Hoiu-laenuühistu seadus (HLÜS)

§ 1. Scope of regulation of Act

This Act determines the legal status, the bases of the activities, the procedure for foundation and dissolution and the requirements for the disclosure of information of savings and loan associations.

§ 2. Application of Act

(1) This Act applies to all savings and loan associations founded or operating in Estonia.

(2) The provisions of law regarding commercial associations apply to savings and loan associations, unless otherwise provided by this Act.

(3) In addition to the provisions of this Act, the provisions of the Creditors and Credit Intermediaries Act apply to a savings and loan association in the event specified in subsection 2 of § 6 of the Creditors and Credit Intermediaries Act.

(4) If the activities of a savings and loan association do not comply with the provisions of subsection 1 or 5 of § 6 of this Act, this is regarded as taking deposits from the public within the meaning of subsections 1, 2 and 3 of § 4 of the Credit Institutions Act.

§ 2¹. Non-application of Regulation (EU) 2022/2554 of the European Parliament and of the Council

Regulation (EU) 2022/2554 of the European Parliament and of the Council on digital operational resilience for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No 600/2014, (EU) No 909/2014 and (EU) 2016/1011 (OJ L 333, 27.12.2022, p. 1–79) does not apply to a savings and loan association.

§ 3. Definition of savings and loan association

(1) savings and loan association is a financial institution operating in the form of a commercial association whose activity is only to provide the services and conclude the transactions specified in § 6 of this Act.

§ 4. Business name of savings and loan association

(1) The business name of a savings and loan association must contain the attribute ‘hoiu-laenuühistu’ [savings and loan association] and may contain the place name of the administrative unit of the seat of the savings and loan association or another place name.

(2) Instead of the attribute specified in subsection 1 of this section, the abbreviation ‘HLÜ’ may be used in the business name of a savings and loan association.

(3) It is prohibited to use the attribute ‘hoiu-laenuühistu’ [savings and loan association] or any words or abbreviations having a misleadingly similar meaning in Estonian or any other language in the name of other persons, institutions or associations.

§ 5. Principles of formation of membership of savings and loan association and its seat and place of business

(1) A savings and loan association operates based on membership and is founded taking into account the provisions of § 17 of this Act.

(3) The seat and place of business of a savings and loan association must be in Estonia.

§ 6. Services provided by and transactions permitted for savings and loan association

(1) The principal and permanent activity of a savings and loan association is the provision of financial services to its members, which consists of the conclusion of the following transactions:

1) depositing transactions for taking deposits and other repayable funds;

2) loan transactions, including consumer credit, mortgage credit, factoring and other transactions for financing companies;

3) guarantees and commitments and other transactions creating binding obligations to persons in future;

4) leasing transactions.

(2) In addition to that provided for in subsection 1 of this section, a savings and loan association may provide the following services to its members:

1) taking securities, guarantees, benefits and earmarked repayable funds offered by a foundation, structural fund or payment agency founded by the European Commission or states that are contracting parties to the EEA Agreement (hereinafter EEA state) and intermediation thereof;

2) giving advice on issues regarding economic activities.

(3) A savings and loan association may provide the following services to its members and other persons:

1) currency exchange services;

2) cash transfers and other payment services in accordance with the provisions of subsection 1 of § 3 of the Payment Institutions and E-money Institutions Act.

(4) A savings and loan association may conclude transactions and perform acts other than those specified in subsections 1–3 of this section only if these are ancillary or supplementary to the services provided by the savings and loan association.

(5) A savings and loan association may not provide the services specified in this section in a foreign state on a cross-border basis or through a branch.

§ 7. Memorandum of association of savings and loan association

(1) In order to establish a savings and loan association, the founders complying with the requirements provided for in § 17 of this Act conclude a memorandum of association. The number of founders must be at least 25.

(2) In addition to the information provided for in subsection 2 of § 5 of the Commercial Associations Act, a memorandum of association must set out:

1) the principle of forming the membership of the savings and loan association and the respective field of activity or profession serving as a basis for forming the membership, or the common economic interest;

2) the division of the membership fees and contributions paid by the founders among the founders;

3) the amount and the terms, time and place of payment of the contribution and membership fee;

4) the names of the members of the credit committee if a credit committee is to be formed;

5) the names, personal identification codes and contact details of the members of the revision committee.

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§ 10. Articles of association of savings and loan association

(1) In addition to the data provided for in the Commercial Associations Act, the articles of association of a savings and loan association must set out:

1) the principle of forming the membership of the savings and loan association and the respective field of activity or profession serving as a basis for forming the membership, or the common economic activities in which the members participate and with which the savings and loan association serves the common economic interests of its members;

2) the amount and the terms of payment of the membership fee;

3) the amount of the contribution and the term and procedure for payment of the contribution;

4) the amount of share capital of the savings and loan association;

5) the amount of and the procedure for formation of the legal reserve and other reserves;

9) other obligatory terms and conditions provided for in this Act.

§ 11. Payment of membership fee and contribution

The founders of a savings and loan association must pay the membership fee and contribution fully in money to an account opened in a credit institution or payment institution that has obtained an authorisation in Estonia and has been specified in the memorandum of association before the submission of an application for registration of the savings and loan association in the commercial register, unless the memorandum of association provides for an earlier term.

§ 12. Transactions concluded before registration in commercial register

(1) Before registration of a savings and loan association in the commercial register, the founders may, in the name of the savings and loan association being founded, conclude only transactions which are aimed at the creation of the organisational structure of the savings and loan association being founded and the acquisition or rental of necessary technical equipment, security systems or other movable and immovable property necessary for the activities of the savings and loan association.

§ 14. Petition for entry of savings and loan association in commercial register

In order to register a savings and loan association in the commercial register, the management board submits an application which, in addition to that provided for in subsection 1 of § 7 of the Commercial Associations Act, sets out:

1) the amount of the share capital;

2) the names, personal identification codes and contact details of the members of the revision committee;

3) a note on the transfer of the competence of the general meeting to the meeting of representatives in full or in part, where such delegation is provided for in the articles of association of the savings and loan association;

4) a notice from the credit institution or payment institution specified in § 11 of this Act concerning the payment of the share capital.

§ 15. Data to be entered in the commercial register

In addition to that provided for in the Commercial Associations Act, the data specified in clauses 1–3 of § 14 of this Act are entered in the commercial register in respect of a savings and loan association.

§ 16. Acceptance of members

(1) Each person who wishes to become a member of a savings and loan association must pay the membership fee in accordance with the procedure and in the amount prescribed by the articles of association, but not less than 40 euros.

§ 17. Requirements for members of savings and loan association

(2) The following persons may become a member of a savings and loan association:

1) natural persons who are active or work in the same field of activities or profession or who have common economic interests;

2) sole proprietors having the same principal field of activity as the persons provided for in clause 1 of this subsection;

3) companies having the same principal field of activity as the persons provided for in clause 1 of this subsection;

4) non-profit associations with members being persons provided for in clauses 1 to 3 of this subsection.

5) foundations whose founders are the persons specified in clauses 1–3 of this subsection.

(3) The number of members provided for in clause 3 of subsection 2 of this section must not exceed 25 per cent of the total number of members.

(3¹) Before accepting the persons specified in subsection 2 of this section as a member of a savings and loan association, the management board is required to ascertain the justified interest of the persons in becoming a member of the savings and loan association and the manner in which the member will participate in the economic activities of the association.

(4) The state, local authorities and legal persons in public law cannot be members of a savings and loan association.

