Establishment of credit unions

A credit union is a special type of financial institution whose business is limited to its members only. A credit union may be established by minimum 30 persons who share a common interest and act jointly with a view to promoting and protecting mutual interests on the principle of financial reciprocity. Under the Credit Unions Act, the members of a credit union may only be sole traders and craftsmen having their head office in the Republic of Croatia and natural persons with domicile in the Republic of Croatia who meet the conditions of the principles on which a credit union is established. A credit union may be established on the following principles:

1. employment or occupation or profession principle; 
2. territorial principle, and 
3. by way of exception, another principle that would ensure achievement of a mutual interest and financial reciprocity of members of the credit union. 

In accordance with the principle of establishment of a credit union, credit union members must meet one of the following conditions:

1. they are employed with the same employer or in the same industry;
2. they are members of the same occupation or profession; or
3. they live in the same area (in the same county); and
4. they are related in any other way that ensures achievement of the mutual interest on the principle of reciprocity.

A credit union may commence with its operations after it has obtained authorisation from the Croatian National Bank and approval for management board members and after its entry in the register of companies.

Application for authorisation of credit unions

The application for authorisation of credit unions is submitted on a form Application for authorisation credit unions, together with the following documents and information:

1. the Articles of Association of a credit union in the notarial form;
2. evidence of payment of membership holdings;
3. business plan for the first three operating years which includes an explanation of the reasons for and the purposes of the establishment, balance sheet and the profit and loss account projections, description of the organisational and personnel structure and technical infrastructure, as well as the accounting policies of the credit union;
4. the list of founders who are members of the credit union, including their personal details and evidence that the requirements for the membership in the union are met;
5. application for approval for the management board member/members; 
6. a list of supervisory board members; and
7. other information listed in the form Application for authorisation of credit unions.

Decision-taking procedure

The time limit for taking a decision on the application for authorisation of credit unions is three months from the date of receipt of a valid application and maximum six months from the date when the application was submitted. The decision on the application for authorisation of a credit union is taken by the Governor of the Croatian National Bank, on the proposal of the Licensing Committee.

The Croatian National Bank will refuse an application for authorisation of credit unions in the following cases:

1. if the proposed member of the management board does not meet the requirements for the appointment;
2. if it ensues from the Articles of Association of the credit union and other documents that the credit union is not organised in accordance with the Credit Unions Act or that the stipulated conditions for the proper operation of a credit union are not in place;
3. if it ensues from the documents and other known facts that the credit union is not capable, in personnel, technical or organisational terms, of managing its operations in accordance with regulations; or
4. if the provisions of the Articles of Association of the credit union are contrary to the regulations.

The authorisation of a credit union expires:

1. if the credit union does not start its operations within six months from the date of issuance of the authorisation;
2. if the credit union has ceased to engage in business for more than three months;
3. as of the date of opening of bankruptcy proceedings or compulsory winding-up procedures;
4. as of the date of the entry of a new credit union in the register of companies, in case of a merger of credit unions; and
5. as of the date of deletion from the court register of the credit union which is acquired by another credit union.

Revocation of decision

The Croatian National Bank will revoke a decision on the authorisation of credit unions in the following cases:

1. if the authorisation has been obtained on the basis of false and inaccurate data;
2. if the supervisory board of a credit union fails to act in accordance with the order issued by the Croatian National Bank to remove a member of the management board of the credit union and appoint a new member of the management board of the credit union, or if the newly appointed management board member fails to ensure elimination of illegalities and irregularities within two months from the date of appointment;
3. if the credit union carries out the activities not authorised by the Croatian National Bank;
4. if the credit union fails to meet the requirements concerning the solvency ratio and other requirements of the business in accordance with the risk management rules;
5. if the credit union prevents in any way the supervision of its operation;
6. if the credit union does not meet technical, organisational, personnel and other requirements necessary for pursuit of the business;
7. if the credit union fails to act in accordance with the decision of the Croatian National Bank imposing measures for eliminating illegalities and irregularities.