THE NATIONAL BANK OF DENMARK ACT

(ACT No. 116-APRIL 7th 1936)

WE CHRISTIAN THE TENTH, by the Grace of God, King of Denmark and Iceland, the Wends and Goths. Duke of Slesvic, Holstein, Stormarn, Dvtmarschen, Lauenberg and Oldenburg do hereby proclaim: The Rigsdag have enacted and We by Our Assent confirmed the following Act:

OBJECTS OF THE BANK.

Section I.

Danmarks National bank (The National Bank of Denmark) which, at the coming into force of this ,act, confer Section 33, takes over the National banken i Kjobenhavn (The National Bank in Copenhagen) shall as the Central Bank of this country have the object in conformity with this Act and the regulations given under this Act to maintain a safe and secure currency system in this country, and to facilitate and regulate the traffic in money and the extension of credit.

GENERAL, CAPITAL FUND, DOMICILE.

Section 2.

The General Capital Fund of the Bank shall be Kroner 50 millions.

The Head Office and Domicile of the Bank shall be in Copenhagen.

MANAGEMENT.

Section 3

The management of the Bank shall be committed to Board of Directors, a Committee of Directors and a Board of Governors.

The members of the Board of Directors, the Committee of Directors and the Board of Governors shall be Danish subjects with domicile in Denmark, besides they shall be of age in possession of the civil rights and not be deprived of the right to dispose of their estate.

Section 4

The Board of Directors shall consist of 25 members, viz.:

a) 8 members with a seat in the ' Rigsdag'. These are to be elected according to the rules of Section 45 of the Constitution. In case one of these members resigns his seat in the " Rigsdag " a new election shall be held for the remaining term of office of the resigning member. The resigning member keeps his seat in the Board of Directors until a successor has been elected.

b) 2 members of which one shall be an economist the other a lawyer. These members, who must not be members of the Rigsdag , shall be appointed by the Minister of Trade, Industry and Shipping.

c) 15 members with a thorough knowledge of trade. These members, who must not be members of the Rigsdag, shall be elected by the entire Board of Directors, so that 3 members retire every year. Due regard shall he paid at the election to establish a comprehensive representation of trade, also comprising the workers occupied in trade, and to secure a representation of the geographical divisions of the country.

The members mentioned in a-c shall be elected or appointed for 5 years. In case a member retires before the expiration of his term of office, a new member shall be elected for the rest of the term.

The Board of Directors shall elect for one year at a time a chairman and a deputy-chairman.

Before amendments of the provisions governing the Bank be made, the Board of Directors shall have an opportunity of giving its opinion.

Section 5

The Committee of Directors shall be composed of the 2 members of the Board of Directors mentioned in Section 4 b together with 5 members elected for 1 year at a time by the Board of Directors from among its members.

The proportional representation system shall be applied in conformity with rules laid down in the By-laws of the Bank, in the case 3 members of the Board of Directors demand it.

The Committee of Directors shall elect for one year at a time a chairman and a deputy-chairman. The election shall be approved of by the Minister of Trade, Industry and Shipping.

Section 6.

The Board of Governors shall consist of 3 members. One of the Governors shall be nominated by the King, and the other Governors appointed by the Board of Directors on the recommendation of the Committee of Directors. The first mentioned Governor shall be chairman of the Board of Governors.

The Governors shall reside in Copenhagen or in places closely connected with Copenhagen. They shall not have a seat in the management of trade organisations or companies nor carry on or take part in the working of private trading activities. The Governors shall be under the obligation to send in their resignation before the expiration of the month in which they complete their 70th year.

