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									Supervisor of Banks:    Banking Legislation (3/10)
                        Banking Ordinance                                  page   103 -1


                         BANKING ORDINANCE, 1941*

                AN ORDINANCE TO CONSOLIDATE AND AMEND THE LAW
                      REGULATING THE BUSINESS OF BANKING

1.    Short title
      This Ordinance may be cited as the Banking Ordinance, 1941.


2.    Interpretation
      (1)   In this Ordinance, unless the context otherwise requires:
            "The Committee" means the Advisory Committee appointed under section 6;
            "the Governor" means the Governor of the Bank of Israel appointed under
            section 8 of the Bank of Israel Law, 5714 - 1954;
            "strike" means any organized total or partial work stoppage by a group of
            workers and includes a go-slow strike and any other organized disruption of
            normal course of the work.
            "dormant deposit" means a deposit, whether in Israeli or foreign currency, in
            respect of which ten months have passed since the day when the last
            instruction from the owner was received.
      (2)   Every other term in this Ordinance has the meaning assigned to the same term
            in the Banking (Licensing) Law, 5741-1981.


2A through 3A. repealed


4.    Restriction on use of word 'Bank'
       (1) No person or body of persons, whether incorporated or unincorporated, other
            than a bank, a foreign bank, a mortgage bank, an investment finance bank and
            a merchant bank, shall, without the consent of the Governor, use or continue
            to use the word 'bank' or any of its derivatives in the name under which he is
            carrying on business.
       (2) Any person or body of persons, whether incorporated or un-incorporated, who
            acts in contravention of the provisions of this section shall be liable to a fine



                                    Unofficial Translation
Supervisor of Banks:     Banking Legislation (3/10)
                         Banking Ordinance                                 page   103 -2

            not exceeding five hundred shekel for every day during which the offence
            continues.
       (3) The Governor may direct any person, after consultation with the Committee
            and after giving such person an opportunity to state his case, to delete, within
            such time as the Governor shall prescribe, the word "bank" or any derivative
            thereof from the name under which he carries on business.
       (4) The Governor shall not exercise his power under subsection (3) in respect of a
            bank, a foreign bank, a mortgage bank, an investment finance bank or a
            merchant bank so long as a direction under section 8D or 8N has not been
            issued in respect of such person.


       (5) Repealed.


       (6) Where a body corporate has not complied with a direction issued to it under
            subsection (3) and has not chosen another name for itself within the period
            prescribed by the Governor, the Governor shall choose a name for it and shall
            notify the appropriate registrar accordingly; the Governor's notification shall
            be deemed to be a notification by the body corporate of the change of its
            name, duly resolved upon and delivered, and the provisions of law relating to
            changes of name shall apply to it mutatis mutandis.


4A. Names likely to mislead
      (a)   Where a person not being a banking corporation carries on business under a
            name not containing the word 'bank' or any derivative thereof, but suggesting
            that such person carries on an activity reserved to a banking corporation under
            section 13 or 21 of the Banking (Licensing) Law, 5741-1981, the Governor
            may, in addition to his powers under section 4, after consultation with the
            Committee and after giving such person an opportunity to state his case, direct
            that within a time, not less than 28 days, prescribed by the Governor such
            person shall delete from the name under which he carries on business any
            word or other expression which suggests that he carries on an activity reserved



                                     Unofficial Translation
Supervisor of Banks:    Banking Legislation (3/10)
                        Banking Ordinance                                 page   103 -3

            to a banking corporation under section 13 or 21 of the Banking (Licensing)
            Law, 5741-1981.
      (b)   A direction under subsection (a) shall be deemed to be a direction under
            section 4(3), and a person who fails to comply with it shall be deemed to be a
            person who without permission continues to use the word 'bank' as part of his
            name.


5.    The Supervisor of Banks and his powers
      (a)   The Governor may appoint a Supervisor of Banks (hereinafter referred to as
            "the Supervisor"), who, upon being appointed, shall be an employee of the
            Bank of Israel and shall be charged with the inspection and general
            supervision of every banking corporation; he and persons acting on his behalf
            shall have the power to require a banking corporation, as well as a banking
            corporation's director, employee or auditor, to deliver to him information and
            document in their possession that relate to the business of the banking
            corporation and of every body corporate under its control, or to enable him to
            examine, copy or photograph any said document; if the information required
            is stored in a computer, than the information shall be delivered in a manner as
            required.
      (b)   Any person who refuses to comply with a request under subsection (a), shall
            be liable to imprisonment for a term of one year.
      (c)   The Minister of Police may empower any employee of the Bank of Israel
            empowered under subsection (a) to act on behalf of the Supervisor to carry out
            investigations of offences under this Ordinance, under the Banking
            (Licensing) Law, 5741-1981 or under the Bank of Israel Law, 5714-1954, or
            offences relating to assets of the customers of a banking corporation. An
            employee empowered as aforesaid shall have all the powers vested in a
            commissioned officer of police of or above the rank of inspector under the
            Criminal Procedure (Evidence) Ordinance, and the provisions of that
            Ordinance shall apply to such investigations as aforesaid.




                                    Unofficial Translation
Supervisor of Banks:      Banking Legislation (3/10)
                          Banking Ordinance                                page   103 -4

      (c1) The Supervisor may, for the purpose of supervision as stated in Subsection
            (a), after consulting with the Committee and with the approval of the
            Governor, promulgate directives pertaining to the operating and management
            methods of a banking corporation, an officer thereof, and anyone employed
            thereby, all of which to assure its sound management and the safeguarding of
            is customers’ interests and to avert impairment to its ability to meet its
            liabilities (in this Ordinance—Proper Conduct of Banking Business
            Directives); such a directive may be issued to all banking corporations or to a
            certain type of banking corporation.
      (c2) (1)         Proper Conduct of Banking Business Directives need not be gazetted
                       in Reshumot; however, the Supervisor shall gazette in Reshumot a
                       notice about the issue of said Directives and the day on which they
                       are to go into effect.
            (2)        Proper Conduct of Banking Business Directives and any amendment
                       thereto shall be made available for the perusal of the public at the
                       offices of the Supervisor and shall be posted to the Web site of the
                       Bank of Israel, as well as additional methods of advertisement as the
                       Governor may determine.
      (d)     The Governor may assume any power vested in the Supervisor.


6.    Constitution of Advisory Committee
      (1)   The Governor may appoint an Advisory Committee consisting of such persons
            and appointed on such terms as he may think fit to advise him on matters
            relating to banking business and he may at any time terminate any
            appointment so made.
      (2)   The Governor may make rules providing for the procedure to be followed at
            any meeting held by the Committee to be constituted under this section.
      (3)   One of the members of the Committee shall be a person appointed by the
            Minister of Finance.
      (4)   The Committee may appoint from among its members subcommittees of one
            or more members, prescribe their functions and delegate powers to them; the



                                      Unofficial Translation
Supervisor of Banks:     Banking Legislation (3/10)
                         Banking Ordinance                                  page   103 -5

             Committee member under subsection (3) shall, by virtue of his appointment,
             be a member of every subcommittee appointed under this subsection.
      (5)    The proceedings of the Committee and of every subcommittee thereof shall be
             secret, and no person shall without the approval of the Governor divulge any
             information regarding them.