(5) A member of a savings and loan association may not be a company in which the same savings and loan association has a direct or indirect holding, or which is controlled directly or indirectly by a member of the management board or supervisory board of the savings and loan association. By way of derogation from the first sentence of this subsection, a subsidiary of a savings and loan association may be a member of the savings and loan association only on the condition that the aggregate holding of the subsidiaries in the savings and loan association does not exceed ten per cent the share capital and voting rights of the savings and loan association.

§ 18. Number of members and list of members of savings and loan association

(1) A savings and loan association must have at least 25 members.

(3) The management board of a savings and loan association must submit to the commercial register a list of the members of the savings and loan association, indicating the data prescribed in subsection 1 of § 15 of the Commercial Associations Act, along with the annual report.

(4) In addition to the data specified in § 15 of the Commercial Associations Act, the list of members of a savings and loan association sets out the contact details (telephone number and e-mail address) of each member. These contact details are not submitted to the commercial register.

(5) The management board of a savings and loan association maintains a list of members in a manner and form that permits the use of information in machine-readable format.

(6) The management board of a savings and loan association is required to keep the list of members up to date and to enter a change in the list of members within 30 days of becoming aware of it.

§ 19. Withdrawal from savings and loan association

(1) A member of a savings and loan association has the right to withdraw from the savings and loan association if the member does not have any outstanding obligations towards the savings and loan association.

(2) Where a member withdraws or is excluded from a savings and loan association, the member has the right to a refund of the paid contribution in accordance with the procedure provided for in the Commercial Associations Act.

(2¹) The contribution or compensation specified in § 33 of the Commercial Associations Act must be paid within three years of termination of membership unless the articles of association prescribe a shorter term. The management board of a savings and loan association may extend the term for the payment of the contribution or compensation as compared to that provided for in law or the articles of association to a reasonable extent, but as a maximum of up to five years, if, according to the circumstances, making the payment causes significant damage to the association or may bring about a potential risk to the continuation of the activities of the association.

(3) A member of a savings and loan association has the right to transfer their membership only to a person who meets the requirements provided for members in this Act and in the articles of association of the association.

§ 20. Dividend right of member who has withdrawn from savings and loan association

A member who leaves a savings and loan association loses the right to receive dividends as of the beginning of the half-year of the financial year during which the member submitted an application to withdraw from the savings and loan association, but until the refund of the contribution on the basis of subsection 2 of § 19 of this Act the member has the right to receive interest on the paid contribution under the same terms and conditions as those under which the savings and loan association pays interest on call deposits.

§ 22. Assets and share capital of savings and loan association

(1) The assets of a savings and loan association consist of contributions and other payments made by its members, income received from the activities of the association, economic assistance by the state and local authorities, donations and other accruals.

(2) The share capital of a savings and loan association is made of contributions of the members.

(3) The share capital of a savings and loan association must be at least 125 000 euros. The net assets of a savings and loan association must be equal to at least the share capital at all times during its operation.

(6) Members or representatives of a savings and loan association decide on the alteration of the amount of the share capital within 12 months of the occurrence of the circumstance giving rise to the alteration of the amount of the share capital. The management board of a savings and loan association immediately submits to the commercial register the decision of the general meeting or of the meeting of representatives by which the alteration of the amount of the share capital of the savings and loan association is decided.

§ 23. Contributions of members of savings and loan association

(1) The amount of the contribution of a member of a savings and loan association must be at least 50 euros.

(2) The contribution of a member of a savings and loan association is paid only in money.

(3) A member of a savings and loan association must pay the contribution within one month after the date of adoption of the decision to accept the person as a member of the association, unless a shorter term is prescribed by the articles of association.

§ 24. Legal reserve and other reserves of savings and loan association

(1) In order to guarantee the obligations of a savings and loan association, a legal reserve must be formed in the amount of at least a half of the share capital, unless the articles of association prescribe a higher level.

(2) The legal reserve is formed and increased out of the membership fees of members, profit appropriations and interest on the legal reserve.

(3) In each financial year at least 20 per cent of net profit must be transferred to the legal reserve. Where the legal reserve reaches the amount prescribed in the articles of association, the increase of legal reserve out of profit appropriations and interest is suspended.

§ 25. Distribution of profit of savings and loan association

(1) The profit of a savings and loan association is distributed on the basis of the annual report approved by a decision of the general meeting.

(2) The members of a savings and loan association whose contributions have been at the disposal of the savings and loan association for less than one year but for more than six months during the financial year receive a half of the amount of dividends.

(3) Payment of dividends is commenced one month after the adoption of the corresponding decision by the general meeting.

(4) No interest is paid on dividends that have not been withdrawn.

§ 26. Covering of loss of savings and loan association

(1) Where the audited annual report or the balance sheet prepared upon liquidation of a savings and loan association shows a loss, the loss is covered out of the legal reserve on the basis of a decision of the general meeting. In the events specified in the articles of association of a savings and loan association, losses may be covered at the expense of other reserves.

(2) Where the legal reserve and other reserves specified in the articles of association are not sufficient to cover a loss and if the articles of association of the savings and loan association provide for the full personal liability or additional liability of members, the general meeting decides the distribution of the uncovered loss among the members of the savings and loan association in proportion to the extent of their additional liability and set a term during which a member is required to pay the amount to be borne by the member in order to cover the loss.

(3) Where the legal reserve and other reserves provided for in the articles of association are not sufficient to cover a loss and if, due to covering the loss, the share capital of the savings and loan association decreases by one-third or falls below the minimum amount specified in subsection 3 of § 22 of this Act, the management board calls a special general meeting of the members within 15 days. The general meeting must decide to:

1) increase the share capital, or

2) dissolve the savings and loan association, or

3) submit a bankruptcy petition.

§ 27. Guarantee of Financial Soundness of Savings and Loan Association

(1) In its activities a savings and loan association must adhere to any and all of the following requirements:

1) the savings and loan association must invest at least ten per cent of the sum of the deposits of its members in an Estonian credit institution or a credit institution of another EEA state in the form of a call deposit or in other liquid assets in accordance with that provided for in subsection 6 of § 27¹ of this Act;

2) the savings and loan association may acquire only immovable property necessary for the principal and permanent activity of the association;

3) the savings and loan association is forbidden to participate as a partner in a general partnership or as a general partner in a limited partnership;

3¹) the savings and loan association is forbidden to have a direct or indirect holding of more than 20 per cent in a credit institution or another financial institution, except in an association bank, a creditor, a credit intermediary and a payment institution;

4) the total investment by the savings and loan association in fixed assets may not exceed the equity capital of the savings and loan association;

5) the total on-balance-sheet receivables from clients and the total off-balance-sheet payables of the savings and loan association must not exceed tenfold of the equity capital of the savings and loan association.

(2) The provisions of clause 2 of subsection 1 of this section do not apply if the savings and loan association has acquired the immovable for the purpose of preventing or avoiding losses and the savings and loan association has transferred the immovable within three years.

(3) A savings and loan association must not make payouts from net profit if the provisions of clause 1 of subsection 1 of this section have not been followed for the period of three months during the financial year or if the annual report of the savings and loan association approved at the end of the last financial year shows that the equity capital of the savings and loan association would fall below the level provided for in subsection 3 of § 22 of this Act.

§ 27¹. Requirements for liquidity

(1) A savings and loan association must invest its assets such that the liquidity of assets, which would enable the satisfaction of justified claims of members, is guaranteed at all times, including in a situation of stress.