THE ROYAL B.~NK-C~.O~IMISSIONF.R. ~ 7The Minister of Trade, Industrv and Shippin~ in lliS capacit~ of Royal Bank-Commissioner shall super~ ise that the Bank fulfils its obligations under this present Act and un~er the ordinances and provisions given pursuant to this present .~ct. The Royal Bank-Commissioner presicles at the meetinrs of the Board of Directors. He shall have admission to the meetings of the Committee of Directors and to be supplied ~ith information concerning the Bank to the extent he might desire. Decisions of particularlv far-reaching character cannot be taken at a mceting of the Conlmittee of Directors when the Royal Bank-Commissioner is not present, unlcss he has been nformed in advance that the case ~rill be dealt with at the meeting. BAN~-NOTF ISSUE. The Bank shall have the sole right to issue notes. The notes issued by the Bank shall be legal tender hetween man and man and for paymcnts and disbursements which take place in public pay-offices. When the Minister of Trade, Industry and Shipping gives his permission notes may be callecl in, and they shall then cease to be legal tender from the date which mi~ht be fixed by ordinance from the ~Iinister of Trade, Industry and Shipping. After the expiration of twelve months from this date the c alled in notes shall lose the ¥ aliditv as against the Bank, pro~ided that the Bank shall have the right to redeem the notes also after this time if circumstances justify it. The denominations, text and form shall be approved of bv the ~Iinister of Trade, Industrv and Shipping. Section 9 The Bank shall be pcrmitted to pUt into circulation the amount of n otes which the traffic in money at anv time ma~ he found to require. Provided that the Bank shall possess f ree .~rom anv encumbrance: a) A gold fund, as set forth in Section Io. b) .~sscts of the naturc laid do~ n in Section I I at a V alue, corresponclin g to not less than that part of the active not ecirculation u hich is not covered by the gold fund. Section IO. The go ld fund shall covcr at least 25 per centum of the total active note circulation. It may consist of: a) Gold, be it in coin or ingots, either in the custody of the Bank o r handed over by the Bank to the Royal Mint to bc coined or melted. C~old, ¥~hich properly secured has bcen dcpos ited abroad or which is in transit through, to or from foreign countries. ~'rovided that such gold shall not count when the Bank's right to dispose thereof is restricted. The gold under this subsection shall not exceed 5 ,' of the total active note circulation. For up to 5 per centum of the note circulation non-interest carrying net-credit-balances on demand with foreign C .entralBanks, approved of in that respect by the Royal Bank -Commissioner, may take the place of gold. lhe value of lcgal tender gold coin shall be determined by the nominal value, the value of other gold coin and of gold in ingots by the contents of fine gold, the l)rice of the gold in Danish currencv being calculated in conformity uith the provisions of the Currency Act. Credit balances in foreign currency shall not be calculated at a higher price than th~t quoted on the Royal E~cchange on the day of settlcment. ~i I I. As the basis for that part of the note circulation which is not covered bv the gold fund may serve gold and net-credithalances on deman~ ~ith foreirn banks, provided thev have not been incluc~ed under Section I 0, bills of exchan~c, Treasurv bills bonds and debentures subject to quotation on the Roval Exchange besides advances for which proper securit~ has been given. Section I2. The Bank shall at the e~piration of everv month report to tlle Roval Bank-Commissioner on the funding of the acti~e note circulation. In case of any deviation from the rulcs go~ ernin~ the funding of the notes of the Bank under Section ~ 9-I I it shall be the dut~ of the Bank to redress the de~,-iation within the expiration of the succeeding month. Section I3Under special circumstances tlle Board of Directors shall, after havin~ obtained the permission of the ~Iinister of Trade, Industry and Shipping, for a period of up to 3 months at a time be allowed to de~iate from the funding rules prescribed. A decision to this effect shall be adopted by at least 2/3 of all the members of the Board of Directors. It shall be the duty of the Bank as soon as possihle to re-establish the normal funding proportion. REDE MPTION OF THE NOTES OF THE BANK etc. Section I4The Ban~; shall be under the obligation to redeem at its Head-Office on demand the notes issued by the Bank at their face value either with legal tender gold coin or wit~. gold-ingots of orclinary fineness and weight, ~hen notes are delivered in items corresponding to the valuc of an ingot. The Bank shall li~;e ~ise be under the obligation to buv at its Head-Office from anv person ~ ho might desire it ingots of fine gold at a price corresponding to the gold price fi~;ed bv the Currenc~ Act ~vith the deduction of 1.~ per centum seigniorage. The above provision can onlv be suspended ~- Act. OTHER FUNCTIONS OF THE B.~N~i. Section I5The functions of the Bank shall especially comprise reception of money on folio- account and current-account, reception of deposits in safe custody, granting of advances and discounting of bills Or exchange besides traffic in gold, foreign currencv and securities. The granti ng of advances shall only take place on satisfac tory securit~ and normally for I-- 3months butnot e~;ceeding 6 months. Renewal of ac~vances mav tal~e pla cc. Further provisions governing the general functions of the Bank sha]l be laid down in the Bv-laws of the Ban~;. Section I6. The Bank shall receive payments and make disbursements for the State. The monthly balance sheet shall give the figures of the credit andjor clebit balances of the State with the Bank. ACCOUNTS AND DISTRIB~TION OF PROFIT. Section I7The financial year of the Bank shall be the calendar year. As soon as possible after the e~piration of the financial vear the books shall be balanced and the accounts for the ~eal expired drawn up. The accounts shall contain a working account and a balance sheet. The accounts shall under careful consideration of existing values and obligations and with the undertaking of necessary writings-off and allocations be rendered as proper and cautious business practice dictates. Securities admitted to public quotation on the Royal Exchange shall not be entered at a higher value than the latest buying rate quoted at the close of the financial year. Securities not admitted to public quotation on the Roval Exchange shall be entered at the supposed value on the day of settlement, but the value shall not exceed the price at which they were acquired. Foreign eurrcncy shall not be entered at a higher value than the rate of exchange quoted at the close of the financial vear. Real e~tate shall not be boo};ed at a higher value than the huying price with addition of costs of improvements and decluctions corresponding to the depreciation through age and use and not exceeding the value assessed for land and building ta~;. The bookcd value of o~her assets shall not excee(l the market v alue. The accounts when approved by the Board of Directors shall be sent to the Minister of Trade, Industry and Shipping together with a report on the work of the Bank during the year e~cpired. When the accounts have been approved by the Royal Bank Commissioner, they shall be published together with the Bank's report for the year expired. Section - I 8. The accounts for the financial year shall he audited by 2 chartered accountants appointed bv the Minister of Trade, lndustry and Shipping for I year at a time. ~ I9. The profit earned bv the Bank shall go to the ~xchequer if it be not allocated to the Reserve Funcl or tc- special ~uarantee funds. Out of the profit of the financial year the F.