• Articles of Association
• Bodies of a Bank

Organisation and Management

Articles of Association

The new Banking Act regulates also organisation and management of a bank and a branch office of foreign bank.

The Articles of Association of a bank, in addition to the prerequisites stipulated in the Commercial Code, have to contain also other prerequisites which form special prerequisites in case of banks. This duty lead in particular to provision of functioning of banking activities and provision of healthy development and safety of banking activities performance.

In accordance with the above, a bank is obliged to regulate relationships and co-operation among its statutory body, Supervisory Board, head employees of the bank, division of internal supervision and internal audit in the Articles of Association. In the new Banking Act, a system of internal supervision of the bank is composed of the division of internal supervision and the division of internal audit.

In order to monitor changes of the Articles of Association effectively, in which decisive organisational changes of the bank are reflected, the banks are obliged to deliver copies of the Articles of Association and their changes to NBS without delay.

Bodies of a Bank

Corporate bodies of the bank are the statutory body and the Supervisory Board. The Board of Directors is the statutory body of the bank. The statutory body as well as the Supervisory Board must have at least three members.

The new Banking Act regulates responsibilities of the statutory body of the bank for its prosperousness and in case of branch offices of foreign banks responsibility of their directors.

Members of the statutory body of the bank and directors of the branch offices of bank are responsible for the actual damage caused at performance of their office, in case of breach of the duties arising from laws, other generally binding legal regulations, the Articles of Association of the bank and other internal actions of management. The new Banking Act stipulates a duty of the bank to regulate legal relations with these persons by a written agreement to which the Labour Code does not apply and which enables to exercise claims for the actual damage against them.

In its Section 25, the new Banking Act introduces legal barriers for preventing from occurrence of interpersonal linkage between a bank and other, in particular, business entities and thus creation of conditions for provision of banking activities on other than on an arm's length basis (e.g. loans, deposits). Furthermore, the Act regulates prohibition of unauthorised use of information by certain persons (e.g. members of the statutory body) which were acquired at performance of their activities, disadvantageous for the bank or its clients. This provision regulates so called insiders who have access to very sensitive information. At the same time, the position of the director of internal supervision, his/her rights and duties as well as assumptions for performance of such office are regulated by the Act. The provision of Section 25 contains new definitions of terms ``financial institution'' and ``enterprise of auxiliary banking services'', which are regulated for the needs of performance of consolidated banking supervision.

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