(2) For the purposes of subsection 1 of this section, a situation of stress means a situation in which a savings and loan association is required to pay out to its members, in accordance with the terms and conditions of the contract, at least five per cent of the total sum of the deposits taken from the members within 60 days of receipt of the relevant application or to return to the members at least 25 per cent of the sum of the contributions within one financial year.

(3) A savings and loan association is required to organise its business activities in such a way that financing the savings and loan association does not rely on excessively short maturities or few sources. The management board of a savings and loan association is required to constantly monitor the maturity of receivables and payables. The maturity of payables of a savings and loan association may not endanger sustainable activities of the savings and loan association.

(4) A savings and loan association must have in place for each 60-day period a strategy, policies, procedures and systems to identify, measure, manage and monitor the liquidity risk in order to ensure the existence of an adequate liquidity buffer throughout the survival period.

(5) For the purposes of this Act, a liquidity buffer means cash or other unencumbered liquid assets which enable a savings and loan association to meet its usual obligations at least during the survival period which may not be shorter than 60 days.

(6) Unencumbered liquid assets specified in subsection 5 of this section means assets, including cash, funds held in current accounts and other assets, which can be sold under normal market conditions within 60 days. Liquid assets are, among other things:

1) the debt instruments specified in Table 1 of Article 336 of Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 26.6.2013, pp. 1–337), for which the specific risk capital charge is no more than 1.6 per cent;

2) the units or shares of UCITS if the assets of the UCITS are invested only in the debt instruments specified in clause 1 of this subsection.

(7) The minister in charge of the policy sector may, by a regulation, establish a more detailed procedure for the liquidity risk management of savings and loan associations, including specify the composition and size of the liquidity buffer.

§ 28. Requirements for loans

(1) Upon granting loans, a savings and loan association is required to observe the good credit practice and the principle of responsible lending, including verify, in accordance with the internal rules approved at the general meeting of the savings and loan association and on the basis of up-to-date information, the creditworthiness of the borrower and the existence of adequate collateral.

(1¹) The provisions of §§ 402–421 of the Law of Obligations Act on consumer credit contracts apply to granting a loan to a member who is a natural person and applies for a loan that is not related to independent borrowing in economic or professional activities, unless otherwise provided for in this Act. Upon granting a loan to a member specified in the first sentence of this subsection, the creditworthiness of the member may not be assessed, when granting a loan, solely on the basis of the fact that the value of the immovable property standing as security exceeds the credit amount or on the assumption that the value of the immovable property will increase, unless the purpose of use of the loan is to construct or renovate the immovable property.

(2) A decision to grant a loan must be based on a prior loan analysis.

(3) The loan analysis conducted prior to deciding to grant a loan must be intended primarily for assessing the creditworthiness of the borrower. Upon assessing the creditworthiness of the borrower, the savings and loan association must consider any and all circumstances that may influence the probability of repayment of the loan. The content and scope of the loan analysis must depend on the loan amount, the loan product, the borrower and the significance of the analysed loan to the savings and loan association as a whole and also the risk level of the loan.

(4) In order to implement the principles provided for in this section, a savings and loan association must, throughout the loan term, collect data from borrowers about their loan burden and performance of their loan obligations and use the data for calculating a reasonable loan burden for its members. The aforementioned data is preserved in accordance with the time limits provided for in the Accounting Act.

(5) A savings and loan association must inform the borrower about the possible risks of taking loans.

(6) Loans which exceed the limit set by a decision of the general meeting of a savings and loan association are granted and renewed on the basis of a specific decision of the credit committee or, if the savings and loan association has not formed a credit committee, on the basis of a decision of the general meeting.

(7) Loans to members of the management board, supervisory board or revision committee who are members of the savings and loan association or to persons with economic interests equivalent to those of such members may granted only in accordance with the procedure prescribed in a decision of the general meeting.

(7¹) The sum of the balances of the loans granted to the persons specified in subsection 7 of this section or to persons related to such persons or the total value of the balances of the other transactions specified in clauses 3 and 4 of subsection 1 of § 6 of this Act may not exceed the amount of the contribution paid by the member more than five times or five per cent of the net assets of the savings and loan association.

(8) A savings and loan association may grant loans secured with a mortgage for a term of up to ten years and may grant other loans for a term of up to five years.

(9) In the event of loans granted to a member of a savings and loan association not specified in subsection 7 of this section, the sum of the balances of the loans or the total value of the balances of the other transactions specified in clauses 3 and 4 of subsection 1 of § 6 of this Act may not exceed the amount of the contribution paid by the member more than 20 times or 20 per cent of the net assets of the savings and loan association.

(10) A savings and loan association is permitted to grant a loan to a credit institution, a financial institution and a legal person belonging to the same consolidation group with the savings and loan association, or to conclude other transactions specified in clauses 3 and 4 of subsection 1 of § 6 of this Act with the aforementioned persons, provided that the balance of such loans and transactions does not exceed as an aggregate 20 per cent of the average total volume of the balances of the loans and transactions of the savings and loan association for the last three financial years.

(11) The minister in charge of the policy sector may, by a regulation, specify the requirements for granting loans prescribed in this section.

§ 28¹. Assessment of creditworthiness of member

(1) In order to comply with the requirements specified in § 28 of this Act, a savings and loan association must establish in its internal rules methods for assessing the creditworthiness of the members applying for a loan and for verifying the data submitted, taking into account, when developing the methods, the following indicators about a member who is a natural and legal person:

1) financial status, amount of regular income or revenue or cash flow and total sum of the contributions made to the savings and loan association;

2) proprietary obligations assumed, including the amount of regular financial obligations, and, if possible, the amount of principal amounts and interest thereof, as well as assets pledged and contingent liabilities;

3) prior performance history of payment obligations, including financial obligations;

4) other facts known to the savings and loan association, which may be of significant importance upon assessment of the creditworthiness of the member and which may affect the due performance of the obligations of the member;

5) the terms and conditions of the service provision contract to be entered into, including the amount of the financial obligation to be assumed.

(2) If a loan is applied for by a member of a savings and loan association who is a natural person and it is not related to independent borrowing in economic or professional activities, the creditworthiness of the member must be assessed, taking into account, in addition to the conditions specified in subsection 1 of this section, other assessable regular household expenses as an aggregate or, where appropriate, as generally applicable rates.

(3) If a loan is applied for by a member of a savings and loan association who is a company, the creditworthiness of the member must be assessed, taking into account, in addition to the conditions specified in subsection 1 of this section:

1) the impact of the possible increase in the financial obligations of the member arising from the provision of the service, and the performance of earlier payment obligations if they are related to the everyday business activities of the member;

2) the purpose of the loan and business plans with financial forecasts;

3) the business model and structure of the member;

4) in the event of a collateral loan, the collateral and its characteristics, such as location, value, and encumbrances;

5) other factors that increase or mitigate the credit risk.

(4) In order to assess creditworthiness, the internal rules of a savings and loan association must provide the following about granting credit:

1) the ratio of the credit amount to the credit collateral and the ratio of the principal amount of the credit and the interest payment to the income of a member;

2) the maximum credit term;

3) the methods on the basis of which the ability of a member to perform the obligations arising from the credit agreement are to be analysed in the event of changes in interest.

(5) For the purposes of this Act, collateral means the property securing a credit agreement.

