Banking Law of the Republic of North Macedonia

BANKING LAW
(Unofficial revised text) 1
I. GENERAL PROVISIONS
Article 1
This Law shall set forth the founding, operations, supervision, and termination of operations of banks and of branches of foreign banks in the Republic of North Macedonia, as well as the opening and operations of branches of banks from European Union member states and direct conduct of financial activities by banks from the European Union member states.
Article 2
For the purpose of this Law, the terms given below shall denote the following:

1. "Bank" shall denote a legal entity, licensed by the Governor of the National Bank of the Republic
   of North Macedonia, established in accordance with the provisions of this Law, the principal activity of which is to accept deposits and other repayable sources of funds from the public and to extend credits on its own behalf and for its own account;
2. "Systemically important bank" shall denote a bank headquartered in the Republic of North
   Macedonia the malfunction or failure of which could lead to systemic risk;
3. "Deposit" shall denote a claim on the bank in cash, with or without interest or compensation of
   any kind, collectible either on demand or within a certain period, depending on the agreed conditions at the time of depositing the cash;
4. “Banking activities” shall denote collecting deposits and approving credits on own behalf and for
   own account;
5. "Bank shareholder" shall denote legal entity or natural person who holds shares in a bank;
6. "Entity/Person" shall denote domestic and/or foreign legal entity and natural person;
7. "Connected entities" shall denote two or more entities who:

• represent a single risk, as one of them directly or indirectly exercises control over other
  entity, or other entities,
• represent a single risk, although they are not control-related, because they are
  interconnected such that the financial problems in one of them are likely to make other entity/entities be in default. Two natural persons shall be considered connected if one of them is a spouse or a person with whom they live in an extramarital union (illegitimately), a child or a foster child, parent or a person under guardianship of the other natural person;

1 This revised text consists of the Banking Law [Official Gazette of Republic of Macedonia No. 67/07 (88/08 - Decision of the Constitutional Court of the Republic of Macedonia No. 182/07 dated 9 July 2008; Decision of the Constitutional Court of the Republic of Macedonia No. 228/07 dated 9 July 2008; 118/08 - Decision of the Constitutional Court of the Republic of Macedonia No. 229/07 dated 10 September 2008; 42/09- Decision of the Constitutional Court of the Republic of Macedonia No. 149/08 dated 11 March 2009), No. 90/09, 67/10, 26/13 (13/14 - Decision of the Constitutional Court of the Republic of Macedonia No. 43/13 dated 4 December 2013) and 15/15, 153/15, 190/16 and 7/19, Law amending the Banking Law (Official Gazette of the Republic of North Macedonia No. 101/19), Law amending the Banking Law (Official Gazette of the Republic of North Macedonia No. 122/21) and the Decision of the Constitutional Court of the Republic of North Macedonia C. No. 247/2020 of 25 May 2021 (Official Gazette of the Republic of North Macedonia No. 125/21)].

7-a. “Associate” shall denote a natural person who, together with a natural person who intends to become a shareholder with qualified holding in a bank or together with a natural person who has been proposed as a member of the Management Board of a bank, directly or indirectly and/or through a contract, exercises control over a domestic or foreign trade company;
8. "Persons/entities connected to a bank" shall include:

• bank subsidiaries and other entities the bank has close links with,
• shareholders with qualified holding in the bank and entities related thereto, and the
  responsible persons of those shareholders – legal entities,
• persons with special rights and responsibilities at the bank and persons related thereto;

9. "Close connections" shall denote cases when two and/or several persons/entities are connected
   by participation or control, and when two and/or several persons/entities are controlled by the same person/entity;
10. "Control" shall denote:

• direct or indirect ownership of a majority share (in another legal entity), or
• direct or indirect ownership of a majority of the voting rights in another legal entity, or
• right to appoint and dismiss the majority members of the management bodies of other legal
  entity, directly or indirectly, including a concluded agreement with one or more shareholders of the other legal entity on yielding or associating their voting rights for the purposes of exerting mutual interests, or
• right to exercise, directly or indirectly, a dominant influence on the management and
  adoption of policies and financial and business decisions of other legal entity;

11. "Bank from European Union member-state" shall be a legal entity registered and with a head
    office in a member state of the European Union, which was granted an authorization to perform banking activities by a competent authority of the member state and is subject to supervision of the competent authority empowered by law or other regulations in such state;

12. "Foreign bank" shall be a legal entity registered and with a head office outside the Republic of
    North Macedonia, which was granted an authorization to perform banking activities by a competent authority in the country, and is subject to supervision of the competent authority empowered by law or other regulations in such state;

13. "Home country" is a European Union member-state, where a bank or other respective institution
    was granted an authorization and registered its head office; 13-а. "Host country" shall be a member state of the European Union which is not a home country, where a bank from other member state conducts financial activities through a branch office or directly;

14. "Authorization" is a document in any form issued by an authority empowered by law or other
    regulations, assigning the right to perform banking activities;

15. "Competent authority" is an authority empowered by law or other regulations to issue
    authorization and/or bank supervision or other respective institutions that perform banking activities;

16. "Subsidiary" shall denote a legal entity controlled by another legal entity (parent entity). Each
    subsidiary of the subsidiary shall be considered a subsidiary of the parent entity;

17. "Banking group" shall denote a bank or financial holding company with a head office in the
    Republic of North Macedonia that exerts control over or have participation in one or several other banks, other non-banking financial institutions or ancillary service undertakings of the bank, where the bank or the financial holding company shall be considered a parent entity of the banking group, whereas all other group members shall be considered subordinated entities of such parent entity;

18. "Financial holding company" shall denote non-banking financial institutions, subsidiaries of which
    are banks or non-banking financial institutions, holding at least 80% of the total assets of the company, with at least one subsidiary being a bank;

19. "Ancillary banking services" shall denote services of real estate management, management and
    maintenance of information system or data processing system or related activities considered to be supporting activities of financial activities performed by one or several banks; 19-а. 19-a. "Ancillary banking services undertaking" shall denote a legal entity whose prevalent activity is to conduct one or several ancillary banking services;

20. "Holding" shall denote direct or indirect ownership of at least 20% of the total number of
    shares/stakes or the voting rights of other entities;

21. "Qualified holding in a bank” shall denote direct or indirect ownership of at least 5% of the total
    number of shares or the issued voting shares in a bank or which makes it possible to exercise a significant influence over the management of that bank;

22. "Initial capital" shall be the minimum amount of capital stipulated by this law the shareholders
    are required to subscribe and pay in;

23. "Credit" shall denote placement of a certain sum of money in exchange for repayment of the
    amount disbursed and outstanding, including the interest or including the interest and commission for that amount;

24. "Recommendation" shall denote an advice given to a bank by the Governor National Bank of the
    Republic of North Macedonia in writing, aimed at more efficient performance of the tasks or providing information to the bank;

25. "Written warning" shall denote a binding recommendation provided by the Governor of the
    National Bank of the Republic of North Macedonia for addressing the identified illegitimacies and irregularities in the operations of the bank within a certain period, accompanied by an announcement for undertaking more severe measures, unless it is observed;

26. "Person with special rights and responsibilities" shall denote a natural person who is a member
    of the Supervisory Board, member of the Management Board, member of the Auditing Committee, member of the Risk Management Committee and other managers as defined by the Statute of the bank. In the case of a foreign bank branch, a person with special rights and responsibilities is a natural person managing the branch;

27. "Independent member" is a natural person and natural persons connected thereto, who:

• is not employed or a person without special rights and responsibilities in the bank,
• is not a shareholder with qualified holding in the bank or does not represent a shareholder
  with qualified holding in the bank,
• does not work, or has not been working in an audit company over the last three years, which
  at that time audited the operations of the bank,
• does not have any financial interest or business relation with the bank in an amount
  exceeding Denar 3,000,000 annually, on average, over the last three years;

28. "Reputation" shall denote honesty, competence, hardworking and character that makes sure
    that the person will not act towards jeopardizing the safety and soundness of the bank and undermining its reputation and credibility;
29. "Own funds" shall be the sum of a bank's Tier I capital and Tier II capital, and the Tier I capital
    shall consist of Common Equity Tier I capital and Additional Tier I capital; 29-a) "Systemic risk" shall denote a risk of disruptions in the financial system that tends to cause serious adverse effects on the financial system and the overall economy;

29-b) "Leverage" shall be the ratio between bank's total on-balance and off-balance sheet assets of the bank and own funds;
30. "Measures" shall mean actions undertaken by the Governor of the National Bank of the Republic
of North Macedonia to eliminate irregularities, noncompliance and illegitimacies in the bank’ operations;
31. “Reorganization measures” shall denote measures undertaken by a competent authority for the
purposes of preserving or improving the financial position of the bank, such as recapitalization, administration, payment suspension, etc., which can affect the rights of third parties;
32. "Branch" shall denote an organizational unit of a bank, having no status of a legal entity, which
directly conducts all or some of the activities performed by the bank;
33. "Representative office" shall denote a part of a bank having no status of a legal entity, which
may research the financial and banking operations market, and shall not perform banking and/or other financial activities;
34. "Non-banking financial institution" shall denote a legal entity other than bank or savings house,
the principal activity of which is:

• carrying one or more of the following financial activities: approving credits; currency
  exchange operations; issuance of e-money, if regulated by special law; issuance and administration of credit cards; financial leasing; factoring; forfeiting; issuance of guarantees and other forms of collateral; economic and financial consulting; insurance activities in line with the law; intermediation in conclusion of credit and loan contracts; securities operations in line with the law; fast money transfer; investment funds management and pension funds management. If the activities are regulated by a special law, the non-banking financial institutions shall perform those activities in line with a special law, or
• acquiring participation in legal entities which carry one or more of the financial activities
  referred to in indent 1 of this paragraph;

35. "Non-financial institution" shall denote a legal entity which is not a bank or non-banking financial
    institution;
36. "Acquiring shares" shall denote subscription, payment, purchasing and inheriting shares and
    obtaining shares by compensation, present, pledge, court decision and other methods specified by a law;
37. "Loan of last resort" shall denote a loan approved by the National Bank of the Republic of North
    Macedonia to a bank according to the Law on the National Bank of the Republic of North Macedonia;
38. "Agreement on loan of last resort" shall denote an agreement concluded between the National
    Bank of the Republic of North Macedonia and a bank, where the National Bank of the Republic of North Macedonia approves to the bank a loan of last resort, while the bank insures the loan of last resort with collateral instruments, and
39. "Transactions with persons/entities connected to the bank" shall denote transactions with
    persons/entities connected to the bank, arising from the bank's on-balance sheet and off-balance sheet claims, concluded contracts on services, purchase and sale of assets, construction contracts, lease agreements, use of loans and subordinated and hybrid instruments, and writing-off based on transactions with persons/entities connected to the bank.
    Article 3
    Banking activities may be conducted only by:

1. a bank granted a founding and operating license by the Governor of the National Bank of the
   Republic of North Macedonia (hereinafter: Governor) a founding and operating license;

2. foreign bank which was granted a license for opening and operating a branch by the Governor
   and

3. bank from a member state of the European Union which, according to this law, opened a
   branch or has been authorized directly to conduct financial activities in the Republic of North Macedonia.
   Article 4
   (1) The word "bank" or words derived from them shall not be used in the name of a trade company, or any legal entity and their organizational units, which was not granted a license for founding and operating a bank or opening and operating a branch of a foreign bank by the Governor, or which is not a branch of a bank from a member state of the European Union. (2) A branch of a foreign bank and branch of a bank from European Union member-state shall use the name of the bank as in the country of registration of the bank's head office, compulsorily indicating its head office and the word "branch". (3) Trade company, or other legal entity and their organizational units, the name of which points to a bank, and was not granted a license for founding and operating a bank or opening and operating a branch of a foreign bank by the Governor, or which is not a branch of a bank from a member state of the European Union, may not be registered in the Trade Registry maintained in the Central Registry.
   Article 5
   Entities which were not granted a license by the Governor and are not branches of a bank from a member state of the European Union or do not conduct financial activities as specified by Section VI

• a of this law, shall not collect deposits.
  Article 6
  (1) The provisions of this law shall also apply to banks founded with a special law, unless otherwise specified by that law. (2) The provisions of the Trade Company Law shall apply to the operations of banks established and having head office in the Republic of North Macedonia, foreign bank branches and branches of banks from European Union member-states, unless otherwise specified by this law. (3) The provisions of the Law on Taking Over Joint Stock Companies shall not apply to banks in the cases when less than 50% plus 1 stock of the total number of voting shares in the bank are taken over and in the cases, stipulated by this law, when the shares are sold by the National Bank of the Republic of North Macedonia (hereinafter: the National Bank).
  II. FINANCIAL ACTIVITIES
  Article 7
  (1) The bank may perform the following activities:

1. accepting deposits and other repayable sources of funds,

2. lending in the country, including factoring and financing commercial transactions,

3. lending abroad, including factoring and financing commercial transactions,

4. issuance and administration of means of payment (payment cards, checks, traveler's checks,
   bills of exchange),

5. issuance of e-money, if regulated by special law,

6. financial leasing,

7. currency exchange operations,

8. domestic and international payment operations, including purchase and sale of foreign
   currency,

9. fast money transfer,

10. issuance of payment guarantees, backing guarantees and other forms of collateral,

11. lease of safe deposit boxes, depositories and depots,

12. trade in instruments on the money market,

13. trade in foreign assets, including trade in precious metals,

14. trade in securities,

15. trade in financial derivatives,

16. asset and securities portfolio management for clients and/or investment counseling for
    clients,

17. providing custody services for property of investment and pension funds,

18. purchasing and selling, underwriting or placement of securities issue,
    18-a) holding securities for clients,
    18-b) counseling for legal entities about structure of capital, business strategy or other related issues or providing merger or acquisition services to legal entities;

19. sale of insurance policies,

20. intermediation in concluding credit and loan agreements,

21. processing and analyzing information on the legal entities' creditworthiness,

22. economic and financial consulting, and

23. other financial services specified by law allowed to be performed exclusively by a bank.
    (2) A bank may not directly perform operations from the area of industry, trade, or other non￾financial activities.
    Article 8 - deleted
    Article 9 - deleted2
    Article 10
    (1) As for a deposit of natural person, the bank shall issue a document unambiguously stating that it is a deposit of a natural person indicating their personal data. (2) The bank shall keep records on each payment in and out of the deposit account and, at the request by the client, issue document recording all payments in and out in the requested period.