7.    repealed




8.    Credit to ensure stability of banking corporation
      (a)    Where the Governor is of the opinion that in order to ensure its stability a
             banking corporation is in need of additional monetary resources, the Bank of
             Israel may provide it with funds by the discount of bills of exchange,
             promissory notes or other negotiable instruments or by loans secured to the
             satisfaction of the Governor.
      (b)    Credit under subsection (a) shall be on such conditions as the Governor may
             deem fit, and he shall prescribe the security to be given by the recipient of the
             credit.
      (b1)   A charge on securities, a charge on a right to securities or a charge on a
             securities account, imposed against the provision of credit to a banking
             corporation under Subsection (a), shall be governed by the provisions of
             Section 37 of the Bank of Israel Law, 5770-2010, mutatis mutandis.
      (c)    The power of the Governor under subsection (a) shall not derogate from his
             power under sections 42 and 44 of the Bank of Israel Law, 5714-1954.


8A. Notice of defects to banking corporation
      (a)    If the Supervisor is of the opinion that a particular banking corporation has
             transacted business in a manner likely to impair its ability to meet its
             obligations or the proper conduct of its business, he shall send it a written
             notice specifying the defects, demanding that they be rectified, or their
             adverse consequences prevented, within a period stated in the notice and



                                     Unofficial Translation
Supervisor of Banks:    Banking Legislation (3/10)
                        Banking Ordinance                                  page   103 -6

            giving it an opportunity to submit, within the same or a shorter period, as may
            be stated in the notice, its observations and objections concerning the defects
            and the demand for their rectification.
      (b)   Where a banking corporation has submitted observations and objections as
            referred to in subsection (a), the Supervisor shall decide upon them as soon as
            possible after receiving them and shall notify the banking corporation of his
            decision, and if he demands the rectification of the defects or the prevention
            of their adverse consequences, he shall prescribe the period within which the
            banking corporation shall fulfill the demand.


8B. Power of Supervisor as to determining bad debts
      (a)   If the Supervisor is of the opinion that the whole or part of a debt due to a
            banking corporation is a bad debt or that any property of a banking
            corporation is reflected in its books by an amount which exceeds its value at
            the time upon sale by a willing seller to a willing purchaser, he may direct the
            banking corporation to allocate the amount necessary under the circumstances
            to an appropriate fund.
      (b)   A direction under subsection (a) shall be deemed to be a notice under section
            8A.


8C. Measures to prevent adverse consequences
      (a)   Where the Supervisor, upon the expiration of the period stated in a notice
            under section 8A, is of the opinion that the banking corporation has not
            rectified the defects notified to it under that section or has not prevented
            their adverse consequences, or where, after giving the banking corporation
            an opportunity to voice or submit its observations and objections, he is of
            the opinion that measures should be taken to prevent the banking
            corporation from being unable to meet its obligations or from causing harm
            to its customers or to persons having rights in it, he may, after consultation
            with the Licenses Committee -




                                    Unofficial Translation
Supervisor of Banks:     Banking Legislation (3/10)
                         Banking Ordinance                                     page   103 -7

            (1)    direct the banking corporation to refrain from classes of acts stated in
                   the direction, other than the fulfillment of obligations;
            (2)    prohibit the distribution of dividends or profits to the shareholders of
                   the banking corporation or the granting of bonuses to its directors and
                   managers and persons empowered to sign on its behalf;
            (3)    suspend or restrict the power of a director, manager or person
                   empowered to sign; And if he found that this is not sufficient, he may
                   remove him from his post; a person who is affected by the
                   Supervisor’s decision to remove him from his post may appeal the
                   decision to the Governor;
      (b)   A direction under this section shall not be published in Reshumot, and the
            plea shall not be heard that an act done in good faith with a person not
            empowered to do it, in contravention of such direction, is void by reason
            only that it was done in contravention of the direction.


8D. Powers to safeguard stability of banking corporation
      (a)   If the Governor, after consultation with the Supervisor, is of the opinion
            that a particular banking corporation is unable to meet its obligations or
            that, because it has conducted its business in a manner deviating from
            sound banking practice, it is unable to return an asset entrusted to it or that
            any of its directors or managers have acted in a manner likely to impair the
            proper conduct of its affairs, he may, after giving the bank an opportunity,
            appropriate under the circumstances, to voice or submit its arguments and
            after consultation with the Licenses Committee, issue to the banking
            corporation any of the directions referred to in Section 8C(a), and he may,
            with the approval of the Committee, as defined in the Bank of Israel Law,
            5770-2010 -
            (1)    Repealed;
            (2)    appoint an administrator to manage the banking corporation as
                   provided in section 8F;




                                     Unofficial Translation
Supervisor of Banks:     Banking Legislation (3/10)
                         Banking Ordinance                                 page   103 -8

             (3)   appoint a special examiner for the banking corporation to supervise its
                   management as provided in section 8G;
             (4)   appoint a management committee for the banking corporation to advise
                   the administrator.
       (b) An appointment as referred to in paragraph (2) or (3) of subsection (a) may be
             given also to a State employee or an employee of the Bank of Israel.
       (c)   Where the Governor is of the opinion that the circumstances of the case and
             the public interest require that any act under subsection (a) be done without
             delay, he may do such act without having consulted the Licenses Committee
             and without having given the banking corporation an opportunity to submit or
             voice its arguments, provided that he hears the banking corporation as soon as
             possible after having acted under subsection (a) and brings the matter before
             the Licenses Committee.
      (d)    Repealed
      (e)    Repealed.
      (f)    The fact of the appointment under subsection (a)(3) shall not be published in
             Reshumot, and the plea shall not be heard that an act done in good faith with a
             person not empowered to do it, or in contravention of a direction issued to the
             banking corporation, is void by reason only of its having been done by such a
             person or in contravention of such a direction.


8D1. Reporting by banking corporation about embezzlement
      (a)    If a banking corporation becomes aware of reasonable grounds to suspect one
             of its employees or officers was involved in an act of embezzlement in a sum
             exceeding the sum determined by the Supervisor, it shall report the
             embezzlement to the internal auditor, in the sense of this term in Section 14E,
             and to the Supervisor, as promptly as possible.
      (b)    Said report to the Supervisor shall include such details as the Supervisor has
             determined. The Supervisor shall also determine the manner of reporting, the
             date thereof, and any other detail that he deems correct.
      (c)    For the purpose of this Section—



                                     Unofficial Translation
Supervisor of Banks:    Banking Legislation (3/10)
                        Banking Ordinance                                  page   103 -9

             “Embezzlement”—one of the infractions listed in Clauses a, f, and g of
            Chapter 11 of the Penal Law, 5737-1977 (in this Section—the Penal Law) and
            all of which relating to assets off, held by, or managed by the banking
            corporation.


8D2. Report of the Supervisor
      Once per year, the Supervisor shall present the Finance Committee of the Knesset
      with a report containing a detailed account of the number of acts of embezzlement
      reported on as stated in Section 8D1, and of acts of embezzlement with regard to
      which the Supervisor has completed his treatment. The report will also explain in
      the detail how the acts were handled and shall present the findings discovered,
      except for the ways in which the information was obtained. The Supervisor will
      bring the report to the attention of the public in a way he determines, including by
      way of advertising in the website of the Bank of Israel.


