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Chapter 1. GENERAL PROVISIONS
Article 1. Subject and Purpose of the Law
This Law defines the structure of the banking
system, economic, organizational and legal fundamentals for establishment,
operation, reorganization and liquidation (resolution) of banks. The purpose of
this Law is to provide legal support for stable development and operation of
banks in Ukraine in order to create an appropriate competitive environment in
the financial market, protect legitimate interests of bank depositors and
clients, introduce favorable conditions for the development of the economy of
Ukraine, and support the domestic commodity producers.
Article
2. Definitions
The terms used in this Law shall have the
following meaning:
“Associated person” shall mean the husband or
wife, lineal relatives of this person (father, mother, children, siblings,
grandfather, grandmother, grandchildren), lineal relatives of this person’s
husband or wife, the husband or wife of a lineal relative.
“Affiliate of a bank” shall mean any legal
entity in which the bank holds qualifying holding or which holds a qualifying
share in the bank. ”Bank” shall mean a legal entity, that has an exclusive
right, under the National Bank of Ukraine license, to render the banking
services, the data on which have been entered into the State Register of Banks.
“Bank with foreign capital” shall mean a bank
where the share of capital, owned by at least one foreign investor is not less
than 10 percent.
“Banking group” - shall mean a group of legal
entities comprising: a parent bank and its Ukrainian and foreign subsidiaries
and/or associates that are financial institutions; two or more financial
institutions where banking is the predominant activity. The bank holding
company and the company that renders supporting services having common
controller with the banking group participants shall form a part of the banking
group. Banking shall be deemed the prevailing activity of the group, if the
cumulative arithmetic average of assets of the banks (bank), being members
(member) of the banking group, for the last four reporting quarters is equal to
or exceeds 50% of the cumulative value of the arithmetic average values of
assets of all financial institutions comprising the group for the same period.
Calculation with regard to the predominant activity of the banking group shall
be carried out every year as of January 1 according to the procedure prescribed
by this Article. Should, after the group is determined the banking one on the
basis of its prevailing activity, the share of cumulative assets of the banks
(bank) within the cumulative size of assets of the financial institutions being
members of this group have decreased and come to 40-50 %%, such a group shall
be deemed the banking group during at least three years from the moment of such
a decrease;
“Bank holding company” shall mean a financial
holding company, in which banking is the predominant activity of the financial
institutions being its subsidiary or associate companies.
“Banking activity” shall mean deposit-taking
activity in respect of the funds of individuals and legal entities and
allocation of these funds on the bank’s own behalf, terms, and at its own risk,
opening and servicing accounts of individuals and legal entities.
“Bank credit” shall mean any obligation of a
bank to extend a certain amount of money, any guarantee, any obligation to
acquire the right to claim debt, or any extension of the debt maturity, which
occurs in exchange for the borrower’s commitment to repay the debt amount, as
well as an obligation to pay interest and other charges due on this amount.
“Banking license” shall mean a document issued
by the National Bank of Ukraine in accordance with the procedure and subject to
the conditions specified hereunder, that grants banks and branches of foreign
banks the right to carry out banking activity.
“Banking payment instrument” shall mean an
instrument containing the details identifying its issuer, the payment system,
in which it is used and, as a rule, its holder. Relevant documents are formed
with the help of banking payment instruments for the transactions performed
using the banking payment instruments, on the basis whereof funds are
transferred or other services rendered to the holders of such instruments.
“Bank accounts” shall mean the accounts which
show bank’s own funds, claims, commitments of a bank in relation to its clients
and counterparties, and which enable transfer of the funds by using the banking
payment instruments.
“State Register of Banks" shall mean the register
maintained by the National Bank of Ukraine which contains information about
state registration of all banks.
“Subsidiary” shall mean a legal entity,
controlled by another legal entity (parent company).
“Deposit” shall mean the funds in cash or a
non-cash form in the currency of Ukraine or a foreign currency which are placed
by clients into their personal accounts with a bank according to an agreement
with the bank for a specified period of time or without specification of such a
period of time, and which are subject to repayment to the depositor under the
laws and regulations of Ukraine and terms and conditions of the agreement.
“Business reputation” shall mean the
information collected by the National Bank of Ukraine regarding compliance of a
legal entity or an individual’s activities, including those of the managers of
the legal entity or holders of the qualifying shares therein, with the
requirements of law, business practices and professional ethics, as well as the
data on integrity, professional and managerial skills of the individuals.
“Economic ratios” shall mean the indicators,
established by the National Bank of Ukraine, being mandatory for all banks.
“Foreign” shall refer to a citizen or a legal
entity of any country other than Ukraine.
“Bank inspection” shall mean a form of banking
supervision effectuation by the persons authorized by the National Bank of
Ukraine directly at the bank premises.
“Qualifying holding” shall mean direct and/or
indirect, independent or joint holding of 10 or more percent of the authorized
capital or the voting rights granted by purchased shares (stakes) of a legal
entity or the ability to exert decisive influence on the management or
activities of the legal entity irrespective of the formal ownership.
“Capital of a bank” shall mean the capital
base, i.e. the residual value of the bank assets after deduction of all its
liabilities.
“Assigned capital” shall mean an amount of
money in a freely convertible currency granted by a foreign bank to its branch
for accreditation thereof.
“Authorized capital” shall mean paid-in money
contributions of bank participants in the value of shares (stakes) of the bank
in an amount determined by the bylaws of the bank.
“Regulatory capital” shall mean an aggregate of
the core and additional capital whose components are defined by this Law and
regulations of the National Bank of Ukraine.
“Legal entity managers” (other than a bank) shall
mean managers of an enterprise or institution, members of the executive body
and (supervisory) council of the legal entity.
“Client of a bank” shall mean any individual or
legal entity that uses services of a bank.
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