Credit union registration, credit union license

How to create a credit union? The procedure of Credit union registration. Credit union licensing

CREDIT UNION REGISTRATION

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BMG has 10 years of experience in providing services for the creation and registration of credit unions in Ukraine. BMG has successfully implemented over 1000 projects, opened over 100 financial institutions and received over 300 licenses for financial activities.

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    Credit union

    A credit union is a non-profit organization founded by individuals, trade unions, and their associations on a cooperative basis in order to meet the needs of its members for mutual lending and the provision of financial services at the expense of the combined monetary contributions of the members of the credit union.

    A credit union is a financial institution whose exclusive activity is the provision of financial services:

    • Provision of funds on loan, including on the terms of a financial loan
    • Attraction of contributions (deposits) of members of the credit union to deposit accounts

    The credit union provides financial services on the basis of registration as a financial institution and obtaining the appropriate credit union licenses.

    Credit union registration procedure

    The activities of the credit union to provide funds on a loan, including on the terms of a financial loan, and to attract contributions (deposits) from members of the credit union to deposit accounts are classified as financial services.

    Financial services are provided by institutions after entering it in the register of financial companies, and after obtaining the appropriate license from the credit union:

    • Credit union license for lending
    • Credit Union license for attracting deposits

    The procedure for registering a credit union that plans to provide financial services:

    1. Registration of a credit union as a legal entity
    2. Bringing to the standards of the financial company
    3. Entry into the register of financial companies – registration of a credit union as a financial institution
    4. Obtaining a credit union license for lending – lending funds, including on the terms of a financial loan
    5. Obtaining a credit union license to attract deposits

    Creation of a credit union

    The credit union is created on the basis of the decision of the constituent assembly.

    The number of founders (members) of the credit union may not be less than 50 people who can be members of the credit union and are united by at least one of the following criteria: they have a common place of work or study or belong to one trade union, an association of trade unions, another public or religious organization or live in the same village, town, city, district, region.

    The decision to create a credit union is drawn up by the minutes of the constituent assembly, which are signed by the chairman and secretary of the meeting.

    An integral part of the protocol is the register of persons who took part in the constituent assembly (list of founders). The register must indicate the last name, first name and patronymic of the person, data of his passport of a citizen of Ukraine or passport documents of a foreigner, address and other information confirming the presence of signs. Data about a person is certified by his personal signature.

    The constituent assembly approves the charter of the credit union, elects its governing bodies, authorizes persons to conduct state registration of the credit union, and resolve other issues related to the creation of the credit union.

    Credit union charter

    The credit union operates on the basis of a charter that does not contradict the legislation of Ukraine.

    The charter of the credit union must indicate:

    • The name of the credit union and its legal address
    • The purpose of creation and objectives of the credit union
    • Credit union membership sign
    • The procedure for the formation and operation of the management bodies of the credit union, the procedure for the formation of branches and departments, their powers
    • Rights and obligations of members of the credit union
    • Conditions and procedure for joining a credit union, procedure for terminating membership
    • Procedure for payment of admission and other fees
    • Sources of income and the procedure for the use of funds and other property of the credit union, including the procedure and conditions for granting loans to members of the credit union, the procedure for the formation and use of funds created by the union
    • The procedure for reporting and monitoring the activities of the management bodies of the credit union
    • The procedure for making changes and additions to the charter of the credit union
    • The procedure for terminating the activities of the credit union and resolving property issues in connection with its liquidation (reorganization)
    • The procedure for covering possible losses of the credit union
    • The procedure for the distribution of income of the credit union

    Credit union registration and licensing

    The credit union is granted the status of a financial institution by the national commission that carries out state regulation in the field of financial services markets in accordance with the requirements of regulatory legal acts.

    A credit union is granted the status of a financial institution by making an appropriate entry in the state register of financial institutions. The National Financial Services Commission issues a certificate of registration of a financial institution to the credit union.

    Licensing of the credit union is subject to the activities of the credit union to attract contributions (deposits) from members of the credit union to deposit accounts.