(6) Upon assessment of the regular income of a member as specified in clause 1 of subsection 1 of this section, a savings and loan association must:

1) take into account the sources of income of the member, including their remuneration, pension, investment income, dividends, income from activities as a sole proprietor, income from business, rent, benefits, grants and maintenance support and the regularity of receipt of the income of the member depending on the form of the employment contract or another contract of the member;

2) use, as a basis, a sufficient period of time, taking into account the sources of income of the member, the regularity of receipt of the income and other aforementioned conditions;

3) make reasonable efforts to verify the accuracy of all appropriate documents and other certificates serving as a basis for and of significance in the calculation of the size of the regular income of the member.

(7) In order to assess the creditworthiness of a member of a savings and loan association, the necessary information must be obtained from the member, appropriate internal sources and databases. Internal sources mean sources at the disposal of the savings and loan association for obtaining information.

(8) A savings and loan association verifies the information submitted by a member about their income and obligations, relying, if possible, on the payment account statement submitted by the member if the other collected information is not sufficient for the assessment of the creditworthiness of the member.

(9) A savings and loan association may grant a loan to a member if it is convinced, as a result of analysing as an aggregate the data serving as a basis for the assessment of creditworthiness, that the obligations arising from the loan agreement will be performed under the terms and conditions agreed on in the agreement.

(10) The minister in charge of the policy sector may, by a regulation, establish more detailed requirements for the assessment of the creditworthiness of a member, including minimum requirements for the ratio of the credit amount to the credit collateral and the ratio of the principal amount of the credit and the interest payment to the income of the member.

§ 28². Keeping of credit file

(1) A savings and loan association keeps a credit file about the necessary data and documents collected for the purpose of assessing the creditworthiness of a member. The credit file is kept for the credit period and must be kept separately for each member applying for a loan.

(2) For the purposes of this Act, a credit file means a set of agreements, certificates, decisions, analyses and other data related to granting and servicing credit.

(3) A savings and loan association must ensure that the credit file contains the data and documents necessary for the analysis of the creditworthiness of a member throughout the credit period.

(4) A credit file must provide sufficient information to the person responsible for granting credit and to the revision committee as well as to the auditor for the assessment of the creditworthiness of a member.

(5) A credit file must include at least the following information and the following documents about granting, monitoring and assessing credit:

1) data on the member, in the event of a member who is a natural person their name, personal identification code or, in the absence thereof, date and place of birth and residence, and in the event of a member who is a legal person their business name, registry code and seat;

2) credit applications;

3) decisions to grant credit or to refuse to grant credit;

4) documents related to the application for credit and the performance of a credit agreement during the credit period;

5) results of the analysis of the assessment of the creditworthiness of the member;

6) credit and security agreements entered into with the member;

7) correspondence conducted with the member with regard to granting credit or performance of a credit agreement;

8) documents on the verification of the data serving as a basis for the assessment of the creditworthiness of the member;

9) in the event of a mortgage credit, documents on the verification, insurance and appraisal of the immovable property standing as security, including, where appropriate, the appraisal of the value of the security by the appraiser of the immovable property.

(6) A savings and loan association must perform the obligation to complete the credit file regardless of the size of the file.

(7) The information included in a credit file may be located in the information and document management system in a divided form, but the savings and loan association must ensure the availability thereof to the persons and units specified in subsection 4 of this section at any time.

§ 29. Formation and members of credit committee

(1) A savings and loan association must have a credit committee if the savings and loan association has at least 50 members. If a savings and loan association has fewer than 50 members, the articles of association may provide for the savings and loan association to have a credit committee.

(2) The credit committee is formed in accordance with the procedure prescribed in the articles of association of the savings and loan association.

(3) The credit committee consists of three members, unless the articles of association prescribe a higher number of members.

(4) A member of the credit committee must be a member of the savings and loan association.

(5) The members of the supervisory board, members of the revision committee or the auditor cannot be members of the credit committee. The articles of association may specify other persons who are not allowed to be members of the credit committee.

(6) The members of the credit committee elect from among themselves a chairman who organises the activities of the credit committee. The chairman of the management board cannot be the chairman of the credit committee.

§ 30. Resolutions of credit committee

(1) Meetings of the credit committee are held when necessary but not less frequently than once a month. Meetings are called by the chairman of the credit committee or the person substituting for the chairman.

(2) The credit committee adopts decisions in accordance with the procedure prescribed in the articles of association of the savings and loan association.

(3) The credit committee decides on the grant of loans in accordance with the procedure approved by the general meeting and assists in organising the collection of debts.

§ 31. Internal rules, rules of procedure and risk management requirements of savings and loan association

(1) A savings and loan association must establish internal rules and rules of procedure that regulate the activities of its managers and employees. The internal rules and rules of procedure are established for the purpose of ensuring compliance with the legislation regulating the activities of savings and loan associations and with the decisions of the management bodies of the savings and loan association.

(2) The internal rules and rules of procedure of a savings and loan association must, among other things, set out the following:

1) the procedure for prevention of conflicts between the interests of the savings and loan association and the personal economic interests of the members of the management board and supervisory board and the employees of the savings and loan association;

2) the procedure for exchange of information and documents within the savings and loan association;

3) the procedure for conclusion of transactions in the name and at the expense of the savings and loan association and in the name and at the expense of the clients;

4) relationships of subordination and the procedure for the delegation of rights, including the separation of functions upon assumption of obligations in the name of the savings and loan association, making payments, recognition of transactions in accounts and reports and assessment of risks involved in transactions.

5) the internal rules of procedure for the imposition of international sanctions established on the basis of the International Sanctions Act and for the implementation of the Money Laundering and Terrorist Financing Prevention Act, and the internal control rules for compliance therewith;

6) the procedure for the conclusion of transactions and performance of acts on behalf and account of members of the savings and loan association and for the provision of advisory services, including the procedure for the assessment of the creditworthiness of a member and for the appraisal of the property standing as security for the loan agreement when granting a loan to the member;

7) the general procedure for the settlement of disputes with a member;

8) the procedure for the assessment of suitability of members of the management board and supervisory board of the savings and loan association.

(3) A person acting in the name of a savings and loan association cannot represent the savings and loan association in transactions or legal disputes with a third party with regard to whom the person acting in the name of the savings and loan association or a person with an economic interest equivalent to that of such person has personal economic interests.

(4) A savings and loan association must not take excessive risks, which could jeopardise its solvency.

(5) A savings and loan association must have risk identification, risk measurement and risk management strategies and procedures, which are sufficient and proportional to the nature, scope and complexity of its activities and ensure objective control, management and assessment of risks. The general principles of risk management of a savings and loan association are approved by the general meeting of the savings and loan association and such principles are reviewed and updated on a regular basis.

(6) The general principles of risk management of a savings and loan association must determine the goals of its credit policy, the risk assessment criteria, the principles of taking and assessing securities, the principles of granting and refinancing loans, the competence for granting loans and the organisation of the relevant decisions.

§ 32. Competence of general meeting of savings and loan association

(1) In addition to that provided for in the Commercial Associations Act, the general meeting of a savings and loan association is competent to:

1) approve the budget of the financial year;

3) establish the procedure for granting loans to members, including the establishment, in accordance with law, of limits on the amount of loan granted to one member;

4) appoint an auditor and a member of the revision committee and establish the bases of and procedure for remuneration thereof;

5) elect members of the credit committee and remove them before the expiry of their term of office;

5¹) decide on the submission of an application for an authorisation, including an application for an authorisation of a credit institution, a creditor or a payment institution;

8) decide on other issues that have been placed within the competence of the general meeting by law or the articles of association.

