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LAW OF UKRAINE

of February 23, 2012 No. 4452-VI

About system of guaranteeing household deposits

(as amended on 17-06-2020)

Section I General provisions

Article 1. Subject and purpose of the Law

1. This Law establishes the legal, financial and organizational principles of functioning of system of guaranteeing household deposits, powers of Fund of guaranteeing household deposits (further - Fund), payment procedure by Fund of compensation for deposits, and also the relations between Fund, banks, the National Bank of Ukraine are governed, powers and functions of Fund concerning removal of insolvent banks from the market and liquidation of banks are determined.

2. The purpose of this Law is protection of the rights and legitimate interests of investors of banks, enforcement of trust, to bank system of Ukraine, stimulation of attraction of financial resources in bank system of Ukraine, providing the effective procedure of removal of insolvent banks from the market and liquidation of banks.

3. The relations arising in connection with creation and functioning of system of guaranteeing household deposits, removal of insolvent banks from the market and liquidation of banks are regulated by this Law, other laws of Ukraine, regulatory legal acts of Fund and National Bank of Ukraine.

Article 2. Determination of terms

1. In this Law the below-specified terms are used in such value:

1) agent bank - bank through which the Fund performs payment of the guaranteed compensation amount for deposits according to this Law;

2) conclusion of insolvent bank from the market - actions which are performed by Fund concerning the bank included in categories insolvent for conclusion from the market by one of the methods determined by article 39 of this Law;

2-1) open tenderings - method of sale of property (assets) in case of which the participant corresponding to competitive conditions who offered top price for property (assets) and undertook accomplishment of competitive obligations becomes the winner (buyer) and for objects of the civil laws limited in turnover - the specified property in property or based on other corporeal right can also have and has the corresponding licenses and permissions;

3) contribution - means in cash or non-cash form in currency of Ukraine or in foreign currency, attracted with bank from the investor (or arrived for the investor) on terms of the contract of bank deposit (deposit), the bank account, or by issue of the registered deposit certificate, including the added percent on such means;

4) the investor - physical person (including physical person entrepreneur) which concluded or for the benefit of which the bank deposit agreement (deposit), bank account or which is the owner of the registered deposit certificate is signed;

5) the investor - the state on behalf of the Ministry of Finance of Ukraine or on behalf of bank in which the state is the owner of share more than 75 percent of shares, - in case of decision making by the Cabinet of Ministers of Ukraine about participation of the state in removal of insolvent bank from the market or the person who expressed intention and presented Fonda the commitment letter about share acquisition of insolvent bank or transitional bank in the course of conclusion of insolvent bank from the market;

5-1) consolidation of assets - the actions directed to collection, group, the analysis, accounting, preparation and asset sale of various banks which are removed from the market or are liquidated on other bases determined by this Law;

5-2) consolidated sale - property acquisition (assets) of various banks which are removed from the market or are liquidated on other bases determined by this Law, way of centralization (consolidation) of separate procedures of sale by Fund;

5-3) means placed on contribution by person who on individual basis receives from bank deposit interests under the contracts signed on conditions which are not the current market conditions - the means placed by physical person on contribution:

what does not correspond to conditions of the public agreement;

under the agreement signed on conditions which are not the current market conditions according to article 52 of the Law of Ukraine "About banks and banking activity", according to the decision of certain officials of bank and/or the governing bodies of bank which are not given authority on establishment of such conditions;

5-4) creditor - the legal entity or physical person having documentary confirmed requirements to bank concerning its property obligations;

5-5) bid increment - the allowance (discount) on which during open tenderings increase/lowering of starting (starting) and each following price of lot announced to sale is performed;

6) liquidation of bank - the procedure of the termination of bank as legal entity according to the legislation;

6-1) lot - unit of assets of bank (several banks) that is exposed for sale at auction;

6-2) No. 590-IX is excluded according to the Law of Ukraine of 13.05.2020;

7) it is excluded;

7-1) independent assessment - value assessment of property or bank shares which is made by the subject of estimative activities;

8) insolvent bank - bank concerning which the National Bank of Ukraine made the decision on reference to category insolvent according to the procedure, provided by the Law of Ukraine "About banks and banking activity";