8E. Offences against directions under sections 8C and 8D
      (a)   A banking corporation which contravenes any direction issued to it by the
            Supervisor under section 8C or issued to it by the Governor under the said
            section or by virtue of his power under section 8D(a) shall be liable to a fine
            of 100,000 pounds.
      (b)   A person who acts as a director, manager, or person empowered to sign while
            his power has been suspended or restricted or while he is suspended from
            office shall be liable to imprisonment for a term of four years or to a fine of
            100,000 pounds.
      (c)   A person empowered to sign on behalf of the banking corporation who
            actually participates in the commission of an offence under subsection (a)
            shall be liable to imprisonment for a term of three years or to a fine of 50,000
            pounds.
      (d)   A person who at the time of the commission of an offence under subsection
            (a) is an active director or a manager or duly empowered representative or the
            chief or sole accountant of the banking corporation shall be liable to



                                    Unofficial Translation
Supervisor of Banks:     Banking Legislation (3/10)
                         Banking Ordinance                                   page   103 -10

            imprisonment for a term of three years or to a fine of 50,000 pounds unless he
            proves -
            (1)    that the offence was committed without his knowledge and that he was
                   not by virtue of his office required to know of its commission; or
            (2)    that he took all reasonable steps to ensure compliance with the
                   directions issued.


8E1. Violation of the Provisions of Section 8D1
      (a)   If an embezzlement offense as defined in Section 8D1(c) has been committed
            at the banking corporation, and the banking corporation has not reported it in
            the manner set forth in Section 8D1, the banking corporation shall be liable to
            the fine set forth in Section 61(a)(2) of the Penal Law.
      (b)   The general manager of the banking corporation shall apply supervision and
            do everything possible to uphold the provisions of Section 8D1; one who is in
            violation of said obligation is liable to the fine set forth in Section 61(a)(1) of
            the Penal Law.
      (c)   If an embezzlement offense as defined in Section 8D1(c) has been committed
            at the banking corporation, and the banking corporation has violated its
            obligation to report as stated in Subsection (a), it is presumed that the general
            manager of the banking corporation has violate his/her obligation as stated in
            Subsection (b) unless he proves that he did everything possible to discharge
            his obligation.”


8F.   Powers of administrator
      (a)   An administrator appointed under section 8D(a)(2) shall manage the bank in
            accordance with directions he receives from the Governor or, if the Governor
            has empowered the Supervisor of Banks to issue directions, from the
            Supervisor of Banks.
      (b)   An administrator shall have the status of a manager of the banking
            corporation, and in addition, every manager who has not been suspended, and
            every employee of the banking corporation, shall comply with his directions.



                                     Unofficial Translation
Supervisor of Banks:      Banking Legislation (3/10)
                          Banking Ordinance                               page   103 -11

      (c)   Besides as provided in subsection (a) and (b), an administrator shall carry out
            the functions of the board of directors and of its committees, and he shall,
            subject to the provisions of section 8H(e), have all the powers conferred and
            functions imposed on the board of directors and its members by the
            memorandum of association and regulations of the banking corporation.
      (d)   The banking corporation shall pay the administrator a salary, as the Governor
            may prescribe.
      (e)   The administrator shall, after consultation with the management committee
            and with the approval of the Governor, be competent to transfer all or part of
            the assets of the banking corporation to another banking corporation which
            assumes all the liabilities thereof.


8G. Special examiner
      (a)   A special examiner appointed under section 8D(a)(3) shall supervise the
            activities of the board of directors of the banking corporation and the
            management of its business in accordance with directions he receives from the
            Governor and, if the Governor has empowered the Supervisor of Banks to
            issue directions, from the Supervisor of Banks.
      (b)   The Governor may permit the special examiner to employ other persons for
            the fulfillment of his tasks.


8H. Management committee
      (a)   A management committee appointed for a banking corporation under section
            8D(a)(4) shall advise the administrator in the discharge of his functions under
            section 8F.
      (b)   So long as the management committee carries out its functions, the board of
            directors and its members shall not carry out their functions or exercise their
            powers.
      (c)   The administrator shall be the chairman of the management committee.
      (d)   The banking corporation shall pay the members of the management committee
            a salary in an amount prescribed by the Governor.



                                      Unofficial Translation
Supervisor of Banks:    Banking Legislation (3/10)
                        Banking Ordinance                                      page   103 -12

      (e)   The management committee shall approve the balance sheet of the banking
            corporation as if it were a general meeting and shall appoint an auditor for the
            banking corporation; but this shall not derogate from the duty to call a general
            meeting.


8I.   Giving information
      (a)   Where a direction under 8D has been issued, every director or manager of the
            banking corporation, whether or not a suspension direction has been issued in
            his regard, and every other person employed at the banking corporation, shall,
            on the demand of the Governor, the administrator, the special examiner or a
            person empowered by one of them in that behalf, furnish him or his agent with
            any such information or with any such book, certificate or other document as
            in the opinion of the person making the demand is calculated to ensure or
            facilitate the carrying out of a direction under section 8D.
      (b)   A person who does not comply with a demand issued to him under subsection
            (a) shall be liable to imprisonment for a term of two years or to a fine or
            10,000 pounds.


8J.   Discontinuance of discharge of liabilities
      (a)   The administrator may, with the approval of the Governor, direct that within a
            period not exceeding ten days from the date of issue of a direction under
            section 8D(a)(2) the banking corporation shall not discharge its liabilities
            which fall or fell due during or before that period.
      (b)   The Governor may extend the period referred to in subsection (a) by ten
            additional days if he has given notice under section 8N of his intention to
            cancel the license of the banking corporation and the period during which its
            directors and managers may state their case has not yet passed or the Court has
            not yet made a winding-up order or receivership order in respect of the
            banking corporation.
      (c)   The administrator shall bring to the notice of the public any direction issued
            under subsection (a) or (b) as soon as possible after its issue.



                                    Unofficial Translation
Supervisor of Banks:     Banking Legislation (3/10)
                         Banking Ordinance                                    page   103 -13

      (d)   The banking corporation, the administrator or the Governor shall bear no
            responsibility for the issue of a direction under subsection (a) or for the non-
            discharge of a liability by virtue of such a direction.


8K. Power to guarantee
      (a)   The Governor may, with the approval of the Government, notify in Reshumot
            that the Bank of Israel, or another banking corporation which has agreed thereto
            and which the Governor has empowered in that behalf, shall guarantee -
            (1)    deposits made with a banking corporation in respect of which a
                   direction has been issued under section 8D, whether to the full extent of
                   the amount of those deposits or up to a specific amount per deposit in
                   prescribed classes of deposits;
            (2)    other classes of liabilities of a banking corporation as referred to in
                   paragraph (1), wholly or in part, provided that -
                   (a)   he considers that the public interest so requires;
                   (b)   a guarantee under this section for the whole of the liabilities of a
                         banking corporation shall not be given unless in the opinion of the
                         Governor there is a reasonable prospect that such a guarantee will
                         enable the bank to continue the orderly conduct of business.
      (b)   A guarantee under subsection (a) may be for an unlimited time, subject to
            conditions or unconditional, as may be specified in the notice.
      (c)   When a notice as aforesaid has been published, the guarantee shall be valid in
            accordance with the contents of the notice even if the debtor banking
            corporation has not consented to the giving of the guarantee, and the guarantor
            banking corporation may at any time recover from the debtor banking
            corporation any amount paid under the guarantee.
      (d)   The debtor banking corporation may, notwithstanding any stipulation to the
            contrary, bind itself vis-a-vis the guarantor banking corporation in respect of a
            guarantee given under subsection (a) and of its terms.
      (e)   Where the Governor, with the approval of the Government, sees fit to cancel a
            guarantee given under subsection (a), he shall give notice of the cancellation



                                     Unofficial Translation
Supervisor of Banks:    Banking Legislation (3/10)
                        Banking Ordinance                                   page   103 -14

            and of the date thereof, which shall not be less than ninety days from the date
            of publication of the notice, in Reshumot and at least two daily newspapers,
            and from that date onwards, no person shall be entitled to claim from the
            guarantor banking corporation the discharge of a liability: Provided that where
            a person is entitled to have a liability of the debtor banking corporation
            discharged to him at a date later than the date of cancellation and that liability
            existed at the time the guarantee was in force, he shall be entitled to recover
            from the guarantor banking corporation until the expiration of thirty days from
            the day prescribed for the discharge of the obligation, and if the guarantor
            banking corporation pays, the provisions of subsection (c) shall apply.
      (f)   The Governor shall not cancel a guarantee given by another banking
            corporation save with the consent of that banking corporation.
      (g)   A guarantee under this section shall be treated as a guarantee given under the
            Guarantee Law, 5727-1967.