    Credit union requirements

    The professional qualities of the manager, chief accountant of the credit union, as well as the head of a separate division of the credit union must meet professional requirements.

    The credit union must keep records of concluded agreements for the provision of financial services, must keep them for at least five years after the fulfillment of all obligations under them, unless otherwise provided by law.

    The credit union must have accounting and recording systems (software and special technical equipment) that must comply with the requirements established by the National Commission for Financial Services, and provide for keeping records of transactions for the provision of financial services to consumers and submitting reports to the National Commission for Financial Services. The data of the accounting and registering systems of the credit union as of any date must correspond to the accounting data.

    The credit union is obliged to have computer equipment that allows for the maintenance of accounting and registration of transactions for the provision of financial services and the fulfillment of the requirements for the submission of information to the National Commission for Financial Services, established by law, and means of communication (telephone, Internet, e-mail).

    A credit union must own or use a separate non-residential premises at the location and location of its separate divisions.

    The premises in which customers (consumers) are serviced must be accessible for persons with disabilities and other low-mobility groups of the population in accordance with state building codes, rules and standards, documented by a specialist in technical inspection of buildings and structures, who has a qualification certificate. Information on the conditions of accessibility of the premises for persons with disabilities and other low-mobility groups of the population is placed in a place accessible for visual perception by the client (consumer).

    The credit union is obliged to ensure the storage of funds and documents and have the necessary security equipment (in particular, safes for storing funds, burglar alarms and / or appropriate security), and the licensee must adhere to the legal requirements regarding cash payments established by law.

    Credit union activities

    Credit union in accordance with its charter:

    • Accepts introductory and compulsory shares and other contributions from members of the union
    • Provides loans to its members on the terms of their payment, urgency and security in cash and non-cash form. Farms and private enterprises that are in their ownership can also receive loans on behalf of members of the credit union. The amount of the loan provided to one member of the credit union cannot exceed 20 percent of the capital of the credit union
    • It attracts, on contractual terms, contributions (deposits) of its members to deposit accounts both in cash and in non-cash form. The obligations of the credit union to one of its members cannot exceed 10 percent of the total obligations of the credit union
      Acts as a guarantor of the fulfillment by a member of the union of obligations to third parties
    • Places temporarily free funds on deposit accounts in bank institutions licensed to work with deposits of citizens, a united credit union, and also acquires government securities, the list of which is established by the authorized body, and shares of cooperative banks
      Attracts, on contractual terms, loans from banks, loans from the United Credit Union, funds from other institutions and organizations solely for providing loans to its members, unless otherwise established by a decision of the authorized body. The total amount of funds attracted, including loans, cannot exceed 50 percent of the value of the total liabilities and capital of the credit union at the time of attraction
    • Provides loans to other credit unions, unless otherwise established by a decision of the authorized body
    • Member of payment systems
    • Pays, on behalf of its members, the cost of goods, works and services within the limits of the loan granted to him
    • Carries out charitable activities at the expense of funds specially created for this purpose

    The credit union has the right to independently establish:

    • The amount of payment (interest), which is allocated to share membership fees and is charged on contributions (deposits) held in the deposit accounts of members of the credit union
    • Amount of payment (interest) for the use of loans provided by the credit union
    • Prices (tariffs) for services provided by the credit union
    • Types of loans provided by the credit union, terms of granting and terms of loan repayment
    • Methods of securing loan obligations, requirements for securing loan repayment

    Credit union membership

    The members of the credit union can be citizens of Ukraine, foreigners and stateless persons permanently residing in the territory of Ukraine, united by at least one of the characteristics.

    Persons who, by a court decision, are recognized as incapable or partially incapacitated, persons serving a sentence of imprisonment, as well as persons who have an outstanding conviction for mercenary crimes, cannot be admitted to a credit union.

    Admission to the credit union and exclusion from its membership is made on the basis of a written application of the person by decision of the supervisory board of the credit union, except in cases of termination of membership due to the death of the person or the expulsion of a member by decision of the general meeting in case of violation of the charter of the credit union.

    Membership in the credit union begins from the date of payment by the person of the entrance and mandatory share contributions in the manner prescribed by the charter of the credit union. First of all, the entrance fee is paid.

