LIETUVOS RESPUBLIKOS REPUBLIC OF LITHUANIA LAW ON CREDIT UNIONS 21 February 1995 No I-796 (As last amended on 22 December 2009 – No XI-597) Vilnius CHAPTER ONE GENERAL PROVISIONS Article 1. Purpose of

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of the Law of the Republic of Lithuania on Payments: 1) indirectly with the assistance of the Central Credit Union, where the credit union is a member thereof; 2) indirectly with the assistance of a selected bank, where the credit union is not a member of the Central Credit Union.

1. A credit union shall have the right to acquire solely the securities of the Government of the Republic of Lithuania, the securities of the Bank of Lithuania, the securities of governments of other EU Member States and the states of the European Economic Area (hereinafter referred to as the “EU Member States”).
2. In addition to the provision of financial services, a credit union may pursue only such other activities as those in the absence of which financial services cannot be provided, which assist in the provision of the financial services or are otherwise directly related to the provision of the financial services.
3. A credit union shall be prohibited from establishing enterprises, also from participating therein, with the exception of participation in the Central Credit Union.
4. A credit union must organise and carry out its activities with a view to ensuring the stability and soundness of its activities.
5. A credit union must organise and carry out its activities with a view to enabling each member of the credit union to make use of the financial services provided by the credit union.
6. Where a credit union itself decides not to carry on a certain activity in the absence of which financial services cannot be provided, which assists in the provision of financial services or is otherwise directly related to the provision of financial services and assists in the conclusion of transactions with other persons on the provision of respective services to the credit unions (hereinafter referred to as “the purchase of a credit union’s ancillary services”), the credit union must notify thereof the supervisory institution and provide to it the information laid down by legal acts of this institution prior to concluding the said transactions. The legal acts of the supervisory institution may set the requirements for the purchase of the credit union’s ancillary services.
7. Courts of the Republic of Lithuania, other institutions or officers of the Republic of Lithuania must, prior to taking decisions restricting the right of a credit union to provide financial services to non-specific group of customers of the credit union, obtain and the supervisory institution must provide a conclusion on the impact of these decisions on the stability and soundness of the credit union and the entire system of credit unions. CHAPTER TWO ESTABLISHMENT AND LICENSING OF A CREDIT UNION Article
8. Establishment and Founders of a Credit Union
9. A credit union shall be established according to the procedure set forth by the Civil Code of the Republic of Lithuania, the Law of the Republic of Lithuania on Financial Institutions, this Law and, except where this Law provides otherwise, the Law of the Republic of Lithuania on Cooperative Societies (Cooperatives).
10. A credit union may be established only for an indefinite period.
11. A credit union may be established only upon obtaining an authorisation of the supervisory institution to establish the credit union.
12. The articles of association of a credit union being established must be submitted to the manager of the Register of Legal Entities and the credit union must be established within nine months from signing of the articles of association; in the event of a failure to do so within the specified time limit, the articles of association of the credit union shall become invalid and the share contributions and initial membership fees paid earlier shall be reimbursed.
13. A credit union shall be established by accumulating the funds covering the expenses incurred in connection with the establishment thereof from initial membership fees and accumulating the share capital – from share contributions.
14. The founders of a credit union may be solely natural persons. A credit union may be established by not less than five founders.
15. The shares of a credit union being established may be acquired by the founders thereof, also the natural and legal persons entitled to membership of the credit union being established according to Article 13 of this Law and in compliance with the restriction established in paragraph 5 of Article 13 of this Law. Each founder of the credit union must acquire shares of the credit union and make a share contribution in accordance with the established procedure.
16. The persons who may not be founders of a financial institution pursuant to the Law of the Republic of Lithuania on Financial Institutions and the natural persons who may not be members of a credit union pursuant to Article 13 of this Law may not be founders of a credit union.
17. Founders shall enter into an agreement of the establishment of a credit union. The following data must be indicated: 1) the date and venue of conclusion of the agreement on establishment of the credit union; 2) names, surnames, personal numbers and place of residence of the founders; 3) the name and registered office of the credit union; 4) the rights and duties of the founders when establishing the credit union and liability for defaulting on the obligations; 5) the persons authorised to represent the credit union being established and their rights and duties; 6) initial membership fee, the procedure for paying and using it; 7) the smallest and largest amounts of a share contribution and the time limits and the procedure for paying these share contributions; 8) the amount of a share contribution paid by each founder; 9) the procedure for reimbursing the share contribution made and the initial membership fee paid where the credit union is not established; 10) compensation of the costs of establishment and remuneration for establishment; 11) the procedure for settling disputes between the founders.
18. A memorandum of association must be signed by all founders. The authenticity of the signatures of the natural persons who have signed the memorandum of association of a credit union shall not be notarised.
19. A memorandum of association concluded in accordance with the procedure laid down by this Law shall be a public document and shall entitle to open a funds accumulation account with a bank registered in the Republic of Lithuania or with the Central Credit Union.
20. The founders of a credit union shall draft the articles of association of the credit union and shall submit them for approval to the statutory meeting. The founders must, prior to the statutory meeting, enter the persons who have made share contributions in the register of members.
21. Prior to the statutory meeting, the minimum share capital must be accumulated and the shares of at least 50 persons must be paid up.
22. Prior to the statutory meeting, any of the founders shall have the right to enter into transactions on behalf of and for the benefit of a credit union being established, unless the memorandum of association thereof stipulates otherwise. Where the statutory meeting does not approve these transactions, the obligations based on these transactions shall be jointly and severally guaranteed by the founders who have entered into them. Article
23. Statutory Meeting of a Credit Union
24. Founders of a credit union must convene the statutory meeting not later than within 60 days from the signature of an agreement on establishment of a credit union.
25. The statutory meeting shall: 1) consider and approve the articles of association of a credit union; 2) elect members of the supervisory board, board, loan committee of a credit union, members of the controllers’ commission (controller); 3) approve a statutory report; 4) approve the transactions entered into by founders of a credit union; 5) decide other issues falling within the scope of competence of the general meeting of members of a credit union.
26. The statutory meeting must be attended by at least 2/3 of the persons entered in the register of members, apart from associate members.
27. The statutory meeting shall be chaired by the chairman elected by the statutory meeting.
28. Minutes must be taken at the statutory meeting. It must indicate: the number of the persons participating in the meeting, all the issues discussed and the decisions adopted. The minutes of the meeting shall be signed by the chairman of the meeting, the secretary and one member authorised by the statutory meeting. A list of all members of a credit union being established must be enclosed with the minutes of the statutory meeting.
29. Where founders of a credit union fail, within the time limit laid down in paragraph 1 of this Article, to convene the statutory meeting of the credit union, all the natural and legal persons entered in the register of members, with the exception of the founders, shall be released from obligations to the credit union and shall have the right to claim from the founders reimbursement of share contributions and initial membership fees without any deductions. Article
30. Statutory Report of a Credit Union The founders of a credit union must draft a statutory report of the credit union and submit it for approval to the statutory meeting. The report must indicate: 1) establishment expenditure; 2) the number of issued shares and the amount of funds received in return for them; 3) the amount of share contributions made by each founder; 4) transactions, where founders transfer the obligations based on these transactions to a credit union; 5) establishment expenditure subject to reimbursement, consideration for establishment. Article
31. Authorisation to Establish a Credit Union
32. An authorisation to establish a credit union shall be granted by the supervisory institution according to the procedure set forth by laws and legal acts of the supervisory institution.
33. In order to obtain an authorisation to establish a credit union, founders of the credit union shall submit to the supervisory institution an application and the documents and information specified by legal acts of the supervisory institution, including: 1) an agreement of the establishment of the credit union; 2) the articles of association of the credit union; 3) the minutes of the statutory meeting; 4) a one-year framework for activities of the credit union; 5) a list of founders, documents and information on the identity of the founders of the credit union, also the amount of the share contribution of each of them, the documents and information evidencing that the funds used for the share contributions have been obtained legitimately; 6) the documents evidencing the complete payment of the credit union’s share contributions; 7) a list of heads of the credit union elected by the statutory meeting whose election is subject to an authorisation of the supervisory institution.
34. The supervisory institution must examine submitted documents and take a decision on the granting of an authorisation to establish a credit union not later than within three months of the receipt of the application.
35. The supervisory institution may refuse to grant an authorisation to establish a credit union where: 1) the submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all information specified by the legal acts or additionally required has been submitted or it is incorrect; 2) the provisions of the articles of association of the credit union do not ensure safe and sound activities of the credit union or are not in conformity with the relevant legal acts; 3) the credit union being established does not conform to the requirements of a legal form as set forth by laws and the requirements set forth for founders, the minimum capital of a credit union, heads of a credit union, the minimum number of members of a credit union.
36. The supervisory institution shall give a written notice to the manager of the Register of Legal Entities of a decision adopted on the granting or a refusal to grant an authorisation to establish a credit union.
37. Following the granting of an authorisation to establish a credit union and until a licence is issued to the credit union, the founder of the credit union shall be prohibited from selling or otherwise transferring the share acquired by him, whereas the credit union shall be prohibited from issuing new shares or otherwise altering the amounts of the smallest share contribution and the largest share contribution as specified in the memorandum of association or the composition of the founders participating in the capital of the credit union.
38. The supervisory institution shall have the right to withdraw an authorisation to establish a credit union prior to the establishment of the credit union where: 1) the authorisation has been obtained by fraud or otherwise violating laws; 2) the credit union was not established within the time limit specified in paragraph 4 of Article 5 of this Law.
39. The supervisory institution shall give a written notice to founders of a credit union and the manager of the Register of Legal Entities of a decision adopted on the withdrawal of an authorisation to establish the credit union. Article
40. Licence
41. When issuing a licence to a credit union, the supervisory institution may restrict its right to provide the licensed financial service of currency exchange (in cash), where this is requested by the credit union or where it is not prepared to provide this service. A restriction on the provision of the licensed financial service of currency exchange (in cash) shall be lifted where the credit union submits an application, documents and information evidencing that the credit union is prepared to provide this service.
