LAW OF THE REPUBLIC OF ARMENIA

of June 3, 2002 No. ZR-332

About agricultural credit clubs

Accepted on April 30, 2002

Chapter 1. General provisions

Article 1. Subject of regulation of the Law

This Law regulates the status of agricultural credit clubs and legal relationship connected with their activities, establishes the principles of forming of clubs, memberships in them, managements of them, the mandatory requirements and conditions connected with attraction of financial resources and provision to clubmen of loans, rendering other services and servicing on insurance and also procedure for regulation of their activities, control of their activities and their reporting.

Article 2. Purposes and tasks of agricultural credit clubs

1. The purposes of agricultural credit clubs (further - clubs) are:

a) forming of mechanisms of assistance by the state, the interested financial organizations, including the international organizations, other countries, to agricultural industry of the Republic of Armenia, including the mechanisms stimulating internal deposits;

b) forming of self-governed system of clubs for financial mutual assistance;

c) provision of the financial services allocated on the principles of mutual assistance to the persons united by common economic interests performing agricultural activities;

d) target and rational use of the borrowed funds aimed at the development of the agricultural sphere and guarantee of their recoverability in combination with the principles of personal and subsidiary responsibility;

e) ensuring financial stability of members of clubs by financial mutual assistance.

2. Tasks of clubs are:

a) requirements satisfaction in borrowed funds of persons performing agricultural activities in rural municipalities;

b) forming of personal deposits of clubmen;

c) covering to the caused clubmen of damage and losses by mutual assistance;

d) rendering to clubmen other financial services which are not forbidden by the legislation of the Republic of Armenia on the principles of mutual assistance.

Article 3. Legal status of club

Club is the voluntary consolidation with the status of the legal entity based on membership of persons performing agricultural activities, created for the purpose of financial mutual assistance.

The club is the non-profit organization which is not pursuing the profit earning aim:

a) provided by which and the services which are not subject of business activity and servicing in financial mutual assistance are performed on behalf of all persons which are his members and with their subsidiary risk;

b) provided, which loans from means of funds (reserves) which are common property of member clubs of the same association, forming which centralized reserves (funds) for financial mutual assistance of members of clubs and other financial services are not subject of business activity.

The club can be created in form of business of non-commercial cooperative or other non-profit organization.

Article 4. Own and borrowed funds of club

1. Own means of club are formed:

a) from obligatory, and also voluntary contributions of his members;

b) from gratuitously the provided means of grants, state and local authority budgets;

c) from other sources which are not forbidden by the law.

Own means of club are subdivided into two parts - on divisible property and on joint indivisible property.

2. Divisible property of club are means of the authorized fund created from compulsory and voluntary contributions of his members.

The deposits which are divisible property of clubmen grant the right to participate in management of club and to use services and servicing of club. Dividends according to them are not paid.

Divisible property of club are the allocated considered funds of his members concerning which members keep the property right and which can back receive in case of exit from club, however during membership in club cannot separately dispose, own or use them.

In case of exit of the member from club the part of equity means formed during its membership is considered as the profit got by this person and is subject to the taxation according to the procedure, established by the legislation of the Republic of Armenia.

3. Joint indivisible property of club are:

a) reserve funds for recovery of loans;

b) reserve funds for financial mutual assistance;

c) the reserve means formed of means of grants.

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