, through a decision of its Board, may at any time cancel, restrict, change or withdraw any imposed terms, after receiving the comments of the concerned financial establishment with regard to the reasons for cancellation, restriction, alteration, withdrawal or imposition.
       
      13.2
             		The granted licence of the representative office may be canceled due to a request by the licensed financial establishment, after fulfilling the conditions specified by the Central Bank for this purpose.
       
      13.3
             		The Central Bank, through a decision by its Board, may cancel a licence in the following cases:
       
       a)
             		If the Central Bank finds any violation in any of the continuous obligations mentioned in Article (9) above, or in any of the terms of the licence.
       
       b)
             		If the licensed financial establishment violates the provision of this resolution, or the provisions of Union Law No. (10) of 1980, or any other instructions or circulars issued by the Central Bank; or if the licence terms are not met or are found difficult to be met.
       
       c)
             		If the Central Bank is provided with false, misleading or inaccurate information by or on behalf of the licensed financial establishment.
       
       d)
             		If a bankruptcy order or a sentence to declare bankruptcy against the licensed financial establishment is issued; or if the interest of its current or potential clients is liable to risk.
       
       e)
             		If an order of liquidation is issued by the concerned judicial authority in the country of origin against the licensed financial establishment or any of its principal owners; or if a court receiver, supervisor or any other similar officer is appointed on its business in that country.
       
       f)
             		If the representative office does not commence to operate its business within one year of date of issuance of licence, unless such period is extended through a decision by the Board of Directors.
       
       g)
             		If the representative office suspends its operations for 3 consecutive months.
       
       h)
             		If the relevant authority or concerned local authorities withdraw the licences granted by these authorities to the licensed financial establishment.
       
      13.4
             		In the event of canceling the licence, it shall be withdrawn through a decision/written request. Such decision shall be published in a circulating daily newspaper, and necessary action shall be taken to enforce the decision.
       

    • Article (14) Supervision

      The Central Bank shall have the right to examine the activities of the representative office whenever deemed necessary to ensure the soundness of the application of the provisions of this resolution.
       

    • Article (15) Amendments

      The Board of Directors has the right to make any amendments, deemed necessary, to the provisions of this resolution from time to time.
       

    • Article (16) Scope of Application and Expiry Date

      16.1
             		This resolution shall apply to all representative offices operating in the country and licensed as per this resolution; or those offices licensed in accordance with the Board of Directors’ decision No. 97/4/1987 issued on 15/12/1987, on condition that they adjust their status to the provisions of this resolution with a maximum period of 6 months from the date of its enforcement.
       
      16.2
             		Representative offices which obtained their licences before the issuance of this resolution are exempted form the provisions of Article 3 (c) above regarding paid-up capital and reserves.
       
      16.3
             		The Board’s resolution No. 97/4/1987 shall hereby be canceled, and replaced by this resolution which comes into effect from the date of its issuance.
       

    • Article (17) Interpretation of Resolution

      The Governor is the sole interpreter of the provisions of this resolution, and His interpretation shall be final.
       

    • Article (18) Publication of Resolution

      The contents of this resolution shall be notified to the concerned authorities to ensure the application of its provisions, and shall be published, in both Arabic and English, in the Official Gazette.
       
      Mohamed Eid Al Meraikhi
       
      Chairman
       
      Issued in Abu Dhabi on 14/4/1996