42. A licence shall be issued for an indefinite period of time.
43. A licence shall be issued to a credit union registered in the Register of Legal Entities by the supervisory institution in accordance with the procedure set forth by laws and legal acts of the supervisory institution.
44. In order to obtain a licence, a credit union shall submit to the supervisory institution an application and the documents and information specified by legal acts of the supervisory institution, including: 1) the articles of association of the credit union registered in the Register of Legal Entities; 2) the evidence that the size of the share capital of the credit union does not fall below the minimum size of the capital of a credit union as specified by this Law; 3) a list of members of the credit union indicating the amount of the share contribution paid in by each of them; 4) a list of heads of the credit union elected following the statutory meeting whose election is subject to an authorisation of the supervisory institution. 5) the credit union’s one-year framework of activities; 6) a description of the management and organisational structure; 7) a draft of the accounting policy and a detailed description of the accounting organisation; 8) documents and information evidencing that the credit union has a proper internal control system, personnel, technical, information and technological security means, premises and insurance of property; 9) documents and information evidencing preparedness to provide the payment services specified in subparagraph 2 of paragraph 2 of Article 4 of this Law, with the exception of the payment services referred to in subparagraphs 1, 2,

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of the Law of the Republic of Lithuania on Payments, indirectly with the assistance of the Central Credit Union, where the credit union is a member thereof; 10) documents and information evidencing preparedness to provide the payment services specified in subparagraph 2 of paragraph 2 of Article 4 of this Law, with the exception of the payment services referred to in subparagraphs 1, 2,

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of the Law of the Republic of Lithuania on Payments, indirectly with the assistance of a selected bank, where the credit union is not a member of the Central Credit Union.

1. The supervisory institution shall have the right to carry out an on-site inspection of preparedness of a credit union applying for the issuance of a licence to provide financial services.
2. Upon the request of the supervisory institution, state and municipal institutions as well as other persons must forthwith supply to the supervisory institution available information on founders, members and heads of a credit union, their financial situation, activities, discovered infringements of laws and other legal acts, conclusions of conducted inspections and checks as well as other information required by the supervisory institution for the taking of a decision on the issuance of a licence.
3. The supervisory institution must examine the submitted documents and information and take a decision on the issuance of a licence within three months of the receipt of the application. Where the supervisory institution requests additional documents or information, the decision must be taken within three months of the receipt of the additional documents and information. A decision on the issuance of a licence must, in any case, be taken within 12 months of the receipt of the application.
4. Articles of association, an operating plan, management and organisational structure, risk management system, accounting organisation, internal control system, technical, information and technological security means, premises, insurance of property of a credit union applying for a licence must ensure safe and sound activities of the credit union and comply with the relevant legal acts, also the credit union must conform to other requirements set forth by this Law, including the requirements set forth for the minimum capital and registered office of a credit union, members of a credit union, heads of a credit union, and be prepared for a safe and sound provision of financial services.
5. The supervisory institution may refuse to issue a licence where: 1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all information specified by the legal acts or additionally required has been submitted or it is incorrect; 2) a credit union does not meet the requirements set forth in paragraph 8 of this Article.
6. A decision taken on the issuance of a licence shall be notified to the manager of the Register of Legal Entities according to the procedure set forth by the Register of Legal Entities and published in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios.
7. A credit union shall have the right to commence the provision of financial services only upon the issuance of a licence.
8. A credit union holding a licence must at all times conform to the requirements set forth for the granting of an authorisation to establish the credit union and for the issuance of the licence. In the cases and according to the procedure set forth in this Law and legal acts of the supervisory institution, the credit union must notify the supervisory institution of any changes in the information submitted to obtain the licence.
9. A credit union shall be prohibited from transferring the rights granted by a licence or otherwise permit another person to provide licensed financial services not on behalf of the credit union and not for the benefit of the credit union. Article
10. Withdrawal of a Licence or Suspension of Validity Thereof
11. The grounds for the withdrawal of a licence shall be laid down by the Law of the Republic of Lithuania on Financial Institutions. In addition to the grounds laid down in paragraphs 1 and 2 of Article 10 of the Law of the Republic of Lithuania on Financial Institutions, a licence may be withdrawn by a decision of the supervisory institution where: 1) a credit union does not meet the requirements set for the granting of an authorisation to establish the credit union or for the issuance of a licence; 2) a credit union ceases to exist due to reorganisation or a decision is taken on liquidation thereof; 3) a credit union does not pay in the first (advance) insurance premium in accordance with the Law of the Republic of Lithuania on Insurance of Deposits and Liabilities to Investors where it must pay it or where insurance is terminated.
12. Withdrawal of a licence or suspension of validity thereof shall be notified to a credit union and the manager of the Register of Legal Entities in accordance with the procedure laid down by regulations of the Register of Legal Entities and published in the supplement Informaciniai pranešimai to the official gazette Valstybės žinios.
13. Reasons must be given for a decision of the supervisory institution on the withdrawal of a licence.
14. A licence may also be withdrawn or validity thereof suspended on the grounds and according to the procedure set forth in Chapter Eight of this Law.
15. Upon the withdrawal of a licence, a credit union shall not have the right to provide financial services, except to the extent it is necessary to settle with the credit union’s creditors, and a decision must be taken on the liquidation of the credit union or opening of bankruptcy proceedings against it according to the procedure set forth in Chapters Nine and Ten of this Law. Article
16. Amendment to the Articles of Association of a Credit Union
17. Amendments to the articles of association of a credit union may be registered in the Register of Legal Entities only upon obtaining an authorisation of the supervisory institution, where the provisions of the articles of association are amended in respect of: 1) the name of the credit union; 2) the smallest and the largest amounts of a share contribution, the rights granted by a share; 3) the powers of the credit union’s bodies, procedure for electing and removing from office their members; 4) the cases when borrowing is possible by a decision of the head of administration, by a decision of the board of the credit union without the consent of the loan committee, and when such a borrowing is not possible without the consent of the loan committee.
18. An authorisation to register amendments to the articles of association of a credit union shall be granted by the supervisory institution according to the procedure set forth this Law and legal acts of the supervisory institution.
19. In order to obtain an authorisation to register amendments to articles of association, a credit union shall submit to the supervisory institution an application and other documents and information specified by legal acts of the supervisory institution.
20. The supervisory institution must examine submitted documents and information and take a decision on the granting of an authorisation to register amendments to the articles of association of a credit union not later than within 30 days of the receipt of the application.
21. The supervisory institution may refuse to grant an authorisation to register amendments to articles of association of a credit union, where: 1) submitted documents do not meet the requirements set in this Law and legal acts of the supervisory institution, not all information specified by the legal acts or additionally required has been submitted or it is incorrect; 2) provisions of the articles of association of the credit union will not ensure safe and sound activities of the credit union or are not in conformity with the relevant legal acts. Article
22. Branches, Representative Offices and Other Structural Divisions of a Credit Union
23. A credit union may establish branches and other structural divisions indicated in the articles of association of the credit union in accordance with the procedure laid down in the articles of association solely within the territory of a municipality of the Republic of Lithuania where the registered office of the credit union is located and within the territory of other municipalities indicated in the articles of association of the credit union and bordering on this municipality.
24. The articles of association of a branch of a credit union, the management and organisational structure, accounting organisation, security means, premises and insurance of property of a branch and other structural divisions of the credit union providing financial services must ensure safe and sound activities thereof and be in compliance with the relevant legal acts.
25. All structural divisions of a credit union providing financial services must be equipped with the communication facilities ensuring transmission of information on the operations carried out to the registered office of the credit union in order to enable the drawing up of a daily balance sheet of the credit union.
26. A representative office of a credit union shall not have the right to provide financial services.
27. Upon the setting up of a branch or another structural division providing financial services, a credit union must, within 15 days of its establishment, notify thereof the supervisory institution and submit to it the information and documents specified by legal acts of the supervisory institution. In the event of a change in any of the particulars communicated, the credit union must, within 15 days from the day of the change, notify thereof the supervisory institution and submit to it the information and documents established by legal acts of the supervisory institution. CHAPTER THREE MEMBERS OF A CREDIT UNION Article
28. Members of a Credit Union
29. Legally capable natural persons having a permanent place of residence in the Republic of Lithuania may be members of a credit union. A natural person may be a member of a credit union where he resides, is employed or studies within the territory of a municipality of the Republic of Lithuania where the registered office of the credit union is located and within the territory of other municipalities indicated in the articles of association of the credit union and bordering on this municipality.
30. The following legal persons registered in the Republic of Lithuania and having their registered office within the territory of a municipality of the Republic of Lithuania where the registered office of a credit union is located and within the territory of other municipalities indicated in the articles of association of the credit union and bordering on this municipality may be associate members of the credit union: 1) associations, trade unions, religious communities and societies, gardeners’ societies, associations of multi-family apartment house owners, public establishments wherein no holdings are held by state institutions, cooperative societies (cooperatives) and agricultural companies; 2) individual enterprises of natural persons who are members of the credit union, the private limited liability companies in which a member or members of the credit union hold a proportion of the authorised capital and/or voting rights granting the right to control the activities. The legal persons indicated in this subparagraph may be associate members of the credit union if they conform to the definition of small and micro enterprises provided for in the Law of the Republic of Lithuania on Small and Medium-Size Business Development.
31. The articles of association of a credit union may also specify additional criteria of admission to the credit union of members of the credit union.
32. An associate member of a credit union must perform all duties of a member of a credit union and may make use of all the services provided by the credit union and exercise the rights of a member, with the exception of the right to vote, be elected to the management and supervisory bodies, commissions, committees and services of the credit union. The articles of association of the credit may also provide for other restrictions of the rights of an associate member: the largest amount of a deposit which may be accepted from a single associate member may be established, the amount of a share contribution and/or loan may be limited, the procedure for reimbursing the deposit and/or share contribution may be laid down, etc.
33. The smallest number of members of a credit union, apart from associate members, is
35. In a credit union, the number of associate numbers may not exceed or be equal to the number of the members meeting the criteria specified in paragraph 1 of this Article.
