Deposit Guarantee Fund Act

Chapter 1
General Provisions

§ 1. Scope of application of Act

This Act provides the procedure for guarantee of deposits taken by credit institutions, and the sources and procedure for compensation for deposits in the event of the insolvency of a credit institution, and determines the legal status of the Deposit Guarantee Fund.

§ 2. Deposit Guarantee Fund

(1) The Deposit Guarantee Fund (hereinafter Fund) is a legal person in public law founded on the basis of this Act.

(2) The purpose of the activities of the Fund is to guarantee the deposits placed with a credit institution by depositors in the event of the insolvency of the credit institution by providing compensation for the deposits under the conditions and to the extent provided for in this Act.

§ 3. Definitions:

In this Act the following definitions are used:

1) "deposit taken by a credit institution (hereinafter deposit)" means money deposited with a credit institution and funds temporarily left at the disposal of a credit institution by a client in the course of banking transactions, which the credit institution is required to repay to the entitled person pursuant to a contract under the law of obligations or legislation. Moneys for the transfer of which a client has issued a corresponding payment order and which have been debited from the client's account on the basis thereof but have not been transferred from the correspondent account of the credit institution by the date on which deposits become unavailable are also deemed to be deposits. Debts evidenced by securities issued by a credit institution which are not part of the own funds of the credit institution are also deemed to be deposits;

2) "joint deposit" means a deposit which is opened in the names of two or more natural persons or which two or more natural persons have the right to dispose of pursuant to a deposit contract;

3) "depositor" means a person who owns a deposit placed with a credit institution;

4) "entitled person" means a person entitled to demand compensation for the deposit owned by or at the disposal of the person under the conditions provided for in this Act;

5) "unavailable deposit" means a deposit which a credit institution is unable to repay due to one of the following reasons:

B the Bank of Estonia has declared a moratorium on the credit institution;

B the Bank of Estonia has revoked the activity licence of the credit institution due to solvency difficulties;

B bankruptcy proceedings have been commenced against the credit institution;

6) "date on which deposits become unavailable" means the date of declaration of a moratorium on or the revocation of the activity licence of a credit institution on the basis of a resolution of the Board of the Bank of Estonia, or the date of commencement of bankruptcy proceedings against a credit institution pursuant to a court ruling.

Chapter 2
Activities and Management of Fund

§ 4. Bases of activities of Fund

(1) The Fund operates pursuant to this Act, the statutes of the Fund and other legislation. The statutes of the Fund are approved by the Government of the Republic on the proposal of the Supervisory Board of the Fund.

(2) The Fund participates in international co-operation relating to the protection of deposits.

§ 5. Membership and term of authority of Supervisory Board of Fund

(1) The Supervisory Board of the Fund (hereinafter Supervisory Board) consists of five members and is the highest directing body of the Fund.

(2) Two members of the Supervisory Board are appointed by the Riigkogu and one member is appointed each by the Government of the Republic, the Bank of Estonia and the organisations representing Estonian credit institutions.

(3) Members of the Supervisory Board are appointed for five years. Upon the expiry of its term of authority, the Supervisory Board continues its activities until a new Supervisory Board assumes office.

§ 6. Change of membership of Supervisory Board

(1) The institution which appoints a member of the Supervisory Board to office may remove him or her before expiry of his or her term of authority upon failure to perform his or her duties to a material extent, significant damage to the interests of the Fund in any other manner or extended inability to participate in the work of the Supervisory Board. The termination of an employment or service relationship may also be the basis for removal.

(2) Upon the removal, resignation or death of a member of the Supervisory Board, he or she is replaced by a new member whose authority continues until the appointment of a new membership of the Supervisory Board.

§ 7. Requirements for members of Supervisory Board

(1) A member of the Supervisory Board must be a citizen of Estonia with active legal capacity whose permanent residence is in Estonia.

(2) Persons who have completed higher education, have the knowledge necessary for performance of the duties of a member of the Supervisory Board and an impeccable reputation may be appointed as members of the Supervisory Board.