9) establish the conditions of and procedure for terminating the agreement with a member who has withdrawn or been excluded from the savings and loan association in accordance with subsection 1 of § 19.

(3) The competence of the general meeting of a savings and loan association may be transferred in full or in part to the meeting of representatives only in accordance with § 32⁴ of this Act.

§ 32¹. Calling and agenda of general meeting

(1) The provisions of §§ 40 and 40¹ of the Commercial Associations Act apply to the calling and agenda of the general meeting unless otherwise provided for in this section.

(2) The management board must call a special general meeting if:

1) it becomes evident that the amount of the net assets of the savings and loan association is not in compliance with the provisions of the second sentence of subsection 3 of § 22 of this Act;

2) it becomes evident that the savings and loan association is unable to meet the requirements provided for in § 27¹ of this Act;

3) this is demanded by at least one-tenth of the members or representatives;

4) this is demanded by the supervisory board;

5) this is demanded by a member of the revision committee or an auditor.

(3) At least ten members of a savings and loan association may demand the inclusion of additional issues on the agenda of the general meeting. Reasons must be given for each additional issue.

§ 32². Special general meeting upon decrease of assets

(1) In the event provided for in clause 1 or 2 of subsection 2 of § 32¹ of this Act, members must decide at a special general meeting on:

1) the increase of the share capital, provided that the amount of the net assets is equal to at least the share capital at all times during its operation;

2) the implementation of other measures as a result of which the amount of the net assets of the savings and loan association is in compliance with the requirements provided for in the second sentence of subsection 3 of § 22 and in §§ 27 and 27¹ of this Act;

3) the dissolution or merger of the savings and loan association;

4) the submission of a bankruptcy petition.

(2) The provisions of § 49 of the Commercial Associations Act do not apply to a savings and loan association.

§ 32³. Special audit

(1) The provisions of § 71 of the Commercial Associations Act apply to the conduct of a special audit unless otherwise provided for in this section.

(2) At least ten members of a savings and loan association may demand a decision on conduct of a special audit on issues regarding the management or financial situation of the savings and loan association, and the appointment of an auditor for the special audit by the general meeting.

(3) If the general meeting does not adopt a decision on the conduct of a special audit, at least one-tenth of the members of the association may demand the conduct of a special audit and appointment of an auditor for the special audit by a court.

§ 32⁴. Election of representatives

(1) The provisions of § 54 of the Commercial Associations Act apply to the election of representatives of a savings and loan association unless otherwise provided for in this section.

(2) One representative may be elected for up to 25 members.

(3) A representative of a savings and loan association must be a member of the savings and loan association but may not be a member of the management board, a member of the supervisory board, a member of the credit committee or an auditor of the savings and loan association, a bankrupt or a person whose earlier acts or omissions have resulted in the bankruptcy or compulsory liquidation of a company or revocation of the authorisation of a company, or any other person who has been deprived of the right to engage in economic activity pursuant to law.

(4) A provision of the articles of association or a transaction that is contrary to the provisions of this section is null and void.

§ 32⁵. Supervisory board of savings and loan association

(1) The supervisory board of a savings and loan association plans the activities of the savings and loan association, organises management and supervises the activities of the management board. The supervisory board notifies the general meeting or the meeting of representatives, if any, of the results of a review.

(2) The supervisory board of a savings and loan association consists of three members unless the articles of association prescribe a higher number of members. A member of the supervisory board must be a natural person with active legal capacity.

(3) A member of the supervisory board must be a member of the savings and loan association.

(4) A member of the management board, a representative, a procurator, an auditor or a member of the credit committee of a savings and loan association, as well as a member of the management board or supervisory board of a credit institution or another financial institution other than an association bank may not be a member of the supervisory board. The articles of association may prescribe other persons who may not be members of the supervisory board.

(5) The supervisory board is competent to review complaints filed against the activities of the credit committee unless this has been placed within the competence of the general meeting or the meeting of representatives by the articles of association.

(6) The consent of the supervisory board is required for conclusion of transactions on behalf of a savings and loan association which are beyond the scope of everyday economic activities, including the transactions which bring about:

1) the acquisition or termination of holdings in other companies;

2) the foundation or dissolution of a subsidiary;

3) the acquisition or transfer of an enterprise, or the termination of its activities;

4) the transfer or encumbrance of immovables and registered movables.

(7) The articles of association may prescribe that the consent of the supervisory board is not required or is only required in the events specified in the articles of association to conclude the transactions specified in subsection 6 of this section. The articles of association may also grant the supervisory board the right to decide on other issues that have not been placed within the competence of the management board or the general meeting in accordance with law or the articles of association.

(8) The consent specified in subsection 6 of this section is not required for the conclusion of a transaction if a delay in the transaction would bring about significant damage to a savings and loan association.

(9) The consent specified in subsection 6 of this section does not apply with regard to third parties.

§ 34. Management board of savings and loan association

(1) The management board consists of two members unless the articles of association prescribe a higher number of members.

(2) Members of the management board are not required to be members of the savings and loan association, unless otherwise provided for in the articles of association.

§ 34¹. Obligations of management board

(1) The management board of a savings and loan association is required, among other things, to:

1) ensure that all employees of the savings and loan association are aware of the provisions of legislation relating to their duties of employment, which arise from this Act, the Commercial Associations Act, the Commercial Code, other relevant legislation, the principles provided for in the documents approved by the managing bodies of the savings and loan association, and the customs and practices common in the economic activities of the association;

2) ensure verification of compliance of the activities of the savings and loan association and its employees with that provided for in this Act, the Commercial Associations Act and other relevant legislation, and with the documents approved by the managing bodies of the savings and loan association and with customs and practices;

3) develop a business plan for implementation of the strategy approved by the supervisory board;

4) establish and regularly review risk taking, management, monitoring and risk management principles and procedures and internal rules of the savings and loan association which comprise current as well as potential risks;

5) perform other obligations arising from this Act.

(2) The management board presents an overview of the activities and economic situation of a savings and loan association to the supervisory board at least once every three months.

(3) The management board immediately informs the members of the supervisory board of any deterioration in the economic situation of a savings and loan association, danger of such deterioration or deviation from the provisions of Chapter 5 of this Act.

(4) The management board provides an overview of the violations established on the basis of subsection 4 of § 41 of this Act at the general meeting of a savings and loan association and presents a plan as to when and in which manner these violations will be eliminated.

§ 36. Requirements for members of management body and employees of savings and loan association

(1) The following person may not be a member of the management board, supervisory board (hereinafter jointly management body), credit committee or revision committee of a savings and loan association:

1) a person whose earlier activities have led to the bankruptcy or compulsory liquidation of a company or revocation of the authorisation of a company;

2) a person who has been deprived of the right to engage in economic activity pursuant to law, or whose earlier activities as a member of a management body of a company have shown that they are unable to organise the management of a company in such a way that the interests of the shareholders, partners, members, creditors and clients of the company are sufficiently protected, or whose earlier activities have shown that they are not suitable to manage a company for other good reasons.

