LAW OF THE REPUBLIC OF MOLDOVA

of October 6, 2017 No. 202

About activities of banks

The parliament adopts this organic law.

This law partially shifts:

- The directive 2013/36/EU of the European parliament and Council of June 26, 2013 about access to activities of credit institutions and prudential supervision concerning credit institutions and investment firms making changes to the Directive No. 2002/87/EC and canceling directives 2006/48/EC and 2006/49/EC, published in the Official magazine of the European Union by L 176 of June 27, 2013 with the amendments made by the Directive 2019/878/EU of the European parliament and Council of May 20, 2019 (CELEX: 32013L0036);

- The regulations No. 575/2013 of the European parliament and Council of June 26, 2013 about prudential requirements to credit institutions and investment firms making changes to Regulations (EU) No. 648/2012, published in the Official magazine of the European Union by L 176 of June 27, 2013 (CELEX: 02013R0575-20230628).

Section I. General provisions

Chapter 1. Subject, determinations, scope and other general provisions

Article 1. Subject of the law

This law regulates:

a) conditions of access to banking activity and implementation that in the territory of the Republic of Moldova;

b) the prudential requirements established for banks according to this law and regulations published for its application;

c) competences, tools and procedures for the prudential supervision of banks exercised by National Bank of Moldova;

d) the prudential supervision of banks exercised by National Bank of Moldova according to the rules established by this law, and published for its application by regulations;

e) requirements to publication by National Bank of Moldova of information in the field of prudential regulation and prudential supervision of banks.

Article 2. Scope and other general provisions

(1) This law is applied to:

a) to banks - legal entities of the Republic of Moldova, including to their foreign departments;

b) to departments of banks of other states - concerning the activities performed by them in the Republic of Moldova.

(2) For the purpose of implementation of prudential supervision of banks of provision of this law are applied also to other categories of persons as follows:

a) Chapter 2 of the Section V is applied to holding financial societies, the mixed holding financial societies and holding societies with the mixed activities - to legal entities of the Republic of Moldova;

b) Chapter 5 of the Section III is applied to auditor societies of banks and auditor societies of holding financial societies, the mixed holding financial societies and holding societies with the mixed activities - to legal entities of the Republic of Moldova.

(3) In the processes of licensing, the notification and approval provided by this law, provisions of the Law on regulation of business activity by permission No. 160/2011 are not applied.

Article 3. Basic concepts

For the purpose of this law the following concepts are used:

the potential acquirer - any physical person or legal entity or group of persons which are effective in coordination and which intend to receive in ownership in any manner, directly or indirectly, including as the vygodopriobretayushchy owner, the share in the capital of bank in connection with the offered acquisition;

expected acquisition - the decision made by the potential acquirer to receive in ownership in any manner, directly or indirectly, including as the vygodopriobretayushchy owner, essential ownership in bank or to increase the essential ownership so that the proportion of its voting powers or ownership in the authorized capital corresponded or exceeded 5, 10, 20, 33 or 50 percent or so that the bank became affiliated enterprise;

as affiliates of other person are considered:

a) members of governing body, and in case of bank - some categories of persons holding key positions according to regulations of National Bank of Moldova;

b) legal entities and/or physical persons which directly or indirectly, individually or as a part of group of cooperative persons own or control one percent and more capital of bank, including vygodopriobretayushchy owners. If the spouse (spouse) of such person or the relative of the first degree of relationship owns or controls ownership in the authorized capital of bank, irrespective of its size, then it is considered that the corresponding ownership belongs to this person and is operated by him;

c) any person who controls person or is under control of person or together with person is under control of other person;

d) any associated subject of person or any participating subject of the joint businesses, any associated subject or any participating subject of joint business of the member of group of persons operating in coordination with person or subjects and person - members of joint businesses of other person;

e) persons affiliated to persons specified in Items a) - d);

f) the affiliate of the physical person - spouses, relatives and cousins-in-laws of the first and second degree of relationship of physical person, the spouse of the specified relatives and cousins-in-laws, and also the legal entity in whom the physical person and/or its affiliates exercise control or own share in joint business or have significant effect or are members of governing body;

g) person by means of whom the transaction with bank is performed for the benefit of person specified in Items a) - f) and who is considered being under the influence of person specified in Items a) - f), in this transaction because of availability of the employment, civil or other relationships between these persons determined according to regulations of National Bank of Moldova;

h) the other persons determined by regulations of National Bank of Moldova;

the insurer/overcautious person - society which performs activities for insurance/reinsurance according to the Insurance law No. 407/2006;

joint business - contractual or other similar commitments according to which two persons or more perform the economic activity which is subject to joint control;

