Federal Law, Banks And Savings Banks, Section II, Licence for Business

Section II - Licence to Engage in Banking Business

Art. 3

1. Banks are required to obtain a licence from the Banking Commission prior to engaging in business operations; they may not register with the Register of Commerce before such licence has been granted.

2. A licence will be granted if:

a) the articles of association, by-laws and business rules of the bank provide for a clear definition of the scope of business and establish an adequate organisation in view of the proposed business activities; where the scope or the importance of the business activities is significant, the bank must create separate bodies for the management, direction, supervision and control. The duties of these bodies must be defined to ensure effective supervision of the bank's management;

b) the bank discloses the minimal fully paid-in share capital as determined by the Federal Council.

c) the persons charged with the administration and management of the bank enjoy a good reputation and thereby assure the proper conduct of the business operations;

c bis) natural persons or bodies corporate, who directly or indirectly participate in at least 10 percent of the capital or voting rights of a bank or otherwise whose business activities are such that they may influence the bank in a significant manner (qualified participation), guarantee that their influence will not impact negatively on a prudent and solid business activity;

d) the persons entrusted with the management of the bank have their domicile in a place where they may exercise the management in a factual and responsible manner.

3. The bank shall file its articles of incorporation, by-laws and internal regulations with the Banking Commission and notify that body of all subsequent amendments concerning the business purpose, the scope of business, the capital or the internal organisation of the bank. Such amendments may not be registered with the Register of Commerce unless they have been approved by the Banking Commission.

4. repealed

5. Each natural person or body corporate shall notify the Banking Commission prior to acquiring or selling directly or indirectly a qualified participation as defined in par. 2 lit. c bis in a bank organised in accordance with Swiss law. This duty to notify exists also whenever a qualified participation is increased or decreased in such a manner that the thresholds of 20, 33 or 50 percent of the capital or voting rights is reached or exceeded or falls thereunder.

6. The bank shall make notification of those persons who fall under the requirements of par. 5 as soon as it has knowledge thereof, at least however once a year.

7. Banks organised under Swiss law shall notify the Banking Commission before they establish a subsidiary, branch, agency or representation abroad.


Art. 3a

1. Par. 1, 2 and 3 of Art. 3 do not apply to cantonal banks. The cantons ensure compliance with corresponding requirements. Cantonal banks are those which have been established by cantonal decree for whose liabilities the canton is responsible as well as banks established by the cantonal decree prior to 1883 which are managed in co-operation with the cantonal authorities but whose liabilities are not guaranteed by the canton.

2. The cantons may transfer the banking supervision over their cantonal banks fully to the Banking Commission. In such a case, the cantonal banks must fulfil the requirements as set out in Art. 3 par. 2 and 3. The establishment and dissolution of cantonal banks as well as the supervision of compliance with legal cantonal prescriptions, remain the responsibility of the cantons.


Art. 3bis

1. The licence to establish a bank which is to be organised in accordance with Swiss law, but in whose case a controlling foreign influence exists, as well as the licence to establish an office or an agency of a foreign or foreign-controlled bank and the licence to appoint a permanent representative of a foreign banks is to be subjected additionally to the following conditions:

a) the country of residence of the foreign bank or of the foreign controlling corporate or individual shareholder shall guarantee reciprocity;

b) the chosen name of the foreign controlled Swiss bank shall in no way indicate or suggest that the bank is Swiss controlled;

c) repealed

2. The bank must inform the Swiss National Bank of the nature of its business activities and its relations with other countries.

3. A bank organised under Swiss law falls under the provisions of par. 1 whenever a foreigner with a qualified participation directly or indirectly holds more than 50 percent of the voting rights in the bank or when it exercises a significant influence on it in another manner.

A foreigner is deemed to be:

a) natural persons who are neither Swiss citizens or do not possess an establishment permit in Switzerland;

b) bodies corporate and partnerships who have their registered office abroad or, when they have their registered office in Switzerland, are controlled by persons defined under a).


Art. 3ter

1. An additional licence within the meaning of Article 3bis must be obtained by any Swiss controlled bank which falls under foreign control.

2. An additional licence must be obtained by any foreign controlled Swiss bank which experiences a change of its controlling shareholders or of the persons who own a controlling interest in some other manner.

3. The members of the Board and the management of a bank are to notify the Banking Commission of all matters which may lead one to conclude that the bank is foreign-controlled or that there has been a change in the persons controlling it. Notification shall also be made of any foreign person who exercises influence.


Art. 3quater

1. The Federal Council is empowered through treaties with other states, to declare the particular requirements of Art. 3bis and Art. 3 ter as totally or partially inapplicable whenever citizens of a contracting state as well as bodies corporate with registered office in a contracting state establish or take over a bank organised under Swiss law or acquire a qualified participation therein. In so far as no international commitments to the contrary exist, the Federal Council can subject this to the existence of reciprocity in the contracting state.

2. Should the body corporate on its part be controlled directly or indirectly by citizens of a third state or by bodies corporate with registered office in a third state, the afore-mentioned provisions are applicable.

Prepared by: M. J. Wharton.

KPMG Fides unofficial translation of Swiss Federal Law - Banks And Savings Banks.
For further information contact Debbie Grauf on +411 249 3131.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.