~ichequer shall prior to other payments receive Kr. I million. Thereafter 2;) per centum of the remainder shall be allocated to the Rescrve Fund if this fund be less than Kr. 25 millions. The rest of the profit shall be paid to the Exchequer under the observation of the following rules: If the rest of the profit does not exceed Kr. 4 millions, one half of the amount shall be paid to the Exchequer and the other half written off the General Capital Fund Certificate. In case the rest of the profit exceeds Kr. 4 millions, Kr. 2 millions shall l~e paid and the remainder written off the General Capital Fund Certificate. When this certificate has been redeemed in full the total rest of the profit goes to the Exchequer unless the Board of Directors with the approval of the Royal Bank-Commissioner decides to allocate a part of the amount to reserves. In case the losses of precedin~ years might have entailed drawing on the General Capital Fund all payments to the Exche quer shall be suspended until the loss of the General Capi tal Fund has bcen recovered. In case the losses of preceding ycars might have reduced the Reserve Fund to less than the amount it constituted when t he Bank commenced business, the payment under subsection 2 of this section sha~l be made, otherwise the ¥~hole profit shall be used to increase the Reserve Fund until it has regained the original size. GENERAL PROVISIONS. Section 20. The Minister of Trade, Industr~v and Shipping may at the request of the Board of Governor s of the Bank supply the Boardwith such information conccrning Banks, Sa~ings-Banks an d the Stock Exchange as is to be had from the Bank Inspectorate, Savings-Banks Inspectorate and the Stoc~i Exchange Inspectorate and which the Bank and the ~Iinister find of interest for the Bank in its capacity as the Central Ban~i of the Country. In the same manner the ~Iinister mav on applic;ltion from the aforesaid Inspectorates and for th eir use asli for such information from the Bank as is of interest for the work of supervi~ion. The Banl; shall be e~empt from paying all direct taxes and rates whate~er. Pro~,-ided that the Bank shall pay taxes upon rcal estate which is not used for its own activity and such levies as have the character of consideration for special contributions. Section 22. The Bank may use ~Instamped paper for its notes and books and for the drafts, bonds and other documents executed in the course of banking. Bonds by which collateral securitv is pledged to the Bank shall be made on unstamped paper Section 23When evidence placed before the Bank shows to the satis faction of the Bank that a receipt for moncy received on deposit or a memorandum of deposit probably has been lost, the Bank shall be entitled by a notification in the l~Statstidende~l, the Government Gazette, to call the bearer to appear within I2 weeks. If nobody appears the Bank may pay the amount of the document to the person who is the rightful creditor according to the books of the Bank. Section 24In case a contract of suretyship has been givcn for the repayment of an advancc granted by the Bank and the borrower ma~ies clefault in payment of principal. instalment or interest , notification hereof shall not l~ter than 6 months after the ma turity of the contribntion mcntioned be sent by registered mail to each of the sureties or to the surety or suretics authorized by the others to recei~e such notification on bchalf of all the sureties. Omission to do so shall have the effeet that the Banl; loses its claim on the sureties to the e~;tent to which the remedy of the sureties as against the borro~ver has heen reduced in ~alue through the omission. Section 25 The Banl; shall be subject to the provisions laid down in the Banlc Act ~o. I22 of the I jth of April I930, section 9, subsection I-~ and 6-9, pro~ ided that the Governors of the Ban ~ and Branch-Managers shall not obtain advances in the Bank or the guarantee of the Bank for advances or be sureties for dcbts to the Bank. Furthermore section 2I of the same Act shall apply correspondingly with regard to this present Act, the regulations gi~ en under this present Act, and the resolutions of the Board of Directors. Section 26. The Board of Directors shall on the recommendation ~f the C~.ommittee of Directors and snbject to confirmation by the ~Iinister of Tracle, Industrv and Shipping draw up the By-laws of the National Bank of Denmark, by which rule s shall bc laid down governing the functions and the management o f the Bank and the salaries and old agc pensions for the Board of Governors and the Staff etc. and the duties of the Auditors. The Bv-laws mav be amended by the Board of Directors subject to confirmation by the ~inister of Trade, Industrv and Shipping. The amendments shall be valid when passed by a simple majority of the whole Board of Directors. AGREEMENT CONCERNING I HE T.~KING O~ ER OF THE NTATIONAL BANK IN COPENHAGF,N. Section 27By agreement between the National Bank in ~openhagen on one side and the ~Iinister of Trade, Industrv and Shippin~ and the Minister of Finance as representatives of the National Bank of Denmark on the other side it may be dccided that all the assets and liabilities, rights and cluties of the old Bank shall pass to the new Bank against a consideration in the form of bonds which are to be redeemed within a certain number of years. The Go- ernment guarantee the interest and redemption of the bonds. The consideration which the shareholders of the old Bank receive in the forrn of bonds shall not as far as any part thereof is concerned be included in the taxable income of the holder in question. At the same time the new Bank commences business the old Bank shall cease to exist. The winding-up proceedings shall be condncted by the National Bank of Denmark. The statutor~ winding-up rules need not be obscrved. The aforesaid bonds shall be issued to bearer. The bonds as well as transfers endorsed thereon besides all other documents made for the purpose of the taking over shall be exempt frorm stamp-duty nor shall an~ fee be paid for the registration at the Courts of Law. THE ABOLITION OF THE ROYAL CHARTF.R etc. Section 28. The Royal Charter of the 4.th day of July I818, confer Act No. I57 of the I2th day of July I907, Act No. 483 of the 30th day of August I919 and Act No. 201 of the 20th day of ~Iay ~933 shall be repealed. The dut~ of the Bank to pay to the Exchequer the profit derived from the exemption to redeem with gold the not cs issued by the Bank shall likewise fall aw av. The statutorv