The Saeima¹ has adopted
and the President has proclaimed the following Law:

Law On Savings and Loan Associations

Chapter I
General Provisions

Section 1. Purpose of this Law

The purpose of this Law is to promote the availability of financial resources, as well as regional development, facilitating the co-participation of individuals in national economy.

[20 November 2003, 21 June 2007]

Section 2. Concept, Tasks and Rights of a Savings and Loan Association

(1) A savings and loan association is a co-operative society with variable number of members and capital and in accordance with this Law and the articles of association thereof provides the following financial services to the members of the association:

1) attracts investments of members and other repayable funds;

2) credits members, also according to financial lease provisions;

3) makes cash and non-cash payments for the provision of services to members, using also non-cash means of payment;

4) carries out trade with financial instruments and currency upon the instruction of members;

5) issues guarantees and other deeds of such liabilities, by which it undertakes a duty to be responsible for debts of members to creditors;

6) keeps valuables of members;

7) consults members in issues of financial nature;

8) [20 November 2003];

9) provides such information, which is related to the settlement of debt obligations of a member;

10) with the permission of the Financial and Capital Market Commission (hereinafter - Commission) carries out other transactions, which are essentially similar to the abovementioned financial services.

(2) The main task of a savings and loan association shall be to develop the ability of members thereof to co-operate in order to create credit resources on the basis of the principles of mutual assistance and self-government, promoting economy, for the satisfaction of personal, as well as economic and everyday needs of members, thus promoting their welfare.

(3) A savings and loan association shall have the status of a merchant.

(4) The savings and loan association shall be a legal person. The savings and loan association has the right to acquire and alienate movable and immovable property, including to accept gifts, donations and inheritances, as well as to undertake liabilities and be a plaintiff and defendant in a court in accordance with the procedures specified in the articles of association.

(5) Legal capacity of a savings and loan association shall set in from the moment when such association has been registered in the Enterprise Register of the Republic of Latvia.

(6) [21 June 2007]

[20 November 2003, 21 June 2007]

Section 2.¹ Non-disclosable Information

(1) Information regarding transactions of a member of a savings and loan association, which is obtained by the savings and loan association when providing financial services, shall be non-disclosable information not containing official secret.

(2) Information regarding accounts and transactions carried out by a member of a savings and loan association shall be provided to the member himself or herself and his or her legal representative.

(3) The non-disclosable information at the disposal of a savings and loan association shall be provided to a State institution, State official, another institution and official in accordance with the procedures specified in the Credit Institution Law.

[4 December 2008]

Section 3. Legal Basis for the Operation of a Savings and Loan Association

(1) The founding, operation, reorganisation and liquidation of a savings and loan association shall be regulated by this Law, the Co-operative Societies Law, the articles of association of the relevant savings and loan association, the regulatory provisions and orders issued by the Commission, the international agreements entered into by the Republic of Latvia and other regulatory enactments.

(2) The provisions of the Co-operative Societies Law in relation to savings and loan associations shall be applicable insofar as it has not been otherwise provided for in this Law.

Section 4. Principles for the Creation of Savings and Loan Associations

(1) Savings and loan associations shall be created for a specific circle of members. The circle of members shall be determined:

1) according to the territorial principle;

2) according to the employment principle;

3) according to the principle of community of interests.

(2) Each aggregate of members of a savings and loan association shall be determined in the articles of association thereof. The savings and loan association is not entitled to accept such persons as members who do not conform to the aggregate of members specified in the articles of association, except the cases provided for in this Law.

Section 5. Members of a Savings and Loan Association

(1) Natural persons who are of legal age and with a capacity to act, who either live in the same administrative territory or are owners of immovable property, or carry out commercial activity or employment activity in the territory, may be members of one savings and loan association. Such local government may be a member of a savings and loan association, the inhabitants of which are members of the relevant savings and loan association. One savings and loan association may be created for activity also in the adjacent administrative territories.

(2) Also natural persons who are of legal age and with a capacity to act and who are employed with the same employer may be members of one savings and loan association.