2 Article 9 that adds a new paragraph (2) in Article 65, and Article 10 that adds eight new Articles 65-a, 65-b, 65-c, 65-d, 65-e, 65-f, 65-g and 65-h of this law shall apply from 1 March 2017.

Article 11
The bank shall display the copies of the Governor's decision on granting a license for founding and operating a bank, the interest rates in effect, the general terms and conditions for operating with deposits of natural persons and the type and the amount of guarantee for the deposits of natural persons, on a noticeable place in its tellers' premises.
III. BANK INCORPORATION

1. Form
   Article 12
   A bank shall be established as a joint stock company with a head office in the Republic of North Macedonia.
2. Shareholders
   Article 13
   (1) A bank shareholder may become domestic and foreign legal entity and natural person. (2) A shareholder with qualified holding in a bank may not become a person, or legal entity controlled by a person:

1. sentenced to imprisonment for crime in the area of finances and banking;3
2. who was imposed an infraction sanction or ban on performing a profession, activity or duty;
3. which has been imposed additional penalty:

• prohibition on obtaining permission for the founding and operation of bank,
• revocation of the license for founding and operation of bank,
• prohibition on establishing new legal entities and
• temporary or permanent prohibition on performing banking activities;

4. against whom a bankruptcy proceeding has been initiated,
5. who does not enjoy any reputation, thus compromising the safe and sound operations of the
   bank, and
6. who fails to comply with the provisions of this law and the regulations adopted on the basis
   of this law and/or failed or has failed to implement and/or acted or has been acting contrary to the measures imposed by the Governor, that compromised or have been compromising the safety and soundness of the bank and its creditors. (3) A person who does not enjoy reputation shall also denote a person who has been convicted, by an effective court decision, for unconditional imprisonment of more than six months, in the period of duration of the legal consequences of the conviction and/or has an associate who has been convicted, by an effective court decision, for unconditional imprisonment of more than six months, in the period of duration of the legal consequences of the conviction.

3. Initial capital
   Article 14
   (1) A bank shall be established with initial capital of Denar 310,000,000, (2) The initial capital under paragraph (1) of this Article and all subsequent increases in the initial

3 Article 13 paragraph 2 item 1 is abolished with Decision of the Constitutional Court of the Republic of Macedonia No. 182/07 dated 9 July 2008 (Official Gazette of Republic of Macedonia No. 88/08).

capital shall be solely in the form of money and paid-in outright. The initial capital paid-in outright shall be registered in the Trade Registry as a core principal. (3) The bank shall maintain the value of the initial capital under paragraph (1) of this Article. (4) The requirement under the Trade Company Law for mandatory indication of the amount of the core principal in the memorandum on ban on offsetting shareholder's claims on a bank with payments for shares in the bank and on use of general reserves for supplementing the dividend shall not apply to banks. (5) Initial capital and any further increase in the initial capital may not be reduced by the return of paid-in stakes of shareholders.
4. Preference shares
Article 15
(1) The total nominal amount of preference shares without voting right in a bank may not exceed 10% of the total nominal amount of the bank's total shares. (2) The provision of the Trade Company Law shall not apply to banks in instances when the preference shares without voting right vest a voting right.
5. Founding and operating license
Article 16
The Governor shall issue a license for founding and operating a bank.
Article 17 4
(1) Persons who intend to found a bank shall submit an application to the National Bank for issuing a license for founding and operating a bank. The application for issuing a license shall comprise the following documents, data and information:

1. draft articles of incorporation,
2. strategic and operational plan of the bank including projection of the financial statements for
   the following five years,
3. draft name of the bank,
4. amount of the initial capital and statement that it will be paid in,
5. sources of funds for payment of the initial capital,
   5-а) a certificate from the Public Revenue Office or, in case of foreign persons, a certificate from the competent institution for regular payment of taxes and contributions,
6. certificate from competent institution for regular payment of the public duties,
7. identity of the persons who intend to found a bank and the number of shares held by each
   of them,
8. evidence for the financial standing of the persons who intend to found a bank,
9. identity, education, experience and professional background of the nominated members of
   the Supervisory Board and the Management Board,

4 Article 17 paragraph (1) item 6 is abolished with Decision of the Constitutional Court of the Republic of Macedonia No. 229/07 dated September 10, 2008 (Official Gazette of Republic of Macedonia No. 118/08).

10. organizational structure of the bank,
    11)internal control and risk management systems, 12)financial activities performed by the bank,

11. evidences related to Article 13 of this law, and
    14)information system and technical equipment of the bank.
    (2) The legal entities that intend to obtain qualified holding in a bank, except for the documents, data and information under paragraph (1) of this Article, shall also enclose the following with the application:

12. certificate from the registry of the head office of the legal entity,

13. articles of incorporation and list of members of the management bodies of the legal entity,

14. list of individuals, with direct or indirect ownership of more than 10% of the shares, i.e.
    stakes in the legal entity and

15. list of legal entities with direct or indirect ownership of more than 10% of the shares, i.e.
    stakes in the legal entity, including financial statements for the last three years. (3) Foreign bank and/or foreign entity with participation in a foreign bank, that intend to acquire control in the bank, in addition to the documents, data and information under paragraphs (1) and (2) of this Article, shall also support the application for founding and operating license with the following:

16. certificate from the registry of the head office of the foreign bank and/or foreign person who
    has a participation in a foreign bank,

17. proof that the foreign bank is authorized to collect deposits and other repayable sources of
    funds in the country of registration of the bank's head office,

18. opinion of the competent authorities in the country in which the head office of the foreign
    bank is registered related to the acquiring control in the bank, and

19. evidence that the competent authority of the foreign bank exercises adequate supervision
    on consolidated basis, at least in a method and volume specified by this law. (4) In addition to those stated under paragraphs (1), (2) and (3) of this Article, the Governor may require additional documents, data and information and conduct an interview with the nominated members of the Management Board and the Supervisory Board and with the individuals intending to acquire qualified holding in the bank. (5) The type and the method of communicating the documents, data and information under 1, 2 and 3 of this Article and the method and procedure for their evaluation shall be prescribed in detail by the National Bank Council.
    Article 18
    (1) The Governor shall adopt a decision on issuing a temporary license or rejecting the application under Article 17 of this law within 90 days after the date of submitting the application. The 90- day period shall not include the periods set by the Governor for completing the submitted application and the period from submitting a request by the Governor to competent domestic and foreign authorities and institutions for obtaining documents, data and information required for the decision making on the application, with the period from the date of submitting the application to the date of the decision making by the Governor, not exceeding 180 days. (2) The Governor shall reject the application under Article 17 of this law if:

20. the application does not contain the complete documentation,

21. the application contains incorrect or false data,

22. according to Article 13 of this law, the person referred to in Article 17 of this law may not be
    shareholder,

23. the available data and information indicate that as a result of the legal or financial standing,
    i.e. the method of its operating, or the nature of the activities of the person referred to in
    Article 17 of this law, and or persons connected thereto, indicate high-risk tendency, which
    may compromise the safety, soundness and the reputation of the bank, i.e. its operations in accordance with the regulations,

24. the financial and the economic standing of the person under Article 17 of this law does not
    correspond with the value of the shares they intend to acquire,

25. the initial capital is lower than that stipulated in Article 14 paragraph (1) of this law,

26. there is a reasonable ground to doubt the legitimacy of the origin of the funds, the reputation,
    or the true identity of the persons under Article 17 of this law and/or persons connected thereto,

27. the submitted documents, data and information under Article 17 paragraphs (1), (2), (3) and
    (4) of this law indicate that the bank will not operate in safe, sound manner and in line with the regulations, i.e. will not be managed in a manner that would provide safety of the entrusted funds,

28. the close connections or organizational or ownership structure of the bank or the group it
    belongs to, may be an obstacle for conducting efficient supervision and taking corrective measures on an individual and consolidated basis, 10)the members nominated to the Supervisory Board and the Management Board fail to fulfill the criteria required for their appointment,

29. considers that the acquisition of shares by the person under Article 17 of this law brings
    about undesired development of the financial system, or 12)failure to fulfill other requirements for granting a founding and operating license, (3) In the decision making, defined by paragraph (1) of this Article, the Governor shall decide on whether the bank will be organized and capable to operate in accordance with the regulations, the set supervisory standards and transparency and safety principles, whether the bank meets the corporate governance and risk management standards, assess the qualification, experience and the reputation of the nominated members of the Supervisory Board, the Management Board and persons referred to in Article 17 of this law, the feasibility of the strategic and operational plan and the financial statements projection. (4) Should the Governor reject the application due to the existence of the grounds referred to in paragraph (2), item 7 of this Article, they shall forthwith inform the Financial Intelligence Office thereon. (5) The National Bank Council shall set the method of determining connected persons.
    Article 19
    The temporary license shall include the requirements to be met by the bank in order to obtain a founding and operating license, as follows:

30. payment of the initial capital,

31. development of a statute,

32. list of nominees with special rights and responsibilities, other than for the members of the
    Supervisory Board and the Management Board, including information on their identity,

education, experience and professional background,
4) employment plan including the qualification structure and training of the bank's staff,
5) leasing or purchasing business premises and equipment and establishing an operation
system,
6) development of bank's written operating policies and procedures, and
7) engagement of an audit company.
Article 20
(1) The bank shall meet the requirements specified under Article 19 of this law within 180 days upon the issuance of the temporary license, and shall submit written evidence to the National Bank. (2) The Governor shall, on the basis of the assessment of the bank's compliance with the requirements indicated in the temporary license, decide with a Decision on issuing a license for founding and operating a bank or rejecting the application under Article 17 of this law within 60 days after the date of submission of the written evidence under paragraph (1) of this Article. The 60-day period shall not include the periods set by the Governor for completing the evidence and the period from submitting a request by the Governor to competent domestic and foreign authorities and institutions for obtaining documents and information required for the decision making, with the period from the date of submitting the evidence to the date of the decision making by the Governor, not exceeding 90 days. (3) In the decision making under paragraph (2) of this Article, the Governor shall decide on whether the bank will be organized and capable to operate according to the regulations, the set supervisory standards and transparency and safety principles, whether the bank meets the corporate governance and risk management standards, assess the qualification, experience and reputation of the nominated members of the Supervisory Board, Management Board and the persons under Article 17 of this law and the feasibility of the strategic and operational plan and the projection of the financial statements. (4) In the decision making under paragraph (2) of this Article, the Governor shall decide on whether the bank still fulfills the requirements underlying the issuance of the temporary license, by requiring new evidence, documents and information. (5) The decision on granting a founding and operating license under paragraph (2) of this Article shall contain:

1. name and head office of the bank,
2. name, surname and address of natural persons, i.e. name and head office of legal entities
   that subscribed and paid-in shares, including the nominal amount and the number of subscribed and paid-in shares,
3. amount of the bank's initial capital,
4. financial activities the bank may perform, and
5. consent on the bank's status.
   (6) Any change in the light of paragraph (5) of this Article shall be an integral part of the decision. (7) The bank shall not perform financial activities that are not indicated in the decision under paragraph (5) of this Article.
   Article 21
   (1) Statute of a bank shall be adopted within 30 days from the date of receiving the decision on issuing a founding and operating license referred to in Article 20 paragraph (2) of this law.