competent authority - body of the public power or officially the body recognized in the internal law which on the legal framework is authorized to exercise supervision of banks (on circumstances - investment societies) as part of the system of supervision existing in the state;

bank - the legal entity whose activities consist in attraction of deposits or other returnable funds from the population and in issuance of credits at own expense;

the vygodopriobretayushchy owner - physical person which, eventually, owns or controls directly or indirectly the potential acquirer or the direct or indirect owner of ownership in the authorized capital of bank or voting powers;

the client - any person who uses or used services of bank, or person who discussed the transaction even if this transaction did not come to the end;

control - the relations between parent society and its affiliated enterprise according to the concepts determined in this Article or the similar relations between face and the company de jure or de facto;

the credit - any obligation to lend money with condition of their return, interest payment and other accompanying payments; any prolongation of repayment period of debt; any guarantee issued, and also any obligation to acquire debt obligation or other rights to payment implementation;

subordinated debt - loan which in total answers the following criteria:

a) it is not provided;

b) the repayment period constitutes at least five years. If the repayment period is not determined, the loan is subject to return at exclusive discretion of bank, however not earlier than five years from the date of issue;

c) conditions of issue do not contain single incentive for early repayment by bank;

d) the provisions regulating subordinated debt do not contain, obviously or implicitly, instructions on the fact that subordinated debts will be or can be ahead of schedule extinguished by bank in others, than liquidation of bank, cases;

e) in case of liquidation of bank it is settled after satisfaction of requirements of all creditors of bank, but to satisfaction of requirements of shareholders, former owners of share in the authorized capital of bank to whom the measures for cancellation and new share issue provided by the law were applied if they own the requirement to bank following from cancellation withheld by them shares, and owners of the subordinated debts issued according to Article 52-1;

the deposit - made money which in total corresponds to the following conditions:

a) are subject to return in time or poste restante with percent either without them or with other benefit or on the conditions approved with the depositor (investor) or person authorized by it and bank which accepts money;

b) do not treat subordinated debts, the property right or services, including insurance services;

c) are confirmed with any written accounting or any receipt, the reference, record or other document of the bank accepting money;

the indirect owner / the indirect receiver in ownership - person, including the vygodopriobretayushchy owner who owns/receives in ownership in the authorized capital of bank by means of other person over whom it exercises control;

essential ownership - immediate or indirect possession in the company in at least than one percent of the authorized capital or voting powers or any other opportunity to have significant effect on enterprise management in case of decision making on general meeting or in governing body, with less than one percent of the authorized capital or voting powers;

the associated subject - the subject by means of whom person can participate in decision making on financial policies and on management of activities of the subject in which this person owns, directly or indirectly, 20 or more percent of voting powers, without control or the general control corresponding the politician;

the subject of the financial sector - any of the following subjects:

a) bank;

b) investment society;

c) non-bank financial society;

d) the company supplier of support services included in the consolidated financial statement of bank or investment society;

e) insurer;

f) overcautious person;

g) holding society with the mixed activities;

h) the holding insurance company and the holding insurance company with the mixed activities;

i) the company of other state which main activities are comparable to any activities of the specified subjects within the corresponding determination;

the regulated subject - bank, the insurer/overcautious person or investment society;

eksternalization - use of the supplier of goods by bank and services which can be also affiliated subject within group or the subject out of group, for the purpose of implementation by it on contractual and permanent bases of some actions / operations, performed by this bank by regular method;

affiliated enterprise - the legal entity who is with parent entity in one of the provisions provided in concept "parent entity". Affiliated enterprises of affiliated enterprise are considered as affiliated enterprises of the company which is primary parent entity;

the company supplier of support services - the company which main activities consist in ownership or property administration, management of services in data processing or similar activities which is additional to the main activities of one or several banks and/or investment societies;

parent entity - person who is in one of the following situations:

a) has the majority of voting powers in other face (affiliated enterprise);

b) has the right to appoint or replace most of members of governing bodies of other face (affiliated enterprise) and at the same time is shareholder / participant or the member of the corresponding face (affiliated enterprise);

c) has the right to perform the determining influence on face (affiliated enterprise), being or not being its shareholder / participant or the member owing to the agreement signed with this face (affiliated enterprise) or provisions of the constituent act of face (affiliated enterprise) in case the legislation applicable to this person (affiliated enterprise) allows it to fall under such agreements or provisions;

d) is shareholder/participant or the member of face (affiliated enterprise), and most of members of the governing bodies of this face (affiliated enterprise) fulfilling the duties in the current accounting period, in the previous accounting period and about day of creation of annual consolidated financial statements were appointed as a result of implementation of the voting powers; this provision is not applied in situation when the other person has concerning affiliated enterprise of the right, provided by Items and), b) or c);