provisions which otherwise apply to the National Bank in Copenhagen shall in future apply to the National Bank of Dcnmark. TRA~SITORIAL PRO~ISIO~\S. Section 29. Th~ General Capital Fund of ~ 2 shall he paid bv the Government in the form of a General Capital Fund (~,ertificate at the coming into force of this present Act. By degreei as funds out of the annual profit bc allocated to the General Capital Fun d corresponding amounts shall be written off the General C.apital Fund Certificate. The pavment of interest on the bo nds mentioned in ~ 2/ shall be made out of the worl;ing accou nt of the Banl; before the profit of the year be asccrtained. Section 3¡ The members of the Board of Directors elected at the meeting of shareholders of the old Bank shall pass over to the Board of Directors of the new Bank ancl take over the tasks laid upon the mcmbers mentioned in ~ 4 c. They shall remain on the Board of Directors until their term of office expires under the rules hitherto in force. At the new elections which the Board of Directors holds until the e~piration of the month of July 1938 the provisions of Section 4 c shall not applv in the case of a re-election. Section 3IUrhen the bonds of Section 27 are to be allotted to the share holders of the National Banl; in Copenhagen thev shall be deli~ered to the person uho holds the shares with legal title in due form. In exchange of shares registered in the name of the holder in the books of the Bank bonds may also be handed out nnder the observance of the following rules: a~ When evidence placed before the Bank shows to the satisfaction of the Ban~; that a share-certificate probably has been lost the National Bank of Denmark shall be entitled by a notification in the ~Statstidende~, the Government Gazette, to call the person who might be in pnssession of the share-certi ficate to appear within 6 nlonths. If nobodv appears the Bank mav deliver the bonds corresponding to the share-certificate to the person registered in the boolis of the Bank as proprietor of the share-certificate. b? In case of defects in the tr~nsfer.s of title endorsed on a share-certificate the National Ban~; of Denmark shall, if it is of opinion that the asserted ownership or the bearer is wcll founded, be entitled to call the person or persons who might have anv objections to the bearer's propertv in the sharecertificate to appear within the aforesaicl n~tice. If no objections are made the Bank may deli~-er the bonc~s to the bear~r of the share-certificate. When e~idence placed befor~ the Bank shows to the satis faction of the Ban~i that a share-certificate, ~vhich ac~ording to the books of the Bank is made out to bearer, probably has been lost, and the person notifying the loss possesses the coupons belonging to the share, the National Bank of Denmark shall be entitled to pay to such person the interest due on the bonds corresponding to the share. If the Bank does not find to its satisfaction that the share-certificate has been destroyed, the interest shall not be paid to him till the Ist da~ of Februan I937. If nothing to invalidate the right of the person noti~ing such loss has transpired within the expiration of 5 years from the taking effect of this Act the Bank mav deliver the bonds to him. In case cash amounts are to be allotted to the shareholders payment shall be made against the production of the dividend coupon for the year current at the taking effect of this present Act. After the expiration of 5 years from the taking effect of this Act all rights to claim bonds in exchange of the old shares or cash allotments shall be forfeited, and the undelivered bonds and cash ~mounts shall fall to the National Bank of Dcnmark ~ ithout compensation to the former shareholders. Amo unts gained in this way shall be allocated to the Reserve Fund of the Bank. Section 32In the penod ~ill the cxpiration of the year I 948 the a bove pr~ visions can only be amended b~ the consent of a major itv of all the members of the Board of Directors. confer ho~vever Section I4 last subsection. C~O ~I ~IE~CE ~IE~'T. Section 33 ~ 27, subsection I, shall ta};~ cffect at onc~. Other~ise tlle .~cc ~hall take effect on SUCll date as ma be fixed in the agreen1~nt men~ioned in Section 27. The Minister of Trade, Industrv and Shipping shall publish the date of the taking effect of this Act. ¥i~Tith which all those concerned shall have to compl~. Given on Amalienborg, the 7th dav of April I936. Und~r Our Royal Hand and Seal. Christian R. (L. S.) ACI(No. 67 - March 15th. 1967) amenting the National Bank of Denmark Act. ~ohs. ~j~rb01. Section 1. The following sub-section 2 shall be inserted in s ection 33: ''Sub-section 2. The Act shall enter into force for Green~ lant on July 1 st, 1967. " Section 2. ' The Minister for Greenland shall promulgatc rulcs go verning the continucd validity of the existing Greenland credit notes for a transitional period. ORDINANCE No. Ij2 o~ the 28th daY of May J936 concerning the comin~ into of Denmark Act, Act No. II6 , force of the National Bank of the 7th dav of Apnl I936. By an agreement made between the National Bank in Copen hagen, the Minister of Finance ~nd the Minister of Trade, Industry and Shipping it has been provided that t}!e National Bank o~ Denmark Act, Act No. II6 of the 7th dav of April 1936, shall come into force on the 28th day of ~Iay 1936. Which is hereby publicly announced. The ~Iinistry of Trade, Industrv and Shipping, the 28th of ~ay I936. Johs. Kj~rbol. K. Skat-R0rdam. B Y - L A W S OF THE NATIONAL BANK O~ DENMARK, MADE ON THE 28T" DAY OF MAY I936 PURSUANT TO Section 26 OF THE NATIONAL BANK OF DENMARK ACT, ACT No. II6 OF THE 7Tn DAY OF APRIL I936, AND CONFIRMED BY THE MINISTER OF TRADE, INDUSTRY AND SHIPPI~G ON THE 2~TU DAY OF MAY 1936. BY-LAWS OF THE NATIONAL BANK OF DENMARK. On the 28th day of ~Iav 1936 the Board of Director~ oftlle P~ ~Tational Bank of Denmarl; on the recommendation of the Committee of Directors has made the belou B~-laws of the Bank pursuant to the provisions of Section 26 of the National Banl; of Denmark Act, ~ct no. II6 of the 7th dav of April I(~36, in expectation of the said By-la~ rs being confirmed bv the ~inister of Trade, Industrv and Shipping in his capacitv of Royal Ban1i-Commissioner: ANAGE~ENT. le Bo~lrd of Direc~ors. ~ 1. The Board of Directors shall consist of 25 members, viz: 8 members with a seat in the ~Rigsdaga. These are to be elected according to the rules of Section 45 of the Constitution. In case one of these mcmbcrs rcsigns his seat in the ~Rigsdaga, a new election shall be held for the remaining term of office of the resigning member. The resigning member keeps his seat on the Board of Directors until a succcssor has been elected. 