LAW OF UKRAINE

of December 7, 2000 No. 2121-III

About banks and banking activity

Section I. General provisions

Chapter 1. General provisions

Article 1. Subject and purpose of the Law

This Law determines banking structure, the economic, organizational and legal basis of creation, activities, reorganization and liquidation of banks.

The purpose of this Law is legal support of protection of legitimate interests of investors and other clients of banks, sustainable development and banking system stability, and also creating favorable conditions for development of economy of Ukraine and proper competitive environment in the financial market.

Article 2. Determination of terms

In this Law terms are used in the following value:

determination of the term "underwriting" is excluded according to the Law of Ukraine of 04.07.2012 No. 5042-VI

the associated person - the husband or the wife, direct relatives of this person (the father, mother, children, brothers and sisters, the grandfather, the woman, grandsons), direct relatives of the husband or the wife of this person, the husband or the wife of the direct relative;

the affiliate of bank - any legal entity in whom the bank has essential participation or which has essential participation in bank;

bank - the legal entity who based on the banking license has exclusive right to provide banking services;

bank with the foreign capital - bank in which the capital share belonging at least to one foreign investor constitutes at least 10 percent;

banking group - group of legal entities:

which have the general controller, consisting of parent bank, its one or several Ukrainian and/or foreign subsidiary and/or associated companies which are financial institutions or for which provision of financial services is the prevailing type of activity, or

consisting of parent bank which is controller, its one or several Ukrainian and/or foreign subsidiary and/or associated companies which are financial institutions or for which provision of financial services is the prevailing type of activity, or

which have the general controller, consisting of two or more Ukrainian financial institutions and/or the companies for which provision of financial services is the prevailing type of activity, their Ukrainian and/or foreign subsidiary and/or associated companies which are financial institutions or for which provision of financial services is the prevailing type of activity in which banking activity is prevailing, or

consisting of non-bank financial institution or the company for which provision of financial services is the prevailing type of activity, is controller, its one or several Ukrainian and/or foreign subsidiary and/or associated companies which are financial institutions or for which provision of financial services is preferential type of activity in which banking activity is prevailing.

The bank holding company and the company on provision of support services, the consumer of financial services who has the general controller with members of banking group is part of this banking group.

The paragraph of the seventh determination of the term "banking group" is excluded according to the Law of Ukraine of 30.06.2021 No. 1587-IX

The prevailing activities in group are bank if cumulative arithmetic-mean value of assets of banks (bank) - members (participant) of banking group for the last four reporting quarters makes 50 and more percent of the cumulative extent of arithmetic-mean values of assets of all financial institutions relating to this group for the specified period. Calculation of the prevailing activities of banking group is perfromed annually as of January 1.

After the group was determined bank based on the prevailing activities and the share of total assets of banks (bank) in the cumulative size of assets of the organizations relating to this group decreased and constitutes from 40 to 50 percent, the group continues to be considered bank within three years from the moment of such reduction;

banking activity - attraction in deposits of money of physical persons and legal entities and placement of the specified means on its own behalf, on own conditions and on own risk, opening and maintaining bank accounts of physical persons and legal entities;

bank loan - any obligation of bank to provide certain amount of money, any guarantee, any obligation to acquire debt the right to claim, any prolongation of repayment period of debt which is provided in exchange for the obligation of the debtor on return of amount of debt, and also on the obligation on interest payment and other charges from such amount;

the banking license - entry in the State register of banks about the right of the legal entity or branch of foreign bank to implementation of banking activity;

the bank payment instrument - the means containing the details identifying his issuer, payment system in which it is used, and, as a rule, the holder of this bank payment instrument. By means of bank payment instruments the relevant documents on the transactions performed with use of bank payment instruments based on which money transfer is carried out are created or other services are rendered to holders of bank payment instruments;

bank accounts - accounts on which own means, requirements, obligations of bank concerning his clients and partners are considered and which give the chance to make money transfer by means of bank payment instruments;

bank holding company - finance holding company in which the prevailing activities of the financial institutions which are its subsidiary and associated companies is banking activity;

issue of the banking license - entering by the National Bank of Ukraine into the State register of banks of record about the right of the legal entity or branch of foreign bank on implementation of banking activity;

withdrawal of the banking license - exception the National Bank of Ukraine from the State register of banks of record about the right of the legal entity or branch of foreign bank on implementation of banking activity;