8L. Bar to winding-up and appointment of receiver
      (a)   Where an administrator has issued a direction under section 8J, a Court shall
            not make a winding-up order or receivership order for the banking corporation
            in respect of which the direction was issued, and the banking corporation or
            any meeting of shareholders thereof or of the holders of any other rights
            therein shall not pass a resolution for the voluntary winding-up thereof; and no
            receiver shall be appointed therefore, whether on behalf of the holders of
            debentures or of any other person, and no attachment shall be imposed on the
            property thereof or on assets thereof in the hands of any other person, and no
            other execution proceedings shall be commenced or continued against it, so
            long as the direction under section 8J is in force, save upon an application on
            behalf of the Attorney General or with his written consent.
      (b)   Where an administrator has been appointed under section 8D(a)(2), the Court
            shall not, so long as the appointment of the administrator is in force, make a
            winding-up order or receivership order for the banking corporation upon the
            application of one of its shareholders, and the banking corporation or any



                                    Unofficial Translation
Supervisor of Banks:    Banking Legislation (3/10)
                        Banking Ordinance                                  page   103 -15

            meeting of its shareholders or of the holders of other rights therein shall not
            pass a resolution for the voluntary winding-up thereof.


8M. Restriction as to resolutions of shareholders' meeting
      A resolution of a meeting of the shareholders of the banking corporation, or of the
      holders of other rights therein, which is repugnant to the provisions of or to any act
      done or direction issued under section 8C to 8K shall be of no effect.


8N. repealed


8O. Declaration of discontinuance of services
      (a)   Where the Supervisor is satisfied that a particular banking corporation is
            unable to conduct its business properly owing to a strike at that or some other
            banking corporation, he may declare that that banking corporation has
            discontinued its services (the discontinuance hereinafter referred to as
            "discontinuance") and may prescribe that the declaration shall apply to all or
            part of the banking corporation's services.
      (b)   The declaration shall be published in Reshumot and in at least four daily
            newspapers appearing in Israel.
      (c)   The declaration may determine the date at which the banking corporation
            discontinued its services, and it may determine different dates for different
            services.


8P.   Revocation
      In revoking the declaration, different revocation dates may be prescribed for
      different services.


8Q. Deferment of dates
      (a)   Where a banking corporation-in-discontinuance and any person have agreed
            between them that a particular act shall or may be done, or a particular
            liability discharged by the banking corporation or that person, at a date



                                    Unofficial Translation
Supervisor of Banks:     Banking Legislation (3/10)
                         Banking Ordinance                                   page   103 -16

            between the making and the revocation of the declaration, the date shall be
            deferred until the expiration of three business days from the revocation of the
            declaration, provided that the act or the discharge of the liability comes within
            the scope of the services to which the declaration applies.
      (b)   Deferment under this section shall also apply to a date prescribed under law
            by a judgment or other decision of a court or other judicial or a quasi-judicial
            authority.


8R. Interest and linkage differentials
      (a)   Where a liability the date of discharge of which is deferred under section 8Q
            bore interest prior to discontinuance, it shall continue to bear interest until the
            new date of discharge at the rate which applied in the period prior to
            discontinuance.
      (b)   Where a liability the date of discharge of which is deferred under section 8Q
            is value-linked, the duty of paying linkage differentials as agreed upon shall
            continue during the period of discontinuance. For this purpose, "value-linked
            liability" means a liability the whole or part of the amount of which is linked
            to the rate of exchange of Israeli currency, the cost-of-living index or the price
            of anything else.
      (c)   The Governor of the Bank of Israel may direct that in a period of
            discontinuance a person may or shall pay to the Bank of Israel any amount he
            owes to the banking corporation-in-discontinuance, and the payment shall be
            deemed to be payment to the banking corporation-in-discontinuance. A
            direction under this subsection shall be brought to the knowledge of the
            debtors in such manner as the Governor may direct.


8S.   Compliance with direction to pay
      Where prior to the date of discontinuance a person issued a check drawn on the
      banking corporation or any other written direction to make a payment from his
      account with the banking corporation, and compliance with the direction is within
      the scope of the services to which the declaration applies, the amount involved shall



                                     Unofficial Translation
Supervisor of Banks:     Banking Legislation (3/10)
                         Banking Ordinance                                  page   103 -17

      be deemed to have been paid in time if the banking corporation pays it within three
      business days after revocation of the declaration.


8T. Limitation of responsibility of bank
      A banking corporation-in-discontinuance shall bear no criminal or civil
      responsibility for any act or omission resulting from the discontinuance of the
      services to which the declaration applies.


8U. Defense to criminal charge
      (a)   A person who draws a check on a banking corporation-in-discontinuance shall
            bear no criminal responsibility under section 14 of the Penal Law Amendment
            (Deceit, Blackmail and Extortion) Law, 5723-1963 (hereinafter referred to as
            "the Penal Law") if the non-obligation of the banking corporation to pay the
            check on the date specified thereon as the date of drawing is due solely to
            deferment under section 8Q.
      (b)   For the purposes of section 15(c) of the Penal Law, where a check is drawn on
            a banking corporation-in-discontinuance, the sixty days shall not include the
            period between the making and the revocation of the declaration if payment of
            the check is within the scope of the services to which the declaration applies.


9.    Returns to be submitted to the Supervisor of Banks
      (1)   Every banking corporation shall furnish to the Supervisor of Banks:
            (a)    not later than twenty-one days after the last day of each month a
                   statement in the form set out in the first schedule to this Ordinance
                   showing the assets and liabilities of the banking corporation at the close
                   of business on the last day of the preceding month.
            (b)    not later than twenty-eight days after the last day of March and
                   September a statement in the form set out in the second schedule of this
                   Ordinance, giving an analysis of advances current and bills discounted
                   as at the 31st March and the 30th September, respectively.




                                     Unofficial Translation
Supervisor of Banks:      Banking Legislation (3/10)
                          Banking Ordinance                                 page   103 -18

            Provided that in the case of a foreign bank, the statements to which reference
            is made in paragraphs (a) and (b) hereof, shall comprise data only with respect
            to offices and/or branches of the foreign bank which are situated in Israel;
            Provided that the Governor may by order from time to time vary the form of
            the first and second schedules, and the dates as at which the information
            required in the second schedule shall be compiled and forwarded to the
            Supervisor of Banks.
      (2)   Any banking corporation failing to comply with the requirements set out in
            paragraphs (a) and (b) of subsection (1) hereof, shall be liable to a fine not
            exceeding five hundred shekel for every day during which the default
            continues.