(2) The bank shall start operating within 90 days after the adoption of the decision on issuing a founding and operating license referred to in Article 20 paragraph (2) of this law.
6. License for status changes
Article 22
(1) The bank shall submit an application to the National Bank for obtaining a license for status changes. (2) The National Bank Council shall determine the documentation, procedure and the criteria for obtaining a license for status changes of a bank. (3) The Governor shall adopt a decision on issuing a license or rejecting the application under paragraph (1) of this Article within 90 days after the date of submission of the application. The 90-day period shall not include the periods set by the Governor for completing the submitted application and the period from submitting a request by the Governor to competent domestic and foreign bodies and institutions for obtaining documents and information required for the decision making on the application, with the period from the date of submitting the application to the date of the decision making by the Governor, not exceeding 180 days. (4) Only banks founded and with head office in the Republic of North Macedonia may make status changes of merger, acquisition and division. (5) The provisions of the Trade Company Law that refer to reporting to creditors shall not apply to the procedure for status change in a bank.
Article 23
The bank shall make a decision on status changes within 45 days from the date of obtaining the decision on issuing a license under Article 22 paragraph (3) of this law.
7. Registering in the Trade Registry
Article 24
(1) The bank shall acquire a status of legal entity by registering in the Trade Registry maintained with the Central Registry. (2) An application for registering in the Trade Registry shall be filed within 15 days from the date of adopting the statute referred to in Article 21 paragraph (1) of this law. (3) The following shall be enclosed with the application for registering in the Trade Registry:

1. bank Statute,
2. Decision on issuing a license for founding and operating a bank,
3. evidence that the funds for the initial capital have been paid in on an interim account with
   the institution responsible for conducting payment operations, i.e. evidence that the foreign person has paid-in the foreign assets on a special account with the National Bank, and
4. other documents as specified by the regulations governing the registration in the registry.
   (4) In the case of increasing the initial capital, the bank shall submit a revised text of the statute to the Central Registry, within 8 days after the entry into force of a decision on amending the statute by the bank's General Meeting of Shareholders. (5) The units of the bank shall also be registered in the Trade Registry as defined by the regulations governing the registration in the Trade Registry.

(6) The members of the Management Board and the Supervisory Board of a bank shall be registered in the Trade Registry maintained at the Central Registry of the Republic of North Macedonia. The Central Registry shall remove the member of the Management or Supervisory Board on the basis of a written request and notification of the bank for expired or withdrawn consent for appointing the person or for unissued consent for reappointment of the same person as a member of the Management or Supervisory Board.
Article 25
The bank shall file an application for registering a status change in the Trade Registry within 15 days from the date of adopting the decision of Article 23 of this law.
Article 26
The bank shall submit a copy of the decision on registration along with the documentation submitted for registering in the Central Registry to the National Bank within 15 days after the registration of the incorporation or the status change of the bank in the Trade Registry.
8. Publishing
Article 27
The National Bank shall publish the following at its web site:

1. a list of banks compulsorily containing the name and head office of the bank and data on
   shareholders with qualified holding, members of the bank's Supervisory Board and Management Board,
2. list of branches of banks from member states of the European Union compulsorily containing
   name and head office of the branch and of the bank that opened it and data on persons with special rights and responsibilities in the branch,
3. list of branches of foreign banks compulsorily containing name and head office of the branch
   and of the bank that opened it and data on the persons with special rights and responsibilities in the branch and
4. list of banks from member states of the European Union that directly perform financial
   activities in the Republic of North Macedonia, which must contain the name and address of the parent bank.
   IV. BRANCHES OF BANKS FROM EUROPEAN UNION MEMBER STATES

1. Right of performing financial activities
   Article 28
   (1) Bank from European Union member-state may, through its branch in the Republic of North Macedonia, perform the financial activities listed under Article 7 of this law, authorized to perform in the home country. (2) The provisions of this and other law and bylaws adopted on the basis of such laws shall apply to the operations of the bank under paragraph (1) of this Article through its branch in the Republic of North Macedonia, referring to the following:

1. implementation of the monetary policy measures,
2. obligation for submitting reports on the branch to the National Bank required for conducting
   monetary policy, monitoring the liquidity and on the branch's activities for statistical

purposes,
3) obligation for submitting and disclosing the annual financial statements under paragraphs
(1) and (3) of Article 110 of this law,
4) banking secrecy,
5) prevention of money laundering and financing terrorism, and
6) consumer protection.
(3) In the legal operations on the territory of the Republic of North Macedonia, the branch of a bank from the European Union member-state shall act on behalf and for the account of the bank from the European Union member-state, shall be entitled to acquire rights and assume liabilities and shall be entitled to be treated at courts and other authorities of the Republic of North Macedonia under the terms that apply to banks incorporated under this law. (4) The bank from the European Union member-state shall be held liable with all its property regarding the liabilities of its branch arisen in the Republic of North Macedonia.
Article 29
The deposits of the branch of a bank from European Union member-state shall be included in the deposit guarantee scheme of the home country.
2. Commencement of operations
Article 30
(1) A bank from European Union member-state may start operating in the Republic of North Macedonia through a branch after the expiration of 2 months after the date the National Bank receives a notification from the competent authority of the home country that includes the following:

1. plan of activities of the branch which, inter alia, contains information on banking and other
   financial activities which will be performed and on the organizational structure of the branch,
2. data on persons with special rights and responsibilities in the branch,
3. address of the branch where one could get the documentation for the branch,
4. amount of own funds of the bank and bank's capital adequacy ratio,
5. comprehensive description of the deposit guarantee scheme in the home country
   unambiguously showing that the deposits of the branch in the Republic of North Macedonia are guaranteed, and
6. financial activities the bank is authorized to perform.
   (2) Within a period of 2 months after receiving the notification under paragraph (1) of this Article, the National Bank may set terms under which the bank from European Union member-state may perform financial activities in the Republic of North Macedonia through a branch, and shall notify the bank and the competent authority of the home country thereon. (3) After receiving the notification under paragraph (2) of this Article or, if the National Bank fails to submit such notification, after the expiration of the period under paragraph (1) of this Article, the bank from European Union member-state may register the branch in the Trade Registry as specified by the provisions of the Trade Company Law that concerns the procedure for registering foreign company subsidiary. After being registered in the Trade Registry, the branch of the bank from European Union member-state may start performing the assigned financial activities. (4) The bank from European Union member-state shall notify the National Bank on each intention

to change the data indicated in the notification under paragraph (1) items 1, 2, 3, 5 and 6 of this Article, at least one month prior to the change.
Article 31
All branches of a same bank from European Union member-state in the Republic of North Macedonia shall be considered one branch.
Article 32
The bank from European Union member-state shall maintain all financial statements and other documentation for its operations in the Republic of North Macedonia, in North Macedonian and shall keep them centralized in its first opened branch in the Republic of North Macedonia.
3. Supervision
Article 33
(1) The competent authority of the home country or its authorized persons may conduct on-site supervision of branch of the bank originating from that member state, and notify the National Bank thereon in advance. (2) In the supervision referred to in paragraph (1) of this Article the competent authority of the home country or its authorized persons shall have the responsibilities of the National Bank stated under Article 116 and 117 of this law. (3) On request of the competent authority of the home country, the National Bank shall take part in or conduct on-site supervision of the branch of the bank from such country in the Republic of North Macedonia.
Article 34
As an exception to provisions of Article 33 of this law, the National Bank shall perform supervision of branch of bank from European Union member-state opened in the Republic of North Macedonia as specified by Articles 116 and 117 of this law in order to determine whether the branch observes the provisions of Article 28 paragraph (2) of this law and undertakes measures in conformity with this law.
Article 35
The competent authority of the home country and the National Bank shall cooperate and exchange information for the purposes of efficient supervision and monitoring of the operations of the bank from European Union member-state which opened a branch in the Republic of North Macedonia.
4. Measures against bank and branch of a bank from European Union member-state
Article 36
(1) If the bank from a European Union member-state, through its branch in the Republic of North Macedonia, acts contrary to Article 28 paragraph (2) of this law, the Governor of the National Bank shall adopt a decision requiring from the bank to address the illegitimacies within a specified period. (2) If the bank from a European Union member-state acts contrary to the decision under paragraph (1) of this Article, the National Bank shall inform the competent authority of the home country which is to undertake measures against the bank and notify the National Bank on the type of

undertaken measures.
(3) If after receiving the notification under paragraph (2) of this Article the competent authority of the home country fails to undertake measures against the bank or, in spite of the undertaken measures, the bank from the European Union member-state still fails to address the illegitimacies, the Governor shall adopt a decision undertaking measures for preventing the illegitimacies or prohibit the bank from performing financial activities through the branch in the Republic of North Macedonia. (4) Before undertaking the measures listed under paragraph (3) of this Article, the National Bank shall notify the competent authority of the home country on the type of measures and the reasons for undertaking such measures. (5) As an exception to paragraphs (2) and (4) of this Article, and in order to protect the interests of the depositors, the National Bank may, without previously notifying the competent authority of the home country, undertake measures against the bank from the European Union member￾state for preventing the illegitimacies or prohibiting the performance of financial activities in the Republic of North Macedonia. (6) The National Bank shall, as soon as possible, notify the competent authority of the home country on the case stated under paragraph (5) of this Article. (7) If the National Bank considers that reorganization measures should be undertaken against a branch as a part of a bank from the European Union member-state, it shall notify the competent authority of the home country thereon.
5. Reorganization measures
Article 37
(1) An excerpt of the decision shall be published in the Official Gazette of the European Union and in at least two daily newspapers in the Republic of North Macedonia in the event of reorganization of a bank from the European Union member-state, including its branch in the Republic of North Macedonia. (2) The reorganization measures shall become effective in the Republic of North Macedonia once they become effective in the home country. (3) The reorganization measures in the Republic of North Macedonia shall apply in conformity with the regulations and procedures applicable in the home country, other than in the cases stated under Article 41 of this law.
Article 38
(1) The competent authority of the home country shall notify the National Bank on the intention to undertake reorganization measures prior to the adoption of the decision on undertaking bank reorganization measures, and unless possible, immediately after the adoption of the decision. (2) Provisions of Article 42 of this law, shall respectively apply to the notification, recognition and reporting of claims.
6. Bankruptcy and liquidation
Article 39
(1) The competent authority of the home country shall be the exclusively authorized to make decision on opening a bankruptcy or liquidation procedure against a bank, including its branches in the Republic of North Macedonia.

(2) The decision on opening bankruptcy or liquidation procedure made by the competent authorities of the home country shall become effective in the Republic of North Macedonia on the date it becomes effective in the home country. (3) The bankruptcy or liquidation procedure shall be conducted as defined by the regulations of the home country, except for the cases under Article 43 of this law.
Article 40
(1) The competent authority of the home country shall notify the National Bank on the intention to make a decision on opening bankruptcy or liquidation procedure prior to the adoption of the decision on opening bankruptcy or liquidation procedure against a bank, including its branches in the Republic of North Macedonia, or unless possible, immediately after the adoption of the decision. (2) An excerpt of the decision under paragraph (1) of this Article shall be published in the Official Gazette of the European Union and in at least two daily newspapers in the Republic of North Macedonia.
Article 41
(1) The persons assigned to conduct the bankruptcy or liquidation procedure may undertake activities in the Republic of North Macedonia on the basis of the decision on their appointment (designation) issued by the competent authority of the home country and North Macedonian translation of such decision verified by a notary in the Republic of North Macedonia. (2) Persons under paragraph (1) of this Article may, in the Republic of North Macedonia, perform all activities they are authorized to perform by the regulations of the home country.
Article 42
(1) Provided that the regulations in the home country require compulsory reporting of claims for the purposes of their recognition, the persons in charge of conducting the bankruptcy or liquidation procedure shall notify, immediately after the beginning of the procedure, each recognized creditor having a head office or residence in the Republic of North Macedonia. (2) Creditors having head office or residence in the Republic of North Macedonia shall have the same rights and treatment in the bankruptcy or liquidation procedure as the creditors with head office or residence in the home country.
Article 43
The regulations of the state of registration of the rights of objects shall accordingly apply to the right of objects registered in the Registry or other centralized registry system at the moment of opening the bankruptcy or liquidation procedure.
Article 44
Provided that the competent authority of the home country revoke the license of the bank for performing financial activities, the National Bank shall prohibit the branch of such bank in the Republic of North Macedonia to perform activities.
7. Membership in professional associations

Article 45
Banks from European Union member-states that have branches in the Republic of North Macedonia may be members of the professional associations in the Republic of North Macedonia enjoying rights and obligations that apply to the banks from the Republic of North Macedonia.
V. FOREIGN BANK BRANCHES