§ 8. Chairman and Deputy Chairman of Supervisory Board

(1) The members of the Supervisory Board shall elect a Chairman and Deputy Chairman of the Supervisory Board from among themselves by an open vote with a majority of votes of the membership in favour. The attendance of all members of the Supervisory Board is necessary for the election of the Chairman and Deputy Chairman of the Supervisory Board. Members of the Supervisory Board shall not remain undecided or abstain from voting in the election.

(2) The Chairman of the Supervisory Board organises the work of the Supervisory Board, chairs the meetings of the Supervisory Board, enters into and terminates the employment contract of the Director General of the Fund and performs other duties placed within the competence of the Chairman pursuant to the statutes of the Fund.

(3) If the Chairman of the Supervisory Board is absent or temporarily absent under the circumstances specified in subsection 6 (2) of this Act, the Deputy Chairman of the Supervisory Board shall perform his or her duties.

§ 9. Meeting of Supervisory Board

(1) Meetings of the Supervisory Board shall be held as necessary but not less frequently than once every three months.

(2) The Chairman of the Supervisory Board has the right to call an extraordinary meeting of the Supervisory Board. The Director General or the auditor of the Fund may also make a proposal to call an extraordinary meeting of the Supervisory Board.

(3) The meeting of a new membership of the Supervisory Board for the election of the Chairman of the Supervisory Board shall be called by the Director General of the Fund within one month.

(4) The procedure for announcing a meeting of the Supervisory Board is provided for in the statutes of the Fund.

§ 10. Resolution of Supervisory Board

(1) The Supervisory Board has a quorum if over one-half of the membership participates in a meeting, including either the Chairman or the Deputy Chairman of the Supervisory Board. Upon a lack of the necessary quorum for holding a meeting, a new meeting with the same agenda shall be held within ten days after the cancellation of the meeting.

(2) Members of the Supervisory Board shall participate in decision-making in person.

(3) Each member of the Supervisory Board has one vote. Members of the Supervisory Board do not have the right to abstain from voting or to remain undecided.

(4) Resolutions of the Supervisory Board are adopted if over one-half of the members of the Supervisory Board who participate in the meeting vote in favour. Upon an equal division of votes, the vote of the chairman governs; in the case of his or her absence, the vote of the Deputy Chairman governs.

§ 11. Minutes of meeting of Supervisory Board

Minutes shall be taken of meetings of the Supervisory Board. The information to be recorded in the minutes, the requirements for the minutes, the procedure for signing the minutes and the procedure for documenting dissenting opinions are provided for in the statutes of the Fund.

§ 12. Competence of Supervisory Board

The Supervisory Board:

1) submits the statutes of the Fund to the Government of the Republic for approval through the Minister of Finance;

2) appoints to and releases from office the Director General of the Fund and determines the amount of his or her basic wages and additional remuneration;

3) approves the budget of the Fund;

4) establishes and amends the amount of the obligatory contribution to be made by credit institutions to the Fund;

5) decides the principles and strategies of investment of the assets of the Fund;

6) decides issues relating to application for loans and guarantees;

7) decides issues relating to insurance of the risks of the Fund;

8) decides issues relating to compensation for guaranteed deposits, including issues relating to the guarantee of deposits specified in clauses 18 (1) 3) and 4) of this Act;

9) supervises the activities of the Director General;

10) approves the annual report of the Fund;

11) appoints an auditor and establishes the procedure for his or her remuneration;

12) decides other issues relating to the activities of the Fund which have not been placed within the competence of the Director General of the Fund.

§ 13. Director General of Fund

(1) The Fund is managed and represented by the Director General who is appointed to and released from office by the Supervisory Board. The term of authority of the Director General is three years.

(2) A person who has completed higher education, has the knowledge and professional qualifications necessary to manage the Fund and an impeccable business reputation may be appointed as the Director General of the Fund.