10.   Exhibition and publication of balance sheet
      (1)   A banking corporation shall publish its audited annual financial report or an
            abstract thereof at such time and in such form and extent as the Supervisor
            may direct.
      (2)   The Supervisor of Banks may, once a year, require any banking corporation,
            in writing, to draw up, exhibit and publish, within the time fixed in the
            requirement, a report of its assets and liabilities to the date fixed in the
            requirement; the report shall include a comparative balance sheet of the assets
            and liabilities of the banking corporation at the said date and of the assets and
            liabilities set out in the last audited balance sheet of the banking corporation
            and shall be drawn up in the same manner as such last audited balance sheet.
      (3)   Any banking corporation to which this section shall apply which fails to
            comply with the requirements thereof shall be liable on conviction to a fine
            not exceeding one hundred pounds.


11.   Individuals not eligible to take part in management of banking corporations
      (1)   Without prejudice to anything contained in section 73 of the Companies
            Ordinance, no person -




                                      Unofficial Translation
Supervisor of Banks:    Banking Legislation (3/10)
                        Banking Ordinance                                  page   103 -19

            (a)    who has been a director of, or directly or indirectly concerned in the
                   management of, a banking corporation which has been wound up by a
                   Court, or
            (b)    who has been sentenced by a Court of Law to a term of imprisonment
                   for an offence involving moral turpitude and has not received a full
                   pardon for the offence for which he was sentenced shall, without the
                   express authorization of the Governor, act or continue to act as a
                   director of, or be directly or indirectly concerned in the management of,
                   any banking corporation.
      (2)   Any person acting in contravention of subsection (1) of this section shall be
            liable on conviction to imprisonment for a term not exceeding two years or to
            a fine not exceeding twenty five thousand shekel, or to both such penalties.


11A. Approval of appointment of officer
      (a)   No person shall serve as an officer in a banking corporation except where
            notice is given to the Supervisor, at least sixty days before the beginning of
            the term of service, and where the Supervisor during said period has not
            announced his objection to said appointment or has announced his consent
            thereto.
      (b)   The Supervisor shall hand down his decision to oppose an appointment after
            he gives the candidate an opportunity to voice his arguments and after
            consulting with the Licenses Committee, and for this purpose he will take into
            account the suitability of the candidate for the proposed post, including his
            business experience, honesty, integrity, and relations of any kind whatsoever
            with the banking corporation or with an officer therein.
      (c)   At a banking corporation in which none of the controlling principals requires
            a license under the provisions of Section 34(b) of the Banking (Licensing)
            Law, 5741-1981, the Supervisor shall take into account, in addition to the
            considerations listed in Subsection (b), the other pursuits and businesses of the
            candidate, the essence of his relationship with the banking corporation, and
            the array of balances and forces on the board of directors of the banking



                                    Unofficial Translation
Supervisor of Banks:     Banking Legislation (3/10)
                         Banking Ordinance                                    page   103 -20

            corporation, including the number of candidates, as stated in Subsection(b)(2),
            who wish to be appointed.
      (d)   The provision in Subsection (c) shall apply to candidates for whom one of the
            following is present:
            (1)    He holds more than 1 percent of a certain type of means of control in the
                   banking corporation or regularly collaborates with a person who holds
                   means of control as aforesaid;
            (2)    The candidate, his spouse, or an officer in a corporation controlled by
                   one of them, is associated with a person who holds more than 1 percent
                   of a certain type of means of control in the banking corporation.
      (e)   If an officer is appointed and after said appointment additional or new details
            come to light in regard to the considerations stated in Subsections (b) and (c),
            as the case may be, the Supervisor may, after giving him an opportunity to
            voice his arguments and after consulting with the Licenses Committee, may
            order his term of service terminated due to said additional or new details.
      (f)   If the Supervisor announces his opposition to an appointment as stated in
            Subsection (a) or orders the termination of service as stated in Subsection (e),
            the person whose candidacy has been disqualified, or the officer whose term
            of service has been terminated, as the case may be, may appeal the
            Supervisor’s decision to the Governor.
      (g)   The provisions of this Section shall also apply to the term of service of a
            director of a banking corporation as the chair of its board of directors, mutatis
            mutandis.
      (h)   (1)    For the purpose of Subsections (a), (e), and (f), an “officer” is a director,
                   a general manager, an internal author, or a person whom the Supervisor
                   determines; The Supervisor shall determine, for each banking
                   corporation, which of its officers require the approval of their
                   appointment, provided that the Supervisor not include more than seven
                   officers in a banking corporation in which no controlling principals
                   require permits under the provisions of Section 34(b) of the Banking




                                     Unofficial Translation
Supervisor of Banks:           Banking Legislation (3/10)
                               Banking Ordinance                                  page   103 -21

                         (Licensing) Law, 5741-1981, and no more than four officers in other
                         banking corporations;
             (2)         For the purpose of Subsections (c) and (d)—
                         “Associated” - the existence of working relations, the existence of
                         material business or professional relations, and also service as an
                         officer;
                         “Regular collaboration” - in the sense of this term in the definition of
                         “together with others” in Section 1 of the Banking (Licensing) Law,
                         5741-1981.


11B.    Information from shareholders
       (a)         In General Assemblies of the banking corporation, the names of those
                   attending the assembly, the names of those who cast votes, the share of
                   holdings of voting rights by force of which they voted, and the nature of
                   their votes shall be itemized in the minutes of the General Assembly and in
                   resolutions of the Assembly in the following matters:
                   (1)       amendment to the Memorandum or the Statutes;
                   (2)       the appointment or termination of service of a director;
                   (3)       approval of actions or transactions that entail General Assembly
                             approval under the provisions of Sections 255 and 268–275 of the
                             Companies Law, 5759-1999 (in this ordinance—the Companies
                             Law);
                   (4)       a distribution under Chapter 2 in Part 7 of the Companies Law;
                   (5)       approval of a merger under Section 320 of the Companies Law.
       (b)         The Supervisor may demand that any person who attended or voted at a
                   given General Assembly of a banking corporation provide details about his
                   identity, the identity of a person who acts as his agent or trustee, and, if it is
                   a corporation, about its controlling principals.
       (c)         A banking corporation in which none of the controlling principals requires
                   a permit under the provisions of Section 34(b) of the Banking (Licensing)
                   Law, 5741-1981, shall send the Supervisor the minutes of the General



                                           Unofficial Translation
Supervisor of Banks:      Banking Legislation (3/10)
                          Banking Ordinance                                  page   103 -22

                 Assembly and any resolution concerning the appointment or termination of
                 service of a director, within ten days of the date of the Assembly.