The state register of banks - the register which is kept by the National Bank of Ukraine and contains the data on banks and their separate divisions, and also branches and representative offices of foreign banks determined by the National Bank of Ukraine in Ukraine;

the subsidiary company - the legal entity, is controlled by other legal entity (mother company);

the contribution (deposit) is means in cash or in non-cash form, in currency of Ukraine or in foreign currency, placed by clients on their personalized bank accounts on a contract basis for certain storage duration or without specifying of such term and subject to payment to the investor according to the legislation of Ukraine and terms of the contract;

Determination of the term "state registration of bank" is excluded according to the Law of Ukraine of 15.02.2011 No. 3024-VI

goodwill - the data collected by the National Bank of Ukraine on compliance of activities of legal entity or physical person, including heads of the legal entity and owners of essential participation in such legal entity, to requirements of the law, business practice and professional ethics, and also data on decency, professional and managerial capabilities of physical person;

sufficiency of domestic capital - the capital size determined by bank / the responsible person in banking group according to requirements of the National Bank of Ukraine sufficient for covering of all substantial risks inherent in bank / to banking group, and observance of the requirements established by the National Bank of Ukraine;

sufficiency of internal liquidity - the liquidity amount determined by bank / the responsible person in banking group according to requirements of the National Bank of Ukraine sufficient for covering of all substantial risks connected with liquidity inherent in bank / to banking group, and observance of the requirements established by the National Bank of Ukraine;

prudential standard rates - indicators which are established by the National Bank of Ukraine and which observance is obligatory for banks;

The term "identification of the personality" of Article 2 is excluded according to the Law of Ukraine of 06.02.2003 No. 485-IV

foreign - connected with the citizen or the legal entity of any country, except Ukraine;

inspection check of bank - form of implementation of banking supervision by persons authorized by the National Bank of Ukraine on the location of bank and/or beyond its limits by way of remote access to documents, information and systems of automation of banking activities with use of information and communication technologies;

essential participation - immediate and/or mediate possession by one person independently or together with other persons 10 in more percent of the authorized capital and/or voting power of shares, shares of the legal entity, or possibility of considerable influence, independent of formal ownership, on management or activities of the legal entity. Person is recognized the owner of the mediated essential participation irrespective of whether person exercises it control of the direct owner of participation in the legal entity or control of any other personality in chain of ownership of corporate laws of such legal entity;

equity - own means, residual cost of assets of bank after deduction of all its obligations;

The term "subscribed capital" of Article 2 is excluded in compliance by the Law of Ukraine from 15.02.201 g No. 3024-VI

the capital assigned - the cash amount in freely convertible currency provided by foreign bank of branch for its accreditation;

the authorized capital - the share value paid by money contributions of members of bank, shares of bank in the amount of, determined by the charter;

the regulatory capital - capital sum of 1 level which consists of fixed capital of 1 level and the supplementary capital of 1 level and the capital 2 levels;

heads of the legal entity (except bank) - the director, organizations, sole executive body or members of collegiate executive body of the legal entity and members of council (the supervisory board, supervising council) of the legal entity;

the client of bank - any physical person or legal entity using services of bank;

the key member of the legal entity, including the key participant in structure of property of bank (further - the key member of legal person / the key participant in structure of property of bank) - any physical person owning share in the authorized capital (shares) of such legal entity, the legal entity who owns share (block of shares) in the amount of 2 and more percent in the authorized capital of such legal entity, and at the same time:

1) if the legal entity has more than 20 participants - physical persons, 20 participants - physical persons which shares are the greatest are considered as key participants;