(3) A member of the Supervisory Board, a bankrupt or a person who has been deprived of the right to be a trader pursuant to law or a court order, or whose activities or failure to act have caused the bankruptcy or compulsory liquidation of a commercial undertaking, shall not be the Director General of the Fund. The Director General of the Fund shall not be a member of the directing body of any credit institution, an employee of a credit institution or an auditor of a credit institution.

(4) The Director General of the Fund is responsible for the economic activities and development of the Fund. The Director General is subordinate and reports to the Supervisory Board. The Director General of the Fund acts pursuant to the orders of the Supervisory Board.

(5) The Director General shall present an overview of the economic activities and financial situation of the Fund and all material circumstances related to the economic activities of the Fund to the Supervisory Board at least once every three months.

§ 14. Competence of Director General and representation of Fund

(1) The Director General:

1) manages the accounting of the Fund;

2) enters into, amends and terminates the employment contracts of the employees of the Fund;

3) determines the remuneration of the employees of the Fund within the limits of expenditure prescribed therefor in the budget of the Fund;

4) decides the making of expenditure necessary for the activities of the Fund according to the budget of the Fund;

5) participates in the meetings of the Supervisory Board;

6) decides other issues which have been placed within the competence of the Director General pursuant to this Act or the statutes of the Fund.

(2) The Director General of the Fund has the right to represent the Fund in all legal acts, unless otherwise prescribed by law.

(3) The Director General has the right to request that the Supervisory Board decide issues relating to the activities of the Fund which are not specified in § 12 of this Act.

§ 15. Duty to maintain confidentiality

The members of the Supervisory Board, the Director General, all employees of the Fund and persons acting in the name and interests of the Fund shall maintain, while in service and after resignation therefrom, banking secrets, business secrets of the Fund and other trade secrets which become known to them in the course of performance of their duties.

Chapter 3
Deposits Guaranteed by Fund

§ 16. Extent of compensation for deposits guaranteed by Fund

(1) The Fund shall guarantee the deposits taken by credit institutions and Estonian branches of foreign credit institutions registered in Estonia pursuant to the provisions of this Act.

(2) The Fund shall compensate for the guaranteed deposits of every depositor in every credit institution and Estonian branch of a foreign credit institution specified in subsection (1) of this section, including the interest thereon as at the date on which the deposits become unavailable, to the extent of 90 per cent, and shall pay compensation of no more than 20 000 ECU per depositor in one credit institution at the rate determined by the Bank of Estonia on the date on which the deposits become unavailable, unless otherwise prescribed by law.

§ 17. Guarantee of deposits in Estonian branches of foreign credit institutions

(1) If the deposits taken by the Estonian branch of a foreign credit institution have a lower level of guarantee than prescribed by this Act, the Fund shall guarantee the deposits taken by the Estonian branch of a foreign credit institution to the extent not guaranteed by the domestic deposit insurance of the credit institution. In this case, the foreign credit institution is required to make obligatory contributions to the Fund calculated on the basis of the share of deposits taken by the branch not guaranteed by the domestic deposit insurance of the branch of the credit institution, on the same bases as Estonian credit institutions.

(2) If the deposits taken by the Estonian branch of a foreign credit institution have a higher level of guarantee by the domestic deposit insurance of the credit institution than prescribed in this Act, the foreign credit institution is not required to make payments to the Fund. In this case, the deposits taken by the Estonian branch of a foreign credit institution are not guaranteed on the basis of this Act.

§ 18. Deposits not guaranteed by Fund

(1) The Fund shall not guarantee:

1) deposits the depositors of which cannot be identified by the credit institution;

2) deposits owned by members of the management board or supervisory board or auditors of the same credit institution or a commercial undertaking belonging to the same group of undertakings as the credit institution, and persons who on the date on which the deposits become unavailable own 5 per cent or more of the stock or share capital of the same credit institution or a commercial undertaking belonging to the same group of undertakings as the credit institution;

3) deposits owned by the spouses, children and parents of persons specified in clause 2) of this subsection or by third persons acting in the name of persons specified in the same clause, pursuant to a resolution of the Supervisory Board;

