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Only the Estonian version is official SAVINGS AND LOAN ASSOCIATIONS ACT[Passed 9 February 1999 (RT[1]
I 1999, 24, 357), entered into force 1 July 1999, Chapter 1 § 1. Purpose of Act This Act determines the legal status, the bases of the activities and the procedure for foundation and dissolution 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 associations apply to savings and loan associations unless otherwise provided by this Act. § 3. Definition of savings and loan association (1) A savings and loan association is a financial institution the principal and permanent activity of which is to
conclude transactions and perform acts specified in § 6 of this Act. (2) Savings and loan associations are commercial associations. § 4. Business name of savings and loan association (1) The business name of a savings and loan association shall 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] nor any words or
abbreviations having misleadingly similar meaning in Estonian or any other language in the name of other persons,
institutions or associations. § 5. Territory in which savings and loan association operates (1) A savings and loan association shall conduct activities on the principle of membership and shall be founded: (2) Several savings and loan associations may operate within an administrative territory specified in subsection (1) of
this section. § 6. Transactions of savings and loan associations (1) A savings and loan association shall conclude the following transactions with its members as its principal and
permanent activity: (2) A savings and loan association may provide the following services for unspecified persons:
Chapter 2 § 7. Memorandum of association of savings and loan association (1) In order to found a savings and loan association, the founders, who must comply with the requirements provided for in § 17 of this Act, shall conclude a memorandum of association. The number of founders shall be at least 25. (2) In addition to the information provided for in subsection 5 (2) of the Commercial Associations Act, a memorandum
of association shall set out: (3)-(4) [Repealed] §§ 8-9 [Repealed] § 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 shall set out: (2) [Repealed] § 11. Payment of membership fee and contribution The founders of a savings and loan association shall pay the membership fee and contribution fully in money into an account in an Estonian credit institution specified in the memorandum of association before submission of a petition for entry of the savings and loan association in the commercial register, unless the memorandum of association prescribes a term which expires earlier. § 12. Transactions concluded before entry in commercial register (1) Before the entry of a savings and loan association in the commercial register, the founders may, in the name of the savings and loan association being founded, only conclude transactions which are directed 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 or immovable property necessary for the activities of the savings and loan association. (2)-(5) [Repealed] § 13. [Repealed - RT I 2010, 34, 182 - entered into force 1.07.2010] § 14. Petition for entry of savings and loan association in commercial register In order to enter a savings and loan association in the commercial register, the management board shall submit a petition which, in addition to the provisions of subsection 7 (1) of the Commercial Associations Act, sets out the amount of share capital and the names, personal identification codes and residences of the members of the audit committee. In addition to that provided for in subsection 7 (1) of the Commercial Associations Act, a notice from a credit institution concerning the payment of share capital shall be appended to the petition. § 15. Data to be entered in the commercial register In addition to the data provided for in the Commercial Associations Act, the following shall be entered in the
commercial register:
Chapter 3 § 16. Acceptance into membership (1) Each person who wishes to become a member of a savings and loan association
shall pay the membership fee pursuant to the procedure and in the amount prescribed by
the articles of association, but not less than 6 euros. (2)-(3) [Repealed - RT I 2010, 34, 182 - entered into force 1.07.2010] § 17. Requirements for membership of savings and loan association (1) The following persons may become members of a savings and loan association association founded on the principle of
territoriality: (2) The following persons may become members of a savings and loan association founded on the principle of common
work, service or profession or on the principle of common economic interests: (3) The number of members provided for in clause (2) 3) of this section shall not exceed 25 per cent of the total number of members of the savings and loan association. (4) The state, local governments and legal persons in public law shall not be members of a savings and loan
association. § 18. Number of members of savings and loan association (1) A savings and loan association shall have at least 25 members. (2) A savings and loan association founded on the principle of common economic interests may have up to 1,000 members. (3) The management board of a savings and loan association shall submit to the commercial register a list of members
of the savings and loan association, stating therein the data prescribed in the provisions of subsection 15 (1) of the
Commercial Associations Act, together with an annual report. § 19. Leaving from savings and loan association (1) A member of a savings and loan association has the right to leave the savings and loan association if the member does not have any unperformed obligations to the savings and loan association. (2) If a member leaves or is excluded from a savings and loan association, the member has the right to the refund of
the paid contribution pursuant to the procedure prescribed in the