2 members of which one shall be an economist and the other a lawyer. These members, who must not be members of the ~Rigsdaga, shall be appointed by the ~Iinistcr of Trade, Industry and Shipping. C) I5 members with a thorough knowledge of trade. These membcrs, who must not be members of the I~Rigsdaga, shall be elected by the entire Boarcl of Directors, so that 3 members retire every year. Due regard shall be paid at the election to establish a comprehensive representation of trade, also comprising the ~vorkers ¥)ccupied in trade anc~ to secure a representation of the geographical c~ivisions of the country. The members mentioned in a-c shall be electecd or appointed for 5 years. The members mentioned in c shall be elected at the meeting of the Board of Directors u herc the annual accounts are submitted for apI~roval. The term of office shall commence on the ensuing ISt day of April. The meml~ers mentioned in a and b shall be elected or appointed for a corresponding term of office. If a member of the Board of Directors dies or retires before the expiration of the term of office another member shall be elected for the rest of the term. The Board of Directors shall elect for I vear at a time a Chairman and a Deputy-Chairman. The elections shall take place at the meeting of the Board of Directors whcre the annual accounts are submitted for approval. The term of office shall commence on the ensuing ISt day of April. Section 2. The Board of Directors shall meet once e~ery three months and otherwise as often as the Chairman decms it necessary, or when the Royal Ban~i-Commissioner or 5 member~ demand it. The Board of Directors forms a quorum when 15 members are present. Decisions shall be passed by a majority of votes; in the case of an equality of votes the Chairman shall have the casting vote The Royal Bank-Commissioner shall preside at the meetings of the Board of Directors. No person in the ser~ice of the Bank may be a member of the Board of Directors. During the absence of a Gov~rnor ~ member ¥)f the Board of Directors may temporaril~ be appointcd Governor; but the person appointed shal! not in that pcriod be entitled to vote on the Board of Directors. A deput~ of the Governor nominated bv the King shall bc appointecl bv the Roval Banl;-Commissioner. A deputy of a Go~ernor appointed b v the Board ¥)~ Directors sha]l be appointed by the Chairman of the Boarcl of Dircctors, as far as possiblc after conference ~ith the Committee of Directors. Section 4 A11 matters of s}~ecia1 importance ~-hich mav bc considered to he outside the domain of daily mana~ement shall to the greatest extent possible be submitted to the Board of Directors. However, if the case be so urgent, that in the opinion of the Board of Governors the decision cannot prudentl~ be postponed until such submission, the Board of Governors shall act, if possible after preceding deliberation with the Committee of Directors, and shall see to it that the case as soon as possible be submitted to the Board of Directors. The Board of Directors shall supervise that the rules governing the functions of the Bank ~s laid clown in the National Ban k of Denmark Act and in these present By-laws be observed, there under that noles are not issued in violation of the rules prescrihed. After the e~;piration of every three months the Board of Governors shall submit to the Board of Directors balance sheets fr om the ledgers of the Bank, and a statemcnt on the fundin g of the note circulation. ~Ioreover, at the quarterly meeting the Board of Governors shall report on the more important business done in the Bank since the latest quarterly meeting. It shall be the duty of the Board of Directors: I ) To elect on the recommendation of the Committee of Directors 2 of the 3 Governors of the Bank. A majority of all the D irectors shall be required to validate the election of a Governor. To dra-v up the Bv-laws ~o~erning the functions of the Bank under ~ ~6 of the National Banl; of Denmar~; Act. and sub~r~it the said By-laws to the Ro~-al Banl;-Commissioner for confirmation. To decide on the establishment and closing of branches. ) To make regulations for the salaries and old age pensions of all the officials of the Bank inclusive of the Governors To elect every three months 2 directors, who together ~ith a member of the Committee of Directors arc to examine the holdings and engagements of the Bank from samples of these drawn at random. The said directors shall in each single case be free to determine ~hat departments of the P~ank they ~ish to examine. fi! On the basis of the report of the Board of Governors and the Committee of Directors to go through the annual accounts of the Banl~, to decide upon writings-off and allocations etc., to determine the application of the annual profit and to submit the annual accounts to the Royal Bank-Commissioner for approbation. 7) To make decisions pursuant to Section I3 of the National Bank of Denmark Act concerning permission to deviate from the funding rules laid down in the said Act. Contributions to undertakin~s for the public benefit may on the recommendation of the Board of Govcrnors and the Committee of Directors be granted bv the Board of Dircctors ~vhen approved of by the Roval Bank-Commissioner. B. rhc Committcc of Dirc~-tors. The Committee of Directors shall be composed of the 2 members of the Board of Directors mentioned in Section I b together ~-ith 5 members elected for 1 year at a time by the Board of Dircctors from among its members. The election shall takc place at the meeting of the Board of Directors where the annual accounts are submitted for approval. The term of office shall commence from the ensuing Ist day of Aprih 1f ~ members of the Board of Directors demand it. the pro portional representation system aecording to Andr;~-s c~tcndecl method shall be applied. If a member of the Committee of Directors die~ or retirc~i before the e~;piration of the term of ¥~ffice another memher shall be elccted for the rest of the term. The C.ommittee of Directors shall elect for I ~car at a lime a Chairman and a Deputv-Chairman. The elections shall be sanctioned bv the ~inister of Trade, Industry and Shippin~. The elections shall take place as soon as possible after the meeting of the Board of Directors where the annual accounts are submitted for approval. The ter ns of office shall commencc on the ensuing ISt day of .~pril. The members of the Committee of Directors shall not have a seat in the management of other banks. Chairman and Deputy -(~hairman shall not have a seat in the management of oth er money institutions either. Section 6. The C.ommittee of Directors shall meet once every month ancl otherwise as often as the ~hairman cleems it nece ssary, or ~hen the Roval Ban~-Commissioner or 3 members demand it. The Committee of oirectors forms a quorum when 4 members are present, hereof at least I of the 2 members mentioned in Section Ib. Decisions shall be taken bv a majority of votes; in the case of an equalitv of votes the Chairman shall have the cast ing vote. The Ro~al Bank-Commissioner shall have admission to the meetings of the Committee of Directors. Decisions of particul arly far-reaching character cannot be taken at a meeting of the Committee of Directors when the Royal Bank-C'.ommissioner is not present, unless hc has bee n informed in advance tha~ the case will be dealt ~ith at the meetlng. Section 7The Committee of Directors shall keep itself informed as regards the more important sides of the functions of t he Bank. It ma~ at any time demand from the Board Or Governors such ~nformation as it might consider necessary in order to compl~ with the duties laid upon it. The Committee of Directors and the Board of Go~ernors should mutuallv enter into negotiation and deliberation on cases and matters which are of a more general importance for the functlons of the Bank, thereunder the rules go~erning the ~ranting of advances, even though a submission to the Board of Directors be not required. .