4) deposits the interest rates of which are significantly higher than the interest rates of other deposits of similar conditions and size with the same credit institution and which pursuant to a resolution of the Supervisory Board may be the cause of the insolvency of the credit institution;

5) deposits of the state;

6) deposits of local governments;

7) deposits of insurance companies;

8) deposits of financial institutions;

9) deposits of credit institutions;

10) deposits of commercial undertakings belonging to the same group of undertakings as the credit institution;

11) deposits the owners of which have not performed their obligations to the insolvent credit institution on time, to the extent of such obligations;

12) deposits arising out of transactions relating to money laundering, which has been established by a court order which has entered into force;

13) deposits owned by a legal person if on the basis of the preceding annual report at least two of the three following economic indicators exceed the following:

B balance sheet total B 1 000 000 ECU at the rate determined by the Bank of Estonia;

B annual net turnover B 2 000 000 ECU at the rate determined by the Bank of Estonia;

B average number of employees over the year B 50 people.

(2) The procedure for the adoption of resolutions and submission of information necessary for the adoption of resolutions specified in clauses (1) 3) and 4) of this section is established by the Bank of Estonia.

Chapter 4
Assets of Fund and Use Thereof

§ 19. Assets of Fund

The assets of the Fund are formed from single payments made upon the foundation of credit institutions and branches of foreign credit institutions, obligatory contributions by credit institutions, income received from the investment of the assets of the Fund and other incomes.

§ 20. Use of assets of Fund

(1) The Fund may use its assets only for the purposes provided for in this Act and for the operating expenses of the Fund according to the budget of the Fund.

(2) The Supervisory Board and the Director General decide on the investment of the assets of the Fund according to the competence provided for in this Act and the statutes of the Fund.

§ 21. Payments made to Fund

(1) Credit institutions are required to make a single payment in the amount of 50 000 kroons to the Fund within one month after the adoption of a resolution by the Board of the Bank of Estonia to issue an activity licence to the credit institution. A foreign credit institution is required to make such payment within one month after the issue of a permit to found a branch in Estonia if the level of deposit guarantee of the domestic deposit insurance of the credit institution is lower than provided by this Act.

(2) The amount of the obligatory contribution is established by the Supervisory Board pursuant to the procedure prescribed by the statutes of the Fund. Amendments made by the Supervisory Board to the amount of the contribution enter into force three months after the adoption of the corresponding resolution unless a later date is specified in the resolution.

(3) The maximum amount of an obligatory contribution shall be 0.125 per cent of the total amount of deposits taken by a credit institution or an Estonian branch of a foreign credit institution per quarter as at the end of the previous quarter. Deposits of other credit institutions, financial institutions and insurance companies are not included in the deposits taken.

(4) The obligatory contribution shall be made by the fifteenth day of the second month of every quarter.

(5) The obligatory contribution on deposits nominated in foreign currencies is calculated in Estonian kroons at the rate determined by the Bank of Estonia as at the last banking day of each quarter.

(6) On the basis of a resolution of the Supervisory Board, the Fund may suspend the collection of obligatory contributions if the assets of the Fund form at least 3 per cent of the total amount of deposits guaranteed on the basis of this Act.

(7) Payments made to the Fund are not subject to return upon dissolution of a credit institution.

(8) Payments made to the Fund on the basis of this Act are expenses related to enterprise as defined in the Income Tax Act (RT^H I 1993, 79, 1184; 1998, 9, 111; 28, 353 and 354; 34, 485 and 489).

§ 22. Investment of assets of Fund

(1) The Fund shall open an account in a credit institution operating in Estonia for the receipt of payments and for transactions related to the activities of the Fund. Payments received by the Fund shall be invested within three working days after the receipt thereof on the account of the Fund pursuant to the provisions of subsection (2) of this section. The balance of the account shall not exceed the amount necessary for the everyday economic activities of the Fund.