(3) Natural persons who are of legal age and with a capacity to act and who are participants of one corporation (professional association) or a professional creative social organisation, or a trade union (trade union association), or a social sports organisation may be members of one savings and loan association. Also the relevant social or trade organisation may the member of such savings and loan association.

(4) It may be provided for in the articles of association of a savings and loan association that spouses of the members already admitted and their children - persons with a capacity to act - may become members thereof. A savings account may be opened for minor children in a savings and loan associations.

(5) The following persons may be a member of one savings and loan association:

1) an individual merchant, individual (family) undertaking, farm or fishing undertaking, if their owners are members of a savings and loan association;

2) a commercial company (partnership and capital company), participants of which are natural persons, if one or several members of the savings and loan association own more than 50 per cent of the voting rights in the equity capital of such companies;

3) a co-operative society of agricultural services, co-operative society of apartment owners, horticultural co-operative society or another society, which does not have the status of a merchant, if at least one member of the savings and loan association has voting rights in the equity capital of such societies;

4) an association, members of which are only natural persons and at least one of them is a member of the savings and loan association.

(6) Legal persons shall not have the voting rights in a savings and loan association.

(7) A member of a savings and loan association shall lose the right to claim against the savings and loan association if no transactions involving his or her account have been carried out for the time period of 60 years.

[4 December 2008; 24 May 2012]

Section 6. Name and Legal Address of a Savings and Loan Association

(1) The name of a savings and loan association shall contain words "savings and loan association", and the name shall contain a feature of an aggregate of members of a savings and loan association.

(2) Only savings and loan associations and joining organisations created thereby are entitled to use the words "savings and loan association" in their name and for other purposes.

(3) The location of the board of directors of directors of a savings and loan association shall be the legal address of the savings and loan association.

Section 7. Separation of the Liability of a Savings and Loan Association and Members Thereof

(1) A member shall be liable for liabilities of a savings and loan association with his or her shares in the equity capital of the savings and loan association, however, he or she shall not be liable with his remaining property. The savings and loan association shall not be liable for the liabilities of the members thereof.

(2) When joining a savings and loan association, a member shall assume liability by his or her shares also for such liabilities of the association, which have arisen prior to him or her joining the association.

(3) A member who has withdrawn or has been excluded from a savings and loan association shall be liable for such liabilities of the savings and loan association, which have arisen until the day when he or she withdrew from the association or was excluded therefrom.

(4) Debts of individual members or other requests in relation to members may not be recovered from the equity capital of a savings and loan association. Until the day when a member has withdrawn from the savings and loan association only the dividends, which are due to the member, and deposits of the member may be the subject of recovery upon such claims.

Chapter II
Founding of a Savings and Loan Association

Section 8. Procedures for the Founding of a Savings and Loan Association

(1) Not less than 20 natural persons with a capacity to act, who conform to the requirements specified for natural persons in Section 5 of this Law, may be founders of a savings and loan association.

(2) In order to receive a special authorisation (licence) for the operation of a savings and loan association, the association to be newly founded shall submit the documents necessary for the receipt of a special authorisation (licence) to the Commission in accordance with the procedures provided for in regulatory enactments, and regulatory provisions and orders of the Commission. The Commission shall issue a special authorisation (licence) for the operation of a savings and loan association for an unspecified period of time. Registration of a savings and loan association in the Enterprise Register of the Republic of Latvia shall be performed only after a decision of the Commission on the issuance of the special authorisation (licence) for the operation of a savings and loan association has been submitted to the Enterprise Register of the Republic of Latvia.

(3) An authorised representative of the founders of a savings and loan association shall, within 15 days after a decision of the Commission on the issuance of a special authorisation (licence) for the operation of a savings and loan association has been received, submit the following founding documents to the Enterprise Register of the Republic of Latvia:

1) the foundation deed;

2) the articles of association;

3) the protocol of the foundation meeting;

4) a document certifying the legal address;

5) a document certifying investment of the equity capital;

6) a document certifying that the State fee for registration and the fee for publication of registration has been paid;

7) a decision of the administrative body of the legal person regarding participation in foundation of an association and the authorisation issued to representatives of such legal person - if a legal person is participating in foundation of an association;

8) a decision of the Commission on the issuance of a special authorisation (licence) for the operation of a savings and loan association.