Commercial Associations Act. (3) A member of a savings and loan association has the right to transfer the membership thereof only to a member who meets the requirements provided for members in this Act and the articles of association of the savings and loan association. § 20. Right of member who leaves savings and loan association to dividends 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 leave the savings and loan association; however, until the refund of the contribution on the basis of subsection 19 (2) of this Act, the member has the right to receive interest on the paid contribution under the same conditions as those under which the savings and loan association pays interest on demand deposits. § 21. [Repealed]
Chapter 4 § 22. Assets and share capital of savings and loan association (1) The assets of a savings and loan association shall be formed from the contributions and other payments made by its members, income received from the activities of the association, economic assistance from the state or a local government, donations and other incomes. (2) The share capital of a savings and loan association shall be formed from the contributions of the members. (3) The share capital of a savings and loan association shall be at least 31,950
euros. The net assets of a savings and loan association shall be at least equal to the
share capital at all times during its activities. (4) The provisions of §§ 192, 1921 and 195, clauses 196 (1) 1)-5) and 7), subsections 196 (3),
(32) and (4) and §§ 1961 and 1962 of the Commercial Code apply upon increase of share
capital. (5) The provisions of §§ 197 and 1971, subsections 199 (1) and (2) and §§ 1992, 200 and
2001 of the Commercial Code apply upon reduction of share capital. Share capital shall not be reduced below
the minimum amount specified in subsection (3) of this section. § 23. Contributions of members of savings and loan association (1) The amount of the contribution of a member of a savings and loan association
shall be at least 6 euros. (2) The contribution of a member of a savings and loan association shall be paid only in money. (3) A member of a savings and loan association shall pay the contribution within one month after the date of adoption of the resolution on acceptance of 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, legal reserve shall be formed in the amount of at least one-half of the share capital unless the articles of association prescribe a higher level. (2) Legal reserve shall be formed and increased from the membership fees of members, profit appropriations and interest on the legal reserve. (3) During each financial year, at least 20 per cent of net profit shall be entered in the legal reserve. If the legal reserve reaches the amount prescribed in the articles of association, the increase of legal reserve from profit appropriations and interest shall be terminated. (4) [Repealed] § 25. Distribution of profit of savings and loan association (1) The profit of a savings and loan association shall be distributed on the basis of the annual report approved by a resolution 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 shall be paid one-half of the amount of dividends. (3) Payment of dividends shall be commenced one month after adoption of the corresponding resolution by the general meeting. (4) A savings and loan association shall not pay interest on dividends which are not withdrawn. § 26. Covering of loss of savings and loan association (1) If the audited annual report or the balance sheet prepared upon liquidation of a savings and loan association show a loss, the loss shall be covered from the legal reserve on the basis of a resolution of the general meeting. In the cases prescribed in the articles of association of a savings and loan association, losses may be covered from other reserves. (2) If the legal reserve and other reserves prescribed in the articles of association are not sufficient to cover a loss and if the articles of association of the savings and loan association prescribe the full personal liability or additional liability of members, the general meeting shall decide on 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) If the legal reserve and other reserves prescribed in the articles of association are not sufficient to cover a loss and if, due to the covering of the loss, the share capital of the
savings and loan association decreases by one-third or falls below the minimum amount specified in subsection 22 (3) of this Act, the management board shall call a special general
meeting of the members within fifteen days. The general meeting shall decide to:
Chapter 5 § 27. Guarantee of Financial Soundness of Savings and Loan Association (1) A savings and loan association shall, in the activities thereof, adhere to all of the following requirements: (2) The provisions of clause (1) 2) of this section shall 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 shall not make payouts from net profit if the provisions of clause (1) 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 past financial year shows that the equity capital of the savings
and loan association would decrease below what is provided in subsection 22 (3) of this Act. § 28. Requirements for loans (1) Upon granting loans, a savings and loan association is required to observe the principles of good credit practice and verify the solvency and reliability of borrowers and the existence of sufficient collateral. (2) A decision to grant a loan shall be based on a prior loan analysis. (3) The loan analysis conducted prior to deciding to grant a loan must be intended primarily for determining the creditworthiness of the borrower. Upon assessing the creditworthiness of the borrower, the savings and loan association shall consider all circumstances which 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 shall collect data from borrowers about their loan burden and performance of their loan obligations; a savings and loan association shall collect such data during the entire loan period and shall use this data for calculating a reasonable loan burden for its members. The aforementioned data shall be preserved pursuant to the time limits prescribed in the Accountancy Act. (5) A savings and loan association shall be obliged to inform the borrower about the possible risks of taking loans. (6) Loans which exceed the limit determined by a resolution of the general meeting of the savings and loan association shall be granted and renewed on the basis of a specific resolution of the credit committee, or on the basis of a resolution of the general meeting if the savings and loan association has not formed a credit committee. (7) Loans to members of the management board, supervisory board or internal audit committee being a member of the savings and loan association or to persons with economic interests equivalent to those of such members shall be granted only pursuant to the procedure prescribed with a resolution of the general meeting. (8) A savings and loan association may grant loans secured by a mortgage with a term of up to ten years and may grant other loans with a term of to five years. (9) A loan granted to a member of a savings and loan association or the total amount of several loans with overlapping