(2) A natural person with active legal capacity, impeccable business reputation and the education, experience and professional qualifications necessary for participation in a management body of a savings and loan association may be a member of a management body of a savings and loan association. The reputation of a person is not impeccable if:

1) the person has been convicted of a criminal offence in the first degree or the person has been punished for an offence against property, economic offence, official misconduct, offence against public trust or offence against a person or an act of terrorism or for financing or supporting activities aimed at the commission thereof or for an offence related to the issue of consumer credit, and the information concerning their punishment has not been deleted from the criminal records database pursuant to the Criminal Records Database Act;

2) the person engages or has engaged in usury within the meaning of subsection 4 of § 39 of the Creditors and Credit Intermediaries Act;

3) the person is subject to an international sanction;

4) the person is the subject of insolvency proceedings, or the person has been declared bankrupt, unless a court has released the person from the obligations that have not been performed in the bankruptcy proceedings;

5) an act or omission of the person has led to the bankruptcy of a creditor, credit intermediary, credit institution, investment firm or other person subject to financial supervision or revocation of the authorisation thereof on the initiative of a financial supervision authority;

6) a court has imposed on the person an occupational ban in accordance with § 49 or a prohibition to engage in enterprise in accordance with § 49¹ of the Penal Code, also if a prohibition on business prescribed in law or a judicial disposition or a prohibition on working in a particular profession or position has been imposed on the person or the person has been punished for the violation of such a prohibition.

(3) A person elected as a member of a management body of a savings and loan association must have the necessary time to perform their duties in the position and must fit into the membership of the management body in terms of their knowledge, skills and experience.

(4) In order to elect or appoint a member of a management body of a savings and loan association, the written consent of the person to be elected or appointed is necessary. In order to allow verification of compliance with the requirements specified in subsections 1 and 2 of this section, the person submits their written consent together with an overview of their education, work experience, engagement in enterprise and punishments entered in the criminal records database, and confirmation concerning the absence of the circumstances provided for in this Act, which preclude the right to be a member of a management body of a savings and loan association.

(5) A member of the management board of a savings and loan association may not be a member of the supervisory board or an auditor of the savings and loan association or a person with economic interests equivalent to those of such persons.

(6) A member of the management board of a savings and loan association may not enter into agreements with other persons if, under such agreements, the duties of the member include investment, preparation or intermediation of loan projects or investment projects, or other such activities. The provisions of this subsection do not apply to pedagogical or research activities.

(7) A member of the management board of a savings and loan association may not act as an employee, a member of a management body or an auditor in a credit institution or another financial institution, including in another savings and loan association, except in a financial institution over which the savings and loan association has direct or indirect control.

(8) A member of a management body and an employee, a member of the credit committee and a member of the revision committee of a savings and loan association are required to give priority to the economic interests of the savings and loan association and the members thereof over their own personal economic interests.

§ 36¹. Obligations and duties of members of management body and employees

(1) Members of a management body and employees of a savings and loan association act with the prudence and diligence expected of them and pursuant to the requirements set for their position. Managers of a savings and loan association must be able to organise the activities of the association in such a way that above all the interests of the members are adequately protected.

(2) Employees of a savings and loan association are required to provide services lawfully, with due professionalism, precision and care.

(3) Members of a management body of a savings and loan association ensure that the organisational structure of the association is transparent, the areas of responsibility are clearly delineated, and procedures are in place for the identification, measurement, management, constant monitoring and reporting of risks that are adequate and proportionate, taking into account the nature, extent and complexity of the savings and loan association.

(4) The management board of a savings and loan association is required to make sure that the rules and other rules of procedure established on the basis of this Act are up to date, assess their efficiency and implement appropriate measures for the elimination of deficiencies.

§ 37. Revision committee of savings and loan association

(1) A savings and loan association must have a revision committee that consists of three members, unless a higher number of members is prescribed by the articles of association.

(2) Members of the revision committee must have education in economics or law or at least three years of work experience in a position related to accounting, finance or auditing of the economic activities of a company.

(3) Members of the management board, supervisory board or credit committee, auditors or accountants of a savings and loan association and persons with economic interests equivalent to those of such persons cannot be members of the revision committee.

(4) The auditing of the economic activities of a savings and loan association does not preclude the activities of the revision committee.

§ 38. Rights and obligations of revision committee of savings and loan association

(1) A member of the revision committee has the right and obligation to audit the assets, payment accounts, securities accounts, accounting documents and documents relating to the activities of the credit committee of a savings and loan association.

(2) Members of the revision committee have the right to monitor any aspect of the work and economic activities of the savings and loan association.

(3) The management board of a savings and loan association enables the revision committee to exercise the rights and perform the obligations specified in subsection 1 of this section and ensures all the working conditions necessary for the performance of the duties of the revision committee, including the right to obtain explanations and information from members of management bodies and employees of the savings and loan association and the opportunity to monitor the elimination of the deficiencies detected and consideration of the proposals made.

§ 39. Duties of revision committee of savings and loan association

(1) The revision committee audits the activities of a savings and loan association, including:

1) verifies the compliance of the savings and loan association and the members of its management bodies and their activities with that provided for in this Act and in the Commercial Associations Act, decisions of the management bodies, internal rules, agreements entered into by the savings and loan association and good practice;

2) verifies compliance with the bases for the activities prescribed in §§ 5 and 6 of this Act and the appropriateness and efficiency of the measures taken for the elimination of deficiencies in the internal rules and in the performance of the obligations of the savings and loan association, and evaluates them regularly;

3) advises the persons responsible for the provision of services of the savings and loan association and members of a management body on issues related to the performance of the obligations provided for in this Act;

4) submits the reports prescribed pursuant to this Act.

(2) The revision committee is required to immediately provide the supervisory board and the general meeting of the savings and loan association and the representatives, if any, of the savings and loan association with the information that has become known to them concerning the savings and loan association which indicates non-compliance with the requirements of this Act or significant damage to the interests of a member.

§ 40. Activities of revision committee of savings and loan association upon identification of risks and in the event of violation of requirements

(1) At least once a year, the revision committee submits to the management board and the supervisory board of a savings and loan association an overview of the risks identified, the results of the analyses and verifications performed and other circumstances, if any, identified in the performance of the duties specified in § 39 of this Act. The overview must also include an assessment of the legal risks of non-compliance with the obligations arising from legislation and other related risks and potential risks.

(2) If the management board of a savings and loan association has not taken measures to eliminate the violations specified in subsection 2 of § 39 of this Act within two months of becoming aware thereof, the revision committee will demand, in accordance with clause 5 of subsection 2 of § 32¹, that the management board call a special general meeting of the savings and loan association.

(4) The revision committee may make a proposal to a special general meeting to:

1) remove members of the management board or the supervisory board;

2) remove members of the credit committee;

3) amend the articles of association;

4) merge the savings and loan association with another savings and loan association;

5) dissolve the savings and loan association in accordance with the procedure prescribed by law and the articles of association.

§ 40¹. Submission of reports and other documents to revision committee

(1) The management board of a savings and loan association submits to the revision committee reports and overviews pursuant to the procedure provided for in this Act and legislation issued on the basis thereof.

(2) The management board of a savings and loan association submits to the revision committee once every three months the balance sheet, income statement and information on the number of members of the savings and loan association.

(3) The management board of a savings and loan association submits to the revision committee the annual report, a copy of the auditor’s report, the proposal for and decision on the distribution of profit or covering of loss and an extract from the minutes of the general meeting concerning the approval of or refusal to approve the annual report within two weeks after the general meeting.

(4) A member of the revision committee may request from the management board of a savings and loan association other data and documents not specified in this section, which enable the revision committee to perform the duties specified in subsection 1 of § 39 of this Act.

§ 41. Audit

(1) It is mandatory for the annual accounts of a savings and loan association to be audited.