    In case of termination of membership of an individual in the credit union, the entry fee is not refunded to him. The return of the compulsory share and other contributions, except for the entrance fee, is made in the manner prescribed by the charter of the credit union, but no later than one month after the general meeting or the supervisory board of the credit union makes the appropriate decision. The return of deposits is made by mutual agreement of the parties or no later than the term provided for by the relevant agreement.

    Members of the credit union are liable for the obligations of the credit union only to the extent of their share contributions.

    Credit union members' rights

    Credit union members have the right to:

    • Participate in the management of the credit union, elect and be elected to its governing bodies
    • Submit proposals for consideration by the management bodies of the credit union
    • Receive loans from the credit union and use other services that are provided to members of the credit union in accordance with its charter
    • Receive information about the activities of the credit union, get acquainted with annual balances, financial statements, minutes of meetings of the governing bodies of the credit union and other documents on the activities of the credit union
    • Receive income on your share contribution, unless otherwise provided by the charter of the credit union
    • Quit members of the credit union

    Credit union governing bodies

    The governing bodies of the credit union are the general meeting of the members of the credit union, the supervisory board, the audit commission, the credit committee and the board. By the decision of the general meeting of the members of the credit union, other governing bodies may be created.

    General meeting of members of the credit union

    The supreme governing body of the credit union is the general meeting of its members.

    The general meeting of the members of the credit union can make decisions on any issues related to the activities of the credit union.

    The exclusive competence of the general meeting of members of the credit union includes:

    • Approval of the charter of the credit union, amendments and additions to it
    • Election and recall of members of the Supervisory Board and Audit Commission
    • Approval of the annual results of the activity of the credit union, reports of the supervisory board, board and credit committee and the conclusions of the audit commission. The annual report on the results of the activity of the credit union is approved by the general meeting only if there is a conclusion of the audit commission
    • Making a decision to increase the share capital of the credit union by increasing the size of the mandatory share contribution or making additional shares
      Making a decision on the procedure for distributing income and covering losses of the credit union
    • Approval of regulations on the supervisory board, audit committee, credit committee and board
    • Decision-making on the termination of the credit union

    Credit union supervisory board

    The Supervisory Board represents the interests of the members of the credit union in the period between general meetings.
    The supervisory board of the credit union is accountable to the general meeting of the members of the credit union and, within the competence determined by this Law and the charter of the credit union, controls and regulates the activities of the board and the credit committee.

    The competence of the supervisory board of the credit union includes:

    • Approval of the provisions on the procedure for the provision of services provided for by this Law and the charter of the credit union to members of the credit union
    • Determination of the types of loans provided by the credit union
    • Resolution of issues on admitting new members to the credit union and termination of membership in the credit union
    • Approval in cases stipulated by the charter of the credit union, decisions of the credit committee on the provision of a loan
    • Determination of the procedure for making decisions on the acquisition and sale of credit union property, the use of temporarily available funds
    • Approval of the estimate and staffing table of the credit union
    • Approval of the regulation on structural divisions of the credit union
    • Appointment of the chairman and members of the board, as well as members of the credit committee
    • Determination of qualification requirements for members of the credit committee, employees of the credit union and experts engaged on contractual terms in accordance with the regulatory legal acts of the Authorized body and the charter of the union
    • Making a decision on the accession of the credit union to the association of credit unions and / or the united credit union and withdrawal from such associations and / or the united credit union, if these issues are not attributed to the exclusive competence of the general meeting of the members of the credit union by the charter of the credit union

    Credit union board

    The Board of the Credit Union is the executive body that manages the current activities. The board consists of persons who are in an employment relationship with the union.