2) if identical by the size of share (blocks of shares) in the authorized capital of the legal entity belong to more than 20 participants - physical persons, all physical persons which own share (block of shares) in the amount of 2 and more percent in the authorized capital of such legal entity are considered as key participants;

3) it is considered that the public company has no key participants;

leverage coefficient - ratio of the capital of 1 level to total assets and off-balance obligations;

collective suitability - availability at members of council of bank, board members of bank of joint/cumulative knowledge, skills, working and managerial experience in the amount necessary (sufficient) for understanding of all aspects of activities of bank, adequate risks assessment to which the bank can be exposed, adoptions of the weighed decisions, and also for ensuring effective management and control of activities of bank in general taking into account the functions assigned to this body by the law, the charter of bank and its internal documents;

the combined capital buffer - the cumulative size of buffers of the capital: buffers of preservation, counter-cyclical buffer, buffer of system importance, buffer of systemic risk";

the company for which provision of financial services is the prevailing type of activity, - the legal entity whose share of the income from realization of financial services in results of the previous accounting year constitutes 50 and more percent of total amount of net income (revenue) from sales of products (goods, works, services);

the controller - physical person or legal entity concerning which there are no controllers - physical persons and which has opportunity to perform decisive influence on management or activities of the legal entity by the direct and/or mediated ownership independently or together with other persons of shares in the legal entity that corresponds to equivalent of 50 or more percent of the authorized capital and/or voices of the legal entity, or irrespective of formal ownership to perform such influence on the basis of the agreement or any other image;

control - opportunity to perform decisive influence on management and/or activities of the legal entity by immediate and/or mediate possession by one person independently or together with other persons of shares in the legal entity, the authorized capital corresponding to equivalent of 50 or more percent and/or voices of the legal entity, or irrespective of formal ownership opportunity to perform such influence based on the agreement or any otherwise;

conflict of interest - the available and potential contradictions between private interests and job or professional responsibilities of person which can influence fair accomplishment of the powers by it, objectivity and impartiality of decision making;

means - money in national or foreign currency or their equivalent;

the credit register of the National Bank of Ukraine (further - the Credit register) - the information system providing collection, accumulating, storage, change, use and distribution (provision) of information on credit operations of banks and about condition of accomplishment of obligations on such transactions, the analysis and classification of the credits;

the creditor of bank - the legal entity or physical person having documentary confirmed requirements to bank according to its property obligations;

chain of ownership of corporate laws of the legal entity - information on the list of key members of the legal entity, including information on key participants of the first and each subsequent level of proficiency in corporate laws of the legal entity;

liquidation of bank - the procedure of the termination of functioning of bank as legal entity according to provisions of this Law and Law of Ukraine "About system of guaranteeing household deposits";

The term "liquidator" is excluded according to the Law of Ukraine of 23.02.2012 No. 4452-VI

The term "liquidating weight" is excluded according to the Law of Ukraine of 23.02.2012 No. 4452-VI

parent bank - the Ukrainian bank which is not subsidiary company of other Ukrainian bank or bank holding company and among which subsidiary and/or associated companies there is bank and/or other financial institution, and/or the company for which provision of financial services is preferential type of activity;

The term "moratorium" is excluded according to the Law of Ukraine of 23.02.2012 No. 4452-VI

The term "insolvency of bank" is excluded according to the Law of Ukraine of 23.02.2012 No. 4452-VI

capital adequacy ratios - ratio of fixed capital of 1 level, the capital of 1 level, the regulatory capital to cumulative exposition under risk;

regulatory legal acts of the National Bank of Ukraine - the regulatory legal acts published by the National Bank of Ukraine within its powers in pursuance of the present and other laws of Ukraine;

The term "division of bank" is excluded according to the Law of Ukraine of 15.02.2011 No. 3024-VI