e) is shareholder/participant or the member of face (affiliated enterprise) and controls independently, based on the agreement signed with other shareholders / participants or members of this person (affiliated enterprise), the majority of voting powers in this affiliated enterprise;

f) actually performs the determining influence on other face (affiliated enterprise) according to the criteria provided by regulations of National Bank of Moldova;

close ties - provision in which two or several physical persons or legal entities are connected among themselves as follows:

a) immediate possession or ownership by means of control in at least than 20 percent of the capital of the company or voting powers;

b) control;

c) permanent relation of control between both or all these persons and same third party;

governing body - bodies of bank which are appointed according to the applied legislation and are authorized to determine strategy, tasks and general orientation of bank and which exercise supervision and monitoring of decision making process concerning management and the physical persons who are actually leading activities of bank;

person - physical person or legal entity, groups of physical persons and/or legal entities registered as appropriate or not;

persons acting in coordination - persons which are in situation when each of them decides to perform the rights connected with the received ownership or ownership which will receive according to the implied or accurate agreement signed between them. Until proved otherwise it is considered that the following persons act in coordination:

a) persons who acquired bank shares in the circumstances specifying the approved purchase or joint intentions of these persons on share acquisition of bank;

b) the involved persons:

- the persons controlling other person or controlled by other person or being under joint control;

- persons directly or indirectly participating in agreements with the purpose of obtaining or joint implementation of voting power if shares which are the subject of the agreement can provide control line item;

- the physical persons from the list of legal entities having the leading powers or powers of control;

- persons able to appoint most of members of governing body within one person;

- any person according to the civil legislation connected with the above-stated physical person the first and second degree of relationship, the spouse of person and relatives of person, cousins-in-laws of person and the spouse of cousins-in-laws and also the societies which are under their control;

c) parent entity jointly with the affiliated enterprises, and also any affiliated enterprise of the same parent entity between them;

d) person with members of governing bodies and with the involved persons, and also these persons among themselves;

e) person with the pension funds and with person administering these funds;

f) persons who when implementing certain economic transactions use the financial resources having the same source or occurring from various organizations, being the involved persons;

g) persons who when implementing certain economic transactions send the sure gain received thus to the same receiver or receivers who are the involved persons;

h) legal entities, structures of property or governing bodies of which have generally the same structure;

i) persons who accepted or accept similar investment policy by acquisition of the financial instruments issued by the same issuer or faces tied with the same issuer and/or by sale of the financial instruments issued by the same issuer or faces tied with the same issuer;

j) persons, identical implementation which the rights granted by the securities issued by bank specifies joint long-term policy in relation to the relevant bank;

k) persons who during the implementing of certain economic transactions, realization of representative interests or implementation of the voting powers granted by financial instruments which they own designated or appoint the same person (the same persons) which is (being) the involved person (the involved persons) as the trustee (trustees);

l) persons who united in any form recognized by the law and the purpose or subject of consolidation is carrying out the transactions connected with bank;

m) persons who owned or own at the same time ownerships in one or several legal entities, exercising control over them and pursuing general policy;

n) persons who performed or carry out joint economic operations;

o) other persons determined by National Bank of Moldova according to the criteria established in regulations;

persons holding key positions - members of personnel whose positions allow them to have significant effect on orientation of bank, but which are not members of governing body. Heads of some important activities, departments, functions of control and support can be considered as persons holding key positions. Categories of the physical persons holding key positions are determined by regulations of National Bank of Moldova;

the public - any physical person or legal entity which does not have necessary knowledge and experience for risk assessment of non-return of the performed placements. Do not enter this category: the state, bodies of the central, regional and local public government, governmental agencies, banks, non-bank financial societies, other similar societies and any other person recognized as the skilled investor in sense of the legislation on the capital market;

systemic risk - risk of violation of financial system which can lead to serious negative consequences for financial system and real economy;

the consolidated provision - the provision following from application of requirements of Chapter 2 of the Section V of this law in case of bank or investment society if they create single bank or single investment society with one or several subjects;

society of trust management of investments - society of trust management of investments according to the Law on the capital market No. 171/2012;

significant society - parent bank / parent investment society, parent holding financial society, the parent mixed holding financial society or bank / investment society is system, bankruptcy or inappropriate activities of which can provoke systemic risk;

investment society - investment society as it is determined by article 6 of the Law on the capital market No. 171/2012;

