Guide to Licensing Credit Organizations
Guide to Licensing Credit OrganizationsRegulation
The licensing procedures for credit organizations and their activities are regulated by the Law of the Republic of Armenia "On Credit Organizations" (hereafter referred to as "the Law"), Regulation 13, Regulation 14, approved by the Central Bank of Armenia (CBA), and other legal acts mentioned in Article 2 of the Law.
Description
A credit organization is a legal entity licensed under the Law to conduct activities defined by Article 8 of the Law. The types of credit organizations are listed in Subsection 6 of Article 3 of the Law.
A credit organization can be established as a limited liability company, joint-stock company, or commercial cooperative. Savings unions, however, can only be created in the form of cooperatives.
Capital and Significant Participants
Before receiving a license, a credit organization must fully pay its charter capital into a cumulative account opened with the Central Bank of Armenia or another bank operating in Armenia.
The basic economic norms and limits for regulating a credit organization’s activities are defined in Article 12 of the Law and Chapter 3 of Regulation 14.
Below are the minimum thresholds for the charter and total capital of credit organizations, except for cases defined by Regulation 14:
|
Type of Credit Organization
|
Minimum Charter and Total Capital (in million AMD)
|
|
Savings unions
|
50
|
|
Credit unions
|
50
|
|
Leasing companies
|
100
|
|
Factoring companies
|
150
|
|
Universal credit companies
|
150
|
|
Refinancing credit companies
|
4000
|
For newly established leasing, factoring, universal credit, and refinancing credit companies that plan to buy and/or sell foreign currency in cash, their minimum total capital should be 1 billion AMD.
Individuals planning to hold 10% or more participation in a credit organization, referred to as significant participants, must obtain prior approval from the Central Bank under Article 10 of the Law and Section 3 of Regulation 13.
Managers
Employees considered managers of a credit organization, as listed in Subsection 1 of Article 9 of the Law, must obtain qualifications, meet the required professional standards, and be registered with the Central Bank, in accordance with Section 4 of Regulation 13.
Premises
The premises and technical equipment used for the activities of the credit organization must comply with the requirements outlined in Section 5 of Regulation 13, which are necessary for ensuring the smooth functioning of the company.
Licensing Procedure
The list of documents required to apply for a credit organization license is outlined in Article 5 of the Law and Clause 23 of Regulation 13. These documents must be submitted to the Central Bank electronically, by registered mail, or in person in paper form. After submitting complete and reliable documents and meeting the necessary requirements, the Central Bank Board will make a decision within one month to either issue the license or reject the application.
The Central Bank Board may reject the application based on the grounds outlined in Subsection 5 of Article 5 of the Law and Clause 28 of Regulation 13.
Once registered with the Central Bank, the credit organization acquires legal entity status and is considered licensed.
The credit organization may open branches and representative offices within Armenia or in foreign countries in accordance with Article 7 of the Law and Chapters 4, 5, and 6 of Regulation 13. These branches and representative offices may operate from the moment of registration with the Central Bank.
Taxes, Duties, and Other Fees
The credit organization must pay taxes as prescribed by the Tax Code of the Republic of Armenia. Additionally, an annual state duty of 6,000,000 AMD must be paid to engage in licensed activities. If a branch conducts cash foreign exchange activities, an annual state duty of 1,000,000 AMD per branch is required. For branches not conducting cash foreign exchange, the duty is 500,000 AMD per branch. For each representative office, the annual duty is 100,000 AMD.
Attention: This document provides a summary of the requirements set forth in the legal acts regulating credit organizations. For more detailed information, it is necessary to review the full legal acts in force.