~11 matters placed before the Board of Directors shall first be submitted to the Committee of Directors. The Committee reports to the Board of Directors on the matter; the report mav be accompanied b~ the recommendations of the Board of Go~ ernors. Cases which due to their urgent character cannot be postponed until the submission to the Board of Directors has taken place, shall as far as possible be submitted to the Committee of Directors. .~t least once every year the Committee of Directors shall examine the more important liabilities of the Bank and ha~e all the assets of the Ban~; checked in order to ascertain their e~cistence. .~ report concerning these examinations shall be sent to the Board of Directors. It shall rest with the Committee of Directors to see to it, that the annual accounts under careful consideration of e~;isting assets and liabilities, and with the undertaking of necessa rv writings-off and allocations have been rendered as proper and cautious business practice dictates. Before the Committee of Directors reports to the Board of Directors, it shall ne;,otiate with the Roval Bank-Commissioner concerning the application of the profit of the year on the basis of the recommendation of the P~oard of Governors. The Committee of Directors shall see that the dailv audit provided for in Section 36 is properly organized. Furthermore the Committee of Directors appoints and dismisses on the recommendati on of the Board of Governors the officials of the Bank wit h a higher charge than that of senior clerk, confer Section I4~ while the other officials are appointed bv th~ Board of Governors. C . ~he Board o f ~oz c~ nor.c. Section 8. The Board of Governors shall c0115ist of 3 mcmbers. one cf the Govern()rs shall be nominatecl h~ the ~ing, ~nd the other Governors ~ppointed by t he Board of Directors on the rccommendation of the C~ommittee of Directors. The first mentioned Governor shall be Chairman of the Bo~rd of Governors. The Governors shall reside in Copenhagen or in places closelv connected w ith Copenhagen. Thev shall not have a seat in the management of tracling organizations or eompanies nor carr~ on or take part in the working of private trading acti vities The Governors shall be under the obligati-)n to send in their resignation before the e~piration of the month in which thev complete their 70th vear. Section 9The Go~ernor nominated by the King as well as the Governors elected bv the P~oard of Directors shall be appointed f~r an unlimited time, but mav be dismissecl by the King and t he Board of Directors respecti~ely. .~ majoritv of 2/3 Of the w hole Board of Directors shall be required in the lattcr ease. The Governors shall be entitled to pension ~mder the old age pension re~ulations of the B~nk. ~ IO. The Board of Governors shall meet as often as it is deemed necessary. Decisions sh all be pacsed L)y a majority of votes. In the case of an equality of votes the Governor nomina ted by the King shall have the casting vote. The Governors shall di vide the duties laid upon them bv mutual agreement and determine what may be left to a single Governor for decision. ~ II. The Governors shall be present at the meetings of the Committee of Directors and the Board o f Directors, unless matters are treated u-hich concern them personally. The Governo rs sha ll be entitled to take part in the delibcrations. 30 3I 3) 4) Section I2. The dailv management of the Bank sha~l he vested in the Board of Governors. It shall particularlv he the dutv of the Board of Governors: ) To see that all the transactions of the Banl; hc properlv entered into the accounts, alld that the staff of the Ban}; on the whole discharge the duties laid upon them, 2) To watch the safe-keeping of all the assets of the Banl; and the ~aluables entrusted to the Bank, To supervise the printing of the bank-notes and the safelieeping and destruction of cancelled notes To see that the management of the business of the branches be properl~ supervised. o To report everv month to the Royal Bank-Commissioner, the Chairman of the Board of Directors and to the Comn~ittee of Directors on the funding of the notes in circ~llation. At least once every month the Board of Governors itself. or bv the auditors mentioned in Section 36, shall cxamine the cash in hnnd and the holdings of the cashiers of the Bank. D. G~ncral Regulations. The regulations for the salaries and old age pensions of the Governors and other membcrs of the staff of the National Banl~ in Copenhagcn shall remain in force for the Govcrnors and staff of this Bank until they be altered in conformitv with the rules laid down. The Board of Directors sllall fix the number of the officials of the Bank with a higher charge than that of senior cl erk. A member of the Board of Dircctors or the Committee of Directors shall havc no ~ote in ~ascs concerning agreements between the Bank ~nd such member or relating to actions b rought against such member nor in case c.f agreements with or actions brought against third partv in s(l f~r as such member has a considerable interest therein, ¥~hich mav be in conflict with that of the Bank. The Directors are under the obligation to keep secret what thev learn through their work in the Bank. A Governor shal l not make nor take part in decisions which concern himself in a similar manner. Section I6. It shall rest with the Committee of Directors and the Board of Governors to watch the justifiableness of and t he secu rity for the engagements which the Bank makes with the singl e members of the Committee of Directors or the Board of Directors or with companies of ¥ hich these members are managers or directors. The same shall hold good of engagements which might be contracted with the Bank by persons attached to the Governors through marriage, relationship or affinity in lineal ascent and descent or as brothers and sisters, or by companies of which such persons are managers. Section I7If a member of the Committee of Directors or Board of Governors of the Bank, a branch manager or other member of the staff of the Bank on behalf of the Bank supervises an unclertaking in which the Bank is interested economically, any remuneration of the person in question will have to be defrayed by the Bank. The amount of the remuneration shall be fixcd by the Committee of Directors. Section 18. Governors, branch managers or other mcmbers of the staff of the Bank must not in any form make or join in speculative transactions. Section 19. Governors, branch managers and auditors must not raise loans in the Bank, obtain the guarantee of the Bank for loans or enter into contracts of suretyship for debts due to the Bank. ~ 20. The signatures of two duly autllorized persons shall be required to bind tl1e Bank. The Chairman of the Committee of Directors shall authorize officials within the Bank to sign on behalf of the Ban~;. The names of the pcrsons authorized to sign on behalf of the Bank shall be puL)lishcd in the ~)~tatstidende(~, the Government Gazette. II. THE FUN-C.TIONS OF THE BANK. 2 ) 3) -~) 5) 6) 7) 8) 9) I O) ~ 21. The denominations, text and form of the notes shall remain unchanged until otherwise provided under Section 8 of the National Bank of Denmark .