36. The following persons may not be members of a credit union: 1) the persons who, in the cases and according to the procedure laid down by legal acts, have failed to submit to the supervisory institution the data on their identity, participants, activities, financial situation, heads of a legal person (member of bodies of the legal person, with the exception of the meeting of participants); 2) the persons who object that the supervisory institution manages, in the cases and according to the procedure set forth by laws and other legal acts, their data required for the issuance of the licences and granting of the authorisations and consents provided for under this Law, including their personal data and information on a person’s previous convictions and health.
37. A credit union must, in accordance with the procedure laid down in Article 15 of the Law of the Republic of Lithuania on Financial Institutions, manage the register of members of the credit union indicating members and associate members of the credit union. Moreover, the credit union must submit particulars of the register of the credit union’s members to the supervisory institution within ten days from the date of the annual general meeting of the credit union or otherwise upon the request of the supervisory institution.
38. A credit union’s members must exercise the rights and perform the obligations of members in such a way as to ensure the stability and soundness of the credit union’s activities.
39. A person may become a member of a credit union where he meets all the requirements set forth for a member of the credit union by this Law and the articles of association of the credit union. Article
40. Rights and Duties of a Member of a Credit Union
41. A member of a credit union shall have the following rights: 1) to participate in the general meetings of members of the credit union and cast a single vote during voting; 2) to elect to the management and supervisory bodies of the credit union and be elected thereto; 3) to obtain information on the annual and interim financial statements of the credit union, reports of the Board on the activities of the credit union, minutes and decisions of the general meetings of members. It shall be possible to refuse to supply information where it contains secrets of the credit union. A refusal to provide the documents or information requested must be executed in writing at the request of a member of the credit union. Disputes relating to the right of a member of a credit union to information shall be settled in court; 4) to appeal to court against the decisions adopted by the general meeting of members, management and supervisory bodies; 5) to secede from the credit union; 6) to receive a part of the profit allocated to members; 7) to receive a share of the assets of a credit union in liquidation in proportion to the amount of his share contribution; 8) to devise his share to one or more persons; 9) subject to consent of the board of the credit union, to transfer his share into the ownership of other persons. The board may object to transferring of the share where the person acquiring it may not be a member of the credit union under this Law or does not meet membership criteria (if such are stipulated in the articles of association of the credit union); 10) to request that the credit union return his share contribution or a part of the share contribution in compliance with the restrictions specified in paragraph 3 of Article 47 of this Law.
42. The articles of association of a credit union may also provide for other rights of a member not in contravention of laws of the Republic of Lithuania.
43. A member of a credit union shall not be entitled to vote at the general meeting of members when the general meeting of members is considering the issue of his membership of the credit union, also in other cases provided for in the articles of association of the credit union, where he is directly concerned.
44. A member of a credit union must: 1) hold shares in the credit union which would be at least of the size specified by this Law and the articles of association; 2) give a timely notice of disappearance of a ground for his membership of the credit union; 3) at the time and in accordance with the procedure laid down by the articles of association, pay the initial membership fee, share contributions and other additional contributions; 4) comply with the articles of association, perform obligations towards the credit union, carry out the resolutions of the management and supervisory bodies thereof, participate in the activities of the credit union; 5) timely and in a due manner perform the loan contracts, contracts on holding deposits with the credit union and other contracts concluded therewith.
45. A member of a credit union may not simultaneously be a member of another credit union, where this is prohibited by the articles of association of the credit union.
46. A member of a credit union’s management or supervisory bodies who has seceded or has been expelled from the credit union may no longer perform his functions at the mentioned bodies. Article
47. Grounds for the Cessation of Membership of a Credit Union A membership of a credit union shall cease where: 1) the board of the credit union grants a member’s request to secede from the credit union; 2) a member of the credit union is recognised legally incapable in accordance with the procedure laid down by laws of the Republic of Lithuania; 3) a member of the credit union is expelled from the credit union; 4) a member of the credit union who is a natural person dies or an associate member of the credit union which is a legal person is reorganized or liquidated; 5) a member of the credit union becomes a member of another credit union, where the articles of association of the credit union prohibit membership of more than a single credit union; 6) a member of the credit union transfers shares to another person; 7) the credit union is liquidated. Article
48. Secession from a Credit Union
49. Each member of a credit union shall have the right to secede from the credit union on his own initiative upon giving a written notice thereof to the board of the credit union at least three months prior to the intended secession. A decision on secession and settlement with the seceding person shall be taken by the board of the credit union.
50. Secession shall be possible solely after the close of a financial year. The board of a credit union may permit a member to secede from the credit union before the close of the financial year where settlement with the person wishing to secede is possible without impairing the interests of the credit union. Article
51. Expulsion from a Credit Union
52. Where a member of a credit union fails to perform his duties, violates this Law and the articles of association of the credit union, he may be expelled from the credit union solely by a decision of the general meeting of members. The board of the credit union may suspend the rights of the member until the general meeting of members which is to consider the issue of expulsion of the member of credit union. Upon adoption, by the board of the credit union, of the decision on suspension of the member’s rights, the member shall be deprived of the right to use the services provided by the credit union.
53. A member of a credit union may be expelled where 2/3 of members of the credit union attending the general meeting of members vote for his expulsion.
54. Where a member expelled from a credit union does not agree with the decision of the general meeting of members to expel him, he shall have the right to refer to court for annulment of such a decision within three months from the day when he learnt or ought to have learnt about adoption of the decision. Article
55. Settlement with Former Members of a Credit Union
56. When repaying share contributions to a person whose membership of a credit union has expired, the credit union must reduce them in proportion to the amounts of the credit union’s losses recorded in the approved annual balance sheet of the credit union for the previous year.
57. A credit union shall settle with a person whose membership of the credit union has expired by paying his share contribution and other amounts relating to his participation in the share capital of the credit union not later than within 12 months from the expiry of membership of the credit union.
58. A person who has been expelled or has seceded from a credit union shall, as from his expulsion or secession, be deprived of the right to use the services provided by the credit union.
59. The funds payable to a deceased person shall be paid to his heirs in accordance with the same procedure as in the cases of secession or expulsion, unless the heirs of the deceased are members of this credit union and become its members in accordance with the procedure laid down by this Law and the articles of association.
60. The funds payable to a member who has been recognised legal incapable shall be paid through his legal representative after the latter submits the required documents. Article
61. Proxies A member of a credit union shall have the right to authorise another person to vote on his behalf at the general meeting of members of the credit union or carry out other actions. At the general meeting of members of the credit union, that person may represent not more than three members of the credit union or may obtain, under a contract, the voting right from not more than three members of the credit union. A proxy statement by the member must be notarised. Heads of a credit union may not stand proxy for a member of the credit union. Article
62. Liability of a Member for the Damage Caused to a Credit Union A member of a credit union shall be held liable for the damage caused to the credit union in accordance with the procedure laid down by the Civil Code of the Republic of Lithuania. Expiry of member of the credit union shall not release the person from liability for the damage caused to the credit union. CHAPTER FOUR MANAGEMENT OF A CREDIT UNION Article
63. Bodies of a Credit Union
64. A credit union must have the following bodies: the general meeting of members, the supervisory board, the board and the head of administration of the credit union.
65. The management bodies of a credit union shall be the board of the credit union and the head of administration of the credit union.
66. A credit union’s articles of association, the Civil Code of the Republic of Lithuania, this Law as well as the Law of the Republic of Lithuania on Financial Institutions and the Law of the Republic of Lithuania on Cooperative Companies (Cooperatives) shall set forth the procedure for the formation and operation of the bodies of a credit union and specify the scope of competence, functions and liability thereof, except where this Law provides otherwise. Article
67. General Meeting of Members of a Credit Union
68. The general meeting of members of a credit union may not be replaced with the meeting of representatives of members of the credit union.
69. The general meeting of members of a credit union shall hold the exclusive right to: 1) amend the articles of association of the credit union; 2) shift the registered office of the credit union; 3) elect members of the supervisory board, the board and the loan committee and members of the controllers’ commission (controllers) and respectively from among the members – chairpersons of the supervisory board, the board, the loan committee and the controllers’ commission, an audit firm and remove them from office; 4) adopt a resolution on expulsion of a member from the credit union; 5) determine the amount of remuneration to members of the controllers’ commission (controller) and annual bonuses to heads of the credit union; 6) set limits for the funds to be allocated to remunerate a reporting expert or independent auditor for their work; 7) approve the annual estimate of revenue and expenditure of the credit union; 8) approve annual financial statements, adopt a resolution on the procedure for appropriating profit and compensating for losses; 9) approve the signing of the memorandum of association of the Central Credit Union, resolve the issue of the credit union’s joining the Central Credit Union and secession therefrom; 10) adopt a resolution on reorganisation or liquidation of the credit union; 11) resolve the issue of the credit union’s joining an association of credit unions and secession therefrom; 12) evaluate the reports submitted by the supervisory board, board, loan committee, the controllers’ commission (controller), the internal audit service of the credit union; 13) at the general meeting of members, resolve the issues assigned to the supervisory board or the board, at the request of the supervisory board or the board; 14) resolve other issues falling within the scope of its competence under laws and the articles of association of the credit union. Article
70. Grounds for Convening the General Meeting of Members of a Credit Union
71. The general meeting of members of a credit union shall be convened by the board of the credit union, and where the board does not convene the meeting in the specified cases and in accordance with the established procedure – by the supervisory board, the head of administration or at least ¼ of members of the credit union, excluding associate members.
72. The extraordinary general meeting of members of a credit union must be convened where: 1) the sum total of the constituent parts of the equity capital of the credit union as specified in paragraph 1 of Article 38 of this Law falls below the minimum capital of the credit union; 2) the equity capital of the credit union is insufficient to ensure safe and sound activities of the credit union; 3) the supervisory institution which sets the time limits for the convening of the meeting and agenda thereof so requires; 4) at the request of the board, the supervisory board or at least ¼ of members of the credit union, excluding associate members; 5) in other cases specified by the articles of association of the credit union and laws of the Republic of Lithuania. Article
73. Quorum of the General Meeting of Members of a Credit Union and Adoption of Resolutions
74. The general meeting of members may adopt resolutions where it is attended by more than ½ of all members of a credit union, excluding associate members. In the absence of the quorum, a repeat meeting shall be convened authorised to adopt resolutions on the issues on the agenda also in the event of absence of the quorum.