holding financial society - non-bank financial society which affiliated enterprises are only or generally banks, investment societies or non-bank financial societies, at least one of these affiliated enterprises being bank or investment society which is not the mixed holding financial society;

the mixed holding financial society - parent entity, other what the regulated subject which jointly with the affiliated enterprises from which at least one is regulated subject with the location in the territory of the Republic of Moldova and together with other subjects constitutes financial conglomerate;

non-bank financial society - the company, other than bank or investment society which main activities is receipt of ownerships or implementation of one or several types of activity specified in Items b) - r) parts (1) Articles 14, including holding financial society, the mixed holding financial society and society of trust management of investments, excepting insurance holding companies and insurance holding companies with the mixed activities;

holding society with the mixed activities - parent entity, other than holding financial society, bank, investment society or the mixed holding financial society which affiliated enterprises include at least bank or investment society;

country of source - the state in which the bank is founded and licensed;

the host country - the state in which the bank has department;

department - the separate division of bank which is legally depending on this bank and directly performing all or some transactions specific to activities of banks;

the consolidating supervisory authority - the competent authority responsible for implementation of supervision on the consolidated basis (based on consolidated statement) behind activities of parent bank or parent investment society and the banks or investment societies controlled by parent holding financial societies or the parent mixed holding financial societies in which these societies are the highest level within group.

Chapter 2. Powers of competent authorities

Article 4. Competent authority for banks in the Republic of Moldova

(1) the National Bank of Moldova is competent authority for banks. In this sense the National Bank of Moldova carries out powers on licensing, regulation and prudential supervision according to provisions of this law and Law on National Bank of Moldova No. 548/1995.

(2) Competences of National Bank of Moldova on improvement and the resolution are performed according to the Law on improvement of banks and the bank resolution No. 232/2016.

(3) the National Bank of Moldova takes measures that within accomplishment of the powers function of supervision based on this law and its any other functions provided by the Law on National Bank of Moldova No. 548/1995, were divided and independent of the function of improvement which is carried out according to the Law on improvement of banks and the bank resolution No. 232/2016.

Article 5. Supervising powers of competent authority

(1) the National Bank of Moldova exercises prudential supervision of the banks operating in the territory of the Republic of Moldova by means of the tools, measures and procedures provided by this law and regulations published for its application.

(2) the National Bank of Moldova exercises supervision of activities of banks, and in case in which is the competent authority responsible for supervision on the consolidated basis, exercises also supervision of activities of holding financial societies and the mixed holding financial societies regarding the provisions applied to them for the purpose of assessment of conformity to the prudential requirements provided by this law and regulations published for its application.

(The National Bank of Moldova collects 3) In case of accomplishment of the competences provided by the law and processes any relevant data and data, including the data of personal nature necessary for assessment of conformity of banks, and as the competent authority responsible for supervision on the consolidated basis of activities of holding financial societies and the mixed holding financial societies, - for assessment of conformity to the prudential requirements provided by this law and regulations published for its application and for investigation of possible violations of these requirements.

(4) For accomplishment of function of prudential supervision and imposing of the sanctions provided by this law, the National Bank of Moldova has necessary competences and is effective independently. For this purpose the National Bank of Moldova shall have special knowledge, necessary resources and operational capability.

(5) For simplification of effective prudential supervision of activities of licensed banks the National Bank of Moldova signs written agreements on coordinating and cooperation with competent authorities of the Republic of Moldova.

(6) the Powers and functions assigned to National Bank of Moldova by this law pursue public interest of ensuring stability and viability of bank system.

Chapter 3. Restrictions

Article 6. Prohibition on implementation of activities for attraction of deposits

(1) activities for attraction of deposits or other returnable funds from the population Are forbidden to any person which is not bank to perform.

(2) the Prohibition provided in part (1), the authorities of the republic Moldova, the international public organizations which member is the Republic of Moldova, or in cases, directly stipulated by the legislation the Republic of Moldova is not applied in case of attraction of deposits or other returnable funds by the Government of the Republic of Moldova or bodies local public on condition that these activities are exposed to the regulation and supervision applied to these cases for the purpose of protection of the rights of depositors and investors.

(3) Any bank of other state cannot perform the activities permited banks in the Republic of Moldova, stipulated in Item and) parts (1) Articles 14, except departments to which the National Bank of Moldova granted the license on the conditions provided by this law.

(4) the Bank of other state can open representations in the territory of the Republic of Moldova only after the notification of National Bank of Moldova according to the regulations adopted by it. Representative offices of banks of other state limit the activities to provision of information, establishment of communications or accomplishment of representational functions and do not perform any of the types of activity permited banks.