    Chairman of the Board of the Credit Union:

    • Represents the interests of the credit union without a power of attorney and acts on its behalf
    • Represents the credit union in its relations with the state, other legal entities and individuals
    • Concludes agreements and other transactions on behalf of the credit union, signs a power of attorney to act on behalf of the credit union
    • Disposes of the property of the credit union in the manner and within the limits determined by the charter of the credit union
    • Prepares a submission to the Supervisory Board for the appointment and dismissal of members of the Board of the Credit Union, appoints and dismisses employees of the Credit Union, applies incentives and penalties to them in accordance with the law, takes measures to train and improve the qualifications of employees of the Credit Union
    • Solves other issues related to the activities of the credit union

    Credit committee of the credit union

    The credit committee of the credit union is a special body responsible for organizing the lending activities of the union.

    The competence of the credit committee of the credit union includes:

    • Consideration of applications from members of the credit union for the provision of loans and making decisions on these issues
    • Monitoring the quality of the loan portfolio
    • Solving other issues related to lending activities

    Credit Union Auditing Commission

    Control over the financial and economic activities of the credit union is carried out by the audit commission.

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        REGULATORY ACTS REGULATORY ACTIVITIES

        Legal and regulatory framework

        01.  Law of Ukraine: On Financial Services and State Regulation of Financial Services Markets

        02.  Regulation: On the State Register of Financial Institutions

        03.  Law of Ukraine On Credit Unions

        04.  Licensing conditions for the implementation of economic activities for the provision of financial services (except for professional activities in the securities market)

        PROCEDURE FOR ESTABLISHING A FINANCIAL COMPANY

        Stages of creating a financial company

        01.  Registration of a financial company

        Preparation of statutory documents, approval of the position of director, registration of a legal entity

        02.  Bringing to standards

        Formation of authorized capital, personnel training, audit, development of rules and regulations

        03.  Entry into the Register

        Preparation of a package of documents, submission to the Commission, consideration of documents, entry into the Register

        04.  Obtaining a license

        Development of rules and contracts, audit, preparation of documents for a license, submission to the commission, issuance of a license for financial services

        WHAT CONDITIONS MUST BE FULFILLED

        Requirements for setting up a Financial Company

        регистрация финансовой компании

        ORGANIZATIONAL AND LEGAL FINANCIAL COMPANY

        Financial companies can be created in any organizational and legal form, if the laws on the regulation of certain types of financial services do not contain special rules and restrictions.

        Special rules are created for: Pawnshops – in the form of a complete society; Credit unions – a legal entity whose members are at least 50 individuals; Insurance companies – in the form of a joint stock company or an additional liability company; Banks – in the form of a joint stock company and others …

        Statutory documents must comply with the requirements of financial companies.

        SIZE OF AUTHORIZED CAPITAL OF THE FINANCIAL COMPANY

        For most financial companies, there is a regulatory minimum size of the authorized capital, which must be formed exclusively in cash.

        For pawnshops – at least UAH 500 thousand or at least 1 million – if branches are opened.

        For a financial company – at least UAH 3 million.

        For a financial company combining several types of activities – at least UAH 5 million.

        For the provision of certain types of financial services, separate requirements may be set.

        The financial company must have a transparent ownership structure in which the ultimate beneficiaries and owners can be identified. The ultimate beneficiaries, owners must have confirmation of the origin of the funds.

        FINANCIAL COMPANY ROOM

        The main requirement for the premises of financial companies is the presence of their own or rented premises, in a non-residential fund at the location of a financial institution specified in the Unified State Register of Legal Entities.

        The premises must be equipped with appropriate computer equipment, which makes it possible to ensure compliance with the requirements for the submission of information to the National Bank of Ukraine / National Commission on Securities and Stock Market, established by the legislation governing the provision of financial services, and communications (telephone, Internet, electronic mail).

        For certain types of financial services, their requirements for premises may be set.

        For pawnshops, there is a place in the room for storing pledged property. A special place of storage of pledged property is a separate room or a separate territory, a place with limited access, which must meet the requirements established by law, be located at the location of the pawnshop or its separate subdivision or at another address and be equipped with the necessary means that must ensure the safety of the pledged items and the maintenance of the pledged items in good condition.

        A credit institution must have a separate private or rented non-residential premises with limited access and a safe for storing money (funds) and documents, which makes it impossible to damage them.

        Insurance companies must own or use premises, namely the non-residential part of the internal volume of the building, limited by building elements, with the ability to enter and exit, which is used exclusively by this applicant in the implementation of insurance activities, at the location.

