The members of the management board (including the chairperson of the management board) and the members of the supervisory board shall be assessed as appropriate by the ECB in the case of appointments to significant institutions. Prior approval of the CNB is obligatory in the case of their appointment in less significant institutions. The assessment of the suitability aims to protect good and prudent management of a credit institution. The primary responsibility for selecting fit and proper candidates and ensuring their continued suitability lies with the credit institution.

The ECB and the CNB shall verify the said process by conducting an assessment of the suitability of candidates for each function to prevent the appointment of (or continued exercise of the function in cases where serious concerns emerge) persons that pose a risk to the adequate functioning of the credit institution. Credit institution's system of securing continuous suitability of the members is also under scrutiny.

According to the general framework in the European Union, members of the governing bodies must be of a good repute and have sufficient knowledge, skills and experience to perform their duties. Additional provisions define that all members of the governing body should devote sufficient time to the performance of their functions and only have a limited number of additional functions (to be able to meet the time commitment requirement to duly perform their functions) and should have honesty, integrity and independence of mind. The overall composition of the governing body (management and supervisory board) must be collectively suitable.

The provisions of Article 38, paragraph (1) of the Credit Institutions Act prescribe the conditions that should be met at all times by a person applying for membership in the management of a credit institution, and Article 45, paragraph (1) of the Credit Institutions Act prescribes the conditions that should be met at all times by the person applying for membership in the supervisory board of a credit institution.

According to Article 45, paragraph (3) of the Credit Institutions Act, the supervisory board of a credit institution that is not a small and non-complex credit institution and credit institutions whose securities are listed on a regulated market as determined by the law governing the capital markets, must have a sufficient number of independent members. Paragraph (4) of the same article of the Credit Institutions Act applies to credit institutions not listed in the previous paragraph and defines that such institutions must have at least one independent member of the supervisory board. Exceptionally, this obligation does not apply to a credit institution which is a subsidiary of an EU parent credit institution having its head office in the RC or an RC parent credit institution.

The credit institution submits an application to the CNB for the assessment of the suitability of the chairman of the management board, the member of the management board and/or the member of the supervisory board no later than four months before the expiration of the candidate's current term, using the national form provided for that purpose (the page contains two sets of forms – one for significant institutions and the other for less significant institutions), where significant institutions submit the application via the IMAS portal.

The CNB conducts an assessment of submitted applications, guided by the provisions of the Credit Institutions Act and the Decision on the assessment of the suitability of the chairperson of the management board, members of the management board, members of the supervisory board and key function holders in a credit institution, but in the case of significant institutions, the decision is taken by the ECB (more information on how the ECB conducts the assessment of the suitability of the members of the governing bodies is available in its Guide to fit and proper assessments), applying also the criteria that are prescribed by the Croatian regulatory framework.

In the case of applications related to less significant institutions, the decision is made by the CNB on the basis of the criteria stipulated in the Decision on the assessment of the suitability of the chairperson of the management board, members of the management board, members of the supervisory board and key function holders in a credit institution and in accordance with the provisions and deadlines prescribed by the Credit Institutions Act.