1. Right of performing financial activities
   Article 46
   (1) Foreign bank may, through its branch in the Republic of North Macedonia, perform the financial activities listed under Article 7 of this law, authorized to perform in the country of its head office. (2) The branch of a foreign bank shall abide by the laws of the Republic of North Macedonia. (3) In the legal operations on the territory of the Republic of North Macedonia, the foreign bank branch shall act on behalf of and for the account of the bank, shall be entitled to acquire rights and assume liabilities and be treated at courts and other bodies of the Republic of North Macedonia under the terms that apply to banks incorporated under this law. (4) Foreign bank with a branch in the Republic of North Macedonia shall be held liable with all its property regarding the liabilities of its branch incurred in the Republic of North Macedonia. (5) Foreign bank branch shall place funds in the Republic of North Macedonia in the amount of at least 20% of the collected deposits of residents in the Republic of North Macedonia. The deposit referred to in Article 48 paragraph (2) of this law shall not be included in the amount of funds placed in the Republic of North Macedonia. (6) The funds of the branch may be used for repayment of liabilities of the foreign banks incurred outside the Republic of North Macedonia, only after settling the liabilities arising from the operations of the branch in the Republic of North Macedonia. (7) All branches of a same foreign bank opened in the Republic of North Macedonia shall be deemed as a single branch for purposes of asset maintenance requirement, as specified by Article 48 paragraph (2) of this law. (8) At least two persons, having acquired prior consent by the Governor, shall manage the bank’s branch, and at least one of them shall have to be fluent in Macedonian language and its Cyrillic alphabet, and have permanent residence in the Republic of North Macedonia. Persons managing the branch shall have to meet the requirements for a member of the Management Board stipulated by this law.
2. Opening a foreign bank branch
   Article 47
   (1) Foreign bank may open a branch in the Republic of North Macedonia upon previously obtained license for opening and operating a branch by the Governor. (2) Regarding the obtaining of license to open and operate a branch, the foreign bank shall submit an application to the National Bank, enclosing the following:

1. authorization of a competent authority of the country of registration of the foreign bank's
   head office, indicating the financial activities the bank is authorized to perform,

2. authorization of the supervisory authority of the country of registration of the head office of
   the foreign bank for opening a branch in the Republic of North Macedonia or a statement indicating no objection to the opening of a branch in the Republic of North Macedonia,

3. bank's Articles of Association or other appropriate act as specified by the regulations of the
   country of registration of the head office of the parent bank,

4. list of shareholders of the foreign bank holding over 5% of the bank's shares,

5. data on the members of the foreign bank's management and supervisory bodies and on
   identity, professional experience and qualifications (education) of the persons nominated to manage the branch,

6. audited audit reports on the foreign bank for the last three years,

7. data on the anti-money laundering system of the foreign bank,

8. evidence that the foreign bank was assigned at least BBB rating according to the rating of
   Standard & Poor's, Fitch IBCA or Thompson Bank Watch or Baa2 according to the Moody's rating,

9. branch's plan of activities including banking and other financial activities that are to be
   performed by the branch,

10. evidence that the funds have been paid-in on the National Bank account, and

11. evidence that the supervisory body of the country of registration of the head office of the
    foreign bank exercises adequate supervision on consolidated basis, at least in a method and volume specified by this law. (3) The Governor shall adopt a decision on issuing a license for opening and operating a branch of a foreign bank or on rejecting the application under paragraph (2) of this Article within at least 30 days from the day of submitting the documentation. (4) The Governor shall reject the application under paragraph (2) of this Article in the cases referred to in Article 18 paragraph (2) items 1, 2 and 3 and paragraph (3) and Article 92 of this law. (5) The Governor shall also reject the application under paragraph (2) of this Article if considered that due to the regulations in the country of registration of the head office of the foreign bank or due to the method of enforcing such regulations, there is no possibility of efficient cooperation and exchange of information between the National Bank and the supervisory authority of the country of registration of the head office of the foreign bank or that the conduct of supervision, as required by this law, will be impeded. (6) The foreign bank shall give written notice to the National bank immediately on any change in the data enclosed in the application referred to in paragraph (2) of this Article. (7) The foreign bank may additionally open another branch in the Republic of North Macedonia only if it submits a written notice to the National Bank and to the Trade Registry maintained at the Central Registry, of the competent authority of the country of registration of the foreign bank, that there are no impediments for opening a branch.

2. Branch's assets
   Article 48
   (1) The foreign bank branch shall hold monetary assets in the amount of at least Denar 120,000,000. The funds will be paid in by the foreign bank to a special account of the National Bank prior to the issuance of the license for opening and operating the branch. Once the branch is registered in the Trade Registry, the funds shall be transferred to one or more deposit account of the branch at banks having a main office in the Republic of North Macedonia. (2) The foreign bank shall keep the deposit under paragraph (1) of this Article at the level of at least 5% of the total deposits of the branch in the Republic of North Macedonia, but not below Denar 120,000,000, depending on which is the higher. The total deposits shall not include the deposits of the foreign bank that opened the branch.

(3) The deposit under paragraph (2) of this Article shall be treated as own funds of a branch and shall not be subject to encumbrance and interest calculation by the foreign bank that opened the branch. (4) The foreign bank may withdraw a portion of the deposit only if the amount is higher than the one referred to in paragraph (2) of this Article, upon prior approval by the Governor.
3. Accounting records
Article 49
Foreign bank shall keep the accounting records, financial statements and other documentation for the branch's operations in the Republic of North Macedonia, in North Macedonian.
4. Revocation of opening and operating license
Article 50
(1) The Governor shall revoke the license for opening and operating a branch of a foreign bank in the following cases:

1. the competent authority revoked the authorization for the provision of banking services of
   the foreign bank that opened a branch, or bankruptcy or liquidation procedure has been instituted against the foreign bank that opened the branch,
2. the foreign bank makes a decision to cease the operations of the branch,
3. the branch ceases meeting its liabilities deriving from the insurance deposits,
4. the foreign bank branch ceases meeting the requirements and criteria underlying the
   issuance of the license,
5. the deposit drops below the amount as set by Article 48 paragraph (2) of this law, or
6. in the cases referred to in Article 154 paragraph (1) items 1, 4, 7, 9, 11, 12 and 14 of this
   law.
   (2) The provisions of this law concerning the bank liquidation and bankruptcy and the provisions of the Bankruptcy Law regulating the bankruptcy proceedings with foreign element shall respectively apply in the case of revocation of the license for opening and operating a foreign bank branch. (3) The deposit under Article 48 paragraph (2) of this law may be transferred from the deposit accounts only for payment to the foreign bank branch's creditors in the case of initiated bankruptcy or liquidation procedures against the branch.

5. Notifications and cooperation
   Article 51
   (1) The persons who manage the foreign bank branch and the foreign bank shall notify the National Bank forthwith, if a procedure for imposing measures by a competent authority has been instituted against the foreign bank or any of its subsidiaries or branches. (2) The Governor shall notify the competent authority of the country of registration of the head office of the foreign bank on the revocation of the license for opening and operating a foreign bank branch, and if possible, prior to the adoption of the decision on revoking the opening and operating license. The notification shall also include the legal consequences from the revocation of the opening and operating license.

(3) The foreign bank shall give written notification to the National Bank at least one month prior to the date of adoption of the decision on cessation of the branch's operations in the Republic of North Macedonia.
Article 52
The competent authorities of the country of registration of the head office of the foreign bank that opened a branch in the Republic of North Macedonia and the National Bank shall cooperate and exchange information for the purpose of efficient supervision and monitoring the operations of the foreign bank and its branch in the Republic of North Macedonia.
6. Application of the provisions of this law
Article 53
(1) The provisions of this law concerning the supervisory standards, the Management Board, reports, accounting and audit, banking secret, supervision, inspection and measures, other than measures for recapitalization and administration, bank bankruptcy, bank liquidation and penalty provisions shall respectively apply to a foreign bank branch. (2) The National Bank Council may specify in detail the application of the provisions of paragraph (1) of this Article to foreign bank branch.
7. Deposit insurance
Article 54
The deposits in the foreign bank branch shall be insured in the Deposit Insurance Funds of the Republic of North Macedonia under the same terms as deposits of the banks having its main office in the Republic of North Macedonia.
8. Membership in professional associations
Article 55
Foreign banks having branches in the Republic of North Macedonia may be members of professional associations in the Republic of North Macedonia, having equal rights and obligations as the banks having a head office in the Republic of North Macedonia.
VI. BRANCHES OF BANKS FROM THE REPUBLIC OF NORTH MACEDONIA IN FOREIGN COUNTRIES
Article 56
(1) A bank having its head office in the Republic of North Macedonia, which intends to open a branch abroad, shall obtain an authorization from the National Bank. (2) The branch of banks having their head office in the Republic of North Macedonia may only provide such banking and other financial services, assigned to the bank by the Governor. (3) The bank shall submit an application to the National Bank for obtaining an approval for opening a branch abroad, including the following information:

1. the country in which it intends to open a branch,

2. a plan of activities, including, amongst other things, the activities to be performed by the
   branch and the structural organization of the branch,

3. the address of the branch, and

4. the identity of the persons nominated to manage the branch.
   (4) The management of the branch shall be entrusted to at least two persons who meet the requirements of Article 17 of this law that apply to members of the Management Board of a bank having a head office in the Republic of North Macedonia. (5) The Governor shall reject the application under paragraph (3) of this Article if there are reasons that may adversely affect the financial standing of the bank or if considered that, based on the regulations of the country the branch is intended to be opened and the method of enforcing such regulations, there will not be an adequate cooperation and exchange of information between the National Bank and the supervisory authority of the country the branch is intended to be opened and that the conduct of supervision, as required by this law, will be impeded. (6) The bank shall notify the Governor on any change in the information specified in paragraph (3) of this Article at least one month before the changes are made. VI-а DIRECT PERFORMANCE OF FINANCIAL ACTIVITIES OF BANKS FROM MEMBER STATES OF THE EUROPEAN UNION
   Article 56-а
   For the purposes of this law, a member state bank shall be considered to perform directly financial activities in another member state where it has not established a branch provided that:

5. it enters into legal contracts in the territory of that member state whose subject is one or
   more financial activities referred to in Article 7 of this law or

6. it performs financial activities in the territory of that member state through its representatives,
   agents or otherwise, for natural person or legal entity residing, or have a permanent place of residence or seat in that member state.
   Article 56-b
   (1) Bank seated in the Republic of North Macedonia, which intends to perform directly financial activities in another member state shall previously notify the National Bank, mentioning the member state where it intends to directly perform financial activities. (2) Along with the notification under paragraph (1) of this Article, the bank shall submit a list of financial activities it intends to carry out in the member state and a business plan for the first three financial years. (3) Within one month of receipt of the notification referred to in paragraph (1) of this Article, the National Bank shall submit the notification to the competent supervisory authority of the host member state and shall inform the bank thereon. (4) The Bank may begin to directly perform financial activities specified in the list referred to in paragraph (2) of this Article from the date of receipt of the notification referred to in paragraph (3) of this Article.
   Article 56-c
   (1) A bank from another member state may begin to directly perform financial activities in the Republic of North Macedonia on the day when the National Bank receives notification from the competent supervisory authority of the member state, including a list of services that the bank intends to provide in the Republic of North Macedonia.

