CREDIT INSTITUTIONS UNDER NETHERLANDS ANTILLES LAW
The solicitation of repayable funds is prohibited
The Netherlands Antilles National Ordinance on the supervision of banking and credit institutions 1994 (‘Landsverordening toezicht bank- en kredietwezen’) does not use the term ‘bank’ (other than when referring to the Central Bank of the Netherlands Antilles). It prohibits anyone to engage in the business of a Credit Institution (‘kredietinstelling’) in the Netherlands Antilles without a license issued by the Central Bank. A ‘Credit Institution’ is defined as an enterprise or institution that to an important extent makes its business of:
(i) solicitation of repayable funds (‘deposits’, whether term deposits or deposits which are repayable on demand, whether or not savings deposits, whether or not against issue of debt instruments) (the “funding side”); and
(ii) granting credit for its own account (the ‘application side’).
Any enterprise or entity that falls within this definition, regardless of whether it belongs to a group of companies or is a stand-alone (or ‘orphan’) company, qualifies as a Credit Institution and would therefore require a banking license, unless it also engages in other commercial or industrial business which is proportionally more important than its financing activities. It is important to note that the definition of Credit Institution looks at both the funding and the application side. If the definition is not met on either side, then the enterprise or entity in question does not qualify as a Credit Institution, and the abovementioned prohibition does not apply.
The Ordinance also contains a prohibition on either funding or application. It prohibits any one (other than a licensed Credit Institution) to – directly or indirectly – solicit funds from the public or extending credit. It should be noted that the Explanatory Memorandum to the Ordinance grants a wide scope to the term ‘public’, i.e. any one other than a licensed Credit Institution. The Central Bank can grant individual exemptions from this prohibition.
Karel Frielink
Attorney (Lawyer) / Partner
