In 2023 The Verkhovna Rada of Ukraine adopted the new version of the Law “On Credit Unions” (hereinafter – the Law), which significantly expands the scope of activity and improves the process of creating credit unions, increases the control of regulatory authorities over their activities, which should improve their stability and restore public trust.
In this article, we will consider the requirements for the registration and licensing of credit unions, and the main and additional financial services that they will be able to provide after obtaining a license from the state regulator.
A credit union is a financial institution that is created for the purpose of meeting the needs of its members in mutual lending, providing financial and other services provided for by the Law, as well as carrying out other activities, with monetary contributions from members of the credit union and other sources.
To start its activity, a credit union must apply to the National Bank of Ukraine (hereinafter referred to as the Regulator) and obtain an appropriate license.
A credit union has the right to be created by its founders – natural persons, provided that their number is at least 50 persons and they meet the membership requirements provided for in the Law.
At the Constituent Assembly, the founders must approve the charter, appoint persons responsible for state registration and management of the credit union, and resolve other issues related to its creation.
Within 120 days from the date of state registration, authorized persons must apply to the Regulator.
Licensing credit unions
Credit union submits an application for issuance to the Regulator licenses and package of documents:
- activity plan for the next year, – for a simplified license or for the next three years – for standard licenses;
- certified a copy of the applicant’s charter or access code in electronic form;
- information about the name and trademark (if available);
- compliance documents the applicant requirements established by law;
- information/ documents determined by the Regulator regarding:
- organs management and systems internal control;
- on compliance heads, managers responsible for risks, compliance, audit or responsible for these functions persons, in case transfers relevant functions to be outsourced to qualified person requirements;
- organizational structures of the applicant;
- equipment, computer room equipment, information systems, premises (what answer to the requirements of the Regulator);
- documents that contain information about legal persons whose leaders of the applicant are managers’ own essential participation; connected persons; associates person’s managers;
- copies provision the applicant that regulates granting financial services, implementation of internal control (management risks and audit);
- documents that confirm payment for processing the application.
Within 60 calendar days’ days from the date of receipt of the application and a complete package of documents, the Regulator accepts the extradition decision or refusal of extradition licenses.
The regulator enters information about the applicant and financial information services specified in the license and in the registered financial institutions and sends an extract from the registry to the applicant for three workers’ days from the date of the acceptance decision.
License works on the whole territory of Ukraine has unlimited terms, and cannot be transferred to third parties.
Credit unions have the right to provide and attract funds on the basis of standard or simplified licenses.
When appropriate credit union requirements legislation and regulations Acts of the National Bank of Ukraine, the Regulator may to allow allies give additional services:
- providing guarantees;
- payment services, with the exception of operations with electronic money.
Credit union carries out economic activity without the goal of obtaining profit and belongs to non-profit organizations in this case compliance requirements established by the Tax Code of Ukraine.
Analysts and lawyers in our companies daily meticulously analyze changes to the current legislation, therefore always are ready to provide comprehensive, professional, and relevant answers to your questions and provide positive registration results for credit unions in your community.