(2) The Fund has the right to invest assets in:

1) bonds which are listed on a stock exchange operating in a member state of the Organisation for Economic Cooperation and Development or on an international stock exchange recognised by those states and which have been assigned an investment grade credit rating by a rating agency recognised by a resolution of the Supervisory Board;

2) credit institutions of the member states of the Organisation for Economic Cooperation and Development which have been assigned an investment grade credit rating by a rating agency recognised by a resolution of the Supervisory Board.

(3) The Director General of the Fund has the right to open an account in one or several credit institutions specified by a resolution of the Supervisory Board for payment of compensation for deposits.

(4) The Fund shall not be a guarantor or assume any other proprietary obligations which do not arise from this Act.

(5) The Fund shall not invest assets in a credit institution if the deposits taken by such credit institution are guaranteed by the Fund, except in the cases provided for in subsections (1) and (3) of this section.

§ 23. Sources of compensation for deposits

(1) The Fund satisfies the claims of entitled persons out of the assets of the Fund.

(2) If the assets of the Fund are insufficient for satisfaction of the claims of entitled persons, the Fund shall take a loan or request that the Government of the Republic take a loan for on-lending to the Fund.

(3) A request for a loan is submitted to the Government of the Republic through the Minister of Finance. The resolution of the Board of the Bank of Estonia to declare a moratorium on the credit institution or to revoke the activity licence thereof, or the court ruling on the commencement of bankruptcy proceedings against the credit institution, information relating to deposits subject to compensation by the Fund and to the amount of compensation to be paid, the preceding annual report of the Fund together with the conclusion of the auditor and the balance sheet of the Fund as at the last working day of the preceding month shall be appended to the request. The Minister of Finance and the Government of the Republic have the right to demand from the Fund other information necessary to decide the taking of a loan.

(4) On the basis of a request specified in subsection (3) of this section, the Government of the Republic is authorised to enter into (a) contract(s) for the taking of (a) loan(s) in a total amount of up to 700 000 000 Estonian kroons. A loan contract which is entered into shall be submitted to the Riigikogu for ratification.

Chapter 5
Compensation for Deposits

§ 24. Principles of compensation for guaranteed deposits

(1) In the event deposits become unavailable, the due date for repayment of all guaranteed deposits is deemed to have arrived. The interest on guaranteed deposits specified in subsection 16 (2) of this Act shall be calculated at the rates prescribed in the deposit or other corresponding contract or, in the absence thereof, at the rates prescribed in the general conditions of deposit valid in the credit institution on the date on which the deposits become unavailable.

(2) Deposits smaller than ten Estonian kroons shall not be compensated for.

(3) The expenses of banking transactions relating to payment of compensation are covered by the entitled persons unless otherwise prescribed by an agreement between the Fund and the credit institution making the payments.

(4) Compensation for deposits nominated in foreign currencies shall be paid in Estonian kroons at the official rate as at the date on which the deposits become unavailable.

(5) Compensation for deposits seized pursuant to the procedure prescribed by law shall be paid to the entitled persons after the entry into force of a corresponding order or ruling by a court or other competent body.

§ 25. Terms for compensation for guaranteed deposits

(1) The payment of compensation for guaranteed deposits shall be commenced not later than thirty days after the date on which the deposits become unavailable through one or several Estonian credit institutions specified by a corresponding resolution of the Supervisory Board.

(2) The payment of compensation for guaranteed deposits shall be completed within three months after the date on which the deposits become unavailable. Compensation which is not paid during this term shall be deposited on the basis of a resolution of the Supervisory Board.

(3) If the Fund has not paid compensation for a guaranteed deposit to an entitled person during the term prescribed in this section, the entitled person has the right to file a claim against the Fund.

§ 26. Organisation of compensation for guaranteed deposits

(1) The basis for compensation for deposits is the unavailability of the deposits due to the declaration of a moratorium, the revocation of an activity licence due to solvency difficulties or the commencement of bankruptcy proceedings against a credit institution. The Bank of Estonia shall promptly notify the Director General of the Fund in writing of the application of such measures with regard to a credit institution.

