Bank of Lithuania

Authorisation of Credit Unions

The aim of this Guide is to introduce persons concerned to the authorisation process for credit unions conducted by the Bank of Lithuania, requirements for credit unions being established (legal persons not yet established) or authorised (already established legal persons), set out the approach of the Bank of Lithuania to new market participants, set out a list of the documents to be submitted with an application for authorisation, and to identify other major aspects of authorisation.

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Licence of a credit union

Credit union means a credit institution holding a licence to engage and engaged in the receipt of deposits and other repayable funds from the non-professional participants of the market specified in the Republic of Lithuania Law on Credit Unions (hereinafter ‘the Law’) and lending thereof, also authorised to engage in the provision of other financial services stipulated by this Law to the persons specified by this Law and assuming related risks and responsibility.

The legal form taken by a credit union as a legal person may only be a cooperative society.

The main purpose of the activities of a credit union is to provide to its members the services of the acceptance of deposits and other repayable funds, lending, and other financial services, to satisfy the economic and social needs of its members.

A credit union must be a member of a central credit union. A credit union must be a member of only one central credit union.


Requirements for founders and members

The founders of a credit union may be solely natural persons. The smallest number of members of a credit union, apart from associate members, shall be 150.

  • The founder of a credit union may not be a natural person who:

                   1) has been convicted of a serious or grave crime or of a crime against the financial system, economy and business practice, property, property rights and property interests or of other criminal acts if the conviction has not expired;

                   2) have failed to submit the data on their identity, participants, activities, financial situation, heads of a legal person;

                   3) the persons who object that the supervisory authority manages their data required for the issuance of the licences and granting of the authorisations and consents, including information on a person’s previous convictions and health.

  • Legally capable natural persons meeting at least one of the following admission criteria selected by a credit union may be members of a credit union:

                   1) if they live, work or study in the territory of the municipality of the Republic of Lithuania where the credit union has its registered office or in the territories of other municipalities bordering this municipality specified in the articles of association of the credit union.

                   2) work in enterprises, undertakings engaged in the same type of economic activity;

                   3) belong to a trade union or an association of the relevant branch of economic activity.

The spouse (cohabitant), children (adopted children) living together and parents (adoptive parents) of a member of a credit union can be the members of the credit union, regardless of the above-named criteria.

  • The following persons may not be members of a credit union:

                  1) have failed to submit the data on their identity, participants, activities, financial situation, heads of a legal person;

                  2) the persons who object that the supervisory authority manages their data required for the issuance of the licences and granting of the authorisations and consents, including information on a person’s previous convictions and health.

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.


Associate members of a credit union

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 this municipality may be associate members of the credit union:

  • associations, trade unions, trade union associations, religious communities and societies, professional bodies of lawyers, gardeners’ societies, associations of owners of multi-family apartment houses and other buildings, public establishments wherein no holdings are held by state institutions or municipalities, households, cooperative societies (cooperatives) and agricultural companies;
  • individual enterprises of natural persons who are the members of the credit union, general partnerships, limited partnerships, private limited liability companies, small communities 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 a credit union if they conform to the definition of small and micro enterprises provided for in the Republic of Lithuania Law on Small and Medium-Size Business Development.

The number of associate numbers in a credit union may not exceed or be equal to the number of the members.


Requirements for the Heads of a credit union

The Heads of a credit union shall be:

  • Members of the Supervisory Board;
  • Members of the Board;
  • Head of Administration;
  • Head of the Internal Audit Service;
  • Chair of the Loan Committee.

The Heads of a credit union must be of good repute and qualifications and experience necessary 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 authority. A person who objects that the supervisory authority 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 the person’s previous convictions and health, may not be the Head of the credit union.

Lietuvos banko Priežiūros tarnybos pozicija dėl reikalavimų Lietuvos banko prižiūrimiems finansų rinkos dalyviams, vertinantiems vadovus ir pagrindines funkcijas atliekančius asmenis.


The smallest capital of a credit union

The sum total of the constituent parts of the equity capital of a credit union as specified in sub-paragraphs 1,2,3 and 4 of Article 32(1) of the Law must not be less than:

  • EUR 145,000 where the credit union does not intend to provide the authorised financial service indicated in Article 5(2)(3) of the Law on Credit Unions;
  • EUR 350,000 where the credit union intends to provide the authorised financial service indicated in Article 5(2)(3) of the Law on Credit Unions.

Statutory timeframe

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. Upon request of additional documents or information by the supervisory authority, the decision must be taken and the credit union being established must be notified thereof within 3 months of the receipt of additional documents and information. However, the decision regarding the granting of a licence must in any way be taken and the credit union being established must be notified thereof within 12 months of the receipt of the application.


Credit union licence fee

Prior to applying for a licence of a credit union it is necessary to pay into the account of the State Tax Inspectorate (STI) a state levy for the granting of the licence, which currently is EUR 730 (the sizes of levies were established by Resolution No 1458 of the Government of the Republic of Lithuania of 15 December 20001.

The procedure for the generation of orders to the income collection accounts of the STI via online banking  and the numbers of the income collection accounts are available on the  STI website.

 

1 – Available only in Lithuanian.


Documents and information to be submitted to the Bank of Lithuania

According to Article 7(3) of the Law on Credit Unions, for a licence to be issued, an application and the following documents and data specified by legal acts of the Bank of Lithuania shall be submitted, including:

  • an agreement of the establishment of the credit union;
  • the articles of association of the credit union;
  • the minutes of the statutory meeting;
  • a list of founders (where the legal person has already been established – of members), documents and information on the identity of the founders (members) of the credit union, also the amount of the main and additional share contribution of each of them, the documents and information evidencing that the funds used for the share contributions have been obtained legitimately;
  • the documents evidencing the complete payment of the credit union’s share contributions;
  • a list of heads of the credit union elected by the statutory meeting whose election is subject to an authorisation of the supervisory institution and documents, specified by the supervisory authority, necessary to assess whether these persons are fit and proper in accordance with the provisions of Article 27 of the Law on Credit Unions;
  • documents confirming 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 the Law on Credit Unions;
  • the credit union’s three-year framework of activities. The requirements for the framework of activities shall be set by the supervisory authority;
  • a description of the management and organisational structure;
  • a draft of the accounting policy and a detailed description of the accounting organisation;
  • 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.
  • a conclusion by a central credit union a member of which the credit union intends to become that the credit union meets the terms of admission to the credit union of members of the credit union set forth in the articles of association of the central credit union.

The procedure for the licensing of a credit union is established in Resolution No 195 of the Board of the Bank of Lithuania of 16 December 2008 on the Authorisation Granted by the Bank of Lithuania to Credit Unions (185.5 KB ).


Laws and legal acts regulating the activities and authorisation of credit unions

 

2 – Lithuanian consolidated version valid as of 1 March–30 June 2017. English version last amended on 12 March 2015.

3 – English version last amended on 1 January 2017.

4 – Lithuanian consolidated version valid as of 1 March 2017. English version last amended on 3 December 2015.

5 – Lithuanian consolidated version valid as of 1 January 2016. English version last amended on 1 January 2016.

6 – Lithuanian consolidated version valid as of 1 December 2016. English version last amended on 17 January 2008.

7 – Lithuanian consolidated version valid as of 1 January 2003. English version last amended on 1 June 1993.

8 – Lithuanian consolidated version valid as of 1 February 2017. English version last amended on 1 January 2015.

9 – Lithuanian consolidated version valid as of 23 November 2018. English version last amended on 7 January 2019.

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Last update: 29-01-2019