75. The members of a credit union attending the general meeting of members (proxies thereof) shall be registered against their signature in the list of participants to be signed by the chairperson and secretary of the meeting. The head of administration, who is not a member of the credit union, shall have the right to attend the general meeting of members in an advisory capacity. A member of the credit union not participating in the general meeting of members, who is nevertheless acquainted with the agenda and a draft resolution, may give a written notice to the general meeting of members not later than until the opening of the meeting as to whether he is in favour or against each individual issue. This notification shall be included in the quorum of the meeting and in the voting results.
76. Voting at the general meeting of members shall be open. Vote in secrecy shall be held at the request of at least 1/4 of members of a credit union participating at the meeting.
77. Resolutions of the general meeting of members shall be adopted by the majority of votes of the members of a credit union registered in the list of participants of the meeting, with the exception of the cases indicated in subparagraphs 1, 3, 4, 9 and 10 of paragraph 2 of Article 22 of this Law. In these cases, decisions shall be adopted by the majority of votes of least 2/3 of members of the credit union registered in the list of participants of the meeting.
78. The minutes of the general meeting of members shall be signed by the chairperson, the secretary of the meeting and one member of a credit union authorised by the meeting. The list of participants of the meeting and, where the vote was held in writing, ballot papers must be attached to the minutes. Article
79. Time Limits and Procedure for Convening the General Meetings of Members of a Credit Union
80. The annual general meeting of members shall be convened by the board of a credit union on an annual basis, but not later than within three months after the close of the financial year. The board must announce the convening of the annual meeting of members in accordance with the procedure laid down by the articles of association of the credit union not later than 20 days in advance before the meeting.
81. The initiators of convening of an extraordinary general meeting of members shall submit an application therefor to the board. The application shall indicate the following: the ground for and purpose of convening the meeting as well as the draft agenda. On receipt of the application, the board must, within ten days from the receipt of the application, take a decision on the convening of the extraordinary general meeting of members. The extraordinary general meeting of members must be held not later than within 30 days from the receipt of the application, but not earlier than after the lapse of 20 days from publication of a notice of convening of the meeting.
82. A repeat general meeting of members of a credit union must be convened not later than within ten days from the meeting not held, and the members of the credit union shall be informed thereof not later than five days before the repeat meeting.
83. A notice of convening of the general meeting of members must indicate: 1) the name and address of the credit union; 2) the date, time and venue of the meeting; 3) the agenda of the meeting.
84. Not later than five days before the meeting, members of a credit union must be given access to the documents relating to the agenda of the meeting.
85. The chairperson of the general meeting of members shall be elected on convening each meeting from among the members of a credit union, and until election thereof the chairperson of the supervisory board shall preside, unless the articles of association of the credit union provide otherwise.
86. The general meeting of members shall not have the right to adopt resolutions on the issues outside the agenda where it is attended by less than 2/3 of members of a credit union, excluding associate members. Only the agenda of the meeting which was not held shall be valid at the repeat meeting. Article
87. Supervisory Board
88. The supervisory board shall be a collegial supervisory body of a credit union. Activities of the supervisory board shall be directed by the chairperson.
89. The number of members of the supervisory board – at least three and not more than nine – shall be determined by the articles of association of the credit union. The supervisory board and chairperson thereof shall be elected by the general meeting of members of the credit union for a term not exceeding four years. The general meeting of members may remove from office the entire supervisory board or its individual members before the expiry of the term of office thereof. The number of the terms of office of a member of the supervisory board shall not be limited.
90. The head of administration of a credit union, a member of the board, a member of the loan committee, a member of the controllers’ commission (controller), a member of the internal audit service or another employee of the credit union may not be a member of the supervisory board.
91. A member of the supervisory board may resign from office before the expiry of his term of office by giving a written notice thereof to the supervisory board at least 14 calendar days in advance.
92. Where individual members of the supervisory board are elected, they shall be elected only until the expiry of the term of office of the current supervisory board. Article
93. Competence of the Supervisory Board
94. The supervisory board shall: 1) control implementation of resolutions of the general meeting of members by the loan committee, the board and the head of administration; 2) assess the activities of the credit union, the board, loan committee and internal audit service thereof, accumulation and use of financial resources, work remuneration, financial situation; 3) submit to the general meeting of members the reports of the board, the loan committee, the controllers’ commission (controller), the internal audit service together with its conclusions and proposals; 4) warn the board, the loan committee and the head of administration of the credit union to eliminate, without delay, the violations in activities of the credit union or give a notice thereof to the general meeting of members, also may propose to the general meeting of members to remove from office members of the board and the loan committee and to the board – to remove from office the head of administration where they, in the opinion of the supervisory board, have violated this Law, other legal acts, the articles of association of the credit union; 5) ensure that the credit union has an efficient internal control system; 6) assess, on a periodical basis, the reports of the internal audit service of the credit union; 7) submit to the general meeting of members its conclusions and proposals regarding annual financial statements, draft procedure for appropriation of profit and/or compensation of losses and on the report on the activities of the credit union drawn up by the board, also on the violations and other shortcomings detected by the internal audit service and the auditor; 8) determine and approve the conditions of and procedure for lending to heads of the credit union and the persons closely related to the heads of the credit union; 9) represent the credit union at court, when hearing disputes between the credit union and the board, between members of the credit union and the board, between the credit union and the head of administration; 10) propose that the board and the head of administration revoke the unlawful resolutions adopted; 11) assess the credit union’s management of the risks arising in the course of provision of financial services; 12) may transfer the issues falling within its scope of competence for resolution to the general meeting of members; 13) consider or decide on the issues which must be considered or decided on by the credit union’s supervisory board under this Law and other laws or the articles of association of the credit union.
95. Minutes must be taken of meetings of the supervisory board. The minutes of a meeting must: 1) specify the venue and time of the meeting, members of the supervisory board attending the meeting, the chairperson of the meeting, information on whether the meeting has a quorum, the agenda of the meeting; 2) present the substance of every issue considered at the meeting, specify the documents and information on the basis whereof every issue is considered, submit a report on speeches of the persons attending the meeting and on their proposals made on every issue considered at the meeting, a record of the results of voting and decisions taken and attach the individual opinions and protests of the persons attending the meeting.
96. The documents submitted when considering issues on the agenda of a meeting must be attached to the minutes of the meeting.
97. All members of the supervisory board, including those who did not attend a meeting of a credit union’s supervisory board, must be granted access to the minutes of the meeting of the credit union’s supervisory board within five working days or, where it is impossible to grant all members of the supervisory board access to the drawn-up minutes of the meeting of the supervisory board within this time limit, as soon as the circumstances permit. A member of the credit union’s supervisory board must confirm that he has been granted access to the minutes of the meeting of the supervisory board and, where he does not agree with the decisions taken or is of the opinion that they have been executed in an inappropriate manner, forthwith declare his protest in writing to the supervisory board; both documents must be attached to the minutes of the meeting of the supervisory board.
98. Every member of a credit union’s supervisory board must take all possible measures to ensure that the supervisory board decides on the issues within the scope of its competence and that the decisions meet the requirements set in legal acts, also perform the duties stipulated by other laws. A member of the credit union’s supervisory board shall be held liable for nonfeasance or misfeasance of this duty or other duties set forth by legal acts in the same manner as members of the management bodies are held liable under laws, the credit union’s articles of association and agreements concluded with the credit union.
99. A meeting of the supervisory board shall be valid if attended by at least a half of the members thereof. A resolution shall be considered to have been adopted where the number of votes of the members of the supervisory board attending the meeting cast in favour exceeds those cast against. Members of the supervisory board shall have equal rights. During voting, each member shall have one vote. Where a member of the supervisory board is unable to attend a meeting, he may express his will not later than by the opening of the meeting by taking a written vote “for” or “against” the resolution put for vote, provided that he has familiarised himself with the draft resolution.
100. The supervisory board shall have the right to invite an expert or independent auditor for the purpose of checking and assessing the financial statements and accounting records of a credit union.
101. At the request of the supervisory board, the board and the head of administration of a credit union must furnish the supervisory board with the documents relating to the activities of the credit union, also provide conditions for checking the activities of the credit union.
102. The working procedure of the supervisory board shall be laid down in the rules of procedure of the supervisory board adopted by it.
103. Meetings of the supervisory board must be held at least quarterly. The regular meetings of the supervisory board shall be convened by the chairperson of the supervisory board. The extraordinary meetings of the supervisory board shall be convened at the request of at least 1/3 of members of the supervisory board or on the instruction of the supervisory institution. The procedure for convening meetings shall be established in the rules of procedure of the supervisory board.
104. The supervisory board shall account for its activities to the general meeting of members in accordance with the procedure laid down in the articles of association of a credit union at least once per year. Article
105. Board of a Credit Union
106. Solely members of a credit union may be elected members of the board of the credit union. The board of the credit union must consist of at least three members.
107. The members of the board and chairperson thereof shall be elected by the general meeting of members of a credit union for a term not exceeding four years. A member of the board, the chairperson of the board may be removed from office or the entire board may be dissolved or may resign before expiry of the term of office in accordance with the procedure laid down by the articles of association. The number of terms of office a member of the board shall not be limited.