terms granted to a member of a savings and loan association shall not be more than twenty times the amount of the
contribution paid by the member and shall not exceed 20 per cent of the equity capital of the savings and loan
association. § 29. Formation and members of credit committee (1) A savings and loan association shall have a credit committee if there are more than fifty members in the savings and loan association or if so prescribed by the articles of association. (2) A credit committee shall be formed pursuant to the procedure prescribed in the articles of association of the savings and loan association. (3) A credit committee shall consist of three members unless the articles of association prescribe a greater number of members. (4) A member of a credit committee must be a member of the savings and loan association. (5) The members of the supervisory board or the internal audit committee, and the auditor shall not be members of
the credit committee. The articles of association may prescribe other persons who shall not be members of the credit
committee. (6) The members of a credit committee shall elect a chairman from among themselves who shall organise the activities
of the credit committee. The chairman of the management board shall not be the chairman of the credit committee. § 30. Resolutions of credit committee (1) Meetings of the credit committee shall be held when necessary but not less frequently than once a month. Meetings shall be called by the chairman of the credit committee or the person substituting for the chairman. (2) The credit committee shall adopt resolutions pursuant to the procedure prescribed in the articles of association of the savings and loan association. (3) The credit committee shall decide on the grant of loans pursuant to the procedure approved by the general meeting and shall assist in organising the collection of debts. § 31. Internal rules and rules of procedure of savings and loan association, and requirements for risk management (1) A savings and loan association shall establish internal rules and rules of procedure which regulate the activities of its managers and employees. The purpose of establishing internal rules and rules of procedure is to ensure compliance with the legislation regulating the activities of a savings and loan association and with decisions of the management bodies of a savings and loan association. (2) Internal rules and rules of procedure of a savings and loan association shall set out the following, among other things: (3) A person acting in the name of a savings and loan association shall not 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 shall not take excessive risks which could endanger its solvency. (5) A savings and loan association shall have strategies and procedures for risk identification, risk measurement and risk management 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 shall be approved by the general meeting of the savings and loan association and such principles shall be reviewed and updated on a regular basis. (6) The general principles of risk management of a savings and loan association shall 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.
Chapter 6 § 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: (2) [Repealed] § 33. [Repealed] § 34. Management board of savings and loan association (1) The management board shall consist of three members unless the articles of association prescribe a greater number of members. (2) Members of the management board are not required to be members of the savings and loan association unless otherwise prescribed by the articles of association. (3) [Repealed] § 35. [Repealed - RT I 2010, 34, 182 - entered into force 1.07.2010] § 36. Requirements for members of management board and supervisory board of savings and loan association (1) A bankrupt or a person whose earlier acts or omissions have caused the bankruptcy, compulsory liquidation or revocation of the activity licence of a company, or any other person from whom the right to engage in economic activity has been taken away pursuant to law shall not be a member of the management board or supervisory board of a savings and loan association. (2) Natural persons with active legal capacity, impeccable business reputation and the education, experience and professional qualifications necessary for participation in the management board of a savings and loan association may be members of the management board of a savings and loan association. (3) Members of the supervisory board or internal audit committee of a savings and loan association, the auditor of a savings and loan association and persons with economic interests equivalent to those of such persons shall not be members of the management board of a savings and loan association. (4) A member of the management board of a savings and loan association shall not enter into agreements with other persons if, pursuant to such agreements, the duties of the member include investment, the preparation or intermediation of loan or investment projects, or other similar activities. (5) A member of the management board of a savings and loan association shall not be a member of the management board, supervisory board or internal audit committee, or the auditor of a credit institution or another savings and loan association.