The term "representative office of bank" is excluded according to the Law of Ukraine of 15.02.2011 No. 3024-VI

professional judgment - the motivated, objective, impartial and valid conclusion and/or assessment of the National Bank of Ukraine of the facts, events, circumstances, faces based on knowledge and experience of employees of the National Bank of Ukraine, on complex and comprehensive information analysis and the documents filed to the National Bank of Ukraine within the stipulated by the legislation procedures and received by the National Bank of Ukraine including as a result of implementation by it of bank regulation and supervision and also on information from official sources;

the profile of risk of bank - result of assessment of level of risks of bank for certain date before accounting died for risk minimization, and also taking into account such actions, by each of types of risk and in aggregative type;

the public company - the legal entity created in the form of public joint stock company which meets the requirements determined by the National Bank of Ukraine;

reorganization of bank - merge, accession, allocation, division of bank, change of its form of business (transformation) which consequence transfer of its property, means, the rights and obligations to legal successors, acceptance by his legal successor of property is;

level of proficiency in corporate laws of the legal entity - the relation concerning ownership of corporate laws of the legal entity between such legal entity and his participants. If all members of the legal entity are physical persons, such legal entity has only one level of proficiency in corporate laws;

the opened reserves - the reserves and funds created or increased for the retained earnings account are also promulgated in the financial reporting of bank

settlement banking activities - the movement of money on bank accounts performed according to orders of clients or as a result of actions which within the law entailed change of the property right to assets;

related person - the legal entity having owners of essential participation, general with bank;

systemically important bank - the bank answering to the criteria established by the National Bank of Ukraine which activities influence banking system stability;

Structure of property of the legal entity - system of relations of legal entities and physical persons that allows to determine:

1) all key participants (including the public companies) and controllers of such legal entity;

2) all key members of each legal entity who exist in chain of ownership of corporate laws of such legal entity;

3) all persons having direct and/or indirect essential participation in such legal entity;

4) the control relations concerning this legal entity between all persons specified in Items 1-3 of this determination;

The term "temporary administration" is excluded according to the Law of Ukraine of 23.02.2012 No. 4452-VI

The term "temporary administrator" is excluded according to the Law of Ukraine of 23.02.2012 No. 4452-VI

the authorized person of bank - person who based on the charter or the agreement has powers to represent bank and to make the certain actions having legal value from his name;

members of bank are founders of bank, shareholders of bank and unitholders of cooperative bank;

members of banking group - banks, other financial institutions, the companies for which provision of financial services is the prevailing type of activity, the bank holding companies, the companies on provision of support services having the general controller;

The term "bank branch" is excluded according to the Law of Ukraine of 15.02.2011 No. 3024-VI

The term "financial holding group" is excluded according to the Law of Ukraine of 19.05.2011 No. 3394-VI

the member of the legal entity - person who owns corporate laws of this legal entity;

financial improvement of bank - renewal of bank solvency and reduction of financial performance of its activities in compliance with requirements of the National Bank of Ukraine.

Terms "associated company", attraction of financial resources and the bank metals which are subject to return the credit register of the National Bank of Ukraine, "mother company", "finance holding company", "the company on provision of support services", "the consumer of financial services", "financial service", "financial institution" are used in this Law in the values given in the Law of Ukraine "About financial services and finance companies".

The term "underwriting" in this Law is applied in the value determined in the Law of Ukraine "About the capital markets and the organized goods markets".

The term "information and communication technologies" in this Law is used in the value given in the Law of Ukraine "About the National program of informatization".

Article 3. Scope of application

This Law governs the relations arising during creation, registration, activities, reorganization and liquidation of banks.

The provision of this Law and regulatory legal acts of the National Bank of Ukraine are applied both to banks, and to branches of foreign banks.

Provisions of this Law are applied to representative offices of the foreign banks operating in the territory of Ukraine if other is not established by international treaties (agreements) which consent to be bound is this the Verkhovna Rada of Ukraine, and also to branches of the Ukrainian banks abroad and to the faces tied with bank determined by article 52 of this Law.

Relevant provisions of this Law extend also to separate liabilities and responsibility of other persons which activities are connected with functioning of banks.

Regulates the relations arising in case of application of the procedure of temporary administration and liquidation of the issuer of mortgage bonds, this Law in part which does not contradict the Law of Ukraine "About mortgage bonds.