11C. Method of appointing directors
       In a banking corporation as stated in Section 11B(c), the following provisions shall
       apply to the appointment of directors, notwithstanding any provisions of the
       contrary in its statutes:
       (1)   Voting in a General Assembly for the appointment of directors shall be
             conducted for each candidate separately;
       (2)   The board of directors may not nominate or appoint directors for the banking
             corporation;
       (3)   An officer, as this term is defined in the Companies Law, shall not take action
             to arrange or thwart the appointment of a certain director, except for
             proposing his own candidacy for service as a director.;


12.    Annual fees
       (1)   A banking corporation shall in every year pay to the Treasury a license fee
             and, in respect of each branch, an additional fee; the Minister of Finance shall
             by order, with the approval of the Finance Committee of the Knesset,
             prescribe the rates and times of payment of the fees, and it shall be lawful to
             prescribe reduced rates of fees for a foreign bank having regard to the extent
             of its activity in Israel.
       (2)   The Minister of Finance may enact by regulations provisions as to reports
             which a banking corporation shall submit for the purpose of calculating the
             fees and as to the procedure for a payment thereof.
       (3)   A banking corporation which does not pay a fee in time shall be liable to a
             fine of five hundred shekel in respect of every day of delay.


12A.         repealed




                                      Unofficial Translation
Supervisor of Banks:     Banking Legislation (3/10)
                         Banking Ordinance                                   page   103 -23

13.   Early repayment of loan
      (a)   A person who receives a loan from a banking corporation for the purpose of
            acquiring a residence or secured by mortgaging a residence may,
            notwithstanding any agreement to the contrary, repay it before the date fixed
            for its repayment on the following conditions:
            (a)    the amount of the early repayment shall not be less than ten per cent of
                   the original amount of the loan or ten per cent of the balance of the loan
                   together with interest and linkage differentials accumulated and not paid
                   by the date of actual payment, whichever is more;
            (b)    the banking corporation may make the early repayment conditional upon
                   the payment of a commission on such terms and at such rate as the
                   Governor may prescribe after consultation with the Committee and with
                   the approval of the Minister of Finance and the Finance Committee of
                   the Knesset.
      (b)   the provisions of subsection (a) shall apply also to a loan as referred to therein
            in respect of which the banking corporation has assigned its rights against the
            borrower to a person other than a banking corporation.
      (c)   A banking corporation shall not assign a loan of the kind referred to in
            subsection (a) unless arrangements have been made with the assignor banking
            corporation, or with another body corporate, ensuring the service to the
            customers is not substantially impaired.


13A. Joint account and joint safe-deposit box
      (a)   Where a banking corporation receives moneys or securities or other negotiable
            instruments in a joint account in respect of which it has been stipulated with
            the banking corporation that upon the death of one of the holders thereof the
            surviving holder or a person legally acting by his authority shall be entitled to
            carry out operations in respect of the said account, the stipulation shall, for the
            purposes of relations between the banking corporation and the holders of the
            account, have effect also after such death.




                                     Unofficial Translation
Supervisor of Banks:    Banking Legislation (3/10)
                        Banking Ordinance                                 page   103 -24

      (b)   The provisions of subsection (a) shall apply, mutatis mutandis, and without
            prejudice to the provisions of section 13(b) of the Estate Duty Law, 5709-
            1949, to a safe-deposit box let by a banking corporation to two or more
            persons with the said stipulation.


13B. Dormant deposits
      (a)   A banking corporation shall try to establish contact with the owner of a
            dormant deposit close to the date of maturity thereof. In the case of a demand
            deposit, the day on which it became a dormant deposit shall be regarded as the
            date of maturity.
      (b)   This section shall apply also to moneys received in respect of securities held
            in custody by the banking corporation; the duty of trying to establish contact
            with the owner of the deposit shall accrue close to the date of receipt of the
            moneys.
      (c)   Where a banking corporation does not succeed in establishing contact with the
            owner of the deposit within two months, it shall invest the moneys in his favor
            in the manner prescribed by the Governor with the approval of the Minister of
            Finance Committee of the Knesset.
      (d)   This section shall not apply to a dormant deposit not exceeding 100 Shekel or
            such other amount as the Governor may prescribe with the approval of the
            Minister of Finance and the Finance Committee of the Knesset. But a banking
            corporation may act in accordance with the provisions of this section even in
            respect of such a deposit.


14.   Issue of bank notes
      A banking corporation shall not issue any bill payable to bearer on demand.


14A. Ratio between items
      (a)   If the Governor is of the opinion that it is necessary to do so in order to
            maintain the stability of banking corporations, he may, after consultation with
            the Committee, prescribe by order ratios which a banking corporation shall -



                                    Unofficial Translation
Supervisor of Banks:     Banking Legislation (3/10)
                         Banking Ordinance                                    page   103 -25

            from the date prescribed in the order - maintain between items, or classes of
            items, included in paragraphs (1) to (5) and designated in the order and items,
            or classes of items, included in paragraphs (6) to (9) and designated in the
            order, the items being -
            (1)    guarantees given by the banking corporation as security for credit;
            (2)    guarantees given by the banking corporation otherwise than as security
                   for credits;
            (3)    liabilities assumed by the banking corporation in respect of documentary
                   credits;
            (4)    liabilities assumed by the banking corporation in respect of acceptances,
                   endorsements and rediscount;
            (5)    contingent liabilities other than such as are set out in paragraphs (1) to (4);
            (6)    deposits made with the banking corporation;
            (7)    loans received by the banking corporation;
            (8)    paid-up capital, capital reserves and revenue reserves, including the
                   balance of undistributed net profits;
            (9)    assets, including debts due to the banking corporation.
      (b)   A banking corporation which contravenes any provision of an order under
            subsection (a) shall pay to the Bank of Israel, in respect of each day that the
            contravention lasts, an amount equal to a certain percentage of the amount by
            which the guarantees or liabilities exceed the proportion prescribed by the
            order; the percentage shall be prescribed by the Governor by order after
            consultation with the Committee and shall not exceed 10 percent per annum.
      (c)   Where a banking corporation contravenes any provision of any order under
            subsection (a), the Governor may direct that until further notice such bank
            shall no longer assume liabilities, or give guarantees, as referred to in
            paragraphs (1) to (5) of subsection (a) or grant credits or make investments or
            distribute profits; provided that the Governor shall do so only after a warning
            has been given; a direction as aforesaid may apply to all or any of the said acts
            and may be conditional.




                                     Unofficial Translation
Supervisor of Banks:      Banking Legislation (3/10)
                          Banking Ordinance                                page   103 -26

      (d)   A banking corporation which contravenes a direction issued under subsection
            (c) shall be liable to a fine of 10,000 pounds, and every manager or
            responsible official who knowingly did the act which constitutes the
            contravention shall be liable to imprisonment for a term of two years.


14B. Offences committed by directors or managers of a banking corporation
      (a)   A director or manager of a banking corporation who knowingly transacts
            business of the banking corporation in a manner impairing its ability to meet
            its obligations shall be liable to imprisonment for a term of four years or to a
            fine of 100,000 pounds.
      (b)   A director or manager of a banking corporation who knowingly transacts
            business of the banking corporation in a manner impairing the proper conduct
            of its business shall be liable to imprisonment for a term of one year or to a
            fine of 20,000 pounds.


14C. Offences in respect of entries in books
      A banking corporation which contravenes the provisions of the Companies
      Ordinance relating to the keeping of books and registers by a company shall be
      liable to a fine of 100,000 pounds, and every person empowered to sign who
      actually takes part in the commission of the offence and every person who is at the
      time a director or manager or the chief or sole accountant of the banking corporation
      shall be liable to imprisonment for a term of two years or to a fine of 25,000 pounds
      unless he proves:
      (1)   that the offence was committed without his knowledge and that he was not by
            virtue of his office required to know of its commission; or
      (2)   that he took all reasonable steps to ensure compliance with the said
            provisions.