~ct. Section 22. Besides the issue of notes and the activities and business in connection there-vith the general functions of the Bank shall particularly comprise the following transactions: Reception of monev on folio-account and current-account, Discounting of bills of exchange, Granting of advances against security, Dra-~ing of checks on Danish and foreign places, Issuing of Bank-Promissorv-Notes, Depositing of money with correspondents, Purchase and sale of securities, Purchase and sale of precious metal in coin and ingots, Purchase and sale of foreign currency, Reception of deposits in safe custody. Section 23The Board of Govcrnors shall fix the rate of interest on folio-account ancl current-account. It may decide, that no intcrest is to be paid on money deposited. Section 24Where for 5 years an amount of intcrest originating from previous deposits but no actual deposit has heen standing to the credit of an account, such amount may fall to the Bank. Section 25The Board of Governors shall fi~c the rate of discount and the rate of interest for advances. When the Board of Governors uishes to alter the rate of discount (the Bank Rate) it shall notif~ the Roval Ban~;-Commissioner and the Minister of Finance to that effect. The Roval Bank- Commissioner and the Minister of Finance shall he entitled personally or bv deputy to take part in the negotiations, but thev shall have no ri~ht of voting. When a decision has been taken the Chairman of the Board of Directors and of the Committee of Directors shall inlmediatelv be notified. Section 26. The decisions of the Board of Governors concernin~ appli cations for advances or discounts are as a rule given orally. No applicant shall be entitled to learn the reason for a refusal. Section 27Advances are normally granted for I to 3 months, but never exceeding 6 months, and against such securitv as may be considered satisfactorv. Reneu al of advances mav takc place. The P~oard of Governors shall decide uhat securities may be accepted as security for advances, and what percentage of the value of the securitv may be granted as an advance. Section 28. The Bank may demancl prepavment of interest for the full term of an ad~ance or for a part thereof. Section 29. The Bank may issue Bank-Promissorv-Notes to specified persons and payable up to eight davs after date or at sight. Bank-Promissory Notes shall be paid at the head office of the Bank as well as at its branches. Section 3¡ The Board of Governors may decide that checks and transfer orders shall not be issued for amounts less than Kroner 200. The Board of Governors shall lay down rulcs governing the purchase and sale of foreign exchange and the purchase and sale of securities. The Board of Governors shall fix the price at which the Bank shall purchase and sell precious metal in coin or in ingots, confer however Section I4~ 2nd and 3rd subsection of the ~ational Bank of Denmark Act. The Bank shall be legal depositary of monies and securities, which are lodged pursuant to Act no. 29 of the I6th day of February ~ 932 concerning debtors' right to release through deposit. The Bank recei~ cs deposits for safe-keeping. The rules govcrning the deposit and the fees to be charged shall be fixed by the Board of Governors. The Bank shall be entitled to refuse to receive a deposit as well as to let a safe. ~oreover, it shall bc entitled to demand the ¥vithdrawal of a deposit and to tcrminate the letting of a safe without stating the reason. Where a deposit has been unclaimed for 20 ~ears and the Barlk does not kno~v the addrcss of the o~-ner it shall be cntitled, by a notification in the ~Statstidende~, the Government Gazette, to demand the depositor, or the person or persons who deem themselves owners of the deposit, to take possession of the deposit within 6 months, and if nobody appcars, to havc the deposit destructed or sold by public auction, the procccds of which shall fall to the Bank, confer howcver Section 5 of Act no. 29 of the I6th day of February I932. Memorandums of deposit drawn up bcfore the coming into force of these By-laws, and which contain the clause that the procceds in case of statute barring fall to the Exchequer, shall remain in force. III . .~CCOUNTS .~!~D AUDIT. Section 35The financ ial year of the Bank shall be the calendar year. The Bo ard of Governors shall not later than the first dav of Februar~ hand over the annual accounts to the Chartered Accountants appointed bv the Rova lBank- Commissioner. When the Comrnittee of Directors h~s made itS report on the annual account s and the negotiation ..ith the Roval BankCommissioner has taken place, confer Section 7, subsecuon 5, the annual accounts shall be submitted to the Board of I)irectors, but in no case later than the 20th dav of March. Section 36 The dailv audit of all the books of the Bank shall at the head office be made by the officials appointed for that purpose, and at the branches by the auditors appointed hv the Committee of Directors. This audit shall commence immediatelv at the beginnin~ of the financial year and be continued daily, so tha~ it alwavs follows (lirectly after the daily entries. The auditors' records shall be submitted to the Board of Governors and produced at each meeting of the Committee of Directors. T he auditors shall enter into their records all that may b e of importance to the Board of Governors, Committee of Directors an d Board of Directors to learn. In case the auditors discover essential irregularitics the auditors shall, besides making entries thereof into the records, without delay notifv the Board of Governors and the Chairman of the Committee of Directors. It shall be the duty of the auditors to call the attention of the Board of Governors and- the Committee of Directors to deficien cies in audit and book-keeping if such might be found. Section 37 The Minister of Trade, Industry and Shipping shall appoint for one year at a time two Chartered Accountants to audit the annual accounts of the Bank. The Chartered Accountants shall be of age, n~t be deplived of the ri~ht to dispose of their estate, nor be in the service of the Bank, be members of the Board of Directors or Committee of Directors nor ~)e attached to any member of the Board of Directors, Committee of Directors or Board of Governors. to accountant or cashier b! being in their service, through marriage, relationship or affinitv in lineal ascent and descent, or as brothers and sisters. During the audit, ~hich shall be performed under carefi-l consideration of existing values and obligations, the Chartered Accountants shall have admission to all books relating to the book-keeping of the Bank and to examine the cash in hand and the holdings of the cashiers of the Bank. The Committee of r)irectors and the Board of Governors shall be under the obligation to give the Chartered Accountants any inforrnation they might demand to ascertain the correctness of the ~ccounts. When the Chartered Accountants have audited the accounts they shall enter a report on the audit into the Chartered Accountants' records. This shall be submitted at the first ensuing meeting of the Committee of Directors, and the members of the Committee present shall by their si~nature confirm that they have taken notice of the contents. l~oreover the re~ords shall be produced at the first ensuing mecting of the Board of Directors. The Chartered Accountants are under the obligation to keep secret what they learn through their activity. Section 38Amendmen-s in t~lese Bv-laws may be passed by the Board of Directors. In order to make an amendnlent valid a majority of all the Directors shall vote in favour thereof and the resolu~ion shall be confirmed l~v the Royal Bank-Commissioner. These By-laws shall come into force when confirmed by the Royal Bank-Commissioner. Pursuant to Section 26 of the ;\Tational Bank of Denmarl; .