At its plenary sitting, the Seimas adopted amendments to the Law on
Credit Unions (Draft Law No XIIP-1410(2)) aimed at restricting the
operations of credit unions. A total of 72 Members of the Seimas voted in
favour of the amendments to the Draft Law with one vote against and one
abstention.
The Seimas decided that the total sum of the
equity capital of the credit union must be at least LTL 300,000 as of 2016
and at least LTL 500,000 as of 2018 where the credit union does not intend
to issue electronic money as part of its licensed financial services. Currently,
the minimum equity capital of the credit union amounts to at least LTL 15,000.
Hopefully, the increase in the minimum capital
will help to ensure stability of credit unions and to safeguard their strong commitment
to develop the business.
Moreover,
the adopted amendments increased the minimum required number of members of a
credit union (apart from associate members) from 50 to 150. The explanatory
memorandum of the document highlights that this will help to attract more
capital and to elect leaders of a credit union from a larger number of people.
In order to reduce the operational risk assumed by credit unions, they
are now required to have at least one expert to assess the risk taken by the
credit union, where the assets of the credit union amount to LTL 50
million and above. The scope of competence and functions of the expert will be
specified by the articles of association of the credit union and other
documents approved by the general meeting of members of the credit union.
Investment in real estate will not be
allowed to exceed 70 per cent (instead of 100 per cent) of the adjusted capital
of the credit union as of 2017. This amendment will allow credit unions to
assess investment risk in a more conservative way. This provision will not
apply where a credit union has acquired real estate by the right of ownership in
order to cut the losses incurred from provision of a financial service to a
client and where it has title to this property for less than three years from
the day of its acquisition.
Rimas Rudaitis, Public Relations Unit, Communications
Department, Office of the Seimas, tel. +370 5 239 6132, e-mail: [email protected]