[24 December 2012]

Section 9. Procedures for the Licensing of a Savings and Loan Association

(1) The Commission shall determine the procedures for the issuance of a special authorisation (licence) of a savings and loan association, as well as the restrictions related to the operation of a savings and loan association.

(2) The Commission shall examine an application regarding granting of a special authorisation (licence) within three months after receipt of all the necessary documents. The Commission has the right not to issue a special authorisation (licence) to a savings and loan association to be newly founded, if laws, regulatory provisions and orders of the Commission have not been complied with in the foundation thereof.

Section 10. Requirements for Receipt of a Special Authorisation (Licence)

In order to receive a special authorisation (licence) for the operation of a savings and loan association, the founders thereof shall:

1) prepare the foundation documents, articles of association and documents regulating the operation of the savings and loan association, which provide a clear idea regarding the planned activity and the organisation corresponding thereto;

2) make the instalment of the minimum founding equity capital;

3) propose candidates of the chairperson of the council, the chairperson of the board of directors and the chairperson and members of the audit commission of the savings and loan association corresponding to the requirements of law.

Section 11. Submission of Notifications and Authorisations of the Commission

(1) A savings and loan association shall require an authorisation of the Commission for:

1) reorganisation of the savings and loan association;

2) carrying out of the transactions referred to in Section 2, Paragraph one, Clause 10 of this Law.

(2) The Commission shall determine the documents to be submitted and the procedures by which the conformity of members of the council and of the board of directors of directors of the savings and loan association with the requirements of this Law shall be assessed.

(3) The savings and loan association shall, in accordance with the procedures specified by the Commission, provide information to the Commission regarding the composition of the council and the board of directors of directors of the savings and loan association and commencement of the provision of new financial services by the savings and loan association.

(4) In order to ascertain the conformity of the members of the council and the board of directors, as well as of the chairperson of the audit commission of the savings and loan association with the requirements of this Law, the Commission has the right to invite the relevant persons to an interview.

(5) The Commission has the right, within 30 days after receipt of all the necessary documents, not to allow that the members of the council and the board of directors or the chairperson of the audit commission of the savings and loan association commence the fulfilment of their duties, if the referred to persons do not conform to the requirements of this Law or the Commission is unable to ascertain their conformity with the requirements of this Law.

(6) The savings and loan association has a duty, not more than 15 days prior to taking of the relevant decision, to notify the Commission in writing regarding an intent of changing the name or legal address of the savings and loan association. If the Commission has not objected against the change in the name or legal address within seven days after receipt of the notification of the savings and loan association, it shall be deemed that the Commission has granted authorisation for changing the name or legal address of the savings and loan association.

[4 December 2008]

Section 12. Requirements for Officials of a Savings and Loan Association

(1) The following person may be the chairperson of the board of directors, a member of the board of directors, the chief accountant, the chairperson and a member of the audit commission of the savings and loan association:

1) [21 June 2007];

2) who is competent in financial management matters;

3) who has the necessary education or professional experience in the operation of savings and loan associations;

4) who has an impeccable reputation (none of the conditions referred to in Paragraph two of this Section applies thereto);

5) who has not been deprived of the right to perform commercial activities.

(2) The following person may not be the chairperson of the board of directors, a member of the board of directors, the chief accountant, the chairperson and a member of the audit commission of the savings and loan association:

1) who has been convicted of committing an intentional criminal offence, also malicious bankruptcy;

2) who has been convicted of committing an intentional criminal offence, even if the person has been released from serving the punishment due to a limitation period, clemency or amnesty;

3) against whom a criminal matter for committing an intentional criminal offence has been terminated due to a limitation period or amnesty.

(3) A person who conforms to the requirements of Paragraph one, Clauses 2, 4 and 5 of this Section may be the chairperson of the council and a member of the council of a savings and loan association.