(2) The bank referred to in paragraph (1) of this Article shall notify the National Bank of any planned change in the data indicated in the notification referred to in paragraph (1) of this Article, at least one month before the change occurs.
Article 56-d
The deposits of the bank authorized to directly perform financial activities in the Republic of North Macedonia shall be included in the deposit guarantee scheme of the home country.
Article 56-e
(1) If the bank directly performing financial activities in the Republic of North Macedonia fails to act in accordance with the provisions of this law, the Governor shall made a decision requiring from the bank to remove irregularities within a specified period. (2) If the bank fails to act in accordance with the decision referred to in paragraph (1) of this Article, the National Bank shall inform the competent authority of the home country that need to take action against the bank and notify the National Bank of the type of measures taken. (3) If, after receipt of the notification referred to in paragraph (2) of this Article, the competent authority of the home country does not take action against the bank or, despite the measures taken, the bank does not remove irregularities, the Governor shall adopt a decision on taking measures to prevent irregularities or prohibiting the bank to directly perform financial activities in the Republic of North Macedonia. (4) Before taking the measures referred to in paragraph (3) of this Article, the National Bank shall inform the competent authority of the home country on the type of measures and the reasons behind the intention to take those measures. (5) By way of derogation from paragraphs (2) and (4) of this Article, and in order to protect the interests of depositors, the National Bank may, without prior notification to the competent authority of the home country, take measures against the bank which directly perform financial activities in the Republic of North Macedonia, for preventing irregularities or prohibit such bank to perform financial activities in the Republic of North Macedonia. (6) The National Bank shall notify, as soon as possible, the competent authority of the home country on the case of paragraph (5) of this Article.
VII. APPROVALS AND REPORTING OF THE NATIONAL BANK

1. Approvals for a bank
   Article 57
   (1) The bank shall file an application and obtain a prior approval from the Governor for the following:

1. amendment to the bank's Statute,
2. commencement of the performance of activities stated under Article 7 paragraph (1) items
   5, 8, 9, 13, 14, 15, 16, 17, 18 and 23 of this law,
3. appointment of Supervisory Board members,
4. appointment of members of the Management Board,
5. founding a subsidiary, branch, bank’s representative office abroad or acquiring equity
   holdings in a bank,
6. establishing or acquiring equity holdings, directly or indirectly, in a non-banking financial

institution or non-financial institution worth more than 10% of the bank's own funds,
7) opening a representative office of a foreign bank,
8) change in the name and address of the bank, and
9) termination of the bank's operations in the case referred to in Article 168, paragraph (1),
item 1 of this law.
(2) The National Bank Council shall determine the type of documentation for obtaining the approval under paragraph (1) items 1, 2, 5, 6, 7 and 8 of this Article and the method of its submission, and the requirements and the procedure for issuing the approval under paragraph (1) items 1, 2, 5, 6, 7 and 8 of this Article. (3) The provisions of Articles 17, paragraphs (4) and (5), Article 118 paragraph (2), items 1, 2, 4, 9 and 10, Articles 83, 88 and 92 of this law shall respectively apply to paragraph (1) items 3 and 4 of this Article. (4) The Governor shall adopt a decision on issuing an approval or rejecting the application for issuing an approval under paragraph (1), items 1, 6, 7 and 8 of this Article within 30 days after the date of submission of the application. The 30-day period shall not include the periods set by the Governor for completing the submitted application and the period from submitting a request by the Governor to competent domestic and foreign bodies and institutions for obtaining documents and information required for the decision making on the application, with the period from the date of submitting the application to the date of the decision making by the Governor, not exceeding 60 days. (5) The Governor shall adopt a decision on issuing an approval or rejecting the application for issuing an approval under paragraph (1), items 2, 3, 4, 5 and 9 of this Article within 60 days after the date of submission of the application. The 60-day period shall not include the periods set by the Governor for completing the submitted application and the period from submitting a request by the Governor to competent domestic and foreign bodies and institutions for obtaining documents and information required for the decision making on the application, with the period from the date of submitting the application to the date of the decision making by the Governor, not exceeding 120 days.
Article 58
(1) Own funds exceeding Denar 560,000,000 shall be required for conducting the activities under
Article 7 paragraph (1) items 3, 13, 14, 15, 16, 17 and 18 of this law, except for domestic trade
in securities.
(2) The Governor may issue an approval for conducting the activities under Article 57 paragraph (1) item 2 of this law based on a previously issued license, approval or opinion of a competent authority, i.e. institution, provided that the license, approval or the opinion are required by other law.
2. Approvals for shareholders
Article 59
(1) Any person who intends to acquire, directly or indirectly, gradually or immediately, shares in the total cumulative nominal amount of and over 5%, 10%, 20%, 33%, 50% or 75% of the total number of shares, i.e. the total number of issued bank’s voting shares, irrespective of whether it has acquired the shares alone or together with other connected persons, directly or indirectly, shall submit an application to the National Bank for obtaining a prior approval. (2) As an exception to paragraph (1) of this Article, any person who, on the basis of a decision of a competent authority as defined by law, acquired, gradually or immediately, shares in the total cumulative nominal amount of and over 5%, 10%, 20%, 33%, 50% or 75% of the total number of shares in a bank, i.e. the total number of issued bank’s voting shares, irrespective of whether

it has acquired the shares alone or together with other connected persons, directly or indirectly, shall submit an application to the National Bank for obtaining an approval for such change within 10 days after the effectiveness of the Decision. (3) In the cases of paragraph (1) of this Article, the banks and the brokerage houses shall not execute a purchase order, i.e. transaction in bank’s shares for which no approval of the Governor has been presented. (4) The transaction for acquiring such shares shall be executed within 180 days after the date of obtaining the approval of the Governor. After the expiration of this period, a procedure shall be initiated for obtaining a new approval. (5) The provisions of Article 17 paragraph (1) items 5, 6, 7, 8 and 13, paragraphs (2), (3), (4) and (5) and Article 18, paragraph (3) of this law shall respectively apply to the documents and the information enclosed with the application referred to in paragraphs (1) and (2) of this Article and the procedure for their assessment. (6) The Governor shall reject the application referred to in paragraphs (1) and (2) of this Article provided that:

1. the application does not contain the complete documentation,
2. the application contains incorrect or false data,
3. the person is not eligible to be a shareholder according to Article 13 of this law,
4. the available data and information indicate that as a result of the legal and financial position,
   i.e. the method of operations or the nature of activities performed by such person, and/or persons connected thereto, there is a high risk tendency, thus compromising the soundness, safety and reputation of the bank, i.e. its operations in accordance with the regulations,
5. the financial and the economic standing of such person does not correspond with the value
   of shares they intend to acquire,
6. there is a reasonable ground to doubt about the legitimacy of the origin of the funds, the
   integrity or the true identity of such person, and/or persons connected thereto,
7. the close connections or ownership or organizational structure of the person/entity or the
   group it belongs to, may be an obstacle for conducting efficient supervision and taking corrective measures on an individual and consolidated basis
8. considers that the acquisition of shares shall bring about undesired development of the
   financial system.
   (7) The Governor shall also reject the application referred to in paragraphs (1) and (2) of this Article submitted by a foreign person, provided that the regulations and practices of the country of origin of the foreign person indicate that the supervisory function will be hindered and disabled. (8) The Governor shall adopt a decision on issuing an approval or rejecting the application under paragraphs (1) and (2) of this Article within 30 days after the date of submission of the application. The 30-day period shall not include the periods set by the Governor for completing the submitted application and the period from submitting a request by the Governor to competent domestic and foreign bodies and institutions for obtaining documents and information required for the decision making on the application, with the period from the date of submitting the application to the date of the decision making by the Governor, not exceeding 90 days.
   Article 60
   The Governor shall immediately inform the Financial Intelligence Office on the decision under Article 59, paragraph (8) of this law on rejecting the application, with respect to Article 59, paragraph (6), item 6 of this law.

3. Reporting
   Article 61
   (1) The bank shall notify the National Bank on:

1. increase in the initial capital of the bank, i.e. new issue of shares,
2. change in the ownership structure of the shares,
3. large exposure as defined by Article 72 paragraph (1) of this law,
4. establishing and abolishing parts of the bank in the country,
5. abolishing bank’s subsidiary, branch, or representative office abroad,
6. replacement of a person with special rights and responsibilities, except for a replacement of
   a member of the Supervisory Board and the Management Board,
7. deteriorated financial standing of a shareholder with qualified holding or any other
   information indicating that a shareholder with qualified holding no longer meets the requirements under Articles 13, 18 and 59 of this law, provided that the bank obtained such information,
8. acquiring equity holdings, directly or indirectly, in a non-banking financial institution or in
   non-financial institution, of less than 10% of the bank's own funds,
9. appointment of an acting member of bank’s Management Board from among the members
   of the bank’s Supervisory Board, and
10. advance payment of dividend.
    (2) The bank shall notify the National Bank on the activities under paragraph (1) items 1, 4, 5, 6, 7, 8, 9 and 10 of this Article within 5 days from the date of adopting the decision on undertaking the activity, i.e. from the acquiring such information. (3) The bank shall submit monthly reports to the National Bank on the changes under paragraph (1) items 2 and 3 of this Article, by the tenth day in the current month for the previous month. (4) The bank shall submit quarterly reports to the National Bank on all large exposures.
    Article 62
    (1) Any shareholder with qualified holding in a bank who intends to reduce its holding, directly or indirectly, so that such holding in the total number of shares or the total number of issued voting shares in the a bank will drop below 5%, 10%, 20%, 33%, 50% or 75%, shall notify the National Bank at least a month prior to the reduction, on the following:
11. the total number of shares and the total number of issued voting shares in the bank they
    intend to sell,
12. the amount by which their holding in the initial capital will reduce,
13. the total number of shares and total number of issued voting shares in the bank they will
    hold after the reduction, and
14. the identity of the person who will acquire their shares in the bank, if known.
    (2) The shareholders shall notify the National Bank on concluded agreements on associating the voting rights arising from the shares in the bank within 5 days after the agreement is being concluded.

VIII. SUPERVISORY STANDARDS

1. Solvency and capital adequacy
   Article 63
   (1) The bank shall dispose of an adequate level of own funds depending on the nature, the type, and the scope of financial activities and the level of risks arising from the conduct of such activities (capital adequacy). (2) The bank shall operate in a manner that allows it permanently to be able to settle all its liabilities (solvency).
   Article 64
   (1) The capital adequacy ratio shall represent the own funds - to - risk weighted assets ratio. (2) Bank's own funds shall not be below the amount of the initial capital prescribed by this law. (3) The National Bank Council shall define the methodology for calculating the bank's capital adequacy ratio, in accordance with the international standards. (4) In the methodology of paragraph (3) of this Article, the National Bank Council shall prescribe requirements to be met by certain positions so that they can be included in own funds, and the bank's risk-weighted assets, the positions that require prior approval by the Governor of the National Bank so that they can be included in the own funds, and the manner of issuing such approval, approaches to be used by a bank in determining capital adequacy, the conditions under which approaches may be used, approaches that require prior approval of the Governor of the National Bank and the manner of issuing such approval, the conditions under which credit ratings can be used and the manner of recognition of external credit risk assessment institution by the Governor of the National Bank for the purposes of determining the capital adequacy.
   Article 65
   (1) The bank shall maintain capital adequacy ratio of at least 8%.
   (2) In fulfillment of the obligation under paragraph (1) of this Article, the bank shall at least maintain:

1. rate of Common Equity Tier I capital of 4.5% of risk weighted assets and
2. rate of Tier I capital of 6% of risk-weighted assets.
   (3) The Governor may prescribe ratios above those stipulated in paragraphs (1) and (2) of this Article for one or several banks in the country, if necessary due to the nature, the type, and the scope of activities the bank performs and the risks it is exposed to as a result of such activities, including risks arising from the macroeconomic environment. 1-а Capital buffers
   Article 65-а
   (1) The bank shall maintain the following capital buffers:
3. capital conservation buffer;
4. countercyclical capital buffer;
5. capital buffer for systemically important banks and
6. systemic risk capital buffer.

(2) The capital buffers under paragraph (1) of this Article shall be fulfilled only with positions that are part of the Common Equity Tier I capital. (3) The total amount of capital buffers shall be the sum of the capital buffers of paragraph (1). (4) The bank may not use the Common Equity Tier I capital maintained to fulfill any of the capital buffers to fulfill other capital buffers under paragraph (1) of this Article, nor for fulfillment of the requirements referred to in Article 65 and the measures under Article 132 paragraph (2) item 3) and
Article 133 paragraph (2) item 2) indent 6 of this law.
1-а.1. Capital conservation buffer
Article 65-b
The bank shall maintain capital conservation buffer of 2.5% of the risk weighted assets. 1-а.2. Countercyclical capital buffer;
Article 65-c
(1) The bank shall calculate and maintain countercyclical capital buffers.
(2) Countercyclical capital buffer is a product of the risk-weighted assets and the specific rate of countercyclical capital buffer. (3) The specific countercyclical buffer rate is a weighted average of the countercyclical buffer rates under Articles 65-d and 65-e of this law.
Article 65-d
(1) The National Bank Council shall adopt a methodology for setting countercyclical buffer rate for exposures in the Republic of North Macedonia. (2) The methodology referred to in paragraph (1) of this Article shall be based on indicators that take account of the credit cycle, risks associated with credit growth and features of the domestic economy. (3) The National Bank shall use the methodology referred to in paragraph (1) of this Article to quarterly set the countercyclical buffer rate for exposures in the Republic of North Macedonia and shall make an announcement on its website if this rate exceeds 0%. (4) The countercyclical buffer rate under paragraph (3) of this Article may not exceed 2.5%. (5) Notwithstanding, the National Bank may set higher countercyclical buffer rates for exposures in the Republic of North Macedonia if necessary based on the indicators laid down in the methodology of paragraph (1) of this Article. (6) The announcement under paragraph (3) of this Article shall particularly contain the following information:

1. the rate of paragraph (3) of this Article;

2. indicator or indicators used to set the rate under paragraph (3) of this Article;

3. an explanation of the reasons for introducing or changing the rate under paragraph (1) of this
   Article;

4. the date on which the bank is required to apply the countercyclical buffer rate, if it introduces or
   increases the rate of paragraph (3) of this Article;

5. an explanation of the reasons for setting the date from which the bank is required to apply the
   countercyclical buffer rate, if the period of disseminating the rate is less than 12 months and

6. an indicative period where the rate is not expected to increase, indicating that this period can be
   changed in case of reducing the rate under paragraph (3) of this Article.
   Article 65-e
   (1) For exposures in another country, the bank shall apply the countercyclical buffer rate which is published by the National Bank on its website. (2) In setting the rate under paragraph (1) of this Article, the National Bank should take account of the countercyclical buffer rate laid down by the competent authority of the other country. (3) The announcement under paragraph (1) of this Article shall particularly contain the following information:

7. the rate of paragraph (1) of this Article and the referring country;

8. an explanation of the reasons for introducing or changing the rate under paragraph (1) of this
   Article,

9. the date on which the bank is required to apply the countercyclical buffer rate, if it introduces or
   increases the rate of paragraph (1) of this Article and

10. an explanation of the reasons for setting the date from which the bank is required to apply the
    countercyclical buffer rate, if the period of disseminating the rate is less than 12 months. 1-а.3. Capital buffer for systemically important banks
    Article 65-f
    (1) The National Bank Council shall prescribe the methodology for identifying systemically important banks containing criteria for identifying systemically important banks and manner of classifying systemically important banks in five subcategories to set the capital buffer for systemically important banks that may range from 1% to 3.5% of risk weighted assets. (2) Based on the methodology referred to in paragraph (1) of this Article, the National Bank shall at least once a year identify systemically important banks, classify them into the corresponding subcategories and set the capital buffer rate for the systemically important banks that each systemic important bank has to maintain for each subcategory. (3) The National Bank shall:

11. notify each systemically important bank on the capital buffer rate it has to maintain and

12. publish a list of systemically important banks on its website.
    (4) If a bank identified as systemically important is a subsidiary of a foreign bank, the National Bank shall notify the competent authority of the domicile country of the foreign bank on the introduced requirement to allocate capital buffer for systemically important banks. (5) If a bank identified as systemically important is a subsidiary of a bank from EU member country, the National Bank shall notify the European Commission and the European Systemic Risk Board on the introduced requirement to allocate capital buffer for systemically important banks. (6) A bank identified as systemically important shall develop a recovery plan as required in the recovery plan methodology. (7) The National Bank Council shall prescribe the recovery plan methodology of paragraph (6) of this Article containing the elements that make up the recovery plan, its submission to the National Bank and the evaluation method of the National Bank.

1-а.4. Systemic risk capital buffer
Article 65-g
(1) The Governor of the National Bank may prescribe a systemic risk capital buffer for all, or one or several banks in the country, if necessary for limiting the risk of disruption to the financial system or the national economy, due to activities of one or more banks or risks they are exposed to. (2) Systemic risk capital buffer rate may range from 1% to 3% of risk weighted assets and may be different for various banks or groups of banks. (3) The National Bank shall announce the introduction of systemic risk capital buffer on its website. The announcement shall particularly contain the following information:

1. systemic risk capital buffer rate,
2. the bank required to maintain the rate referred to item 1) of this paragraph,
3. an explanation of the reasons for introducing capital buffers, only if the explanation does not
   threaten the stability of the financial system in the country,
4. the date from which the bank is required to apply the systemic risk capital buffer rate and
5. the name of countries if the exposures to clients from those countries are subject to systemic risk
   capital buffer.
   (4) Following the introduction of systemic risk capital buffer, the National Bank shall at least once every two years reconsider the need for revision or revocation of this capital buffer. (5) If the requirement for maintaining systemic risk capital buffer refers to a bank which is a foreign bank subsidiary, the National Bank shall, at least a month before, notify the competent authority of the domicile country of the foreign bank on the introduced requirement. (6) If the requirement for maintaining a systemic risk capital buffer refers to a subsidiary bank of a bank from an EU member country, the National Bank shall notify the European Commission and the European Systemic Risk Board. (7) The National Bank shall notify the Government of the Republic of North Macedonia on the introduction of systemic risk capital buffer, at least a month before the announcement pursuant to paragraph (3) of this Article.
   Article 65-h
   (1) A bank that fulfills the total amount of capital buffers of Article 65-a of this Law shall not be allowed to distribute earnings related to the items of the Common Equity Tier I capital that would reduce the Common Equity Tier I capital and failure to fulfill the total amount of capital buffers. (2) A bank that fails to fulfill the total amount of capital buffers of Article 65-a of this law shall calculate the maximum distributable amount in accordance with the methodology prescribed by the National Bank Council and shall inform the National Bank thereof. (3) Without calculating the maximum distributable amount, the bank referred to in paragraph (2) of this Article shall not:
6. distribute the earnings related to the items of the Common Equity Tier I capital;
7. create an obligation to pay variable remuneration or to pay variable remuneration if the payment
   obligation was created at a time when the bank did not fulfill the total amount of capital buffers and
8. makes payments based on instruments that are part of the additional Tier I capital.

(4) The bank referred to in paragraph (2) of this Article may allocate, through the actions referred to in paragraph (3) of this Article, only the maximum distributable amount calculated in accordance with the methodology of paragraph (2) of this Article. (5) The distribution of earnings related to the items of the Common Equity Tier I capital in paragraphs (1) and (3) of this Article shall apply to:

1. payment of the cash dividends;
2. distribution in the form of bonus shares or other capital instruments that are part of the Common
   Equity Tier I capital;
3. repurchase of own shares or other capital instruments that are part of the Common Equity Tier I
   capital and
4. repayment of amounts paid in capital instruments that are part of the Common Equity Tier I
   capital.
   (6) Restrictions on the distribution prescribed in this Article shall apply only to payments that reduce the Common Equity Tier I capital or reduce profits, and only if non-payment does not mean fulfillment of requirements for introducing a bankruptcy or liquidation proceeding under this Law. (7) The bank referred to in paragraph (2) of this Article shall prepare a capital conservation plan and deliver it to the National Bank within 10 days after the date determined that it no longer meets the total amount of capital buffers. (8) The methodology referred to in paragraph (2) of this Article, the National Bank Council shall prescribe the type of information the bank under paragraph (2) of this Article shall submit to the National Bank and the content of the capital conservation plan. (9) The National Bank may reject the capital conservation plan under paragraph (7) of this Article, if it considers that it would not provide sufficient capital to meet the total amount of capital buffers.

2. Risk management
   Article 66
   (1) The bank shall permanently manage the risks, adequately to the nature, the type and the scope of the financial activities it performs. The bank shall specify the criteria, the manner, and the methods of risk management, as well as the capital adequacy assessment, in accordance with its risk level, by the general acts and the internal procedures. The general acts and the internal procedures shall be in compliance with the regulations, the standards, and the rules in the banking area and the methodology prescribed by the National Bank Council. (2) The general acts and the internal procedures referred to in paragraph (1) of this Article shall include all material risks the bank is exposed to in the performance of individual and of all types of financial activities, and particularly the following types of risks:

1. liquidity risk,
2. credit risk, including country risk and counterparty risk,
3. interest rate risk of the banking book, currency risk and market risk,
4. risk of concentration of bank's exposure and,
5. operational risk, including the information systems inadequacy risk.
   Article 67
   The bank shall maintain the exposure to certain types of risks within the limits specified by this law.

Article 68
(1) For the purposes of proper risk management, the National Bank Council, in accordance with the international standards, shall prescribe:

1. Risk management methodology,
2. Methodology for credit risk management and determining criteria for classification of on-balance
   sheet and off-balance sheet assets items by the risk degree,
3. Methodology for currency risk management,
4. Methodology for managing interest rate risk of the banking book,
5. Methodology for liquidity risk management,
6. Methodology for bank's IT system security,
7. Methodology for managing the risk of excessive leverage, inter alia, sets forth the manner of
   determining and monitoring the leverage ratio and
8. Methodology for managing other types of bank risks.
   Article 69
   (1) For the purposes of protecting from potential or current losses arising from specific risk-bearing on-balance sheet and off-balance sheet assets items, the bank shall make value correction, i.e. allocate special reserve. (2) The value correction and the amount of the special reserve shall be determined in a manner and amount as specified by a methodology developed by the National Bank Council.

3. Bank exposure
   Article 70
   The exposure of a bank to an entity/person shall include total on-balance sheet and off-balance sheet bank claims on that entity/person, including investments in securities issued by that person, regardless of the purpose of the acquired securities.
   Article 71
   (1) Exposure to a single entity and entities connected thereto shall not exceed 25% of the bank's own funds. (2) Exposure to a bank's subsidiary shall not exceed 10% of the bank’s own funds. (3) Exposure to a shareholder with qualified holding in the bank, and entities connected thereto, shall not exceed 10% of the bank’s own funds. (4) Exposure to a person with special rights and responsibilities, and persons connected thereto, shall not exceed 3% of the bank’s own funds. (5) The total exposure to the entities/persons referred to in paragraphs (2), (3) and (4) of this Article shall not exceed 65% of the bank’s own funds. (6) The credits and other forms of bank exposure to the entities/persons referred to in paragraphs (2), (3) and (4) of this Article exceeding Denar 6,000,000 shall be approved on the basis of a decision of the bank’s Supervisory Board.

(7) The terms for approving credits and other forms of exposure, collecting deposits and performing other financial activities for the entities/persons referred to in paragraphs (2), (3) and (4) of this
Article, under the same risk level determined in accordance with the supervisory standards, shall not
be more favorable than those that apply to other clients of the bank.
(8) The National Bank Council shall closely prescribe the method of applying the provisions of this
Article.
Article 72
(1) Large exposure to an entity and entities connected thereto shall be considered an exposure equal or higher than 10% of the bank’s own funds. (2) The total amount of large exposures shall not exceed eight times of the bank’s own funds. (3) The National Bank Council shall closely prescribe the method of applying the provisions of this
Article.
Article 73
The bank shall adjust the method of lending and the procedure for regulating the overdue claims to the supervisory standards prescribed by this law and the regulations adopted on the basis of this law.
Article 74
(1) The bank shall not extend a credit or engage in other form of exposure, used, directly or indirectly, for purchasing shares in that bank. (2) The bank shall not extend credits or engage in other form of exposure to an entity and entities connected thereto with a pledge on shares issued by that bank. (3) The bank shall not acquire, directly or indirectly, more than 5% of the shares of another bank or non-banking financial institution that owns more than 5% of the total bank's shares.
4. Bank's own shares
Article 75
(1) The bank may acquire own shares by purchasing, by itself or through a person acting on its own behalf, and for the bank's account, up to 10% of the total bank's shares, but not more than the amount of the non-distributed profits. (2) The purchase of own shares shall be valid only if:

1. a decision on acquiring own shares by purchase is adopted by the General Meeting of
   Shareholders specifying the manner of purchasing, the maximum number of shares that may be purchased, the period of purchase which may not exceed twelve months after the date of adoption of the decision on acquiring own shares, the minimum and the maximum equivalent which may be paid for them, and
2. the nominal value of the purchased own shares including the nominal value of the own shares
   the bank acquired previously and owns, does not exceed 10% of the nominal value of the total bank's shares. (3) The bank shall sell its own shares acquired in compliance with paragraph (1) of this Article within one year after the date of their acquisition.

(4) If the shares under paragraph (1) of this Article are not sold within the period specified in paragraph (3) of this Article, they shall be canceled immediately. (5) The acquisition of own shares contrary to paragraph (2) of this Article shall be considered void.
Article 76
(1) The restrictions specified by Article 75 of this law shall not be applied provided that the acquisition of the own shares is made:

1. by force of the law, and
2. on the basis of effective court decision.
   (2) The shares acquired in the cases referred to in paragraph (1) of this Article shall be sold within a year after the date of their acquisition. (3) In the case the acquired shares referred to in paragraph (1) of this Article are not sold within the period specified by paragraph (2) of this Article, they shall be canceled immediately.
   Article 77
   The rights arising from the acquired own shares shall be frozen (adjourn), up till the moment of their sale.

5. Bank investments
   Article 78
   (1) The bank shall not invest in and acquire land, buildings and equipment, which are not used for performing financial activities, other than those acquired on the basis of uncollected claims. (2) The property of the bank in land, buildings, equipment, and equity holdings in non-financial institutions shall not exceed 60% of the bank's own funds. (3) The aggregate amount of the equity holdings in non-financial institutions shall not exceed 30% of the bank's own funds. (4) A single equity holding of a bank in a non-financial institution shall not exceed 15% of bank's own funds. (5) A bank shall not exercise control in a non-financial institution, except in ancillary banking services undertaking. (6) Within three years from acquisition, the limits stipulated under paragraphs (2), (3), (4) and (5) of this Article shall not include the property in land, buildings, and equipment acquired on the basis of uncollected claims not used by the bank for performing financial activities, and equity holdings acquired on the basis of uncollected claims.
6. Bank liquidity
   Article 79
   The bank shall maintain the liquidity, i.e. to manage the assets and the liabilities in a manner ensuring settlement of due liabilities at all times.

Article 80
For the purposes of maintaining the liquidity, in accordance with the Methodology under Article 68 of this law, the bank shall manage the liquidity risk, including in particular:

1. establishment and maintenance of an adequate maturity structure,
2. planning and management of inflows and outflows of funds and providing of an adequate
   amount of liquid assets,
3. tracing the sources of funds and their concentration, and
4. liquidity testing.