        Credit unions are required to have a separate room with limited access and a safe for storing money (funds) and documents, which makes it impossible to damage them.

        PERSONNEL OF THE FINANCIAL COMPANY

        There are the following professional requirements for financial companies:

        1. Requirements for the manager and chief accountant
        2. Professional requirements for specialists (for the securities market)
        3. Requirements for the person responsible for financial monitoring

        The head of a financial company that provides the following financial services: lending, leasing, factoring, insurance, currency exchange, money transfer, construction financing, guarantees and sureties, are subject to the following requirements:

        1. have a higher education master’s degree or equivalent;
        2. undergo advanced training and pass an examination for the compliance of knowledge with professional requirements according to the standard training program for managers;
        3. have at least five years of general work experience, of which at least two years of work as a manager, in particular, at least one year as a manager in the financial services markets (for the chairman of the board of a credit union and a pawnshop manager – at least one year of work as a manager)
        4. have an impeccable business reputation.

        The chief accountant of a financial company that provides the following financial services: lending, leasing, factoring, insurance, currency exchange, money transfer, construction financing, guarantees and sureties, are subject to the following requirements:

        1. have a higher education at least a bachelor’s degree;
        2. undergo advanced training and pass an examination for the compliance of knowledge with professional requirements according to a standard training program for chief accountants;
        3. have at least three years of work experience as a manager in the field of financial and / or accounting activities or work experience in the financial services markets in positions related to financial or accounting activities;
        4. have an impeccable business reputation.

        Banks, participants in the securities market are set their own requirements.

        Financial companies are subjects of primary financial monitoring, for this purpose the following requirements are set for the position of the person responsible for financial monitoring: have an impeccable business reputation, have a higher education, at least a year’s work experience in the field of preventing and combating the legalization (laundering) of proceeds from crime, take refresher courses and pass an exam according to the standard refresher training program for the subjects of primary monitoring.

        For financial companies, participants in the stock and securities market, additional professional requirements may be set. So for an asset management company, in order to obtain a license for asset management, it is necessary to have at least 3 certified asset management specialists.

        REGULATORY FOR REGISTRATION OF A FINANCIAL COMPANY

        Financial companies providing the following financial services: lending, leasing, factoring, insurance, currency exchange, money transfer, construction financing, guarantees and sureties, impose the following requirements:

        1. The constituent documents must contain an exhaustive list of types of financial services that the financial company will provide as an exclusive type of its activity, including taking into account the restrictions on the combination of certain types of financial services. The constituent documents of a financial institution – must meet the requirements of a special regulatory legal act, according to which such a legal entity was created.
        2. A financial company has an internal document governing the procedure for the provision of financial services and model contracts with consumers of financial services must comply with the requirements of the law.
        3. Availability of an accounting system that meets legal requirements.
        4. Availability of accounting and recording systems (software and special technical equipment), which must comply with the requirements established by law, and provide for the maintenance of accounting transactions for the provision of financial services to consumers and reporting.
        5. Formation of the financial company of the authorized capital in cash, as well as the compliance of its size with the requirements of the legislation.
        6. Compliance of the manager and chief accountant with the Professional requirements for managers and chief accountants of financial institutions.
        7. The presence of the conditions necessary for the provision of financial services to consumers, namely: own or rented premises at the location of the applicant, indicated in the Unified State Register; appropriate computer technology, which makes it possible to ensure compliance with the requirements for the presentation of information established by the legislation governing the provision of financial services, and communication facilities (telephone, Internet, e-mail).

        WHAT IS NECESSARY TO START REGISTRATION OF A FINANCIAL COMPANY

        To get started, you must provide:

        1. Information about the Founders and ultimate beneficiaries.
        2. Data about the Premises (physical address where the company will be located).
        3. Information about the Manager, Chief Accountant, Responsible for financial monitoring (may be the person of the Director / Chief Accountant): passport, code, diploma, work book.
        4. The planned name of the Company.

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            We employ practicing specialists with at least 5 years of work experience

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