EMERGENCY MEASURES IN RESPECT OF BANKS IN THE NETHERLANDS ANTILLES
The Central Bank may apply for emergency measures
The Ordinance on the Supervision of Banking and Credit Institutions 1994 (the “Ordinance”) contains two important definitions:
“credit institution“: an undertaking or entity which as an important part of its business obtains moneys, whether repayable directly or in due course, whether in the form of savings or against issue of one or more types of debt acknowledgements, and grants credits for its own account;
“international credit institution“: a credit institution which is obtaining or extending funds, as the case may be, abroad and to which an exemption has been granted from articles 9 through 15 of the Foreign Exchange Ordinance (P.B. 1981, no. 67).
Article 2(1) of the Ordinance provides that no one may carry out the business of a credit institution in the Netherlands Antilles without having obtained a permit from the Bank of the Netherlands Antilles (the “Central Bank”). This prohibition applies to both on-shore and off-shore credit institutions, i.e. also to “international credit institutions”.
One can approach the Central Bank with a request for assistance. Assuming that the Central Bank would want to grant assistance, there are mainly two possibilities for the Central Bank to do so. Firstly, the Central Bank can request the court to order emergency measures on the basis of article 28 of the Ordinance. Emergency measures would in short mean that the Central Bank is appointed as a receiver, replacing the corporate organs of the bank concerned. The Central Bank will then guard the interests of the joint creditors of the bank, which could finally result in the liquidation of the bank, depending on the circumstances of the case.
Secondly, the Central Bank could request the court to order the dissolution of the bank on the basis of article 8(5) of the Ordinance. The court will appoint one or more receivers. I note that a request for dissolution on the basis of article 8(5) of the Ordinance would normally be preceded by a request from the Central Bank to the bank on the basis of article 8(4), e.g. requesting the credit institution to cease its illegal activities and, to the extent possible, revert the results thereof within a term set by the Central Bank. If such bank would nevertheless continue to perform its activities, then the next step would be a request for dissolution as abovementioned.
Karel Frielink
Attorney (lawyer) / Partner