8-1) consolidation of investors - several legal entities and/or physical persons which expressed general intention which submitted the common competitive offering and provided to Fund the joint commitment letter about share acquisition of the same insolvent bank or transitional bank in the course of conclusion of insolvent bank from the market;

8-2) pre-sale preparation - actions for preparation for sale of bank or property of bank (several banks) which are performed by Fund concerning bank or property of bank (several banks) for increase in their investment appeal and cost;

9) transitional bank - the bank created in the course of removal of insolvent bank from the market which single shareholder is the Fund about day of sale of this bank to the investor (consolidation of investors);

10) the settlement plan - the decision of Fund which determines method, economic case, terms and conditions of removal of insolvent bank from the market;

11) the accepting bank - bank which does not belong to category problem or insolvent which participates in process of removal of insolvent bank from the market by acceptance from this bank of part or all property (assets) and obligations;

12) problem bank - bank concerning which the National Bank of Ukraine made the decision on reference to category problem according to the procedure, provided by the Law of Ukraine "About banks and banking activity" and regulatory legal acts of the National Bank of Ukraine;

13) sale of bank - sale to the investor of all or to part of shares which do not belong to it, transitional bank or insolvent bank;

14) the register of members of Fund of guaranteeing household deposits (further - the register of members of Fund) - the register which is kept by Fund and contains data on participation of bank in system of obligatory guaranteeing household deposits;

15) system of guaranteeing household deposits - set of the relations regulated by this Law which subjects is the Fund, the Cabinet of Ministers of Ukraine, the National Bank of Ukraine, banks and investors;

15-1) specialized agency - the legal entity created by Fund for the purpose of transfer of assets and liabilities of insolvent bank to it in the cases and procedure determined by this Law;

16) temporary administration - the procedure of removal of bank from the market which is entered by Fund of rather insolvent bank according to the procedure, established by this Law;

17) the authorized person of Fund is the employee of Fund which on behalf of Fund and within the powers provided by this Law and/or delegated by Fund performs operations on ensuring removal of bank from the market during implementation of temporary administration of insolvent bank and/or liquidation of bank.

Section ІI Legal status of Fund and its governing bodies

Article 3. Legal status Fonda

1. The fund is the organization performing special functions in the sphere of guaranteeing household deposits and removal of insolvent banks from the market and liquidation of banks in the cases established by this Law.

2. The fund is legal entity of the public law, has the separated property which is object of the right of state-owned property and being under its economic authority. The fund is subject of property management, independently owns, uses and disposes of the belonging property, making concerning it any actions (including alienation, transfer to lease, liquidation) which are not contradicting the legislation and the purpose of activities of Fund.

3. The fund is economically independent organization, has separate balance, current and other accounts in the National Bank of Ukraine and also accounts in securities in depository institutions - national banks.

The fund is the organization which is not aiming at profit earning.

4. The fund has seals with the image of the State Emblem of Ukraine with the name, records also the reporting according to the legislation.

5. In the activities the Fund is guided by the Constitution of Ukraine and the legislation of Ukraine.

6. The Fund location - the city of Kiev.

7. Public authorities and the National Bank of Ukraine have no right to interfere with activities of Fund concerning realization of the functions and powers which are legislatively assigned to it. Interaction of Fund with the National Bank of Ukraine and public authorities is performed in the limits determined by this Law, other acts of the legislation.

8. Governing bodies of Fund is the administrative board and executive directorate.

9. Reorganization and liquidation of Fund are performed based on the separate law. In case of reorganization or liquidation of Fund assets of Fund are transferred to one or several non-profitable organizations into which power guaranteeing household deposits is included, or enlisted in the income of the government budget in case of the termination of Fund as legal entity.

Article 4. Functions Fonda

1. The main objective of Fund is ensuring functioning of system of guaranteeing household deposits and removal of insolvent banks from the market.

