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Banking and finance |  |
Banks may be established by domestic or foreign natural or legal persons. There are no restrictions for all foreign natural and legal persons that are located in any of the WTO member countries. However, the condition of reciprocity still applies to those countries that are not members of the WTO. The level of founding capital that is necessary to establish a bank (20 to 60 million HRK) determines the type of operations that the bank wishes to perform. Namely, newly established banks are not allowed to carry out banking activities in gathering deposits and savings from citizens in both domestic and foreign currency before a three-year period from establishment has expired. A single shareholder may acquire more than 10% of shares with voting rights in the assembly only upon prior approval by the Croatian National Bank. If a bank acquires an ownership stake in another bank or in a company that exceeds its guarantee capital by more than 10%, or if it acquires a majority stake in another company, it must obtain approval from the Croatian National Bank. These restrictions do not apply if the ownership stake is acquired in bankruptcy or distraint proceedings, or if security instruments stipulated by the Distraint Act are implemented. The scope of business of a bank must be performed in such a way that the guarantee capital always amounts to at least 10% of total assets and active off-balance items, distributed and weighted by risk levels (minimum capital adequacy). Insurance companies Natural or legal persons can establish a joint-stock insurance company. A maximum 15 percent single stake with voting rights can be held by a natural or legal person. For stakes larger than 15% special permission must be obtained from the Insurance Supervisory Directorate, which is the authority that issues operating licences and supervises the activities of insurance companies. According to the Insurance Act, other types of insurance companies that may be established are mutual insurance companies, public insurance companies, insurance and re-insurance pools, and subsidiaries of foreign insurance companies. The capital market Entities established for dealing with securities are companies, bourses, other institutionalised public markets, banks, account operators, transfer agents, the Central Depository Agency, as well as investment fund management companies. Trades in securities that are issued according to public offers are carried out through bourses and other institutionalised public markets (Zagreb Stock Exchange, Varaždin Securities Market). The pension insurance system The new Croatian pension insurance system was introduced on 1 January 2002 and it includes three levels:
The Croatian Pension Insurance Fund receives compulsory contributions for generational solidarity from the salaries of all insured persons (level I). In order to realise the second level of the pension reform, special enterprises for the management of the pension fund (compulsory pension enterprises) and compulsory pension funds have been established. Employees pay the obligatory contribution (part of their salary) to their account held within a pension fund. Pension funds may be established by pension enterprises and domestic and foreign natural persons and legal entities. The minimum capital required when establishing a compulsory pension enterprise totals 40 million HRK; a compulsory pension enterprise may establish and manage only one compulsory fund. An insured person may be a member of only one compulsory pension fund, and may hold only one account with that fund. In order to realise the third level of the pension reform, voluntary pension funds may be established by pension insurance companies, enterprises for the management of the pension fund (voluntary pension enterprises) or a patron of a voluntary pension fund. Voluntary pension funds are managed by voluntary pension enterprises, the minimum capital of which totals 15 million HRK. An insured person may be a member of one or more voluntary pension funds at the same time. A compulsory or voluntary pension fund is a special fund: it is not regarded as a legal entity and serves to collect the contributions from fund members and to invest them to increase the value of fund property in order to assure the payment of pension obligations to all fund members in accordance with the provisions of the Act. A pension insurance company may be established as a joint-stock company or a limited liability company that offers pension scheme programmes on the pension market, secures pensions within the compulsory pension insurance scheme based on individual capitalised savings, as well as pensions and other pension obligations within the voluntary pension insurance scheme based on individual capitalised savings. HAGENA, the Pension Fund and Insurance Supervision Agency, supervises the activities of pension companies and funds. It has been established in accordance with the Obligatory and Voluntary Pension Funds Act. The Agency is independent but responsible to the Croatian Government and the Croatian Parliament. The foreign currency system Foreign currency transactions with foreign countries are based on the Foreign Currency System, Foreign Currency Transactions, and Trade in Gold Act, which states that foreign currency is freely available and that trade in foreign currency must be carried out through the foreign currency market. In legal terms, a foreign entity is a legal person that has its headquarters abroad or a physical person with residence abroad. Payments and credit transactions abroad are realised through authorised banks (i.e. those licensed for foreign transactions) that are responsible for their own solvency regarding payments to foreign countries. Foreign legal entities may hold foreign currency accounts with authorised banks in convertible currencies, through which they can freely make foreign currency transactions and payments abroad. Foreign legal entities may deposit foreign currency into their foreign currency accounts held with licensed domestic banks. Profits made from the investment of foreign capital in Croatia may be transferred freely to foreign accounts abroad provided that all legal obligations have been settled in Croatia. Profits made by foreign contractors involved in investment projects in Croatia may be freely transferred abroad. Foreign entities may accept receivables in domestic currency in accounts held with domestic banks licensed to carry out business abroad under the conditions prescribed by the Croatian Government. Such receivables in domestic currency can be used by foreign legal entities for transfer abroad, for payment in Croatia, for loans to domestic legal entities in accordance with the Act, and for the transfer to another foreign legal entity’s account (in domestic currency). Foreign currencies and securities nominated in foreign currencies can be freely brought into Croatia. Legal persons from Croatia must collect payments for exported goods within 150 days of when the goods were exported or the service provided. This time limit can be prolonged only once if approval is obtained from the Croatian National Bank. For exports to the Commonwealth of Independent States, payments must be made within 180 days. Domestic legal persons can also make clearances or claim their
credits (collect their dues) from abroad in foreign currency (cash),
pay for the import of goods and services in advance, all in accordance
with the Act. However, it is necessary to obtain special approval
from the Croatian National Bank. Payment and collection of payments
for carrying out business with foreign countries can be done by
the following usual instruments of payment: documentary letters
of credit (revocable and irrevocable, confirmed and unconfirmed,
transferable and non-transferable, back-to-back, single and revolving,
red-clause letters of credit, stand-by letters of credit); clean
payments; documentary collections; cheques; bills of exchange; promissory
notes; bank guarantees. |
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