(2) The trustee in bankruptcy or the moratorium administrator of a credit institution shall submit balance confirmations to the entitled persons and information regarding the entitled persons together with the balance confirmations of unavailable deposits to the Fund within twenty-four days after the date on which the deposits become unavailable.

(3) Entitled persons have the right to submit their own balance confirmations within two months after publication of the information specified in subsection 28 (2) of this Act. If an entitled person fails to submit the person's own balance confirmation during this term, the deposits are compensated for on the basis of the information submitted to the Fund by the trustee in bankruptcy or the moratorium administrator of the credit institution.

(4) If information relating to the size of the deposit to be compensated for to an entitled person specified in the balance confirmations submitted to the Fund by the trustee in bankruptcy or moratorium administrator of the credit institution and by the entitled person differ, the Fund shall forward the balance confirmation submitted by the entitled person to the trustee in bankruptcy or moratorium administrator of the credit institution for verification of the information within three days after receipt thereof. In such case, the compensation shall be paid after the balance confirmation submitted by the entitled person is compared with the accounting data of the credit institution.

(5) If a deposit is compensated for before the arrival of a balance confirmation from an entitled person in an amount that does not correspond to the size of the deposit according to the accounting data of the credit institution, the Fund shall compensate for the deficit within the term specified in subsection 25 (2) of this Act pursuant to the provisions of § 16 of this Act or collect the overpaid amount from the person. The person has the right to file a claim against the Fund for collection of the underpaid amount of compensation.

(6) The Director General of the Fund shall open a corresponding account in the credit institutions specified in subsection 22 (3) of this Act and submit information relating to the compensation to be paid to the entitled persons to the management board of the credit institution not later than three days before commencement of the payment of compensation for guaranteed deposits pursuant to the provisions of subsection 25 (1) of this Act.

(7) Compensation shall be paid in cash or, on the basis of a written application of the entitled person, in the form of a non-cash settlement.

§ 27. Compensation for joint deposits

(1) For the purposes of compensation for joint deposits, each depositor is a separate entitled person.

(2) Compensation for a joint deposit shall be paid to the depositors in equal shares unless otherwise prescribed in the deposit contract.

§ 28. Notification of depositors

(1) Credit institutions shall notify persons entering into deposit contracts of the organisation of deposit guarantee provided by this Act, the extent of compensation for guaranteed deposits, and the conditions and procedure for payment of compensation.

(2) Within three working days after the date on which deposits become unavailable, the Fund is required to publish information in at least two daily national newspapers, at least twice in each, setting out the following:

1) the name of the credit institution or the Estonian branch of a foreign credit institution in which deposits are unavailable;

2) the term and place for submission of balance confirmations of guaranteed deposits and the format of balance confirmations;

3) the time and place of payment of compensation for guaranteed deposits;

4) the list of documents required upon payment of compensation.

(3) Credit institutions shall not use deposit guarantee for advertising purposes.

§ 29. Right of recourse

Upon the payment of compensation for a deposit to an entitled person, the right of claim against the credit institution is transferred from the entitled person to the Fund in the amount paid.

§ 30. Satisfaction of claims of entitled persons with respect to deposits not compensated for by Fund

Claims which are not compensated for by the Fund to entitled persons in the event of the insolvency of a credit institution shall be satisfied pursuant to the Bankruptcy Act (RT 1992, 31, 403; RT I 1997, 18, 302; 1998, 2, 46) and the Credit Institutions Act (RT I 1995, 4, 36).

Chapter 6
Relations of Fund with Supervision Authorities of Credit Institutions

§ 31. Right of Fund to obtain information

(1) The Fund has the right to obtain information from the Bank of Estonia, Estonian credit institutions and, if deposits taken by them are guaranteed by the Fund, Estonian branches of foreign credit institutions, relating to the deposits, the owners thereof and the economic indicators of the credit institutions and branches of credit institutions, if this is necessary for the performance of the duties of the Fund.

(2) The procedure for requesting information specified in subsection (1) of this section and submission thereof to the Fund is established by the Bank of Estonia.

(3) The Fund does not have the right to exercise independent supervision over credit institutions.