[20 November 2003, 21 June 2007]

Section 13. Grounds for Cancellation of a Special Authorisation Issued for the Operation of a Savings and Loan Association

The Commission may cancel a special authorisation (licence) issued to a savings and loan association if:

1) the savings and loan association has not commenced the operation within 12 months from the day when the special authorisation (licence) was issued;

2) it is detected that the savings and loan association has provided false information for the receipt of the special authorisation (licence);

3) the savings and loan association does not comply with the restrictions on the operation specified by the Commission;

4) the savings and loan association regularly does not comply with the requirements of this Law and the regulatory provisions and orders of the Commission;

5) the court has approved a decision taken in accordance with the procedures specified in this Law on initiation of the bankruptcy procedure of the savings and loan association;

6) the Commission has received a submission of the savings and loan association regarding cancellation of the special authorisation (licence) due to termination of the operation of the savings and loan association in accordance with this Law;

7) the savings and loan association has not, for more than two months after receipt of a decision of the Commission on warning regarding cancellation of the special authorisation (licence), voluntarily and in full amount made payments into the Deposit Guarantee Fund;

8) the savings and loan association has been late in making payments or has not made payments in full amount for financing of the operation of the Commission in accordance with the procedures specified in Law.

[4 December 2008]

Chapter III
Capital and Distribution of Profit of a Savings and Loan Association

Section 14. Own Funds of a Savings and Loan Association

The own funds of a savings and loan association is the difference between the assets and liabilities of the savings and loan association.

Section 15. Equity Capital of a Savings and Loan Association

(1) The equity capital of a savings and loan association shall be formed by the sum of nominal values of shares of all members of the savings and loan association. The member of the savings and loan association may pay for his or her shares only in cash. The minimum amount of the equity capital of the savings and loan association shall be 2000 lats.

(2) The right to claim of a former member against a savings and loan association regarding disbursement of shares shall lapse, if the share has not been taken out within 60 years after expiry of the term of disbursement of shares and the interested person has not applied any claims regarding disbursement of shares. After expiry of the term the shares not taken out shall become the property of the savings and loan association.

[4 December 2008]

Section 16. Reserve Capital of a Savings and Loan Association

(1) A savings and loan association shall create a reserve capital, transferring at least 25 per cent from the annual net profit therein (profit after payment of taxes), until the reserve capital reaches at least 10 per cent from the total assets.

(2) Also other payments into the reserve capital may be provided for in the articles of association of a savings and loan association or by a decision of the general meeting (meeting of authorised persons).

Section 17. Distribution of Net Profit of a Savings and Loan Association

(1) The part of the net profit remaining after deductions into the reserve capital shall be distributed according to the provisions of the articles of association of the savings and loan association.

(2) The dividends allocated shall be disbursed within 90 days after allocation, and the dividends not taken out within the referred to time period shall be deemed a claim investment.

Section 18. Activities of a Savings and Loan Association Involving Credits

A savings and loan association is entitled to receive a credit from a bank or a savings and loan association registered in the European Union, from a global Latvian credit company, from an association or foundation of savings and loan associations registered in the European Union, from State and local government funds, as well as from State and local government capital companies.

[24 May 2012]

Chapter IV
Types of Activities of a Savings and Loan Association and the Requirements Regulating Activities Thereof

Section 19. Types of Activities of a Savings and Loan Association

(1) After registration with the Enterprise Register of the Republic of Latvia a savings and loan association is entitled to carry out the activities specified in the articles of association thereof and in the special authorisation (licence) issued by the Commission.

(2) A savings and loan association shall accept investments only from members thereof.

(3) A savings and loan association shall issue loans only to members thereof - natural persons and to the persons referred to in Section 5, Paragraph five, Clause 1 of this Law according to the credit policy provisions approved by the general meeting (meeting of authorised persons).

(4) The following shall be determined in the credit policy of a savings and loan association:

1) the objectives for which loans shall be issued;

2) the interest rates and the procedures for the calculation thereof;

3) the time periods for which loans shall be issued;

4) the types of security depending on the objective and amount of the loan to be issued;

5) the objectives, for which loans may be issued without security, and the amount of such loans;

6) the procedures for requesting a loan;

7) the procedures, by which a loan request shall be examined and a decision on granting a loan or on refusal to grant it shall be taken;

8) the procedures for supervision of the loans issued;

9) the procedures for recovery of loans not paid in due time;

10) the provision that a member may utilise the received loan only for the purpose, for which it was issued.