The part six is excluded according to the Law of Ukraine of 17.06.2014 No. 1507-VII

Article 4. Bank system of Ukraine

The bank system of Ukraine consists of the National Bank of Ukraine and other banks, and also branches of foreign banks which are created and operate on the territory of Ukraine according to provisions of this Law and other laws of Ukraine.

The bank independently determines the directions of the activities and specialization in types of service.

The National Bank of Ukraine determines types of specialized banks and procedure for acquisition by bank of the status specialized.

The National Bank of Ukraine performs regulation of activities of specialized banks through prudential standard rates and normative legal support of the transactions performed by these banks.

The National Bank of Ukraine determines systemically important banks according to the following criteria: size of bank, degree of financial interrelations, activities.

The National Bank of Ukraine exercises regulation and banking supervision according to provisions of the Constitution of Ukraine, this Law, Law of Ukraine "About the National Bank of Ukraine", other legal acts of Ukraine and is normative - legal acts of the National Bank of Ukraine. The National Bank of Ukraine determines features of regulation and supervision of systemically important banks taking into account specifics of their activities.

Article 5. Economic independence of banks

Banks have the right to own, use and dispose independently of property which is in their property.

The state does not answer for obligations banks, and banks do not answer for obligations the state if other is not provided by the law or the agreement.

The National Bank of Ukraine does not answer on obligations of banks, and banks do not answer for obligations the National Bank of Ukraine if other is not provided by the law or the agreement.

Public authorities and local government bodies are forbidden to influence somehow management or employees of banks during the course of performance them service duties or to interfere with activities of bank, except as specified, provided by the law.

The damage caused to bank as a result of such intervention is subject to compensation according to the procedure, determined by the law.

Article 6. Form of business of bank

Banks in Ukraine are created in the form of joint-stock company or cooperative bank.

Features of legal status, procedure for creation, activities, reorganization and liquidation of banks, are determined by this Law and the Law of Ukraine "About system of guaranteeing household deposits".

The legislation on joint-stock companies is applied to banks taking into account the features established by this Law.

In case of contradiction of regulations of this Law to regulations of other legal acts (including codes) regulations of this Law have advantage.

Article 7. National banks

The national bank is bank which 100 percent of the authorized capital belong to the state. The national bank can exist only in the form of joint-stock company.

Provisions of this Law extend to national banks taking into account the features established by this Article. Provisions of other laws of Ukraine are applied to national banks in the part which is not contradicting this Article.

The single shareholder of national bank is the state. Functions on management of corporate laws of the state in national bank are performed by the Cabinet of Ministers of Ukraine. The body which exercises control of corporate laws of the state in national bank also performs functions of the supreme body of management of national bank (further - higher body).

Other governing bodies of national bank are the supervisory board of national bank and board of national bank.

Decisions of the supreme body are drawn up by acts of the Cabinet of Ministers of Ukraine which drafts prepare and submitted for consideration of the Cabinet of Ministers of Ukraine by the central executive body providing forming of the state financial policy and are not subject to coordination with other interested bodies.

The charter of national bank affirms higher body and shall conform to requirements of the laws of Ukraine taking into account the features established by this Law and regulatory legal acts of the National Bank of Ukraine.

Decision making relatively is within the exclusive competence of the supreme body:

1) determinations of the main (strategic) activities of national bank and approval of reports on their execution;

2) approvals of the development strategy of national bank approved by the supervisory board of national bank;

3) introduction of amendments to the charter of national bank;

4) increase or reduction of the authorized capital of national bank;

5) appointments and the terminations of powers of members of the supervisory board of national bank according to the procedure of and taking into account the features provided by this Article;

6) approvals of conditions of the civil agreements signed with members of the supervisory board of national bank, election of person authorized on signing of civil contracts with members of the supervisory board of national bank;

7) establishments of amount of remuneration of members of the supervisory board of national bank, including incentive and compensation payments;

8) approvals of regulations on remuneration of members of the supervisory board of national bank, requirements to which are established by the National Bank of Ukraine;