108. The board of a credit union shall: 1) admit new members to the credit union, resolve the issues of expiry of membership of the credit union, with the exception of expulsion of a member; 2) elect and remove from office the head of administration, approve the rules of procedure of the administration; 3) organise and convene the general meetings of members of the credit union; 4) draw up and submit to the general meeting of members of the credit union for approval an annual estimate of the credit union’s income and expenditure based on calculations; 5) approve the rules for borrowing, including deposits, and lending funds; 6) adopt decisions on disposal of the assets of the credit union and acquisition of fixed assets, taking and granting of long-term loans, offering of surety or guarantee for the discharge of obligations of third parties where the value of the assets or the amount of transactions does not exceed 1/10 of the equity capital of the credit union. Without a separate decision of the general meeting of members, the board may adopt decisions on disposal of the assets of the credit union and acquisition of fixed assets, taking and granting of long-term loans, offering of surety or guarantee for the discharge of obligations of third parties where the value of the assets or the amount of the transactions exceeds 1/10 of the equity capital of the credit union and where the general meeting of members of the credit union takes a decision by the majority of 2/3 votes to grant to the board such a right and such a right of the board is provided for in the articles of association of the credit union; 7) draft the credit union’s annual financial statements, the procedure for appropriating profit and compensating for losses; 8) approve the rules for investment of assets of the credit union; 9) establish rates for the services provided by the credit union; 10) establish the amount of the initial membership fee; 11) adopt decisions on the establishment of branches, approval or amendment of the regulations thereof, termination of activities thereof, appointment and removal from office of heads thereof, also on the establishment and termination of activities of the structural divisions providing financial services; 12) consider and decide on other issues which must be considered or decided on by the credit union’s board under this Law and other laws or the articles of association of the credit union.
109. Minutes of meetings of the board of a credit union shall be taken and access thereto shall be granted in the manner stipulated in paragraphs 2-4 of Article 27 of this Law.
110. Every member of a credit union’s board must take all possible measures to ensure that the board decides on the issues falling within the scope of its competence and that the decisions meet the requirements set in legal acts, also perform other duties stipulated by laws. A member of the board of a credit union shall be held liable for nonfeasance or misfeasance of this duty or the duties set forth by other legal acts under the laws, the articles of association of the credit union and the agreements concluded with the credit union.
111. The working procedure of the board of a credit union shall be laid down in the rules of procedure of the board adopted by it.
112. In addition to the cases provided for in the rules of procedure of the board, meetings of the board shall be convened also on the instruction of the supervisory institution.
113. A member of the supervisory board, a member of the loan committee, a member of the controllers’ commission (controller), a member of the internal audit service of a credit union may not be a member of the board.
114. The board shall account for its activities to the supervisory board and the general meeting of members in accordance with the procedure laid down in the articles of association of a credit union at least once per year. Article
115. Administration of a Credit Union
116. The administration of a credit union shall consist of the head of administration, the chief accountant (accountant) of the credit union and other employees of the credit union referred to in the documents of the credit union. The administration of the credit union shall implement the resolutions adopted by the general meeting of members, the supervisory board, the board and shall perform other functions specified in laws and the documents of the credit union.
117. The head of administration of a credit union shall be elected and removed from office by the board. An employment contract with the head of administration shall be concluded by the chairperson of the board, and where the same person is both the chairperson of the board and the head of administration, an employment contract with the head of administration shall be signed by another member of the board authorised by the board.
118. The head of administration of a credit union shall be a single-person management body.
119. The head of administration of a credit union shall be held liable for nonfeasance or misfeasance of the duties set forth by legal acts or the articles of association of the credit union under the laws, the articles of association of the credit union and the agreements concluded with the credit union.
120. A member of the supervisory board, a member of the loan committee, a member of the controllers’ commission (controller), a member of the internal audit service, the chief accountant (accountant) of a credit union, the persons who are members of the board or heads of administration of another credit union may not be the head of administration of the credit union.
121. A member of the supervisory board, a member of the board, a member of the loan committee, a member of the internal audit service, a member of the controllers’ commission (controller), the head of administration of a credit union, the persons who are members of the board or heads of administration of another credit union may not be the chief accountant (accountant) of the credit union.
122. The head of administration shall: 1) organise and carry out the financial activities of a credit union; 2) represent the credit union at court, arbitral institutions and other institutions, except where otherwise provided for by this Law; 3) on behalf of the credit union, conclude transactions with members of the credit union and third parties. The head of administration may conclude the transactions referred to in subparagraph 6 of paragraph 3 of Article 28 of this Law, provided there is a decision of the board of the credit union to enter into these transactions; 4) manage the register of members of the credit union; 5) conclude employment contracts with employees, and in his absence, another person authorised by the board shall sign the employment contracts; 6) be responsible for the drawing up of annual financial statements; 7) be responsible for submission of documents and data to the manager of the Register of Legal Entities; 8) consider and decide on other issues of operation and management of the credit union which, under this Law and other laws, are not assigned to the exclusive competence of the board or other bodies of the credit union. Article
123. Heads of a Credit Union and Employees
124. The heads of a credit union shall be: 1) members of the supervisory board; 2) members of the board; 3) the head of administration; 4) the head of the internal audit service; 5) the chairperson of the loan committee; 6) the chairperson of the controllers’ commission (controller).
125. The heads of a credit union must be of good repute and possess the qualification and experience in order to properly perform their duties. Requirements for the qualifications and experience of the heads of the credit union shall be set forth by legal acts of the supervisory institution. A person who objects that the supervisory institution manages, in the cases and according to the procedure set forth by laws and other legal acts, his data required for the issuance of the licences and granting of the authorisations and consents provided for under this Law, including his personal data and information on the person’s previous convictions and health, may not be the head of the credit union.
126. A person may not be regarded to be of good repute where he: 1) has been convicted of a serious or grave crime provided for in the Criminal Code of the Republic of Lithuania or of a crime against property, property rights and property interests, economy and business practice, the financial system or of corresponding criminal acts under criminal laws of foreign states, irrespective of whether the conviction has expired; 2) has been imposed administrative, disciplinary penalties or other sanctions provided for in laws where these penalties or sanctions have been imposed for infringement of the provisions of laws or other legal acts regulating the provision of financial services and pursuit of the activities of financial institutions and where he has been penalised more than once per year; 3) abuses psychotropic, narcotic, toxic substances or alcohol.
127. The supervisory institution shall also have the right to recognise that a person is not of good repute by taking into consideration: 1) his conviction of a crime or a criminal offence not referred to in subparagraph 1 of paragraph 3 of this Article or of corresponding criminal acts under laws of foreign states; 2) the imposition of the sanctions provided for by laws on a legal person whose qualifying holding in the authorised capital and/or voting rights he holds or held or whose head he is or was or the winding up of the said legal person by reason of insolvency or by a court’s decision or judgement on the grounds of inappropriate activities or infringements of legal acts; 3) while holding a qualifying holding in a financial institution’s authorised capital and/or voting rights, the suspension of his right to exercise the voting right at the general meeting of the financial institution’s members according to the procedure set forth by laws; 4) the absence of other important reasons for which the person may not be regarded to be of good repute.
128. Only the persons holding an authorisation of the supervisory institution may be heads of a credit union. Legal acts of the supervisory institution may provide for the cases where the requirement for the authorisation of the supervisory institution may be waived.
129. A credit union must, at least 30 days prior to the election or appointment of a person the head of the credit union, notify thereof the supervisory institution and submit the documents and data specified by legal acts of the supervisory institution and evidencing that the person meets the requirements set by the legal acts.
130. Where a credit union does not receive a request of the supervisory institution to submit additional information or is not notified of a decision not to grant an authorisation to elect the head of the credit union within 30 days of the receipt of submitted documents and data by the supervisory institution, the authorisation shall be considered to have been granted. Where additional information is requested, the time limit of 30 days shall be counted from the receipt of additional information.
131. The supervisory institution may refuse to grant an authorisation to elect the heads of a credit union where: 1) submitted documents do not meet the requirements set forth by the legal acts of the supervisory institution, not all data specified by the legal acts or additionally required have been submitted or they are incorrect; 2) the heads of the credit union do not meet the requirements set forth in paragraphs 3 and 4 of this Article; 3) a person whose election is subject to an authorisation is prohibited from holding this position under this Law or other laws.
132. The supervisory institution shall withdraw an authorisation to elect the head of a credit union where: 1) the authorisation has been obtained by fraud or otherwise violating laws; 2) the authorisation has been granted to elect a person who no longer meets the requirements set forth by this Law or other laws for the granting of an authorisation.
133. A credit union shall be notified of a decision taken on the withdrawal of an authorisation. Upon taking, by the supervisory institution, of a decision on the withdrawal of the authorisation and upon the request of the supervisory institution, the credit union must, in accordance with the procedure set forth by laws, forthwith remove the head from office and terminate the employment contract concluded therewith.
134. Requirements for the qualifications, experience and repute of employees of a credit union may be set forth by legal acts of the supervisory institution. Article
135. Internal Control of the Activities of a Credit Union Requirements for the internal control of a credit union shall be set forth by the Law of the Republic of Lithuania on Financial Institutions, this Law and legal acts of the supervisory institution. Article
136. Services, Commissions and Committees of a Credit Union
137. Where the assets of a credit union fall below LTL 10 million, a controllers’ commission (controller) must be elected within the credit union. Where the assets of a credit union amount to or exceed LTL 10 million, independent audit must be carried out in the credit union in accordance with the procedure laid down by Article 53 of this Law. The controllers’ commission (controller) shall be elected by the general meeting of members for a period stipulated by the articles of association of the credit union, which shall not exceed four years. It shall be permitted not to elect the controllers’ commission (controller) in a credit union where the general meeting of members of the credit union adopts a decision on the carrying out of audit of the credit union by an audit firm or where the audit of the credit union is compulsory under this Law.
138. Where the assets of a credit union amount to or exceed LTL 10 million, the credit union must have in place a standing internal audit service. The internal audit service shall be elected and dissolved by the supervisory board. The internal audit service shall account for its activities to the general meeting of members and the supervisory board in accordance with the procedure laid down in the articles of association of a credit union at least once per year.
139. A credit union must have a loan committee.
140. A credit union shall have the right to have also other committees, services and commissions specified in the articles of association of the credit union.
