Chapter III Financial Regulations

CHAPTER III Financial Regulations

Article 25. Capital of the Central Bank

1. The initial capital of the Central Bank has a value of 25 million Convertible Marks, which is equivalent to the amount of twenty-five million German Marks. The authorized capital of the Central Bank is its initial capital, which may be periodically increased or decreased as a result of the distribution of net profit, in accordance with Article 27 or Article 29 of this Law.
2. The total initial capital of the Central Bank is paid in full within a period of two weeks from the date this Law enters into force. The modalities for the payment of the initial capital are determined by the Parliamentary Assembly of Bosnia and Herzegovina.

Article 26. Calculation of Net Profit or Net Loss of the Central Bank The net profit or net loss of the Central Bank is calculated for each financial year in accordance with international accounting standards as the amount of net business revenues or losses (including realized gains and losses) and net unrealized estimated gains or losses, and after the adoption of provisions on: a. doubtful and questionable receivables, amortization of assets, and contributions to the pension fund for employees; and b. the necessity of issuing approval from the institutions responsible for the budget of Bosnia and Herzegovina for other purposes that the Central Bank may deem necessary.

Article 27. Distribution of Net Profit of the Central Bank If the Central Bank realizes a net profit in any budget year, the net profit is distributed by the Board of Directors and used applying the following order of priority: a. the distribution from net profit is made to the account of the capital of the Central Bank in the amount necessary to increase the amount of authorized capital of the Central Bank equivalent to five percent of the total amount of monetary liabilities (as defined in Article 31) shown on the accounts of the Central Bank at the end of that financial year; b. the allocation from net profit to the general reserve held by the Central Bank is made in the amount necessary to increase the amount of the general reserve to a level equivalent to the amount of authorized capital of the Central Bank; the general reserve may be used only to compensate for losses of the Central Bank; c. the distribution from net profit is, based on a unanimous decision of the Board of Directors, made to reserves for special purposes established by the Central Bank; and d. any remaining profit that remains after the aforementioned distributions shall be distributed as follows: it is considered that the aforementioned distributions are fully carried out from net business profit, except in the case where business profit is not included in net profit or, if the aforementioned distributions have exhausted the net business profit included in net profit, then the distributions shall be carried out from net unrealized estimated profit; any eventual remaining amount of net business profit is distributed to the relevant competent authorities for fiscal matters determined by the Parliamentary Assembly of Bosnia and Herzegovina in accordance with paragraph 2 of Article 25 of this Law within a period of four months after the end of the budget year; any eventual remaining net unrealized profit is distributed to the account of the estimated value of reserves held in the balance sheet of the Central Bank.

Article 28. Allocation of Net Loss of the Central Bank If the Central Bank realizes a net loss in any budget year, the net loss shall be allocated as follows: a. if the net loss consists of net business losses and net unrealized estimated losses, the amount of net business losses is charged to general reserves or capital, while the amount of unrealized estimated losses is allocated to the account of the estimated value of reserves or, if the balance of the account of the estimated value of reserves, as a result of such allocation, were to be negative, that amount is allocated to general reserves or capital, applying this order; b. if the net loss is the amount of net business profit and a larger amount of unrealized estimated losses, the loss is allocated to the account of the estimated value of reserves or, if, as a result of such allocation, the balance of the account of the estimated value of reserves were to be negative, the loss is allocated to general reserves or to capital, applying this order; or c. if the net loss is the amount of net business losses and smaller net unrealized estimated profits, the loss is charged to general reserves or capital, applying this order.

Article 29. Covering Deficits in the Capital of the Central Bank Whenever: a. on the quarterly preliminary balance sheet (without audit) of the Central Bank prepared in accordance with Article 64, the value of assets falls below the amount of assets and unamortized authorized capital; or b. the amount of net profit of the Central Bank for any financial year is insufficient to increase the amount of authorized capital of the Central Bank to a level equivalent to five percent of the total amount of monetary liabilities (as defined in Article 32) shown on the balance sheet of the Central Bank at the end of a certain financial year, within two months after submitting the balance sheet to the Presidency of Bosnia and Herzegovina, the ministry responsible for the budget of Bosnia and Herzegovina provides Convertible Marks in the amount or amounts necessary to cover the deficit.

Article 30. Limitations on Distribution of Net Profit No transfer, payment, or disbursement in accordance with Article 27 or 28 of this Law shall be executed if, in the opinion of the Board of Directors of the Central Bank, it would result in the assets of the Central Bank being less than the amount of its liabilities and unamortized capital and reserves.