2. In pursuance of the main objective the Fund according to the procedure, provided by this Law, performs the following functions:

1) is conducted by the register of members of Fund;

2) accumulates the funds received from the sources determined by article 19 of this Law exercises control of completeness and timeliness of transfer of charges by each member of Fund;

3) invests fund in government securities of Ukraine;

3-1) performs placement of bonds according to the procedure and in the directions of attraction of financial resources determined by this Law and issue of bills of exchange in the cases provided by the law on the Government budget of Ukraine for the corresponding year;

4) performs actions for the organization of payments of compensations for deposits in case of decision making about withdrawal of the banking license and liquidation of bank;

5) is performed by regulation of participation of banks in system of guaranteeing household deposits;

6) takes part in inspection checks of problem banks according to the offer of the National Bank of Ukraine;

7) applies to banks and their heads respectively financial sanctions and imposes administrative penalties;

8) performs measures on:

to preparation for introduction of the procedure of removal of bank from the market, including organizational actions for holding open tender and determination of the least costly method of conclusion of bank from the market;

to holding procedure of removal of insolvent bank from the market, including by accomplishment of the settlement plan, implementation of temporary administration and liquidation of bank;

9) performs checks of banks relatively according to this Law;

10) gives financial support of bank according to this Law;

11) is performed by financial analysis of banks for the purpose of identification of risks in their activities and forecasting of potential expenses of Fund for removal of insolvent banks from the market and compensation of means to investors;

12) No. 590-IX Is excluded according to the Law of Ukraine of 13.05.2020

12-1) makes the corresponding inquiries to clients, investors and other creditors of bank according to the procedure, established by Fund;

13) performs actions for informing the public on functioning of system of guaranteeing household deposits, protection of the rights and the interests of investors protected by the law, increase in level of financial literacy of the population according to this Law;

Studies 14) and analyzes tendencies of market development of the resources attracted from investors with members of Fund.

3. The fund performs other functions within the powers determined by this Law, other acts of the legislation.

Article 5. Accountability Fonda

1. The fund is accountable to the Verkhovna Rada of Ukraine, the Cabinet of Ministers of Ukraine and the National Bank of Ukraine.

Accountability of Fund means:

1) delegation and withdrawal by the Cabinet of Ministers of Ukraine of the representative in administrative board of Fund;

2) delegation and withdrawal of the representatives by the National Bank of Ukraine in administrative board of Fund;

3) delegation and response the Verkhovna Rada of Ukraine of the representative in administrative board of Fund.

The fund till July 1 of the following for reporting submits years to the Verkhovna Rada of Ukraine, the Cabinet of Ministers of Ukraine and the National Bank of Ukraine the annual statement together with audit opinion.

Article 6. Regulatory legal acts Fonda

1. Within the functions and powers the Fund performs normative regulation of system of guaranteeing household deposits and removal of insolvent banks from the market.

2. The fund adopts regulatory legal acts on the questions carried to its powers which are mandatory banks, legal entities and physical persons.

3. The fund publishes regulatory legal acts in the form of instructions, provisions, rules.

4. Regulatory legal acts of Fund are subject to state registration according to the procedure, established by the legislation.

Article 7. Reporting Fonda

1. Annually the Fund constitutes the annual statement including the activities report of Fund for accounting year and the financial reporting.

2. Reliability of the financial reporting of Fund is confirmed by the independent auditor who is determined by administrative board of Fund.

3. The financial reporting of Fund will be promulgated in the Uryadovy Kuryer or Golos Ukrainy newspapers no later than July 1 of the following for reporting years.

4. The annual statement will be promulgated on the official page of Fund on the Internet no later than July 1 of the following for reporting years.

Article 8. Structure and procedure for forming of administrative board of Fund

1. The administrative board of Fund consists of five people - one representative of the Cabinet of Ministers of Ukraine, two representatives of the National Bank of Ukraine, one representative of special-purpose committee of the Verkhovna Rada of Ukraine and the managing director Fonda (on position).

2. Fonda heads administrative board the chairman who is annually elected by administrative board of Fund from among his members. The managing director Fonda cannot be elected the chairman of administrative board of Fund.

3. Can be the member of administrative board of Fund person who is citizen of Ukraine, constantly lives in Ukraine, has complete higher education in the field of economy, finance or the right, length of service in at least five years, faultless goodwill and has no unspent convictions for making of mercenary criminal offenses. The member of administrative board of Fund cannot be the head, the participant or the connected person of bank.

4. The term of office of the member of administrative board of Fund, except the managing director of Fund, constitutes four years and can be prolonged, but no more than for one term.

