Registration of credit institutions

Credit institutions play an important role in creating a favorable financial environment, contributing to the development of the country’s economy, providing companies with access to capital for business expansion, implementing innovative projects and new technological processes, creating new jobs, and facilitating private individuals’ access to credit for various needs, including the purchase of housing, obtaining higher education or starting a business.

With the development of technologies, the provision of financial lending services has become faster, more convenient, and more accessible, both for companies that provide such services and for their consumers. With the help of online services, you can get a microloan without even leaving your home.

The company “Prikhodko and Partners” has many years of experience in creating credit companies for its clients, which successfully conduct business in Ukraine even in these difficult times for the country.

In this publication, we will talk about the types of companies that provide lending services, the order of their creation and licensing, and about some features that the legislator sets for financial market participants.

In Ukraine, there are various types of credit institutions, including banks and non-bank financial institutions, such as:

• credit unions;
• factoring companies;
• pawnshops;
• microfinance organizations;
• quick lending institutions, etc.

The general terms of licensing of financial companies are specified in the Regulations on Licensing and Registration of Financial Services Providers and the Conditions of Their Conducting Financial Services Activities (hereinafter referred to as the Regulations) and require licensees to strictly comply with requirements regarding:

• transparency of ownership structure and origin of capital;
• impeccable business reputation and compliance of managers and responsible persons with qualification requirements;
• management and control systems;
• policies and internal regulations of the company;
• premises, accounting and registration systems, trademark, and website, minimum authorized capital;
• compliance with AML/CFT requirements; approved business plan;
• other requirements depending on the type of institution and the services it plans to provide.

However, each type of credit institution has its own nuances and requirements for conducting such activities. Let’s consider the features of some such institutions.

A pawnshop is a financial institution that provides loans secured by property (except for real estate and vehicles), and in case of compliance with the restrictions on the combination of activities specified in the Regulations, has the right to carry out other activities.

To obtain a license, the applicant must ensure the minimum level of authorized capital, in the following amount:

• 500,000 hryvnias for providing loans secured by property;
• 1 million hryvnias, if the pawnshop has subdivisions;
• 5 million hryvnias, if the applicant plans to provide other financial services.

Factoring companies, on the basis of a corresponding license, have the right to transfer funds to the client’s disposal for a fee, while the client transfers to the factoring company his right to a monetary claim against the debtor.

Provided that it is included in the register of collection companies, a non-banking financial institution that has a license to provide factoring services and/or to lend funds, in particular on the terms of a financial loan, may also carry out activities for the settlement of overdue debts in the interests of third parties.

Applicant must provide a minimum amount of capital in the amount of 3 million hryvnias (paid in cash).

 A credit union is a financial institution that is created to meet the needs of its members in mutual lending, providing financial and other services provided by the Law “On Credit Unions”, as well as carrying out other activities, for the monetary contributions of the members of the credit union and other sources.

Credit unions have the right to grant and receive funds on the basis of standard or simplified licenses.

For licensing and conducting financial activities by a credit union, the legislation does not establish requirements for the provision of minimum authorized capital.

Licenses issued to credit institutions are valid throughout the territory of Ukraine, have an unlimited term of validity, and cannot be transferred to third parties.

So, if you are looking for reliable lawyers for the registration of a credit institution, you should definitely contact the company “Prikhodko and Partners”.

Our lawyers, depending on your business strategy, needs, and opportunities, will offer the optimal type of credit company, prepare all the necessary documents/information, and provide professional support at all stages of registration and licensing of the credit institution.