[21 June 2007; 25 May 2012]

Section 20. Requirements Regulating Activities of a Savings and Loan Association

(1) The proportion of own funds of a savings and loan association to the sum total of assets and off-balance sheet items (capital adequacy) may not be less than 10 per cent.

(2) A savings and loan association shall arrange the assets thereof so that satisfaction of legally justified claims of creditors thereof could be ensured at any time.

(3) [4 December 2008]

(4) A savings and loan association is entitled to make investments in State issued securities of the Republic of Latvia and in mortgage bonds issued by banks registered in the Republic of Latvia.

(5) A savings and loan association is not entitled to found commercial companies, as well as to make investments in the equity capital of other commercial companies.

(6) A savings and loan association is entitled to deposit the funds not issued in loans to the members thereof only to a bank or savings and loan association registered in the Republic of Latvia or a foreign country.

(7) The risk of a transaction of a savings and loan association shall be qualified as high, if the amount of the transaction exceeds 10 per cent from the own funds of the savings and loan association.

(8) The total sum of high-risk transactions may not exceed the own funds of a savings and loan association more than eight times.

(9) The total amount of loans issued to one member or a joint risk group shall not exceed 25 per cent from the own funds of a savings and loan association.

(10) The total amount of credits issued to members of a savings and loan association, the board of directors and the audit commission or their spouses, parents or children shall not exceed 15 per cent from the own funds of the savings and loan association, except cases when credits issued to such persons have been secured with their additional shares or investments in the savings and loan association.

(11) Credits, which individually or jointly exceed 1000 lats and are allocated to the chairperson of the savings and loan association, credit committee or to any member of the board of directors, credit committee and audit commission, shall be allocated with a decision unanimously taken by the board of directors of the savings and loan association.

(12) The open foreign currency position of a savings and loan association in an individual foreign currency shall not exceed 10 per cent and in total in all foreign currencies - 20 per cent from the own funds.

[21 June 2007; 4 December 2008]

Section 21. Cases of Repayment of Overpaid Share Value

(1) A savings and loan association shall, within a week after a decision of the relevant administrative body of the savings and loan association on non-acceptance of a person in the savings and loan association, repay the value of the shares to the person in monetary terms.

(2) A savings and loan association shall, within a week after a decision of the relevant administrative body of the savings and loan association on rejection of the purchase of additional shares, repay the paid value of the additional shares to the person in monetary terms.

(3) The entrance fee paid in by the person shall not be repaid, if a decision on non-acceptance of the person in the savings and loan association is taken.

Chapter V
Organisational Structure, Accounting and Annual Report of a Savings and Loan Association

Section 22. Special Management Provisions of a Savings and Loan Association

(1) Also a credit committee shall be created in a savings and loan association in accordance with the procedures specified in the articles of association thereof.

(2) A member of the board of directors and the audit commission may not be a member of the credit committee of the savings and loan association. The credit committee shall provide a report on the work thereof in accordance with the procedures specified in the articles of association of the association to the general meeting (meeting of authorised persons) and the board of directors of the savings and loan association.

(3) A savings and loan association, the number of members of which exceeds 500, may specify in the articles of association that the meeting of persons authorised by members have all the rights of a general meeting of members specified in the laws regulating the activities of co-operative societies.

(4) A savings and loan association may provide for in the articles of association that members of the board of directors, the credit committee and the audit commission carry out work without remuneration.

[4 December 2008; 24 May 2012]

Section 23. Accounting and Annual Report of a Savings and Loan Association

(1) Accounting of a savings and loan association shall be arranged according to the provisions of the Commission regarding preparation of annual accounts.

(2) The annual account of a savings and loan association shall be prepared in accordance with the provisions of the Commission. The board of directors shall be responsible for the preparation of the annual report, and the audit commission of the savings and loan association shall examine it prior to the general meeting (meeting of authorised persons), in which the report is to be approved. For a savings and loan association, assets of which at the end of the accounting year exceed 100 000 lats, the annual report shall be examined by a sworn auditor or a commercial company of sworn auditors.

