Article XII Company

Definition of 'Article XII Company'


An investment company chartered under Article XII of the New York State Banking Law. Established to finance international banking transactions, they are usually owned by foreign banks. Article XII companies typically engage in businesses like those of internationally oriented commercial banks, such as lending to foreign borrowers, foreign exchange trading and the issuance of letters of credit. The difference is that Article XII companies don't usually buy equities. Moreover, these companies cannot accept deposits in New York State, and only outside the state with the approval of the New York State Banking Board. They are exempt from the Federal Reserve System's reserve requirements.

Investopedia explains 'Article XII Company'


Article XII companies are described by New York State's Banking Department as "being unique to New York." The laws that provide for investment companies date from 1890.

For many years, the policy of the State's Banking Department policy was to allow foreign banks to establish investment companies only if there were no other practical means of entering the New York market. This explains the existence of many of the current Article XII companies.



comments powered by Disqus
Hot Definitions
  1. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious debt when government leaders use borrowed funds in ways that don't benefit or even oppress citizens. Some legal scholars argue that successor governments should not be held accountable for odious debt incurred by earlier regimes, but there is no consensus on how odious debt should actually be treated.
  2. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.
  3. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by additional investment would not warrant the expense. A harvest strategy is employed when a line of business is considered to be a cash cow, meaning that the brand is mature and is unlikely to grow if more investment is added.
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will be executed at a specified price (or better) after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy (or sell) at the limit price or better.
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.
Trading Center