§ 32. Failure of credit institution to perform duties arising from this Act

(1) The Fund shall promptly notify the Banking Supervision of the Bank of Estonia of a failure to make an obligatory contribution on time or to fulfil other obligations arising from this Act.

(2) If a credit institution fails to fulfil the obligations specified in subsection (1) of this section, the Banking Supervision shall impose the sanctions prescribed by the Credit Institutions Act on the credit institution which violated the law.

Chapter 7
Reporting, Auditing and Supervision

§ 33. Accounting

The Fund shall organise its accounting pursuant to the Accounting Act (RT I 1994, 48, 790; 1995, 26B28, 355; 92, 1604; 1996, 40, 773; 42, 811; 49, 953), the Establishment of Personal Liability for Accounting and Correctness of Accounting Information Act (RT I 1993, 43, 620; 1996, 6, 101), other legislation and the statutes of the Fund.

§ 34. Annual report

(1) The financial year of the Fund begins on 1 January and ends on 31 December.

(2) The Fund shall publish an annual report approved by the Supervisory Board not later than six months after the end of the financial year pursuant to the procedure prescribed in the statutes of the Fund.

(3) The economic activities of the Fund shall be audited by the State Audit Office.

§ 35. Auditor of Fund

(1) The Supervisory Board shall appoint an internationally recognised independent auditor to audit the activities of the Fund and to approve the accuracy of the annual report.

(2) An auditor may be appointed to conduct a single audit or for a specified term.

(3) Members of the Supervisory Board, members or employees of a directing body of the Fund or any credit institution shall not be auditors.

§ 36. Dissolution of Fund

The Fund shall be dissolved on the basis of an Act.

Chapter 8
Implementation of Act

§ 37. Making of single payments by operating credit institutions

(1) All credit institutions operating in Estonia are required to make the payment provided for in subsection 21 (1) of this Act to the Fund within seven days after the entry into force of the statutes of the Fund.

(2) Foreign credit institutions with branches in Estonia need not make the payment provided for in subsection 21 (1) of this Act if the deposits are guaranteed by their domestic deposit insurance to the same or a higher level than provided for in this Act.

§ 38. Procedure and terms for implementation of Act

(1) Upon the entry into force of this Act the following provisions shall be implemented under the following conditions and with the following terms:

1) the maximum amount of compensation for guaranteed deposits, 20 000 ECU, specified in subsection 16 (2) of this Act applies not later than as of 1 January 2010. Upon the entry into force of the Act, 20 000 Estonian kroons per depositor of each credit institution is established as the maximum amount of compensation for guaranteed deposits. The schedule for achieving the maximum amount specified in subsection 16 (2) of this Act is established by the Supervisory Board of the Fund;

2) only deposits nominated in Estonian kroons and German marks are guaranteed upon the entry into force of this Act. The extension of guarantee to deposits nominated in other foreign currencies is decided by the Supervisory Board of the Fund;

3) the provisions of clause 12 4) of this Act do not apply before 1 January 2002;

4) until 1 January 2002 the amount of the obligatory contribution to the Fund shall be 0.125 per cent of the total amount of deposits taken by a credit institution or the Estonian branch of a foreign credit institution per quarter pursuant to the provisions of subsection 21 (3) of this Act.

(2) The deposit guarantee provided for in this Act applies as of 1 October 1998.

§ 39. Calling meeting of Supervisory Board of Fund

The first meeting of the first membership of the Supervisory Board shall be called by the Bank of Estonia within ten days after the appointment of the last member of the Supervisory Board.

§ 40. Amendments to Income Tax Act

Clause 5) is added to subsection 5 (1) of the Income Tax Act (RT I 1993, 79, 1184; 1998, 9, 111; 28, 353 and 354; 34, 485 and 489) with the following wording:

"5) the Deposit Guarantee Fund established pursuant to law."

§ 41. Entry into force of Act

This Act enters into force on the tenth day after publication in the Riigi Teataja, except for subsection 21 (4) which enters into force on 1 July 1998.