14D. Guarantee of bill-broking
      (a)   For the purposes of this section -
            "bill" means a bill of exchange or promissory note within the meaning of the
            Bills of Exchange Ordinance;


                                      Unofficial Translation
Supervisor of Banks:     Banking Legislation (3/10)
                         Banking Ordinance                                  page   103 -27

            "subsidiary" has the same meaning as in the Securities Law, 5728- 1968, but
            does not include a subsidiary which is a banking corporation.
      (b)   A banking corporation which brokers a bill between a seller and a purchaser
            or sells a bill made by another person shall be a guarantor vis-a-vis the
            purchaser for the payment of the bill until the expiration of twelve months
            from the date of payment thereof, unless the bill is transferred from the
            purchaser otherwise than by operation of law; this provision shall be in
            addition to, and not in derogation of, any duty under any other law, and a
            guarantee under this section shall always be regarded as a guarantee given as
            security for a credit, as dealt with by section 14A(a)(1).
      (c)   Where a banking corporation has paid a bill under the provisions of
            subsection (b), then -
            (1)    if the banking corporation was liable for payment by reason of its having
                   brokered the bill between a seller and a purchaser, it shall be entitled to
                   resort to and recover from the seller and all the parties liable under the
                   bill to the seller;
            (2)    if the banking corporation was liable for payment by reason of its having
                   sold a bill held by it, it shall have all the rights it had against all the
                   parties to the bill before selling it.
      (d)   In a claim against a banking corporation under subsection (b), the banking
            corporation shall be debarred from pleading that it did not broker or did not
            sell the bill if it is proved -
            (1)    that the moneys used for the purchase or the bill were delivered by the
                   purchaser to the banking corporation or a subsidiary in order that it
                   might affect the purchase or some other investment; or
            (2)    that the moneys referred to in paragraph (1) were delivered by the
                   purchaser at the offices of the banking corporation to an official of the
                   banking corporation or to another person under circumstances justifying
                   the assumption that he was acting as an official of the banking
                   corporation within the scope of his functions at the banking corporation.




                                         Unofficial Translation
Supervisor of Banks:    Banking Legislation (3/10)
                        Banking Ordinance                                       page   103 -28

      (e)   The provisions of subsections (d) and (g) shall not apply if the money was
            delivered outside Israel to a subsidiary conducting its business abroad, for the
            purpose of purchasing a bill the place of payment of which was not in Israel.
      (f)   The provisions of this section shall not apply to a bill of the State or the
            Jewish Agency or a bill made by a national institution designated by the
            Governor with the approval of the Finance Committee of the Knesset.
      (g)   This section shall apply notwithstanding any agreement providing otherwise,
            unless the agreement was made in writing and the purchaser of the bill is a
            banking corporation or some other purchaser approved by the Supervisor for
            this purpose either generally or in respect of a particular case.


14E. Internal Auditor
      (a)   The board of directors of a banking corporation shall appoint an internal
            auditor of the corporation as recommended by the board of director's audit
            committee (hereinafter referred to as "the audit committee").
      (b)   The internal auditor shall examine, among other things, the proper functioning
            of the banking corporation as regards its adherence to the law, preservation of
            integrity, economy, efficiency, and maintenance of proper banking practice; he
            will also examine adherence to the directives of the Supervisor of Banks.
      (c)   Subject to the other provisions of this section and the necessary changes,
            where appropriate, the internal auditor shall be governed by the following
            sections of the Internal Audit Law, 5752-1992: 3, except for subsection (a)(2),
            7 through 10, 14(b) and (c), and 24(c).
      (d)   The internal auditor shall operate according to accepted professional standards
            and under the guidance of the audit committee, and shall report his findings to
            the chairman of the board of directors, the director-general, and the chairman
            of the audit committee.
      (e)   The appointment of the internal auditor, and the termination or suspension of
            his employment, shall be undertaken by the board of directors or at the
            recommendation of the audit committee.




                                    Unofficial Translation
Supervisor of Banks:    Banking Legislation (3/10)
                        Banking Ordinance                                    page   103 -29

      (f)   The Supervisor of Banks may, after consulting the advisory committee,
            determine rules for the implementation of the provisions of this section.


14F. through 14G. repealed


14H. Financial sanction
      If the Supervisor has reasonable grounds to assume that a banking corporation has
      committed one of the following, he may impose on it a financial sanction in the sum
      of one million New Israel Shekel:
      (1)     violation of a Proper Conduct of Banking Business Directive;
      (2)     violation of a directive that the Governor established by order under Section
              13a(b);
      (3)     violation of a directive that the Governor established by order under Section
              13b(c).


14I. Reduced financial sanction
     (a)      The Supervisor may not impose a financial sanction that is smaller than the
              financial sanction established in this Chapter, except under the provision of
              Subsection (b).
      (b)     The Governor, in consultation with the Minister of Justice, may determine
              types of events, circumstances, and considerations, due to which the
              Supervisor may impose a financial sanction smaller than that established in
              Subsection 14H, and at maximum rates of reduction that he shall determine.


14J. Protracted violation and recurrent violation
      (a)     In the event of a protracted violation, the financial sanction set forth for the
              violation at issue shall be increased by a financial sanction at the rate of one-
              fiftieth thereof for each day on which the violation continues.
      (b)     In the event of a recurrent violation, the financial sanction that may be
              imposed for said violation if it were a first violation shall be increased by a
              sum equal to one-half of said financial sanction; for this purpose, a



                                    Unofficial Translation
Supervisor of Banks:    Banking Legislation (3/10)
                        Banking Ordinance                                   page   103 -30

              “recurrent violation” is a violation of one of the provisions listed in Section
              14H within two years a previous violation of the same provision, for which a
              financial sanction was imposed on the violator.


14K. Demand for sanction
      A financial sanction shall be paid at the demand of the Supervisor within thirty days
      of the day on which said demand is made. Said demand shall be issued after notice
      is given to the person who became aware of the intent to issue it, after he is given an
      opportunity to express his claims. Said notice shall state that due to a protracted
      violation the violator shall be charged a further financial sanction under the
      provisions of Section 14J(a).


14L. Indexation differentials and interest
      If a financial sanction is not paid on time, it shall be increased for the period of
      arrears by indexation differentials and interest under the Interest and Indexation
      Law, 5721-1961 (in this Law—Indexation and Interest) until payment is made.


14M. Collection
      The financial sanction shall be remitted to the State Treasury and the Tax
      (Collection) Ordinance shall apply to its collection.


14N. Advertising the imposition of a financial sanction
      If a financial sanction under Section 14H is applied, the Supervisor may instruct the
      party liable for payment to inform customers about, or to advertise in a newspaper
      or in any other way that the Supervisor instructs, the fact of the imposition of the
      sanction, the name of the party liable to payment, the essence and circumstances of
      the violation for which the sanction was imposed, and the sum of the sanction.


14O. Appeal
      (a)     A demand for payment of a financial sanction may be appealed in Jerusalem
              Magistrate’s Court within thirty days of the presentation of the demand.



                                    Unofficial Translation
Supervisor of Banks:         Banking Legislation (3/10)
                             Banking Ordinance                                   page   103 -31

      (b)     The filing of an appeal shall not have the effect of delaying the payment of a
              financial sanction unless the Supervisor accedes to this or the court has given
              an order to the contrary.
       (c)    If the appeal is upheld, the financial sanction shall be refunded plus
              indexation differentials and interest from the day it was paid to the day it is
              refunded.