9) approvals of the report on remuneration of members of the supervisory board of national bank, requirements to which are established by the National Bank of Ukraine;

10) approvals of the annual statement of national bank;

11) approvals of actions for results of consideration of the report of the supervisory board of national bank, including about accomplishment of the development strategy of national bank;

12) coverings of losses and profit distribution;

13) approvals of the size of annual dividends;

14) approvals of regulations on the supervisory board of national bank;

15) changes like joint-stock company in the form of which there is national bank;

16) share issues, their crushing or consolidation;

17) redemption national bank of shares of own issue;

18) cancellation or sales of the redeemed shares of national bank;

19) reorganization of national bank, election of the commission on reorganization of national bank;

20) liquidations of national bank, election of the commission on the termination (liquidation commission, liquidator) of national bank, approval of the liquidation balance sheet;

21) establishments of selection criteria of the external auditor of national bank;

22) consents on making of large deal on representation of the supervisory board of national bank;

23) consent on transaction in which making there is interest, in the cases and procedure established by the Law of Ukraine "About joint-stock companies" taking into account provisions of article 52 of this Law;

24) approval of procedure for annual efficiency evaluation of activities of the supervisory board, including criteria of estimation of accomplishment of strategy and/or the business plan of development of national bank and by results of such assessment.

Powers according to the solution of the questions which are within the exclusive competence of the supreme body cannot be transferred to other governing bodies of national bank. The supreme body has no right to make decisions concerning activities of national bank, not being within its exclusive competence. The supreme body does not take part in the current management of national bank.

The supreme body has the right to obtain any information on financial and economic activities of national bank necessary for implementation of its powers, taking into account provisions of this Law of rather bank secrecy.

The supervisory board is collegiate organ of management of national bank, within the competence exercises control of national bank, and also controls and regulates activities of executive body of national bank for the purpose of accomplishment of the development strategy of national bank. The supervisory board of national bank, acting for the benefit of national bank according to this Law, performs protection of the rights of investors, creditors and the state as shareholder. Provisions of article 37 of this Law of the collective validity and rather effective management and control of activities of bank extend to the supervisory board and board of national bank.

The supervisory board of national bank consists of nine members from whom six members are independent, and three members are representatives of the state.

Members of the supervisory board of national bank shall conform to requirements of this Article, and also requirements to the head of bank, the stipulated in Clause 42 presents of the Law. Appointment of person to position of the member of the supervisory board of national bank is not allowed if such appointment can lead to conflict of interest. Person who has the criminal record which is not extinguished or not removed in the procedure established by the legislation cannot be the member of the supervisory board of national bank and/or was exposed to administrative punishment for making of the offense connected with corruption.

Person who cannot be the independent member of the supervisory board of national bank:

1) is or within the last five years was the head (except the independent member of the supervisory board) this national bank and/or its branches, representations and/or other separate division or the legal entity in whom this national bank has essential participation;

2) are or within the last three years was the employee of this national bank and/or its branch, representation and/or other separate division or the legal entity in whom this national bank has essential participation;

3) is the connected person (except the independent member of the supervisory board) this national bank;

Receives 4) or within the last three years received from this national bank or legal entities in whom this national bank has essential participation, the essential income, except the income in type of remuneration for execution of functions of the member of the supervisory board (at the same time the income exceeding 5 percent of gross annual income of such person for the corresponding year is essential);

5) is the owner of essential participation, the head, the official and/or the member of council or other governing body, the employee of other bank registered in Ukraine or person who has opportunity to influence decision making on the main activities and/or performs considerable influence on management and activities of other bank registered in Ukraine;

6) is person authorized on accomplishment of functions of the state or local self-government (according to the list specified in Item of 1 part one of article 3 of the Law of Ukraine "About prevention of corruption");

7) is or within the last two years was official who holds responsible and especially responsible position (under officials who hold responsible and especially responsible position, are understood persons specified in the note to article 51-3 of the Law of Ukraine "About prevention of corruption");

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