141. The procedure for the formation and operation of the services, commissions and committees of a credit union and scope of competence thereof shall be specified by the credit union’s articles of association and other documents adopted by the bodies of the credit union. Requirements for the procedure for the formation and operation of the services, commissions and committees of the credit union and scope of competence thereof may also be set by legal acts of the supervisory institution. Article
142. Loan Committee
143. The members of the loan committee and chairperson thereof shall be elected by the general meeting of members of a credit union from among at least three members of the credit union for a term of office not exceeding four years. A member of the supervisory board, a member of the board, the head of administration, a member of the internal audit service, a member of the controllers’ commission (controller) of a credit union may not be a member of the loan committee.
144. The loan committee shall consider applications for loans of members of a credit union. It shall provide for the terms and conditions of and the procedure for paying and repaying a loan and submit proposals on these issues to the board of the credit union or the head of administration thereof. The loan committee shall also consider the loans not repaid on time and submit proposals to the board and/or the head of administration. A loan contract may not be concluded with a member of the credit union where consent of the loan committee is required according to the procedures laid down by the credit union and the loan committee does not approve of the granting of the loan.
145. The articles of association of a credit union must indicate the cases when borrowing is possible by a decision of the head of administration, by an independent decision of the board of the credit union without the consent of the loan committee, and when such borrowing is not possible without the consent of the loan committee. In respect of consideration of applications of members for loans, the consent of the loan committee shall not be required where the loan granted by the credit union and interest do not exceed the amount of a share contribution held by a member in the credit union or where repayment of the loan is secured by the pledge of a fixed-term deposit held with this credit union or in other cases provided for in the articles of association of the credit union.
146. The loan committee shall account for its activities to the general meeting of members and the supervisory board in accordance with the procedure laid down in the articles of association of a credit union at least once per year.
147. The working procedure of the loan committee shall be laid down in the rules of procedure of the loan committee adopted by it. Article
148. Controllers’ Commission (Controller) of a Credit Union
149. The scope of competence and functions of the controllers’ commission (controller) shall be specified by the articles of association of a credit union and other documents approved by the general meeting of members of the credit union.
150. A member of the supervisory board, a member of the board, the head of administration, a member of the loan committee, a member of the internal audit service of a credit union or another employee of that credit union, also a person related by blood and marriage to the persons indicated in this paragraph may not be a member of the controllers’ commission (controller).
151. The controllers’ commission (controller) must check the annual financial statements of a credit union and submit, on the basis thereof, a conclusion of the auditing commission (auditor) on these statements. The controllers’ commission (controller) must check the annual financial statements of a credit union and submit its opinion thereon solely where the audit of the credit union is not carried out by an audit firm.
152. A conclusion of the controllers’ commission (controller) on the annual financial statements of a credit union shall be submitted on the same issues as the issues whereon the auditor’s report must be submitted under this Law.
153. Members of the controllers’ commission (controller) may be remunerated for their work.
154. Members of the controllers’ commission (controller) shall be held liable, in accordance with the procedure laid down by laws of the Republic of Lithuania, for unsatisfactory control of activities of a credit union and for concealing activity shortcomings. CHAPTER FIVE CAPITAL OF A CREDIT UNION AND APPROPRIATION OF PROFIT Article
155. Capital of a Credit Union The capital of a credit union shall consist of the equity and loan capital. Article
156. Equity Capital
157. The equity capital of a credit union shall consist of: 1) the share capital; 2) the reserve funds; 3) retained earnings (loss) of the previous year; 4) mandatory reserve or reserve capital; 5) tangible fixed assets revaluation reserve; 6) retained earnings (loss) of the current year; 7) other reserves.
158. The articles of association of a credit union must indicate the capitals and reserves formed in the credit union. Article
159. Loan Capital
160. The loan capital of a credit union shall be made up of the funds which the credit union has acquired by the right of ownership through borrowing from members of the credit union, credit unions or the Central Credit Union by issuing long-term debt securities (bonds) or concluding loan agreements. The initial maturity date of the debt securities and the term of validity of a loan agreement shall be at least five years.
161. The loan capital of a credit union must conform to all characteristics of a subordinated loan. Article
162. Minimum Capital of a Credit Union
163. The sum total of the constituent part of a credit union’s equity capital specified in subparagraphs 1, 2, 3 and 4 of paragraph 1 of Article 36 of this Law must be not less than LTL 15
164. This shall be the minimum capital of a credit union.
165. Where it transpires that the sum total of the constituent parts of a credit union’s equity capital as specified in paragraph 1 of this Article has fallen below the minimum capital of the credit union, the board of the credit union must forthwith notify thereof the supervisory institution and immediately convene an extraordinary general meeting of members. The general meeting of the credit union’s members must take decisions which would allow to restore the credit union’s capital to the minimum amount of a credit union’s capital as quickly as possible. The board of the credit union shall notify the supervisory institution of the decisions taken at the general meeting of the credit union’s members on the restoration of the capital not later than within three working days. Article
166. Share Capital and Shares of a Credit Union
167. The share capital of a credit union shall consist of the value of all share contributions of the credit union. Share contributions shall be made solely in money’s worth.
168. The smallest amount of a share contribution may not be less than LTL
170. It shall be prohibited to recover from a member of a credit union the share contributions which are the property of the credit union, with the exception of the cases when the debtor succeeds from the credit union.
171. Shares of a credit union shall not be subject to the Law of the Republic of Lithuania on Securities. Shares of a credit union shall be uncertificated. Article
172. Adjusted Capital The adjusted capital of a credit union shall be the sum total of the credit union’s capital reduced by the amount and according to the procedure set forth by legal acts of the supervisory institution. Article
173. Capitals and Reserves
174. The reserve capital of a credit union shall comprise additional contributions of members of the credit union and/or deductions from the profit of the credit union. The purpose of the credit union’s reserve capital shall be to guarantee the financial stability of the credit union. By a decision of the annual general meeting of the credit union’s members, the reserve capital of the credit union may be used solely to cover the operating losses of the credit union.
175. The mandatory reserve or reserve capital shall be formed from a credit union’s net profit deductions. Allocations to the mandatory reserve or reserve capital shall be compulsory and may not be less than 20 per cent of the credit union’s net profit, until the mandatory reserve or reserve capital reaches 1/5 of the credit union’s equity capital. The mandatory reserve or the reserve capital may, by a decision of the annual or extraordinary general meeting of the credit union’s members, be used solely to cover operating losses of the credit union. Upon using a part of the mandatory reserve or reserve capital to cover the credit union’s operating losses, deductions from the net profit to the mandatory reserve or reserve capital shall be repeated until it reaches the specified amount.
176. The tangible fixed assets revaluation reserve shall be the amount of the increase in the value of tangible fixed assets resulting after the revaluation of the assets. The tangible fixed assets revaluation reserve shall be reduced in the event the revaluated assets are written off, depreciated, written down or transferred into the ownership of third parties. A part of the reserve which is left unused after the writing off, depreciating or transferring into the ownership of third parties of the tangible fixed assets may be included in the profit available for appropriation at the close of the financial year. This reserve may not be directly used to cover operating losses of a credit union.
177. Other reserves of a credit union shall be the reserves whose formation and use has been provided for in the articles of association of the credit union. Article
178. Appropriation of Profit
179. The profit or loss of a credit union shall be the financial result of the credit union’s annual activities, which shall be calculated by deducting the credit union’s expenses of the financial year from the credit union’s earnings of the year.
180. The net profit or loss shall be the financial result of a credit union’s annual activities, which shall be calculated by deducting the tax amounts for the reporting period from the financial result of the credit union’s annual activities.
181. The net financial result (profit or loss) of annual activities for the financial year must be appropriated not later than within three months of the close of the financial year when the annual general meeting of members of the credit union approves annual financial statements.
182. Where, after the close of the financial year, the sum total of a credit union’s unappropriated result and net result of annual activities at the beginning of the next financial years is positive (profit), the general meeting of the credit union’s members shall adopt a decision on appropriation of profit. The decision must indicate: 1) retained earnings (loss) at the beginning of the financial year; 2) net financial result of annual activities; 3) deductions to the mandatory reserve or reserve capital; 4) deductions to other capitals and reserves formed in the credit union; 5) the share of profit allocated for the payment of bonuses in proportion to turnover and/or dividends; 6) the use of profit for other purposes indicated in the articles of association of the credit union; 7) retained earnings.
183. Profit may be allocated for the payments referred to subparagraphs

paragraph 4 of this Article solely upon effecting the deductions compulsory for a credit union to the capitals and reserves formed in the credit union and covering the credit union’s losses.

1. Where, after the close of the financial year, the sum total of a credit union’s unappropriated result and net result of annual activities at the beginning of the next financial years is negative (loss), the credit union’s members shall adopt a decision on the covering of this loss. The loss shall be covered: 1) by transfers from the mandatory reserve or from the reserve capital; 2) by transfers from the reserve capital.
2. Where the amounts transferred from reserves are insufficient for the covering of a loss: 1) the remaining retained loss may be covered by the share contributions of members of a credit union or brought forward to the beginning of the next financial year, where the credit union’s equity capital does not fall below the specified minimum capital of a credit union as a result of the occurred loss; 2) the remaining retained loss must be covered by the share contributions of members of a credit union when the credit union’s equity capital falls below the specified minimum capital of a credit union as a result of the occurred loss.
3. Where it transpires, upon performance of assessment of a credit union’s activities, that as a result of the loss occurred in the credit union the credit union’s equity capital falls bellows the specified minimum capital of a credit union, members of the credit union must make additional contributions to the credit union’s mandatory reserve or reserve capital or make additional share contributions which would allow to restore the credit union’s equity capital up to the minimum amount of the capital as quickly as possible. CHAPTER SIX A CREDIT UNION’S OPERATIONAL RISK AND PRUDENTIAL TREATMENT THEREOF, PROTECTION OF THE INTERESTS OF THE CREDIT UNION’S CLIENTS Article
4. Taking of Operational Risk and Prudential Treatment Thereof
5. Requirements for the taking of a credit union’s operational risk and prudential treatment thereof shall be set by the Law of the Republic of Lithuania on Financial Institutions.