5. In case of the end of term of office of the member of administrative board of Fund the relevant organ or the organization which delegated it delegates to structure of administrative board of Fund of the new representative in a month or makes the decision on prolongation of term of office of the member of administrative board of Fund.

6. Powers of the member of administrative board of Fund can be ahead of schedule stopped on representation of body which delegated it. Powers of the member of administrative board of Fund also stop at the initiative of administrative board of Fund in case:

1) filing of application about the termination of powers at own will;

2) impossibility of accomplishment of the obligations assigned to it, including for health reasons;

3) the terminations of employment relationships with body which delegated it;

4) introductions in legal force of conviction of court concerning it;

5) death or based on the judgment about recognition by its incapacitated it is limited by capable, is unknown absent or the announcement the dead;

6) losses of citizenship of Ukraine;

7) absence without valid excuse at three and more meetings of administrative board of Fund in a row

7. The body which delegated the member of administrative board of Fund which powers are ahead of schedule stopped according to part six of this Article shall delegate to structure of administrative board of Fund of the new representative after early termination of powers of the previous representative in a month.

8. Powers of the managing director of Fund as member of administrative board of Fund stop in connection with release it from position of the managing director of Fund.

9. Members of administrative board of Fund perform the functions on a voluntary basis. The expenses incurred in connection with accomplishment of powers by them according to this Law and the regulations of administrative board of Fund are refunded to members of administrative board of Fund.

10. The question of the organization of activities of administrative board of Fund and procedure for clerical work are determined by regulations which affirm at its meeting.

11. Placement and organizational material security of administrative board of Fund it is performed by Fund at the expense of its budgeted expenses.

Article 9. Powers of administrative board of Fund and chairman of administrative board of Fund

1. The administrative board of Fund performs the following powers:

1) is approved by regulations of administrative board of Fund;

2) approves expense budget of Fund;

3) approves the development strategy for Fund and the annual plan of its activities;

4) approves the principles of investment policy of Fund and the annual investment plan of Fund;

5) appoints to position and dismisses the director of the manager of Fund;

6) is approved by staff of executive directorate of Fund for representation of the managing director of Fund;

6-1) approves decisions of executive directorate about placements of bonds or issue of bills of exchange of Fund and the direction of their placement;

6-2) approves the report of executive directorate of Fund on reasons for the choice of the least costly conclusion method for Fund from the market of the bank referred to category insolvent and condition of accomplishment of the settlement plan for the last quarter until the end of the first month following reporting quarter;

6-3) approves the report of executive directorate of Fund on condition of realization of assets (property) of banks on which the decision on withdrawal of the banking license and liquidation for the last quarter until the end of the first month following reporting quarter is made;

7) approves decisions of executive directorate on participation of Fund in the international organizations in the sphere of guaranteeing (insurance) of deposits;

8) approves decisions of executive directorate of Fund on establishment of special collection in Fund or the differentiated charges in Fund depending on risks of banks;

9) approves decisions of executive directorate of Fund on attraction of the credit or irretrievable financial aid;

10) annually determines the auditor for carrying out audit inspection of Fund;

11) is approved by the annual statement of Fund;

12) makes the decision on carrying out extraordinary audit inspection of Fund and determines the auditor for its carrying out;

13) is approved by regulations on service of internal audit of Fund, approve appointment and dismissal of the head of service of internal audit;

14) approves requirements to disclosure of information on activities of Fund;

15) is approved by procedure and payment terms of work of members of executive directorate of Fund;

16) is approved by the list of positions of employees of Fund to whom requirements of part two of article 16 of this Law extend;

16-1) approves procedure for selection of members of executive directorate of Fund and authorized persons of Fund;

17) makes the decision on limiting increase in the amount of compensation of means on deposits.

2. The chairman of administrative board Fonda performs such powers:

1) will organize meetings of administrative board of Fund and presides over them;

2) signs protocols of meetings of administrative board of Fund;

3) distributes obligations between members of administrative board of Fund;

4) performs other powers and functions according to regulations of administrative board of Fund.

Article 10. Operating procedure of administrative board of Fund

1. The operating procedure of administrative board of Fund is determined by its regulations.

2. Administrative board Fonda holds the regular meetings at least once a quarter.

3. The administrative board of Fund can hold emergency meetings at the initiative of its chairman or on demand at least than three of his members or upon the demand of executive directorate of Fund.