~Ct (Act no. I16 of the 7th dav of April I936) the above ~v-la~s of the N~tional Bank of Denmark passed this da~ b~ the Board ¥)f Directors of the Ranl~ on the recomn1endati on of the Committee of Directors of the said Ban~; are here h- eonfirmed as being v alid until other~vise L)e provided. The ~linistr~ of Trade, Industrv and Shipping. the 28th dav of ~Iav 1 936. Johs. Kj~erh01. ~. ~'. ,S'knt- R~rdam. ORDINANCE No. 344 of the 22nd day ~f December I~37 concerning the redemption of the notes of the National Bank of Denmark. Pursuant to section I of the Act of the 22nd day of December I937 concerning the redemption of the notes of the ~ational Bank of Denmark and measures to the safeguard of the Danish exchangc the following is herebv provided: Section I. The National Bank of Denmark shall for the timc being -apart from the cases where the Royal Bank-Commissioner might order otherwise-be exempted from its duty to redecm with gold the notes issued by the Bank and to buv gold. Section 2. This Ordinance shall take effect on the 3ISt dav of December 937 Which is hereby publicly announced. The Ministry of Trade, Industrv and Shipping, the 22nd of December I937. Johs. Kjzrb01. P. Villads~n. ACT (No. I66 - .~pnl I3th I93~) amendin~ Act No. II6 of the 7th da~ of .~pril J936, The ~ational Bank of Denmark Act. WE CHRISTIA~- THE TE~TH by the Gracc of God P~ing of Denmark and Iceland the ~ends and Goths Dukc of Slesvic, Holstein. Stormarn Dytmarschen Lauenburg and Oldenburg do h e r e b y p r o c 1 a i m The Rigsdag ha~ e enacted and We by Our Assent confirmed the follo~-ing Act Section ~3 of Act i~o II6 of the 7th day of April I936, the ~ational Bank of Denmark Act, shall run as follo~s ~>When evidence placed before the Ban}; shows to the satis faction of the Bank that a receipt for money received on deposit or a memoranclum of deposit probablv has been lost, the Bank shall be entjtled bv a notification, ¥-hich is to be inserted in the first number of the !~Statstidende~( (the Government Gazette) published in a ¥luarter of a vear, to call the bearer to appear ~ithin 3 months If nobody appears the Bank mav pav the amount of the document to the person ¥~-ho is the rightful creditor according to the books of the Bank <~ Section ,,. This Act shall ta};e effect on the Ist day of July I938. With ~hich all those concerned shall have to comply Given on Amalienborg, the I3th day of April I938. Under Our Roval Hand and Seal ACT (No. 88 - ~larch Isth I939) amending the ~ording of various provisions laid down in the Penal Cocle No. I26 of the l jth da~ of April I930 ~nd other ~cts. ILoss of rights due to the ~iol~tion of l~ WE CHRISTIA~- THE TE~TH by the Grace of God ~;ing of Denmark and Iceland the ~ends and Goths Duke of Slesvic Holstein Stormarn Dvtmarschen, Laucnbur~ and Oldenburg do hereby proclaim The Rigsda~ have enacted 3nd ~e hy Our Assent confirmed the followin~ Act Chapter 2. Section 44~ct J~o. Ir6 of ~he 7th day of April I936, the ~ational Bank of Dcnmark Act. Section 3, 2nd subsection shall run ~s follow~ The members of the Board of Directors, the Committee of Directors and the Board of Governors shall be Danish subjects ~ith domicile in Denmark, besides thev shall be of age, enjoy the rcputation and confidence prerequisite to the offices (appointments, tasks) and not be deprived of the right to dispose of their estate ~/ Chapter 3 Section 52. Subsection 1 This Act shall take effect on the lSt day ofJulv 1 939 With which all those concerned shall have to comply Given on Christiansborg, the Isth day of .~arch 1939 Under Our Royal Hand and Seal Christian R ~L S.) SJ~inckc. AMENDMENTS OF THE BY-LAWS as adopted on the 20th of ~arch l942 b~ the Board of Directors on the recommendation of the Committee of Directors of the Bank and confirmed bv the Minister of Trade, Industry and Shipping on the ISt of Apnl I94a. re ~Section 2: The following subsection to be added: ~When the Chairman deems that a case for special reasons should be decided without a meeting being held, the decision of the Board of Directors may be made in writing unlcss the Royal Bank-Commissioner or at least 5 members of the Board of Directors demand the case to be dealt with in a meeting.< re ~ 4: Subsection 4, number 5, to be amended as follows: )~To elect every three months 2 directors who together with a member of the Committee of Directors by an examination in the Bank make themselves acquainted with its work and, if convenient, without assuming an auditor's liability draw samples at random from the holdings and engagements of the Bank in such a way that the members in question in each case shall be free to decide what departments of the Bank they wish to examine. re ~ 5: The last subsection to be amended as follows: I~The members of the Committee of Directors shall not have a seat in the management of other banks The Chairman and Deputy-Chairrnan shall not be attached to other banks or savin~s-banks.< re ~ 6: Subsection 1, filst clause, to be amended as follows: )~The Committee of Directors shall meet once every mcnth urless other decision be made, ~nd otherwise as often ~s the Chairman deems it necessar~, or when the R<~v~l Banl;-C:ommissioner or 3 members demand it. r~ ~ 9: Subsection 2 to be amended as follows: ~The Governors shall be entitled to pension from the o~d-age pensi-)n fund of the National Banl; of Denmarl;.~l re ~ 36: Subsection I, first clause, to be amended as follows: ~The daily ~udit of aU the books of the Ban~i shall be made by officials appointed for that purpose. At a branch, however, the audit may, on the recommendation of the Board of Governors, be made by an auditor appointed by the Committee of Directors.~ Suhsection 2 to be amended as follows: )~The auditors shall lieep a record. The auditors' record shall be submitted to the Board of Governors once a month and produced at the monthly meeting of the Committee of Directors. If the audit at a branch be made by an auditor special~y appomted, a report on this audit based on information from this auditor shall be entered into the record.~ RECEI~JED FEB ~ 11994 CENTE~ HE STUDY CF CENTRAL BANKS