7. Open currency position
   Article 81
   The bank shall maintain an open currency position in accordance with the Methodology under Article 68 of this law.
   IX. BANK BODIES AND BANK MANAGEMENT
   Article 82
   (1) Bank bodies shall include General Meeting of Shareholders, Supervisory Board, Risk Management Committee, Auditing Committee, Management Board and other bodies specified by a Statute (Credit Committee, etc.). (2) The bank's Statute shall closely prescribe the number, composition, competencies, rights, duties, responsibilities and the manner of operating of the bank bodies, as well as the number, the term of office, the competencies, rights, responsibilities and the terms for appointing persons with special rights and responsibilities. (3) The bank management shall be in conformity with the provisions of this law and the best corporate governance rules prescribed by the National Bank Council in accordance with the international standards.
   Article 83
   (1) A person with special rights and responsibilities in a bank shall have a university degree and be knowledgeable in banking and/or finance regulations, corporate governance rules and shall have appropriate experience ensuring safe and sound bank management. (2) A person with special rights and responsibilities may not be:

1. a National Bank Council member,
2. an employee of the National Bank,
3. a person sentenced to imprisonment for crime in the area of banking and finance,5
4. person who was imposed a security measure or ban on performing a profession, activity or
   duty,
5. person without reputation, thus compromising the safe and sound bank operations,
6. person who fails to comply with the provisions of this law and the regulations adopted on

5 Article 83 paragraph 2 item 3 is abolished with Decision of the Constitutional Court of the Republic of Macedonia No. 182/07 dated 9 July 2008 (Official Gazette of Republic of Macedonia No. 88/08).

the basis of this law and/or failed or has failed to implement and/or acted or has been acting contrary to the measures stated by the Governor, that compromised or have been compromising the safety and soundness of the bank,
7) member of Supervisory Board, Risk Management Committee, Auditing Committee and
Management Board of another bank, or employee in another bank, or
8) person who performed function of a person with special rights and responsibilities in a bank
or another legal entity in which administration has been initiated, or against which a bankruptcy or liquidation procedure have been initiated, unless unambiguously determined on the basis of the available documentation and data that the person was not involved in any action that led to the introduction of administration, a bankruptcy or liquidation procedure or performed such function immediately prior or after the occurrence of the reasons that led to the introduction of administration, initiation of a bankruptcy or implementation of a liquidation procedure. (3) A person who does not enjoy reputation shall also denote a person who has been convicted, by an effective court decision, for unconditional imprisonment of more than six months, in the period of duration of the legal consequences. (4) A member of the Management Board of a bank shall not enjoy reputation even when he/she has an associate subject to the circumstances referred to in paragraph (3) of this Article. (5) Member of a managing board of a bank may at the same time be a member of not more than two supervisory bodies i.e. non-executive member of a board of directors of not more than two non-banking financial institutions and non-financial institutions. (6) Member of a supervisory board of a bank may at the same time:

• be a member of a managing body and a supervisory body i.e. perform a function of executive
  and a function of non-executive member of the board of directors of non-bank financial institutions or non-financial institutions or
• be a member of three supervisory bodies, i.e. perform three functions of non-executive member
  of the board of directors of non-banking financial institutions or non-financial institutions. (7) Member of a board of directors of a bank may not be a person who is a manager, a member of a board or executive member of a board of directors at any domestic or foreign company. (8) The limitations of paragraph (2) item 7) and paragraphs (3), (4) and (5) of this Article shall not apply to membership in:

1. bodies of nonprofit organizations on a voluntary basis, without remuneration and
2. bodies of companies that belong to the same banking group in the Republic of North
   Macedonia or abroad.
   (9) In cases where the bank, as part of a banking group, implements the policies of the group, the members of the supervisory board and/or board of directors should make sure that those policies are appropriate to the bank and consistent to the laws of the Republic of North Macedonia and the National Bank standards. (10) The bank shall make sure that majority of the members of the supervisory board and the board of directors are available upon request of the National Bank.
   Article 84
   (1) Persons with special rights and responsibilities shall operate solely in the interest of the bank and its depositors, and to act with attention and diligence of a reasonable proprietor. (2) In case the persons with special rights and responsibilities determine that a decision of the bank bodies violates the law or other regulation adopted on a basis of a law, or the contents of which is

such that it can compromise the liquidity of the bank and its safety and soundness, they shall inform the Supervisory Board and the National Bank in writing.
Article 85
The provisions of the Trade Company Law pertaining to procurator authorized commercial agent and salesperson and a procedure for approving a deal with an interested party shall not apply to the banks.

1. Bank's General Meeting of Shareholders
   Article 86
   (1) The bank's General Meeting of Shareholders shall perform the following activities:

1. adopts the Statute and the amendments to the bank Statute,
2. reviews and adopts the annual report on the bank's operations, including the written opinion
   thereon, prepared by the Supervisory Board,
3. discusses and adopts the report of the auditing company and the written opinion thereon
   prepared by the Supervisory Board,
4. adopts the annual account and the financial statements of the bank,
5. decides on the use and allocation of the profit, or loss coverage,
6. decides on new issue of shares of the bank,
7. decides on status changes and cessation of the bank's operations,
8. appoints and dismisses the members of the Supervisory Board,
9. elect an audit company and decide on the proposal for terminating the contract with the audit
   company and;
10. decides on other issues of relevance to the operations of the bank specified by the bank Statute.
    (2) The bank's General Meeting of Shareholders may not appoint a member of the bank's Supervisory Board without prior approval of the Governor.
    Article 87
    (1) The General Meeting of Shareholders of a bank shall be convened at least once a year. (2) The annual General Meeting of Shareholders of a bank shall be held before the expiration of six months of the calendar year for the previous year. (3) As an exception to paragraph (2) of this Article and in instances under Article 108 paragraph (4) of this law, the bank's annual General Meeting of Shareholders for the previous year may be held before the expiration of the nine months of the calendar year. (4) The bank shall submit the report on the held General Meeting of Shareholders to the National Bank, including the work papers and the adopted decisions within 15 days after the General Meeting of Shareholders. (5) In addition to the persons referred to in the Trade Company Law, the National Bank may also press charges for determining annulment of a decision adopted by the General Meeting of Shareholders of a bank.

2. Supervisory Board

Article 88
(1) The Supervisory Board of a bank shall consist of at least five and maximum of nine members. (2) Besides the person under Article 83 of this law, a member of a Supervisory Board in a bank may not be an employee in the bank. At least one fourth of bank's Supervisory Board members shall be independent members. (3) Members of the supervisory board shall have appropriate knowledge and experience for carrying out their responsibilities, to avoid conflicts of interests and to devote sufficient time to carry out any obligations arising from the powers prescribed by this law. (4) Members of the supervisory board shall together have the knowledge and experience required for independent oversight of the bank's operations, especially for understanding the activities performed by the bank and the material risks it is exposed to. (5) The term of office of the Supervisory Board members shall be four years. (6) The same person may not be an independent member of the supervisory board in the same bank for more than three consecutive terms. (7) The Supervisory Board members shall elect a President from amongst their ranks. (8) The Supervisory Board shall meet at least once every quarter.
Article 89
(1) The Supervisory Board shall supervise the operations of the Management Board, approve the policies for conducting financial activities and supervise their implementation. (2) The Supervisory Board shall be responsible for ensuring good practice and management and bank stability, as well as timely and accurate financial reporting to the National Bank. (3) The Supervisory Board shall also perform the following activities:

1. adopts the bank's business policy and development plan,

2. appoints and dismisses members of the bank's Management Board,

3. appoints and dismisses members of the Risk Management Committee,

4. appoints and dismisses members of the Auditing Committee,

5. adopts the bank's financial plan,

6. establishes internal audit department;

7. approves the annual plan of the Internal Audit Department,

8. adopts the information security policy,

9. adopts the bank's risk management policies,

10. adopt a policy of avoiding conflict of interest to identify any conflict of interest and prevention
    measures and actions;

11. adopt a remuneration policy in accordance with the business policy, development plan,
    financial plan and policy to avoid conflicts of interests of the bank;

12. adopt and implement policies for the method of selection, monitoring of operations and
    dismissal of members of the supervisory board, risk management board, audit committee and board of directors;

13. discusses the reports on the activities of the bank's Management Board,

14. discusses the reports of the Risk Management Committee,

15. discusses the reports of the Auditing Committee,

16. discusses the reports of the Internal Audit,

17. discusses the reports of the Compliance Officer/Department,

18. approves the annual account and the financial statements of the bank,

19. approves the exposure to a person of more than 20% of the bank's own funds, with the
    exception of exposure based on purchase of securities issued by the National Bank and the Republic of North Macedonia;

20. approves the transactions with persons related to the bank exceeding Denar 6,000,000

21. approves the acquiring equity holdings and purchase of securities higher than 5% of the
    bank's own funds, other than purchase of securities issued by the National Bank and the Republic of North Macedonia,

22. approves the proposal of the Auditing Committee for appointing audit company or the
    proposal for terminating the agreement with the audit company and is responsible for ensuring appropriate audit,

23. adopts the internal audit policy,

24. discusses the supervisory reports, other reports submitted by the National Bank, the Public
    Revenue Office and other competent bodies and proposes, i.e. undertakes measures and activities for addressing the identified shortcomings and weaknesses in the bank's operations,

25. approves the annual report on the bank's operations and submits written opinion thereon to
    the banks' General Meeting of Shareholders,

26. discusses the report of the auditing company and submits written opinion thereon to the
    General Meeting of Shareholders,

27. adopt the Corporate Governance Code which regulates the rules for bank's management and
    supervision and

28. adopts the bank's Code of Conduct.
    (4) The Supervisory Board shall make self-assessment of its operations from the aspect of the individual members and jointly at least once a year, and shall notify the General Meeting of Shareholders thereon. (5) The bank's Supervisory Board may not appoint a member of the bank's Management Board without obtaining prior approval from the Governor, other than in the cases referred to in Article 92 paragraph (5) of this law.

3. Risk Management Committee
   Article 90
   (1) The Risk Management Committee in a bank shall consist of at least three and maximum of nine members. (2) The members of the Risk Management Committee shall be elected from among the persons with special rights and responsibilities employed in the bank. One of the members of the bank's Management Board shall be a member of the Risk Management Committee. (3) The members of the Risk Management Committee, in addition to the requirements under Article 83 of this law, shall have minimum three-year experience in the area of finance or banking, shall be knowledgeable in bank's operations, its products and services and shall understand the bank's risks. (4) The Risk Management Committee shall meet at least once a week.

(5) The Risk Management Committee shall also perform the following:

1. permanently monitors and assesses the risk level of the bank, and identify the acceptable level
   of exposure to risks in order to minimize the losses as a result of the bank's risk exposure,
2. establishes risk management policies and monitors their implementation,
3. follows the regulations of the National Bank pertaining to the risk management and the bank's
   the compliance with such regulations,
4. assess the bank's risk management systems,
5. determines short- and long-term strategies for managing certain types of risks the bank is exposed
   to,
6. analyzes the reports on the banks' risk exposure developed by the bank's risk assessment units
   and proposes risk hedging strategies, measures and instruments,
7. monitors the efficiency of the internal control systems in the risk management,
8. analyzes the risk management effects on the bank's performances,
9. analyzes the effects of the proposed risk management strategies, as well as the proposed risk
   hedging strategies, measures and instruments,
10. assessment of compliance of the prices of products and services offered by the bank with the
    levels of risk taken, in accordance with the bank's business policy and development plan;
11. informs the Supervisory Board quarterly on the changes in the bank's risk positions, the changes
    in the risk management strategies, the risk management effects on the bank's performances as well as the undertaken measures and instruments for hedging risks and the effects thereof, and
12. approves exposure to a person/entity from 10% to 20% of the bank's own funds.
    (6) The Risk Management Committee shall make self-assessment of its operations from the aspect of individual members and jointly at least once a year, and shall submit it to the Supervisory Board.

4. Auditing Committee
   Article 91
   (1) The bank's Auditing Committee shall consist of at least five and maximum of nine members. (2) The majority members in the Auditing Committee shall be elected from among the members of the Supervisory Board, and the other members shall be independent members. (3) At least one Auditing Committee member shall be an authorized auditor. (4) An employee in the audit company referred to in Article 105 of this law may not be a member of the Auditing Committee. (5) The Auditing Committee members shall elect a President from amongst their ranks, responsible for the organization of the work of the Auditing Committee. (6) The Auditing Committee members, besides the requirements under Article 83 of this law, should also be knowledgeable in:

1. the bank's operations, its products and services,
2. the risks the banks is exposed to,
3. the internal control systems and risk management policies of the bank, and
4. accounting and audit.
   (7) The Auditing Committee shall meet at least once quarterly, and on request of the Supervisory Board.