(2¹) A savings and loan association, the annual report of which is examined by a sworn auditor or a commercial company of sworn auditors, shall submit to the Commission a copy of the report of the sworn auditor or the commercial company of sworn auditors addressed to the management of the savings and loan association within 10 days after approval of the annual report, but not later than three months after the end of the reporting year.

(3) [22 May 2008]

(3¹) A savings and loan association shall, not later than within 10 days after approval of the annual report and not later than three months after the end of the reporting year, submit a copy of the annual report and the report of the sworn auditor, if any, to the State Revenue Service together with an extract from the minutes of the general meeting (meeting of authorised persons) regarding approval of the annual report. The savings and loan association shall submit the referred to documents in printed form or in electronic form.

(3²) The State Revenue Service shall, not later than within five working days, hand over the documents referred to in Paragraph 3.¹ of this Section, if they have been submitted in electronic form, or electronic copies of such documents, if they have been submitted in printed form to the Enterprise Register in electronic form. The Enterprise Register shall ensure public access to the documents received. The procedures for handing over and certification of electronic documents shall be determined by an interdepartamental agreement entered into by the State Revenue Service and the Enterprise Register.

(3³) The Enterprise Register shall, not later than within five working days after receipt of the documents referred to in Paragraph 3.² of this Section, publish a notification in the newspaper Latvijas Vēstnesis [the official Gazette of the Government of Latvia] that the information referred to in Paragraph 3.¹ of this Section is available at the Enterprise Register.

(4) Each member of a savings and loan association has the right to become acquainted with a complete annual report and receive an extract thereof for a fee not exceeding the expenses for the copying of the report.

[21 June 2007; 22 May 2008; 23 September 2010; 24 May 2012]

Chapter VI
Supervision of Activities of a Savings and Loan Association

Section 24. Organisation of Supervision of Activities of a Savings and Loan Association

(1) In order to ensure safe operation, stability and development of savings and loan associations, the supervision of savings and loan associations shall be carried out by the Commission in accordance with this Law and other regulatory enactments.

(2) An administrative act of the Financial and Capital Market Commission, issued in accordance with this Law, may be appealed to the Administrative District Court. The Court shall examine the case as the court of first instance. The case shall be examined in the composition of three judges. A judgment of the Administrative District Court may be appealed by submitting a cassation complaint.

[4 December 2008 / Paragraph two shall come into force from 1 January 2009 (see Transitional Provisions)]

Section 25. Application of Intensified Supervision

[4 December 2008]

Section 26. Rights of Authorised Persons of the Commission during Supervision Process

An authorised person of the Commission has the right to become acquainted with all documents, assets and liabilities of a savings and loan association and to receive explanations from the responsible persons of the savings and loan association.

Section 27. Duties of a Savings and Loan Association in the Development and Operation of an Efficient Internal Control System

A savings and loan association shall create an efficient internal control system in order to ensure the risk management of the association and active protection thereof, the veracity and timeliness of the information provided to the government, the compliance with the laws, regulatory provisions and orders of the Commission, as well as the policy and procedure of the savings and loan association.

Section 27.¹ Participation in the Credit Register

The participation of a savings and loan association in the Credit Register shall be determined by the Law On the Credit Register.

[24 May 2012 / The new wording of the text of Section shall come into force from 1 December 2012 (see Paragraph 10 of Transitional Provisions)]

Chapter VII
Termination of Activities of a Savings and Loan Association

Section 28. Grounds for Termination of Activities of a Savings and Loan Association

Activities of a savings and loan association may be terminated in accordance with:

1) a decision of the general meeting (meeting of authorised persons) of the savings and loan association;

2) a court adjudication.

Section 29. Termination of Activities of a Savings and Loan Association and Reorganisation of the Association in Accordance with a Decision of the General Meeting (Meeting of Authorised Persons)

(1) The general meeting (meeting of authorised persons) of a savings and loan association is entitled to take a decision on termination of activities of the association only after the savings and loan association has fulfilled all the liabilities recorded in the accounting registers thereof in relation to creditors.

(2) The general meeting (meeting of authorised persons) of a savings and loan association shall have to take a decision on termination of activities in the following cases:

1) if the number of members of the savings and loan association has reduced below 20;

2) if the legal subject, legal relationship with which determined the aggregate of the members of the relevant savings and loan association, ceases to exist;

3) if the savings and loan association has been acquired by another association;

4) if the savings and loan association has been merged with another association or other such associations and result in the founding of a new savings and loan association.