(4) In addition to auditing the annual accounts, a savings and loan association conducts, at least once a year, an audit of compliance with the following requirements (hereinafter special-purpose assignment):

1) the requirement for the existence of an adequate share capital provided for in subsection 3 of § 22 of this Act;

2) the requirements provided for in clauses 1 and 3–5 of subsection 1 and in subsection 3 of § 27 of this Act;

3) the requirement for the existence of the liquidity buffer prescribed in § 27¹ of this Act and for the composition of the liquidity buffer;

4) the requirements specified in subsections 7–10 of § 28 of this Act, except in the event of persons with equivalent economic interests;

5) the requirements provided for in subsection 2 of § 47¹ of this section.

(5) For the purposes of this Act, special-purpose assignment means an assurance audit service which must be provided in accordance with the International Standard on Assurance Engagements (Estonia) 3000 and the provision of which is subject to that provided for in the Auditors Activities Act with the special rules provided for in this Act.

(6) In the auditor’s report on the results of the special-purpose assignment specified in subsection 4 of this section, the auditor submits a report to the management board, supervisory board and representatives, if any, of the savings and loan association, expressing an opinion on compliance with the requirements specified in subsection 4 of this section. Upon establishment of a violation of the requirements specified in subsection 4 of this section, a reference to the requirement under this Act with which the activities of the savings and loan association do not comply and an explanation of the nature of the violation must be added.

(7) The minister in charge of the policy sector establishes, by a regulation, more detailed conditions for carrying out the special-purpose assignment provided for in subsection 4 of this section, including the following:

1) whether the special-purpose assignment to be carried out provides reasonable or limited assurance;

2) the point in time as at which or the period for which the special-purpose assignment is carried out.

§ 41¹. Organisation of accounting

(1) A savings and loan association organises its accounting in accordance with this Act, the Accounting Act, the Commercial Associations Act, the Commercial Code and the articles of association and accounting policies and procedures of the savings and loan association.

(2) The accounting provides truthful information concerning the financial situation and economic activities of the savings and loan association.

(3) The minister in charge of the policy sector may establish, by a regulation, more detailed requirements for the organisation of accounting and reporting of savings and loan associations.

§ 41². Right of member and person wishing to become member to obtain information and information to be disclosed about savings and loan association

(1) The management board of a savings and loan association submits to a member of the savings and loan association an audited annual report in electronic form no later than ten days before the general meeting which decides on approval of the annual report takes place.

(2) At the request of a member of a savings and loan association, the management board of the savings and loan association submits to the member the following data and documents within 30 days of the receipt of such request:

1) the latest audited annual report;

2) the total value of the funds deposited by the member with the savings and loan association, including the sum of the member’s contributions and accrued interest as at the time of the information request;

3) the most recent auditor’s opinion on the annual accounts and the auditor’s report on the results of the special-purpose assignment in accordance with § 41 of this Act;

4) information on how the existence of an adequate liquidity buffer is ensured pursuant to that provided for in subsection 4 of § 27¹ of this Act;

5) the data specified in the first sentence of subsection 2 of § 36 of this Act on the members of the management bodies of the savings and loan association and the contact details (telephone number and e-mail address) of the members of the management bodies and the members of the revision committee;

6) a list of members of the association and their latest contact details;

7) information on loans issued based on the sector of the field of activity of the borrowers as at the end of the last month;

8) the sum of uncollectible receivables as at the last month;

9) the balance sheet and income statement of the savings and loan association for the last reporting period submitted to Eesti Pank.

(3) The provisions of subsection 2 of this section do not apply if the savings and loan association has made the aforementioned information and documents available to its members through an electronic system or has provided the information and documents in any other manner.

(4) At the request of a person wishing to become a member of a savings and loan association, the management board of the savings and loan association submits to the person the following data and documents within 30 days of the receipt of such request:

1) the latest audited annual report;

2) the data specified in the first sentence of subsection 2 of § 36 of this Act on the members of the management bodies of the savings and loan association and the contact details (telephone number and e-mail address) of the members of the management bodies and the members of the revision committee;

3) the balance sheet and income statement of the savings and loan association for the last reporting period submitted to Eesti Pank.

(5) The annual reports for the last three financial years and the articles of association of a savings and loan association must be available at the seat of the savings and loan association and on its website, if any.

(6) The management board of a savings and loan association must, at the request of a member, provide the information specified in this section on paper and may ask a reasonable fee for this.

§ 41³. Submission of information to Eesti Pank

A savings and loan association periodically submits statistical data to Eesti Pank in accordance with the procedure provided for in the Official Statistics Act and the Eesti Pank Act and the legislation established on the basis thereof.

§ 41⁴. Processing and storage of personal data

(1) A savings and loan association processes the personal data specified in this Act for the performance of the obligations arising from law.

(2) A savings and loan association stores the personal data of the members of the management bodies submitted on the basis of subsection 4 of § 36 of this Act for two years after the termination of the employment relationship.

(3) The contact details of the members of the management body and of the revision committee provided for in this Act are stored by a savings and loan association for two years after the removal of a member of the management body or of the revision committee or the expiry of their term of office. The personal data of the members of a savings and loan association provided for in this Act are stored by the savings and loan association for two years after the termination of membership.

§ 42. Division and merger of savings and loan association

(1) The division of a savings and loan association is prohibited.

(2) A savings and loan association may be merged on the basis of a decision of the general meeting. The merger may take place by way of establishing a new savings and loan association or by merging the savings and loan association with another savings and loan association.

(3) Savings and loan associations are merged in accordance with the procedure provided for in the Commercial Code, unless otherwise prescribed in this Act.

§ 43. Audit of merger agreement

(1) A merger agreement between savings and loan associations as well as any and all merging savings and loan associations are audited by the same auditor.

(2) The auditor prepares a report concerning the audit of the merger agreement, indicating the assessment methods used for determining the exchange ratio of contributions, and give an opinion with regard to the compliance of the merging savings and loan associations with measures to guarantee financial soundness.

(3) In addition to the auditor, the revision committees of the merging savings and loan associations also examine the merger agreement of the associations and prepare a written report concerning the examination.

§ 44. Merger of savings and loan associations for foundation of association bank

(1) Savings and loan associations may merge for the purpose of foundation of an association bank in accordance with the provisions of the Credit Institutions Act. In such an event the merging savings and loan associations are deemed to be dissolved.

(2) Upon foundation of an association bank, the assets of the merging savings and loan associations transfer to the association bank being founded and the members of the savings and loan associations become members of the association bank.

§ 45. Dissolution of savings and loan association

(1) A savings and loan association is dissolved:

1) on the basis of a decision of the general meeting (voluntary dissolution);

2) by a court order (compulsory dissolution);

3) if the savings and loan association has less than 25 members and the number of members has not increased in two months;

4) on other grounds provided by law or the articles of association.

(2) A savings and loan association is dissolved in accordance with the procedure provided for in the Commercial Associations Act.

§ 45¹. Application of Bankruptcy Act in event of bankruptcy of savings and loan association

The provisions of the Bankruptcy Act apply to the submission of a bankruptcy petition, declaration of bankruptcy and bankruptcy proceedings of a savings and loan association unless otherwise provided for in this Chapter.

§ 45². Bankruptcy petition and appointment of interim trustee

If the court has accepted a bankruptcy petition, the court will decide on the appointment of an interim trustee within three days and make a ruling on the decision. If appointment of an interim trustee is decided in a preliminary hearing, the court will decide on the time of the hearing within seven days after the receipt of the bankruptcy petition and deliver the summonses. In such an event the court will decide on the appointment of an interim trustee within ten days of the receipt of the bankruptcy petition.