Article 7. Bank name

(1) the licensed bank or licensed bank department of other state Is forbidden to any person, other by what, to use the name "bank" or derivatives of this name in connection with type of activity, product or service, except for case when this use is established or is recognized as the law or the international agreement or when unambiguously follows from context in which this name is used that the speech not about implementation of activities inherent in bank.

(2) Without prejudice to part provisions (1) subjects or departments of group to which the bank belongs can use in the names initials, abbreviation, emblem, the name or other identification elements used at the level of group.

Section II. Requirements for access to activities of banks

Chapter 1. The minimum requirements on access to activities

Article 8. The license and power on licensing

(1) For implementation of activities in the Republic of Moldova each bank shall have the license granted by National Bank of Moldova on the conditions provided by this law.

(2) the National Bank of Moldova has exclusive right on issue of licenses to banks.

(3) the Minimum requirements on access to banking activity and condition on which the National Bank of Moldova can grant licenses, are provided in this Chapter.

(4) the National Bank of Moldova grants the license to bank only if there is confidence that this bank can provide implementation of activities in safety conditions and observance of requirements of the provident and reasonable management providing depositor protection and other creditors and good functioning of bank system in this connection provisions of this law and regulations published for its application shall be observed.

Article 9. Original capital

(1) the National Bank of Moldova refuses licensing if the bank has no the original capital equal to the minimum limit set by regulations of National Bank of Moldova. This limit cannot be less than 100 million lei.

(2) During creation of bank the original capital is provided by the authorized capital less the organizational expenses necessary for organization of bank.

(3) the Authorized capital of bank is completely brought in the form of money at the time of subscription or government securities - in case of the original capital the bridge bank, including in case of its increase. The authorized capital consists of amount of the deposits received in payment for shares.

(4) Shares can be paid fully or partially with the government securities issued for this purpose by the Government on behalf of the Ministry of Finance in case of the system financial crisis determined as such by the national authority created for management of system financial crises and also in the cases provided by articles 111 and 217 of the Law on improvement of banks and the bank resolution No. 232/2016.

Article 10. Location

The bank - the legal entity of the Republic of Moldova is located in the territory of the Republic of Moldova, and the location is specified in the charter of bank. The location is the place where the governing body of bank is located.

Article 11. Management of activities

(1) the National Bank of Moldova grants the license to bank only if at least three physical persons direct the current activities of bank applicant.

(2) Physical persons to which responsibility as members of governing body of bank for which the license is requested is entrusted shall conform to requirements, stipulated in Article 43.

Article 12. Shareholders

(1) the National Bank of Moldova grants the license to bank applicant only if this bank provided information on the identity of direct or indirect shareholders, including vygodopriobretayushchy owners - legal entities or physical persons which will have essential ownerships, and also about the amount of their ownership, and in case of lack of essential ownerships the bank applicant provides information on the identity of the largest 20 direct or indirect shareholders, including vygodopriobretayushchy owners, legal entities or physical persons.

(2) the National Bank of Moldova grants the license, only if it is completely sure that from prospect of need of ensuring provident and reasonable bank management quality of persons specified in part (1), conforms to requirements of Article 48.

(3) In case of application of provisions of part (1) the method of determination of voting powers is established according to part provisions (7) Article 45.

(4) in the presence of close ties between bank and any other physical persons or legal entities the National Bank of Moldova grants the license only when these communications do not interfere with accomplishment of its supervising function.

(5) the National Bank of Moldova refuses licensing to bank if the documents having the legal force, or the documents of the public power or other state regulating activities of one or several physical persons or legal entities with which the bank has close ties or difficulties which arose in case of data application of documents interfere with accomplishment of supervising function of National Bank of Moldova.

(6) the National Bank of Moldova demands from banks necessary information for permanent monitoring of observance of the conditions specified in parts (4) and (5), and part provisions (5) Article 51.

Article 13. Program of activities, organizational structure and bases of management of activities

Any statement for licensing to bank shall be followed by the program of its activities from which it is necessary to achieve capability of bank effective objectives in the conditions compatible to rules of provident and healthy banking practice which contains the types of activity offered for implementation and organizational structure of bank and which specifies the parent societies, holding financial societies and the mixed holding financial societies which are part of group. The statement for licensing shall be followed by the description of bases of management of activities, the processes and mechanisms provided by part (1) Article 38.

Article 14. The activities permited banks

(1) Banks can perform the following types of activity within the granted license:

a) attraction of deposits and other returnable funds;

b) issuance of credits, among which: the consumer loans, credit agreements connected with real estate, factoring (with the right of appeal or without), financing of commercial transactions (including fixed amounts);

c) financial leasing;

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