Law on Credit Organizations of 2002

Armenia

(amended through 2007)

The Law on Credit Organizations governs the licensing procedures, regulation and supervision of activities of credit organizations in Armenia, including credit unions, savings unions, leasing and factoring organizations and other credit organizations.

Credit organizations may be established in the form of limited liability companies, joint stock companies or commercial or non-commercial cooperative enterprises.

The law contains provisions on:

  • Registration and licensing of credit organizations;
  • Regulation and supervision of the activity of credit organizations;
  • Changing the type of activity of banks;
  • Submission and publication of financial statements, audit report, and information auditing;
  • Law infractions and remedial measures; and
  • Transitional provisions: changing the type of activity of banks (discusses how banks may change their type of activity to become a credit organization).

Notably, this law outlines the differences between credit organizations and universal credit organizations. Credit organizations are those that fall into any of the following four categories (outlined in Article 3, paragraph 6):

a) credit unions that attract funds from their participants and provide funds to them, and in the cases prescribed by the Central Bank normative acts, attract funds from other persons or provide funds to them;

b) savings unions that attract funds from their participants and provide funds to them;

c) organizations engaged in financial leasing (leasing), the main activity of which is execution of leasing transactions in accordance with the provisions of Paragraph 6, Chapter 35 of the Civil Code of Armenia; and

d) factoring organizations that are mainly engaged in executing factoring transactions in accordance with Chapter 48 provisions of the Civil Code of Armenia.

Universal credit organizations (defined in Article 3.6(e)) are any remaining credit organizations that do not fall into the above outlined categories. According to Regulation 14 “Regulation of Activities of Credit Organizations: Prudential Standards for Activities of Credit Organizations” (2002), universal credit organizations are permitted to carry out all the functions outlined for credit organizations in Article 8 of this law, except for the purchase, sale and management of gold and standardized bullions and coins, and additional restrictions apply to their issuance and allocation of bonds.