§ 45³. Declaration of bankruptcy and presuming insolvency of debtor who is savings and loan association

In addition to that provided for in subsection 1¹ of § 31 of the Bankruptcy Act, the insolvency of a debtor who is a savings and loan association is presumed if the net assets of the savings and loan association are less than the rate provided for in subsection 3 of § 22 of this Act.

§ 45⁴. Notification of bankruptcy ruling of savings and loan association

(1) A trustee notifies all depositors and other known creditors of the bankruptcy ruling and the time and place of the first general meeting of creditors. Subsection 2 of § 34 of the Bankruptcy Act does not apply to notification of the known creditors of a savings and loan association.

(2) The trustee notifies all persons who have obligations towards the debtor of the declaration of the bankruptcy of the debtor and provides details of the trustee’s professional payment account to which the amounts owed to the savings and loan association will be paid.

§ 45⁵. Rankings of claims

After the payments specified in subsection 1 of § 146 of the Bankruptcy Act have been made, the claims of the creditors are satisfied in the following rankings:

1) accepted claims secured by a pledge, to the extent provided for in subsection 2 of § 153 of the Bankruptcy Act;

2) accepted claims arising from deposit agreements;

3) other accepted claims which were filed by the time limit;

4) other claims which were not filed by the time limit but were accepted.

§ 46. Application of Act to savings and loan associations being founded or operating

(1) As of the entry into force of this Act, savings and loan associations can be founded only in accordance with the procedure provided for in this Act and the provisions of this Act apply to such savings and loan associations.

(2) Loan and savings associations operating upon the entry into force of this Act are deemed to be savings and loan associations.

(3) Savings and loan associations operating upon the entry into force of this Act must bring their activities and documents into conformity with the requirements of this Act within three months after the entry into force of this Act.

(4) Savings and loan associations established before 1 July 2010 must bring their activities into conformity with the version of this Act, which entered into force on 1 July 2010, not later than by 1 July 2011.

§ 47. Application of requirements provided for share capital

(1) As of the entry into force of this Act, the minimum share capital of a savings and loan association must be 200 000 kroons.

(2) As of 1 July 2001, the share capital of a savings and loan association must be at least 300 000 kroons.

(3) As of 1 July 2002, the share capital of a savings and loan association must comply with the provisions of subsection 3 of § 22 of this Act.

(4) If a savings and loan association fails to bring the amount of the share capital of the association into conformity with the provisions of subsections 1 to 3 of this section, the registrar will delete the savings and loan association from the register or commence compulsory dissolution of the association in accordance with the procedure provided for in § 56 of the Commercial Register Act.

§ 47¹. Formation and further activities of savings and loan associations after 1 March 2026

(1) After 1 March 2026, a savings and loan association may not be formed or entered in this form as a commercial association in the commercial register.

(2) As of 1 July 2026, a savings and loan association may not enter into new deposit agreements or issue loans to members who are natural persons within the meaning of subsection 1¹ of § 28 of this Act. Neither may a savings and loan association renew existing deposit agreements and loan agreements entered into with natural persons.

§ 47². Bringing activities into compliance with requirements of wording of this Act that entered into force on 1 March 2026

(1) A savings and loan association founded and operating before 1 March 2026 must bring its activities and documents into compliance with the requirements provided for in subsection 1 of § 3, subsections 1 and 3 of § 5, § 6, clause 5 of subsection 2 of § 7, clause 1 of subsection 1 of § 10, §§ 14 and 15, subsection 5 of § 17, subsections 4 and 5 of § 18, subsection 3 of § 22, clauses 1 and 3¹ of subsection 1 of § 27, § 27¹, subsections 1, 1¹, 7¹, 9 and 10 of § 28, clauses 5–8 of subsection 2 of § 31, § 34¹, subsections 1–7 of § 36 and § 40¹ of the wording of this Act that entered into force on 1 March 2026 by 1 October 2026 at the latest.

(2) The members who have become members of a savings and loan association before 1 March 2026 are not subject to the rate of the membership fee provided for in subsection 1 of § 16 and the amount of the contribution provided for in subsection 1 of § 23 of the wording of this Act that entered into force on 1 March 2026.

(3) The requirements for audit provided for in § 41 of the wording of this Act that entered into force on 1 March 2026 apply to the financial year 2026 and subsequent financial years.

(4) The duties and requirements for a revision committee provided for in §§ 39 and 40 of the wording of this Act that entered into force on 1 March 2026 apply to the financial year 2026 and subsequent financial years.

§ 47³. Application for authorisation and termination of activities of savings and loan association

(1) A savings and loan association founded and operating before 1 March 2026 may continue to operate from 1 January 2029 only in the form of a credit institution, including an association bank, if it wishes to continue to take deposits. Otherwise, from 1 January 2029, a savings and loan association may continue as a commercial association, including on the basis of an authorisation of a payment institution or a creditor, without being treated as a savings and loan association and provided that it has terminated taking deposits.

(2) If a savings and loan association wishes to continue as a credit institution, payment institution or creditor, it will submit a relevant application for an authorisation to the Financial Supervision Authority by 1 January 2027 at the latest. If a savings and loan association has not submitted the relevant application for an authorisation by 1 January 2027 at the latest, or if the Financial Supervision Authority has refused to grant it authorisation by the time limit specified in subsection 4 of this section, it must terminate the conclusion of depositing transactions with its existing members, provision of payment services and issue of consumer credit to them in accordance with the time limits provided for in the agreements. If a savings and loan association does not have adequate liquid funds to pay out deposits, the maturities of the deposit agreements entered into before 1 March 2026 may exceptionally be extended by a maximum of five years if a depositor who is a member has granted their written consent therefor.

(3) A savings and loan association that does not submit an application for an authorisation pursuant to subsection 2 of this section but decides to continue its activities as a commercial association, must notify the Financial Supervision Authority of such a decision in writing by 31 December 2028 at the latest.

(4) If a savings and loan association has submitted an application for an authorisation pursuant to subsection 2 of this section but the Financial Supervision Authority has not decided whether to grant or refuse to grant an authorisation by 31 December 2028, the activities of the savings and loan association are not deemed activities without an authorisation for the purposes of the Penal Code. In such an event, the savings and loan association is not permitted to enter into new contracts for the provision of the services specified in § 6 of this Act, to renew contracts entered into for the provision of such services before 1 January 2029, or to accept new members as of 1 January 2029 until a decision has been made to grant or refuse to grant an authorisation.

(5) If a savings and loan association has not submitted an application for an authorisation to the Financial Supervisory Authority pursuant to subsection 2 of this section by 1 January 2027 at the latest, or the Financial Supervisory Authority has refused to grant an authorisation, and the savings and loan association has not submitted a notification to the Financial Supervisory Authority pursuant to subsection 3 of this section by 31 December 2028 on its continuation as a commercial association, the Financial Supervisory Authority will submit a request for the compulsory dissolution of the savings and loan association to a court by 1 March 2029 at the latest. The Financial Supervision Authority also submits a request for compulsory dissolution if a savings and loan association has submitted a notification pursuant to subsection 3 of this section but nevertheless continues depositing transactions, provision of payment services or issue of consumer credit. Upon submission of a request for compulsory liquidation, the Financial Supervision Authority follows the provisions of the Commercial Associations Act and the Act on the General Part of the Civil Code.

§ 48. Entry into force and validity of Act

(1) This Act enters into force on 1 July 1999.

(2) This Act is valid until 1 March 2029.