(3) If the equity capital of a savings and loan association reduces and becomes smaller than the minimum amount specified in the articles of association, the board of directors shall, within two months, convene the general meeting (meeting of authorised persons) of members, which shall decide on increasing of the equity capital of the association up to the minimum equity capital specified in the articles of association or on liquidation of the savings and loan association.

(4) Also other cases of terminating the activities of a savings and loan association may be specified in the articles of association thereof.

(5) If the own funds of a savings and loan association reduce and become smaller than the 2000 lats, the board of directors shall, within one month, convene the general meeting (meeting of authorised persons) of members, which shall decide on increasing of the own funds of the association up 2000 lats or on liquidation of the savings and loan association.

Section 30. Procedures for Liquidation of a Savings and Loan Association on the Basis of the Decision of the General Meeting (Meeting of Authorised Persons)

(1) The procedures for liquidation of a savings and loan association specified in this Section shall be applicable in cases when the activities of the savings and loan association are terminated and the savings and loan association is liquidated in the cases referred to in Section 29 of this Law.

(2) The general meeting (meeting of authorised persons) of a savings and loan association shall appoint a liquidator. The liquidator shall act and be responsible in accordance with the provisions regarding members of the board of directors. The liquidator of a savings and loan association may also be a legal person. Activities of the savings and loan association during liquidation process, as well as activities of the liquidator shall be subject to the supervision of the Commission.

(3) In a savings and loan association, assets of which at the end of the accounting year exceed 50 000 lats, the liquidator may be replaced with a liquidation commission elected by the general meeting (meeting of authorised persons).

(4) The liquidator shall notify the decision on commencement of liquidation of a savings and loan association in the newspaper Latvijas Vēstnesis and in the newspaper, which according to the place of distribution and number of copies thereof includes as large number of members of the savings and loan association as possible. Creditors shall apply their claims against the savings and loan association to the liquidator of the association within 90 days from the day when the notification was published. The creditor shall append all documents justifying its claim to the application thereof.

(5) The liquidator shall take a decision on recognition of the claim of the creditor and send to the creditor according to the address indicated thereby not more than within 30 days after expiry of the term announced for application of creditors. The liquidator shall notify the decision thereof to the creditor in a registered letter. The creditor may appeal a decision of the liquidator on non-recognition or partial recognition of the claim to a court within 30 days from the day when the registered letter was sent.

(6) The liquidator shall receive and recover that due to the savings and loan association, sell the property of the association and satisfy the claims against the savings and loan association in accordance with the procedures specified by law, prepare a report on liquidation, announce the termination of the liquidation and notify the Enterprise Register of the Republic of Latvia thereof.

(7) Claims of creditors, which have been recognised by a court adjudication (judgment) that has entered into effect and the recovery commenced according to which against a savings and loan association has not been completed, as well as claims, which at the time of appointing a liquidator, are still in legal proceedings, shall be satisfied according to general procedures of liquidation.

(8) The remuneration of the liquidator, the liquidation expenditure, as well as the expenditure of the savings and loan association to be liquidated shall be approved by the general meeting (meeting of authorised persons).

(9) The order of satisfying the claims applied by creditors and recognised, in case of liquidation of a savings and loan association, shall be as follows:

1) claims of the Deposit Guarantee Fund;

2) tax and duty claims;

3) claims of work remuneration of such paid employers who are not members of the savings and loan association;

4) claims of such creditors and employees who are not members of the association;

5) claims of deposits, except claims of members of the board of directors, the audit commission and the credit commission;

6) claims of other members of the association who are not members of the board of directors, the audit commission or the credit committee;

7) claims of members of the board of directors, the audit commission and the credit committee.

(10) Complaints regarding activities of a liquidator shall be examined and decisions on his or her appointing and holding liable shall be taken by the general meeting (meeting of authorised persons).