6. A credit union must make provisions to reduce its operational risk on the basis of legal acts of the supervisory institution and taking account of the risk of every transaction it concludes on the provision of financial services, the financial and economic condition of a client, the performance of the obligations related to the transactions on the provision of financial services, the available means of ensuring the performance of these obligations as well as other circumstances influencing the value of the credit union’s assets. Article
7. Prudential Requirements for a Credit Union’s Activities
8. The following prudential requirements shall be set for credit unions: 1) capital adequacy; 2) liquidity; 3) maximum open position in foreign currency; 4) maximum exposure to a single borrower; 5) other requirements set by legal acts of the supervisory institution.
9. The specific ratios and methodology for calculation thereof shall be laid down by legal acts of the supervisory institution. The supervisory institution shall also have the right to set individual ratios for a credit union. *
10. The requirement referred to in subparagraph 4 of paragraph 1 of this Article shall not apply to a credit union whose adjusted capital does not exceed LTL 2 million.
11. In respect of the requirement of maximum exposure to a single borrower, the borrowers of a credit union shall be subject to the interlinking criteria established by the supervisory institution. *Note. Paragraph 3 of Article 44 shall remain in force until 1 January
12. Article
13. Limits on Investment in Immovable Property
14. A credit union may invest in immovable property where it is necessary to ensure direct activities of the credit union (buildings wherein the registered office of the credit union is located or wherein financial services are provided, etc.). This investment may not exceed 100 per cent of the adjusted capital of the credit union.
15. Paragraph 1 of this Article shall not apply where a credit union has acquired immovable property by the right of ownership to cut the losses incurred by a financial service provided to a client and where it holds such a property by the right of ownership for a time period not exceeding one year from the day of its acquisition. Article
16. Lending In Articles 47 and 48 of this Law, lending shall be considered to be the conclusion of transactions wherefrom a monetary claim of a credit union or irrevocable monetary commitment of the credit union arises. Article
17. Limits on Lending
18. The amount lent to a single member of a credit union may not exceed tenfold the amount of that member’s share contribution and 10 per cent of the deposits held with the credit union and the amount of the loans undertaken by the credit union as determined on the basis of the latest balance sheet of the credit union.
19. Funds may be lent to a member of a credit union regardless of the restriction specified in paragraph 1o f this Article, where the amount being lent and exceeding tenfold the amount of a share contribution is secured, over the entire period of lending, by pledge of the equivalent amount of a fixed-term deposit held with this credit union. ‑{}‑
20. A credit union may lend funds to a member thereof for a period not exceeding one year without requiring to secure their repayment by the means of securing obligations provided for in the Civil Code of the Republic of Lithuania, where the amount of funds requested by the member and interest thereon do not exceed the amount of his share contribution to the credit union. In this case, a restriction shall, in accordance with the procedure laid down by the articles of association of the credit union and other documents adopted by bodies of the credit union, be imposed on the member of the credit union to dispose of the share contribution or a part thereof not smaller than the amount of funds being lent together with the interest payable thereon until repayment of the amount lent and the interest.
21. The conditions of and procedure for lending to the head of a credit union and the persons closely related to the head of the credit union must be approved by the supervisory board of the credit union. The sum total of such a lending per one head of the credit union and the persons closely related thereto may not exceed ten per cent of the adjusted capital of the credit union. In this Article, the persons closely related to the head of a credit union shall be the spouse (cohabitee), children (adopted children), parents (adoptive parents) of the head of the credit union and legal persons, where the head of the credit union holds a qualified holding in the authorised capital and/or voting rights thereof. Decisions on such a lending must be taken by the board of the credit union, and a person related to such a lending may not participate in the taking of a decision. The terms of lending set for the persons referred to in this paragraph may not be more favourable than the terms of lending set for other clients of the credit union.
22. A credit union may lend funds solely where lending is secured by at least one of the means of securing obligations as provided for by the Civil Code of the Republic of Lithuania, with the exception of the case referred to in paragraph 3 of this Article.
23. Where the period of lending exceeds five years, such a lending must be secured by mortgage. Article
24. Limits on Lending for Making Share Contributions to a Credit Union A credit union shall not have the right to lend its share being acquired for making of a share contribution or for granting of a subordinated loan thereto, also for acquisition of the credit union’s debt securities. Article
25. Secret of a Credit Union
26. The secret of a credit union shall be all data and information of a client of the credit union known to the credit union concerning: 1) accounts held in the credit union by the credit union’s client, the balance of funds in these accounts, the client’s operations performed with the funds in his account, the terms of the contracts on the opening of the accounts by the client; 2) liabilities of the credit union’s client to the credit union and terms of the contracts wherefrom these liabilities have arisen; 3) other financial services provided to the credit union’s client and terms of the contracts on the provision of the financial services; 4) the financial situation and assets of the credit union’s client, activities, operating plan, liabilities to third parties or transactions concluded with the third parties, commercial (industrial) or professional secrecy of the client.
27. A credit union, the credit union’s employees and any third parties being in the possession of the information which constitutes a secret of the credit union may not divulge such information for an indefinite period of time, except in the cases referred to in paragraphs 3-5 of this Article and in other laws.
28. Solely the information which constitutes a secret of a credit union and which is related to a client may be divulged to the credit union’s client or at the written request of the client indicating to whom and which information must be provided.
29. A credit union shall have the right to divulge the information which constitutes a secret of the credit union to courts or third parties where this is necessary to protect the legitimate interests of the credit union and only to the extent this is necessary to protect the credit union’s interests.
30. A credit union shall provide the information which is considered a secret of the credit union to the institutions referred to in the Law of the Republic of Lithuania on Prevention of Money Laundering and Terrorist Financing, also to third parties according to the procedure set forth by laws where, according to this Law and/or other laws, the credit union must provide such information thereto. Article
31. Provision of Information on Financial Services
32. At the places where a credit union provides financial services to clients, the credit union’s name and the financial services which the credit union has the right to provide must be indicated, in an easily accessible place, to every prospective client; conditions must also be provided for public access to the information referred to in paragraph 2 of this Article.
33. Prior to concluding a contract on the provision of financial services, a credit union must provide a client with detailed information on the terms of the provision of the financial services, price of the services, duration of the provision of the services, possible consequences thereof and other information which may influence the client’s decision to enter into the contract. CHAPTER SEVEN ACCOUNTING, REPORTING AND AUDIT OF A CREDIT UNION Article
34. Accounting
35. A credit union must keep accounts in compliance with laws and other legal acts of the Republic of Lithuania, also the accounting policy selected by the credit union.
36. The accounting policy must cover general accounting principles, accounting methods and regulations designed to keep the accounts of a credit union and to draw up and submit financial statements.
37. The accounting organisation of a credit union must be such that: 1) financial statements reflect the actual financial position and results of operations of the credit union; 2) it provides conditions for the heads of the credit union to safely and soundly use and manage the credit union’s assets and to dispose thereof; 3) it provides conditions for members of the credit union and the institutions authorised by law to carry out verifications and to control the activities of the credit union, the heads and other employees thereof having the right to take decisions which give rise to the credit union’s obligations to other persons and the financial situation of the credit union.
38. A credit union’s Board shall be responsible for the organisation of accounting and the preservation of accounting documents in accordance with the requirements set by this Law and other legal acts of the Republic of Lithuania. Article
39. Reporting
40. The financial statements of a credit union shall comprise interim financial statements and annual financial statements.
41. Interim financial statements shall be the financial statements drawn up upon generalising the data of a period shorter than the financial year. The composition and periodicity of submitting of interim financial statements to the supervisory institution shall be established by legal acts of the supervisory institution.
42. Annual financial statements shall consist of: 1) the balance sheet; 2) profit (loss) account; 3) notes on the accounts.
43. At the close of the financial year, a credit union must: 1) within three months of the close of the financial year, but not later than 15 days prior to the annual general meeting of members of the credit union, submit to the supervisory institution the annual financial statements (annual financial reports) checked by the controllers’ commission (controller) or an audit firm, a draft decision on the appropriation of profit and a conclusion of the controllers’ commission (controller) or the auditor’s report;‑{}‑ 2) within three months of the close of the financial year, but not later than ten days prior to the annual general meeting of members of the credit union, provide access for the members of the credit union to the annual financial statements (annual financial reports) checked by the controllers’ commission (controller) or an audit firm, a draft decision on the appropriation of profit and a conclusion of the controllers’ commission (controller) or the auditor’s report; 3) within three months of the close of the financial year, approve annual financial statements by a decision of the general meeting of the credit union’s members and take a decision on the appropriation of profit; 4) within three working days of the taking of a decision by the general meeting of the credit union’s members on the approval of annual financial statements, submit to the supervisory institution the annual financial statements approved by the meeting and a decision on the appropriation of profit.
44. The general meeting of a credit union’s members may not take a decision on the appropriation of profit where annual financial statements have not been checked by the controllers’ commission (controller) or an auditor.
45. The head of administration of a credit union shall be held liable for the accuracy of the information provided in annual financial statements according to the procedure set forth by laws.
46. Premiums and other benefits specified in the articles of association of a credit union shall be paid to heads of the credit union after the close of the year, where such a decision is adopted by the general meeting of members of the credit union when approving annual financial statements. Article
47. Audit
48. An audit firm must audit a credit union’s annual financial statements and, on the basis of the audit, provide an auditor’s report on these statements, that is, an opinion on whether the credit union: 1) have correctly and accurately showed in its annual financial statements the results of annual operations and the financial position; 2) has drawn up the financial statements in compliance with the laws and other legal acts regulating accounting and currently in force in the Republic of Lithuania; 3) has accurately and in a qualified manner valued the assets; 4) has made mandatory adjustments of the value of the assets and performed write-offs; 5) has formed mandatory and required capitals, reserves and provisions to reduce the operational risk; 6) comply with capital requirements set by this Law and legal acts of the supervisory institution;‑{}‑ 7) efficiently and soundly manages assets and ensure safe and sound activities of the credit union; 8) has in place adequate internal control and information systems.