Chapter 7 § 37. Internal audit committee of savings and loan association (1) A savings and loan association shall have an internal audit committee which consists of three members unless a greater number of members is prescribed by the articles of association. (2) Members of the internal audit committee shall have education in economics or law or at least three years' 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 of a savings and loan association, auditors or accountants of savings and loan associations, and persons with economic interests equivalent to those of such persons shall not be members of the internal audit committee. (4) External auditing of the economic activities of a savings and loan association does not preclude the activities of the internal audit committee. § 38. Rights and obligations of internal audit committee of savings and loan association (1) Members of the internal audit committee have the right and obligation to verify the assets, bank accounts, securities accounts, accounting documents and documents relating to the activities of the credit committee of the savings and loan association, and the right to demand explanations and all possible assistance in the performance of their activities. (2) Members of the internal audit committee have the right to monitor any aspect of the work and economic activities of the savings and loan association. § 39. Duties of internal audit committee of savings and loan association (1) The internal audit committee shall audit the annual report of the association, prepare the internal audit report and submit the report to the general meeting for approval. (2) The internal audit committee shall analyse any deficiencies discovered in the work and economic activities of the savings and loan association, prepare reviews of the deficiencies on a regular basis and, depending on the degree of importance, submit the reviews to the management board, supervisory board or general meeting of the savings and loan association for hearing and for elimination of the deficiencies. (3) The internal audit committee shall continuously monitor compliance of the savings and loan association with the requirements provided for in Chapter 5 of this Act and submit a corresponding report to the general meeting for approval together with the annual internal audit report. § 40. Activities of internal audit committee of savings and loan association upon violation of requirements for guarantee of financial soundness of savings and loan association (1) The internal audit committee shall notify the management board of violations of measures to guarantee the financial soundness of the savings and loan association and of violations of the requirements for loans. (2) The management board of a savings and loan association is required to take measures to eliminate violations within two months. (3) If violations are not eliminated during the term specified in subsection (2) of this section, the internal audit committee shall call a special general meeting of the savings and loan association pursuant to the procedure provided for in the Commercial Associations Act. (4) The internal audit committee may make a proposal to a special general meeting to: § 41. Auditor of savings and loan association (1) A savings and loan association shall have an auditor. (2)-(3) [Repealed] (4) In the course of auditing a savings and loan association, the auditor shall verify the conformity with the
requirements prescribed in §§ 27 and 28 of this Act and shall submit to the savings and loan association a report which
contains the auditor's opinion regarding the conformity with the aforementioned requirements.
Chapter 8 § 42. Division and merger of savings and loan association (1) The division of a savings and loan association is prohibited. (2) On the basis of a resolution of the general meeting, a savings and loan association may merge by establishing a
new savings and loan association or by merging with another savings and loan association. (3) The merger of savings and loan associations shall be effected pursuant to the procedure prescribed in the Commercial Code unless otherwise prescribed in this Act. § 43. Audit of merger agreement (1) A merger agreement between savings and loan associations, and all merging savings and loan associations shall be audited by one and the same auditor. (2) The auditor shall prepare a report concerning the audit of the merger agreement, indicate the assessment methods used to determine 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 audit committees of the merging savings and loan associations shall also audit the merger agreement of the associations and prepare a written report concerning the audit. § 44. Merger of savings and loan associations in order to found association bank (1) Savings and loan associations may merge in order to found an association bank pursuant to the provisions of the Credit Institutions Act. In such case, 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 shall be dissolved: (2) A savings and loan association shall be dissolved pursuant to the procedure prescribed in the Commercial Associations Act.
Chapter 9 § 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 shall be founded only pursuant to 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 shall 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 shall bring their activities into conformity with
the version of this Act 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 share capital of a savings and loan association shall be at least 200,000 kroons. (2) As of 1 July 2001, the share capital of a savings and loan association shall be at least 300,000 kroons. (3) As of 1 July 2002, the share capital of a savings and loan association shall comply with the provisions of subsection 22 (3) of this Act. (4) If a savings and loan association fails to bring the amount of share capital of the association into conformity with the provisions of subsections (1)-(3) of this section, the registrar shall delete the savings and loan association from the register or commence compulsory dissolution of the association pursuant to the procedure provided for in § 60 of the Commercial Code. § 48. Entry into force of Act This Act enters into force on 1 July 1999. [1] RT = Riigi Teataja = State Gazette |