15.   Penalties
      (a)     (1)      Any banking corporation which -
                       (a)    willfully fails to comply with the provisions of this ordinance, or
                       (b)    issues bank notes in Israel or circulates or causes to be circulated
                              in Israel any bank notes issued by it or any other bank notes the
                              issue of which is not authorized by the Governor
                       shall upon the application of the Attorney General made to the
                       Registrar of Companies, be struck off the register of companies.
              (2)      Any person who, being a director or manager of a banking corporation,
                       (a)    fails to take all reasonable steps to secure compliance by the
                              banking corporation with the requirements of this Ordinance, or
                       (b)    fails to take all reasonable steps to ensure the correctness of any
                              statement submitted under the provisions of this Ordinance,
                       shall in respect of each offence be liable on conviction to
                       imprisonment for a term not exceeding two years or to a fine not
                       exceeding three hundred pounds or to both such penalties.
      (b)     One who violates any of the provisions in Section 11A, or fails to provide
              information after being asked to do so under the provisions of Section 11B,
              or who acts in contravention of the provisions of Section 11C, is liable to
              one year of imprisonment or a fine at twice the sum established in Section
              61(a)(3) of the Penal Law.;

15A. Secrecy
      (a)    A person shall not disclose any information delivered to him or show any
             document submitted to him under this Ordinance or under the Banking



                                         Unofficial Translation
Supervisor of Banks:     Banking Legislation (3/10)
                         Banking Ordinance                                  page   103 -32

            (Licensing) Law, 5741-1981: Provided that it shall be lawful to disclose
            information if the Governor deems it necessary so to do for the purposes of a
            criminal charge or if the information or document was received from a
            banking corporation and that banking corporation consents to its disclosure.
      (b)   For the purposes of the disclosure of documents and information received
            under this Ordinance or under the Banking (Licensing) Law, 5741-1981 to the
            Court, the Bank of Israel and the Supervisor and his employees shall have the
            status of the State and its employees.
      (c)   A person who contravenes this section or the provision of section 6(5) shall be
            liable to imprisonment for a term of one year or to a fine or 10,000 pounds.


15A1. Forwarding of information to a supervisory authority in a foreign country
      (a)   Notwithstanding the provisions of Section 15A, the Supervisor may forward
            information in his possession to a competent authority in a foreign country
            that serves the function of supervising a branch of a banking corporation in
            said country, a banking institution incorporated in said country that is
            controlled by a banking corporation, or a foreign corporation that is a foreign
            bank that operates in Israel or that controls a banking corporation.
      (b)   The Supervisor shall not forward information under the provisions of
            Subsection (a) unless he is aware that the following two circumstances are
            present:
            (1)    The information is needed for the discharge of the competent authority’s
                   duties in supervising the stability of the branch, the banking institution,
                   or the foreign corporation, as stated in Subsection (a), as the case may
                   be;
            (2)    The supervisory authority confirms that a confidentiality requirement
                   similar to the provisions of Section 15A applies to it or has undertaken
                   not to forward the information to any other party.
      (c)   The Supervisor shall not forward information as aforesaid if it is determined
            that [said information] is liable to impair a pending investigation or the State
            security.



                                     Unofficial Translation
Supervisor of Banks:    Banking Legislation (3/10)
                        Banking Ordinance                                  page   103 -33


15A2. Forwarding of information to the supervisory authority in Israel
       (a) Notwithstanding the provisions in Section 15A, the Supervisor may divulge
            information or present a document to an employee of the Bank of Israel for
            the discharge of his duties, to the Securities Authority within the meaning of
            this term in Section 2 of the Securities Law, 5728-1968, or to the
            Commissioner of the Capital Market, Insurance, and Savings at the Ministry
            of Finance (in this Section—the Recipient Entity), provided the Supervisor is
            aware that the information or document is required for the discharge of the
            Recipient Entity’s functions.
       (b) No person shall divulge information or present a document provided to him
            under the provisions of this Section. Violators of the provision in this
            Subsection are liable to imprisonment for one year or a fine as stated in
            Section 15A(c).


15B. Application of provisions to cooperative societies
      In the case of a cooperative society which is a banking corporation, the provisions of
      this Ordinance shall apply mutatis mutandis, and in particular -
      (1)   any reference to a board of directors shall be deemed to be a reference to a
            committee, within the meaning of the Cooperative Societies Ordinance;
      (2)   any reference to a director, manager, person having power to sign or
            accountant shall be deemed to be a reference to an officer, within the meaning
            of the Cooperative Societies Ordinance;
      (3)   repealed


15C. Auxiliary corporation
      For the purposes of Sections 5, 8A, 8C, 8O to 8U, 13 and 13A, a body corporate as
      said in paragraphs 11(a)(3a) to (3c) and 11(b) of the Banking (Licensing) Law,
      5741-1981, shall be treated as a banking corporation.




                                    Unofficial Translation
Supervisor of Banks:         Banking Legislation (3/10)
                             Banking Ordinance                                                 page   103 -34

15C1. Upholding of the Law
      The provisions of Sections 8D1, 8D2, and 8E1 are meant to add to the provisions of
      any law, including procedures and directives of the Supervisor.


15D. Implementation
      The Minister of Finance is charged with the implementation of this Ordinance.


16.   Repeal
      The Banking Ordinance, the Banking (Amendment and Further Provisions)
      Ordinance, 1936, and the Banking (Amendment and Further Provisions) Ordinance,
      1937, are hereby repealed.




HAROLD MACMICHAEL
High Commissioner


8th October, 1941



*
      Published in the Palestine Gazette No. 1134 of 1941, Suppl. 1, p. 85 (English edition); amended in: Palestine
      Gazette No. 1359 of 1944, Suppl 1, p. 89 (English edition); Iton Rishmi of 5709, Suppl. A, p. 90 - LSI vol. II,
      p. 65; Sefer Ha-Chukkim of 5714, p. 88 - LSI vol. VIII, p. 73; Sefer Ha-Chukkim of 5716, p. 2 - LSI vol. X, p.
      3; Sefer Ha-Chukkim of 5721, pp. 74, 114 and 172 - LSI vol. XV, pp. 71, 120 and 188; Sefer Ha-Chukkim of
      5725, p. 50 - LSI vol. XIX, p. 46; Sefer Ha-Chukkim of 5726, p. 14 - LSI vol. XX, p. 11; Sefer Ha-Chukkim of
      5731, p. 124 - LSI vol. XXV, p. 119; Sefer Ha-Chukkim of 5736, pp. 210 and 248 - LSI vol. XXX, pp. 208
      and 242; Sefer Ha-Chukkim of 5739, pp. 47 and 72 - LSI vol. XXXIII, pp. 51 and 84; Sefer Ha-Chukkim of
      5741, pp. 170 and 241 - LST vol. XXXV, pp. 195 and 289; Sefer Ha-Chukkim of 5750, p. 119; Sefer Ha-
      Chukkim of 5752, p. 203; Sefer Ha-Chukkim of 5754, p. 154; Sefer Ha-Chukkim of 5755, p. 429; Sefer Ha-
      Chukkim of 5756, p. 324, Sefer Ha-Chukkim of 5764, p. 390 and 508 , Sefer Ha-Chukkim of 5765, p. 830,
      Sefer Ha-Chukkim of 5768 p. 189 and 684, Sefer Ha-Chukkim of 5770 p. 474.




                                           Unofficial Translation

								
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