49. The general meeting of a credit union’s members shall select an audit firm to perform audit of the annual financial statements of the current year and not more than two subsequent financial years.
50. A credit union must, until the end of the first half of the current financial year, conclude an agreement with the audit firm selected at the general meeting of the credit union’s members on carrying out of the audit of annual financial statements and submit it to the supervisory institution. Article
51. Requirements for an Auditor and an Audit Firm, Duties and Liability Thereof The requirements set for an auditor and an audit firm, duties and liability thereof shall be set by the Law of the Republic of Lithuania on Financial Institutions. CHAPTER EIGHT SUPERVISION OF CREDIT UNIONS Article
52. Supervisory Institution of Credit Unions
53. The Bank of Lithuania shall be the supervisory institution of credit unions.
54. The supervisory institution shall exercise supervision of the credit unions holding a licence issued in accordance with the procedure laid down by this Law.
55. Supervision shall be exercised in compliance with this Law, the Law of the Republic of Lithuania on Financial Institutions, the Law of the Republic of Lithuania on the Bank of Lithuania and legal acts adopted by the supervisory institution. Article
56. Protection of the Information Obtained for Supervision Purposes
57. Information obtained for supervision purposes under this Law may not be publicly announced, divulged or made otherwise accessible, except in the cases specified by in this Law.
58. The supervisory institution, current or former employees thereof, the auditors acting on behalf thereof or third parties as well as any other persons whereto the information obtained for supervision purposes has been communicated in accordance with the procedure laid down by laws must comply with the requirement set forth in paragraph 1 of this Article.
59. Paragraph 1 of this Article shall not apply to the information which has already been publicly announced or made accessible or on the basis whereof data on specific persons cannot be directly or indirectly established.
60. The supervisory institution shall have the right to use the information obtained for supervision purposes, including the information obtained from the supervisory institutions of foreign states, for the purpose of exercising supervisory functions, including the imposition of sanctions, or where, according to the procedure set forth by laws, a decision of the supervisory institution has been appealed against.
61. The information obtained for supervision purposes may be communicated: 1) to the institutions specified by laws in accordance with the procedure laid down by laws, where it is required to investigate or to hear a criminal case, also in the cases and according to the procedure set forth in the Law of the Republic of Lithuania on Prevention of Money Laundering and Terrorist Financing; 2) to courts, where it is required in the course of a credit union’s bankruptcy proceedings or proceedings for the compulsory winding up of a credit union; 3) to the institutions of the Republic of Lithuania exercising supervision of the provision of financial services, insurance activities and the financial markets, where it is required for the exercise of the supervisory functions; 4) to the institutions exercising supervision of the provision of services of the credit institutions of foreign states and other financial services, insurance activities and the financial markets, where it is required for the exercise of the supervisory functions; 5) to the State undertaking “Deposit and Investment Insurance”, where it is required for the exercise of functions thereof; 6) to auditors of a credit union, where it is required for the exercise of functions thereof; 7) to other state institutions, where such information is required for the exercise of functions thereof and where this is necessary for credit unions’ supervision purposes; 8) to the European Central Bank, where it is required for the exercise of functions thereof.
62. The information obtained for supervision purposes may be communicated to the institutions referred to in subparagraphs 3-6 of paragraph 5 of this Article where the requirements set for them on the protection of the information are not lower than provided for under this Law.
63. Pursuant to subparagraph 4 of paragraph 5 of this Article, information may be communicated to the supervisory institution of a foreign state which is not a Member State of the European Union where an agreement has been concluded therewith providing for the exchange of the information obtained for supervision purposes and where under the laws of that state, the requirements set for the supervisory institution of the foreign state on the protection of the information are not lower than provided for under this Law. Article
64. Consideration of Applications for the Issuance of a Licence, Granting of an Authorisation or Consent or for Carrying out of Other Actions and Decisions of the Supervisory Institution
65. Detailed terms of and the procedure for submitting and examining applications for the issuance of the licences, granting of the authorisations, consents provided for under this Law or for carrying out of other actions (hereinafter referred to is this Article as the “granting of authorisations”) and issuing them as well as detailed requirements for the submitted documents shall be set forth by legal acts of the supervisory institution.
66. An application for the granting of an authorisation shall be examined and a decision thereon shall be taken within the time limits laid down in this Law or, where the time limits have not been laid down in this Law, within the time limits laid down by legal acts of the supervisory institution. The supervisory institution shall have the right to request additional documents and information required to take the decision. Where the supervisory institution requests additional documents and information or the applicant submits additional documents or information at his own initiative, the time limit of consideration of the application and taking of the decision shall be calculated from the receipt of the additionally requested documents and information or the documents and information additionally submitted by the applicant.
67. The supervisory institution shall notify applicants of a decision taken on the granting of an authorisation within five working days of the taking of the decision. Reasons must be given whenever the supervisory institution refuses to grant an authorisation. Article
68. Rights of a Supervisory Institution
69. In addition to other duties and rights laid down in this Law and other legal acts, the supervisory institution shall have the right: 1) to issue to the credit union the instructions specified in paragraph 2 of this Article, and the credit union must implement them within the time limit laid down by the supervisory institution and forthwith give written notice thereof to the supervisory institution; 2) where the decisions taken by bodies of a credit union pose a threat to the stability and soundness of activities of the credit union, to apply, according to the procedure set forth by laws, to court to declare them void; 3) to conclude agreements on the carrying out of an inspection of a credit union with audit firms, property appraisers or other persons holding appropriate qualifications in order to determine the value of the payment institution’s assets, financial position of the payment institution, to assess the risks taken or inspect other areas of the credit union’s activities. Where, upon completion of the inspection, it is established that the credit union has supplied incorrect information to the supervisory institution or where other infringements of legal acts are established, the expenses in connection with organisation of the inspection as incurred by the supervisory institution shall be covered by the credit union. Where the persons acting in accordance with the agreements concluded with the supervisory institution and referred to in this subparagraph carry out the credit union’s inspection, they shall be subject to provisions of paragraphs 2 and 3 of Article 60 of this Law; 4) to demand that an audit firm auditing the credit union’s financial statements be changed, where the audit firm or the auditor does not meet (carry out) the requirements set forth by laws; 5) to demand that the controllers’ commission (controller) of the credit union or some members thereof carrying out of a check of the credit union’s financial statements be changed, where they do not meet or breach the requirements set forth by legal acts and articles of association of the credit union, inappropriately perform the functions and duties assigned thereto.
70. The supervisory institution, upon discovering infringements of legal acts or shortcomings in the activities of a credit union or upon establishing that the activities of the credit union pose a threat to the stability and soundness of activities of the credit union, shall have the right to issue to the credit union the following written instructions: 1) to eliminate the infringements of the legal acts or shortcomings in the activities of the credit union within the time limits laid down by the supervisory institution; 2) not to conclude certain transactions or to reduce the scope of such transactions, including transactions on the purchase of the credit union’s ancillary services or acquisition of immovable property, or to sell or otherwise transfer to third parties immovable property; 3) to carry out an audit of interim financial statements of the credit union within the time limit laid down by the supervisory institution; 4) to prepare and implement, within the time limits laid down by the supervisory institution, an acceptable action plan for the restructuring of activities of the credit union and/or the elimination of discovered infringements and/or shortcomings; 5) to convene the general meeting of the credit union’s members or a meeting of the supervisory board or the board and to discuss thereat the issues proposed by the supervisory institution; 6) for the heads of the credit union to appear before the supervisory institution and provide clarifications. The supervisory institution shall have the right to publicly announce its instruction for the heads of the credit union to appear before the supervisory institution; 7) to carry out other actions or not to carry out certain actions in order to bring infringements of legal acts to an end or to eliminate shortcomings in activities of the credit union or to ensure the stability and soundness of the activities of the credit union.
71. The supervisory institution, upon discovering infringements of legal acts or shortcomings in activities of a credit union or where activities of the credit union pose a threat to the stability and soundness of activities of the credit union, shall have the right to temporarily set for the credit union individual prudential ratios or additional prudential requirements. Such a decision of the supervisory institution must be substantiated and taken in accordance with the provisions of paragraph 2 of Article 62 of this Law.
72. The instructions referred to in paragraphs 2 and 3 of this Article may also be given by simultaneously imposing sanctions.
73. The employees of the supervisory institution shall have the right, according to the procedure set forth by the supervisory institution, to participate in the work of bodies of a credit union and committees of the credit union – to attend meetings or sittings in the capacity of observers or otherwise observe activities of the bodies of the credit union, the committees of the credit union and heads of the credit union.
74. The supervisory institution, according to the procedure set forth by it and in compliance with the legal acts regulating the protection of personal data, shall have the right to store and otherwise process data on debtors of a credit union. The credit union must provide to the supervisory institution data on debtors of the credit union and shall have the right to use these data according to the procedure set forth by legal acts of the supervisory institution. Article
75. Appeal against Decisions, Acts (Omissions) of the Supervisory Institution
76. The persons whose rights or interests protected under the law have been violated shall have the right to file an appeal to court against decisions, acts (omissions) of the supervisory institution according to the procedure set forth by laws.
77. Filing of an appeal to court shall not have suspensory effect on a decision or an action appealed against until its resolution. Article
78. Inspection of a Credit Union
79. Inspection of credit unions shall be conducted by the employees of the supervisory institution. The supervisory institution, when inspecting (verifying) a credit union, shall also have the right to engage third parties.
80. A credit union must provide the following facilities to carry out an inspection: 1) to supply to the persons conducting the inspection all the information and documents requested by them; 2) to provide an opportunity for the persons conducting the inspection to make use of data of the credit union’s information systems; 3) to provide the persons conducting the inspection with a workstation.
81. The persons conducting an inspection shall have the right: 1) to have unimpeded access to the premises of a credit union and divisions thereof during the office hours of the credit union under inspection; 2) to request and obtain the information and documents (originals or certified copies thereof) required to carry out the inspection, oral or written clarifications of the heads and other employees of the credit union; 3) to request copies of submitted documents or to make copies thereof themselves