4. Decisions of administrative board of Fund are made at meetings by a simple majority vote on condition of participation in meeting at least than four of his members. In case of equal distribution of voices the voice of the chairman of administrative board is decisive.

5. Decisions of administrative board of Fund it can be made by poll of his members according to regulations of administrative board of Fund.

6. In case of consideration by administrative board of Fund of question of appointment, dismissal of the managing director of Fund the managing director Fonda does not take part in vote.

Article 11. Executive directorate of Fund

1. The executive directorate of Fund exercises control of the current activities of Fund.

2. The executive directorate of Fund consists of seven members. The director the manager Fonda and his deputies are part of executive directorate of Fund for position.

3. Members of executive directorate of Fund can be citizens of Ukraine who constantly live in Ukraine, have complete higher education in the field of economy, finance or the right, length of service in at least five years, faultless goodwill, have no unspent convictions for making of mercenary criminal offenses and work in Fund at permanent basis. The member of executive directorate of Fund cannot be the head, the participant or the connected person of bank or any other legal entity with whom the Fund or bank which is removed by Fund from the market has contractual relations.

4. The managing director Fonda has deputies who are appointed and exempted by him in coordination with administrative board of Fund. The number of deputy directors - the manager of Fund it is determined by the staff list, but cannot exceed four people.

5. Decisions of executive directorate of Fund are made at meetings by a simple majority vote on condition of participation in meeting at least four members of executive directorate. In case of equal distribution of voices the managing director's voice Fonda is decisive.

6. The procedure for the organization of work and holding meetings of executive directorate of Fund is determined by its regulations.

Article 12. Powers of executive directorate of Fund

1. The executive directorate of Fund has the following powers in the sphere of ensuring activities of Fund:

1) makes the decision on exception of bank from among members of Fund;

2) is constituted by the project of expense budget of Fund and gives it on approval to administrative board of Fund;

3) is given on approval to administrative board of Fund by the annual statement of Fund;

4) convenes emergency meetings of administrative board of Fund;

5) annually submits for consideration of administrative board of Fund proposals concerning determination of the auditor for carrying out audit inspection of Fund;

6) determines structure of Fund, approves regulations on its structural divisions;

7) is approved by the staff list of Fund, condition and payment method of work of employees of Fund, except members of executive directorate of Fund;

8) makes the decision on participation of Fund in the international organizations in the sphere of guaranteeing (insurance) of deposits with the subsequent coordination of this decision by administrative board of Fund;

9) makes the decision about material and staffing of activities of Fund within the expense budget of Fund approved by administrative board of Fund;

10) Fonda adopts regulatory legal acts;

11) is approved by regulations of executive directorate of Fund;

Gives 12) on approval to administrative board of Fund of regulations on service of internal audit and on coordination of the offer on appointment (release) of the head of service of internal audit;

13) makes decisions on the property which is in the sphere of management of Fund (including on alienation, lease, liquidation);

14) makes the decision on attraction of the credits from non-bank financial institutions and the foreign creditor with the subsequent approval of this decision by administrative board of Fund.

2. The executive directorate of Fund has the following powers concerning sources of forming of fund:

1) makes the decision on establishment of special collection in Fund or the differentiated charges in Fund depending on risks of banks;

1-1) makes the decision on placement of bonds, issue of bills of exchange and submits it for approval to administrative board of Fund. Such placement, issue can be performed only for the purpose of attraction of financial resources by Fund or in the cases determined by this Law;

2) makes the decision on need of attraction of the credits of the Cabinet of Ministers of Ukraine, the National Bank of Ukraine and/or irretrievable financial aid at the expense of the Government budget of Ukraine;

3) is given on approval to administrative board of Fund by the investment plan of Fund;

4) makes the decision on investment of fund according to the investment plan;

5) makes the decision on charge and collection of penalty fee for untimely transfer of charges by bank in Fund;

6) makes the decision on transfer of payment due date of regular collection in Fund in the cases determined by this Law.

3. The executive directorate of Fund has the following powers in the sphere of ensuring compensation of means on deposits:

1) is determined by procedure for maintaining the register of members of Fund;

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