Chapter VIII
Liability for Violations of Regulatory Enactments

[4 December 2008]

Section 31. Restriction of Activities of a Savings and Loan Association

(1) If the Commission detects that a savings and loan association does not comply with the requirements of this Law, the legal acts issued by the Commission or the directly applicable regulatory enactments issued by institutions of the European Union, or concludes that the strategy, procedures and measures of a savings and loan association do not ensure sufficient risk management, it shall request that the savings and loan association carries out the necessary measures for the prevention of such situation without delay.

(2) In addition to that specified in Paragraph one of this Section the Commission is entitled to carry out one or several of the following measures:

1) to warn a savings and loan association;

2) to partially or completely suspend the provision of financial services of a savings and loan association;

3) to issue orders in writing, which are addressed to the supervisory bodies and executive bodies of a savings and loan association, as well as to managers and members of such bodies and which are necessary in order to restrict or discontinue the activities of the savings and loan association, which endanger or may endanger the stability, solvency or reputation of such savings and loan association;

4) to impose the fines provided for in this Law.

(3) Appealing of an administrative act issued by the Commission in relation to the issues referred to in this Section shall not suspend the execution thereof.

Section 32. Amount of a Fine

(1) [1 December 2012]

(2) The Commission is entitled to impose a savings and loan association a fine up to 5000 lats for activities, as a result of which the requirements of this Law or of the regulatory enactments issued in accordance thereby, or of directly applicable regulatory enactments issued by institutions of the European Union have been violated.

(3) The fines referred to in this Law shall transferred into the State budget.

[24 May 2012 / Amendments regarding deletion of Paragraph one and amendments to Paragraph two shall come into force from 1 December 2012 (see Paragraph 10 of Transitional Provision)]

Transitional Provisions

1. Section 13, Clause 7 and Section 30, Paragraph nine, Clause 1 of this Law shall come into force concurrently with the relevant amendments to the Law On Deposit Guarantees of Natural Persons.

2. Until the time when the regulatory provisions and orders of the Commission come into force, the norms of the Bank of Latvia shall be binding on savings and loan associations.

3. Until the day of the coming into force of a law on occupational activity, the term "occupational activity" used in this Law shall mean "individual work".

4. The special authorisations (licences) issued to savings and loan associations for the operation of a credit institution, which have been issued on the basis of regulatory enactments that were in force until the day of coming into force of this Law, shall be recognised as valid.

5. The Cabinet shall, by 1 September 2001, submit amendments to the Saeima to the Credit Institution Law, to the Law on the Financial and Capital Market Commission, tax laws and other laws related to the coming into force of this Law.

[20 November 2003]

6. Section 27.¹ of this Law shall come into force on 1 January 2008.

[21 June 2007]

7. Amendments to Section 23 of this Law shall be applicable to reports, which have been submitted to the State Revenue Service on 1 July 2008 or later.

[22 May 2008]

8. Until the legal regulation of agricultural farms and fish farms according to the Law On Agricultural Farms and Fish Farms, an agricultural farm or a fish farm may be one member of the savings and loan association without the right to vote, if the member of the savings and loan associations owns 100 per cent shares of the relevant farm.

[4 December 2008]

9. Amendments to Section 24 of this Law regarding supplementation thereof with Paragraph two (in relation to appealing of an administrative act in the Administrative District Court) shall come into force on 1 January 2009. If an application regarding an administrative act of the Financial and Market Capital Commission has been submitted to the Administrative District Court by 1 January 2009, a decision on the application submitted shall be taken, as well as the administrative case initiated shall be examined and a court adjudication in this case shall be rendered and appealed in accordance with the provisions of the Administrative Procedure Law.

[4 December 2008]

10. Amendments to Sections 27.¹ and 32 of this Law, as well as amendment in relation to deletion of the informative reference to the European Union directive shall come into force from 1 January 2012.

[24 May 2012]

Informative Reference to the European Union Directive

[24 May 2012 (see Paragraph 10 of Transitional Provisions)]

This Law shall come into force on 1 January 2002.

The Saeima adopted this Law on 29 March 2001.

President V. Vīķe-Freiberga

Riga, 18 April 2001

¹ The Parliament of the Republic of Latvia

Translation © 2013 Valsts valodas centrs (State Language Centre)