(8) The Auditing Committee shall adopt operating rules and procedures approved by the bank's Supervisory Board. (9) The Auditing Committee shall:

1. discuss the financial statements of the bank and make sure that the disclosed financial
   information on the bank operations are accurate and transparent as specified by the accounting regulations and international accounting standards,
2. review and make assessment of the internal control systems,
3. monitor the operations and assess the efficiency of the Internal Audit Department,
4. monitor the bank's audit process and assess the work of the audit company,
5. adopt the bank's accounting policies,
6. monitor the compliance of the bank's operations with the regulations related to the
   accounting standards and the financial statements,
7. hold meetings with the Management Board, the Internal Audit Department and the audit
   company as to the identified non-compliances with the regulations and weaknesses in the bank's operations,
8. discuss the reports of the Risk Management Committee,
9. proposes the appointment of audit company and termination of agreement with an audit
   company and
   10)report to the bank's Supervisory Board on its operations at least once quarterly. (10) The Auditing Committee shall make self-assessment of its operations from the aspect of individual members and jointly at least once a year. (11) The Audit Committee shall submit semi-annual and annual report on its operations to the supervisory board. The annual report shall contain the assessment of paragraph (10) of this Article.

5. Management Board
   Article 92
   (1) The bank's Management Board shall consist of at least two and maximum of seven members. (2) A member of a bank's Management Board, besides the requirements under Article 83 paragraph (1) of this law, must have a 6-year successful work experience in finance or banking or 3-year work experience as a person with special rights and responsibilities in a bank with activities corresponding to those in the bank in which they are appointed. (3) Members of the board of directors shall together have the expertise and experience required for independent bank's management, especially for understanding the activities performed by the bank and the material risks it is exposed to, as specified with the corporate governance rules referred to in Article 82 paragraph (3) of this law. (4) The members of the Management Board must be permanently employed with the bank and at least one of the members must be fluent in Macedonian, know its Cyrillic alphabet, and have a permanent residence in the Republic of North Macedonia. (5) If the number of members of the Management Board of a bank drops below the one set by this law, the Supervisory Board shall, from amongst its ranks, appoint an acting member(s) of the Management Board. Acting members of the Management Board shall be subject to entry into the Trade Registry.

(6) The member of the Management Board appointed to be an acting member of the Management Board may not participate in the decision-making within the competences of the Supervisory Board within the period of carrying out this duty.
Article 93
The bank's Management Board shall:

1. manage the bank,
2. represent the bank,
3. enforce the decisions of the General Meeting of Shareholders and the Supervisory Board of
   the bank, i.e. make sure that they are implemented,
4. take initiatives and give proposals for promoting the bank's operations,
5. appoint and dismiss the persons with special rights and responsibilities pursuant to the
   provisions under this law and the bank's statute,
6. develop a bank's business policy and development plan,
7. develop a financial plan of the bank,
8. develop a bank's information security policy,
9. prepare an annual report on the bank's operations and submit it to the Supervisory Board,
   and
10. develop a Code of Conduct of the bank.
    Article 94
    (1) The bank's Management Board shall be responsible for:
11. providing working conditions for the bank in compliance with the regulations,
12. risk management and monitoring,
13. achievement and maintenance of proper level of own funds,
14. functioning of the internal control system in all areas of the bank operations,
15. smooth operating of the Internal Audit Department of the bank, i.e. make sure that the Internal
    Audit Department has an access to the documentation and to the employees of the bank for the purposes of smooth conduct of its activities,
16. smooth operating of the Officer/Department referred to in Article 99 of this law, i.e. make sure
    that the Officer/Department has an access to the documentation and to the employees of the bank for the purposes of smooth conduct of its authorizations,
17. adoption and implementation of policies for the method of selection, monitoring of operations
    and dismissal of persons with special rights and responsibilities, except for members of the supervisory board, risk management board, audit committee and the board of directors;
18. maintenance of commercial and other books and business documentation of the bank, compiling
    of financial statements and other reports in accordance with the regulations governing the accounting and accounting standards,
19. timely and accurate financial reporting,
20. regularity and accuracy of the reports submitted to the National Bank in line with the law and
    the regulations adopted on the basis of law, and
21. undertaking of measures imposed by the Governor against the bank

(2) The bank's Management Board shall be responsible to the Supervisory Board for its operations. (3) The bank's Management Board shall report to the Supervisory Board on its operations at least every quarter. (4) The bank's Management Board shall immediately notify the Supervisory Board on:

1. deteriorated bank's liquidity or solvency,
2. reasonable ground for revoking the founding and operating license or on a ban on performing
   certain financial activity as specified by law,
3. reduction of the own funds below the requirement as specified by this law,
4. the findings of the supervision and the inspection of the National Bank, and
5. the findings of the Public Revenue Office and other controlling bodies.
   (5) The bank's Supervisory Board shall immediately notify the National Bank on the cases referred to in paragraph (4) items 1, 2 and 3 of this Article. (6) The bank's Supervisory Board shall immediately notify the National Bank on the findings referred to in paragraph (4) item 5 of this Article provided that they significantly affect the financial standing of the bank. (7) A member of the Management Board shall immediately notify the Supervisory Board in the case they or persons connected thereto, acquire a control in other legal entity.

6. Internal Audit Department in the bank
   Article 95
   (1) The bank's Supervisory Board of the bank shall organize an Internal Audit Department, as an independent organizational unit in the bank. (2) The organizational design, rights, responsibilities and relations with other organizational units in the bank, and the responsibilities and requirements for appointing a manager of the Internal Audit Department shall be regulated by the Supervisory Board. (3) The Internal Audit Department shall conduct constant and full-scope audit of the legitimacy, accuracy and promptness of the bank's operations through:

1. assessment of the internal control systems adequacy and efficiency,
2. assessment of the implementation of the risk management policies,
3. assessment of the design of the information system,
4. assessment of the accuracy and reliability of the commercial books and financial statements,
5. verification of the accuracy, reliability and the timeliness in the reporting in accordance with
   the regulations,
6. monitoring of the compliance with the regulations, the Code of Conduct, policies and
   procedures,
7. assessment of the anti-money laundering systems, and
8. assessment of the services the bank obtains from its ancillary services undertakings.
   (4) The Internal Audit Department shall carry out its activities in conformity with the internal audit principles and standards, the bank's Code of Conduct and the operating policy and procedures of the Department.

(5) The Internal Audit Department officers shall be employed with the bank and shall only perform the function of the Department. At least one of the employees of the Department shall be an authorized auditor. (6) The employees of the bank shall provide the persons, i.e. the employees in the Department referred to in paragraph (1) of this Article, an access to the available documentation and all required information.
Article 96
(1) The Internal Audit Department shall develop annual plan of activities of the department, endorsed by the Supervisory Board. (2) The plan under paragraph (1) of this Article shall indicate the subject to audit including the description of the contents of the planned audit in certain areas and schedule of the audits during the year including the planned auditing period.
Article 97
(1) The Internal Audit Department shall prepare semi-annual and annual report on its operations and submit them to the Supervisory Board, Management Board and Auditing Committee of the bank. (2) The semi-annual and annual report under paragraph (1) of this Article shall contain:

1. description of the conducted audits of the bank's operations,
2. assessment of the internal control systems adequacy and efficiency,
3. observations and measures proposed by the Internal Audit Department, and
4. assessment of the implementation of the measures proposed by the Internal Audit
   Department.
   (3) The annual report referred to paragraph (1) of this Article shall also contain:
5. assessment of the achievement of the objectives set by the annual plan of activities,
6. assessment of the planned auditing period and the possible deviation, and
7. information on other conducted activities.
   (4) The Supervisory Board shall submit the annual report of the Internal Audit Department to the National Bank.
   Article 98
   The Internal Audit Department shall immediately notify the Supervisory Board and the Management Board if, during the audit, it identifies:
8. violation of the risk management standards which is likely to deteriorate the bank's liquidity
   and solvency, and
9. that the Management Board violates the bank's regulations, general acts and internal
   procedures.

7. Compliance
   Article 99
   (1) The bank's Management Board shall, depending on the type, scope and complexity of activities performed by the bank, appoint a Compliance Officer or organize a Compliance Department.

(2) The officer, i.e. the department referred to in paragraph (1) of this Article shall be responsible for identification and monitoring of the risks arising from the non-compliance of the bank's operations with the regulations. Risk of non-compliance with the regulations shall include particularly, but not limited to the risk of measures imposed by the National Bank, financial losses and reputation risk as a result of the failures in the compliance of the bank's operations with the regulations. (3) The officer, i.e. the department staff referred to in paragraph (1) of this Article shall perform solely the activities defined by paragraph (2) of this Article and shall be independent in the performance of activities within their competence. (4) The employees with the bank shall provide to the officer i.e. the department staff referred to in paragraph (1) of this Article an access to the available documentation and render all necessary information. (5) The officer, i.e. the manager of the department referred to in paragraph (1) of this Article shall submit monthly report to the Management Board and semiannual report to the Supervisory Board on its operations.
8. Conflict of Interest
Article 100
(1) Any person with special rights and responsibilities shall make a written statement on the existence, if any, of a conflict of their personal interest with the interest of the bank, regularly every six months. (2) Personal interest of the persons under paragraph (1) of this Article shall also denote interests of the persons connected thereto. (3) Conflict between the personal and the bank's interest shall exist when financial, or any other type of business or family interests of the persons under paragraphs (1) and (2) of this Article are concerned by the adoption of decisions, concluding agreements or performing other business activities. (4) Realization of financial, business and family interest shall imply generation of monetary or other type of benefit, directly or indirectly, by the persons under paragraphs (1) and (2) of this Article. (5) The persons under paragraph (1) of this Article shall not attend the discussion and adoption of decisions, conclude agreements, or perform other business activities if their objectivity is questionable due to the existence of a conflict between their personal interest and the interest of the bank. (6) Statement on existence of a conflict of interests shall also be given before the meeting for discussing and adopting decisions, concluding agreements, or performing other business activity. (7) The written statement under paragraphs (1) and (6) of this Article shall be submitted to the bank's Supervisory Board and Management Board, indicating the reason underlying the conflict of the personal with the bank's interest. (8) If the person under paragraph (1) of this Article conceals the existence of a conflict of interests, the National Bank and any other person who has a legal interest may require annulment of the legal matter to the competent court in accordance with this law.
X. REPORTS, ACCOUNTING AND AUDITING

1. Reports
   Article 101
   (1) The banks shall submit reports and data to the National Bank.

(2) The National Bank Council shall prescribe in more details the forms, types, methodology, contents of the reports and data, and the deadlines for their submission to the National Bank. (3) The National Bank Council may prescribe reports and data which are to be published by the bank, as well as the manner, the form and the deadlines for their publishing.
2. Accounting
Article 102
(1) The bank shall keep its business records in a regular and updated manner. Business records and financial statements shall be compiled in accordance with the regulations on accounting and the accounting standards, unless otherwise stipulated by this law. (2) The bank shall organize its operations and keep business records, as well as the business and accounting documentation, in a manner confirming that the bank operates, at any time, pursuant to the provisions of this law. (3) The bank shall classify the data in its business records pursuant to the chart of accounts. (4) When preparing the financial statements referred to in this Article, the bank shall apply the form as defined by Article 103 of this Article. (5) The bank shall prepare an annual account, financial statement and consolidated financial statement. (6) The bank shall submit to the National Bank non-audited semi-annual and annual financial statements within 30 days following the expiry of the period it refers to. (7) The bank shall submit to the National Bank a monthly report on the balance and the transactions on all accounts in the banks' chart of accounts.
Article 103
(1) The National Bank Council shall prescribe:

1. the chart of accounts for banks,
2. the types and the contents of banks' financial statements, and the notes to those statements,
   and
3. the Methodology for recording and valuation of the accounting items and for preparation of the
   financial statements.
   (2) For supervisory purposes, the Governor may prescribe additional accounting guidelines, data and reports, the bank is required to submit to the National Bank.

3. External audit
   Article 104
   Annual financial statements and business records shall be audited and assessed by an auditing company, which shall prepare an audit report in accordance with the auditing regulations and with the provisions in this law.

Article 105
(1) The bank shall appoint an auditing company notifying the National Bank thereon within 15 days from the appointment date. (2) The Governor shall not accept the auditing company if it:

1. has less than 3 years audit experience,
2. is a person related to the bank,
3. has provided consulting services to the bank in the period of last 2 years,
4. has been subject to measures imposed by the Chartered Auditor Institute over the last 3
   years and
5. has an inadequate expertise or fails to follow the professional standards.
   (3) Should the Governor does not accept the auditing company, they shall notify the bank thereon within 15 days after receiving the notification referred to in paragraph (1) of this Article and shall require from the bank to appoint another auditing company. (4) The bank shall appoint another auditing company within 45 days after receiving the notification referred to in paragraph (3) of this Article. (5) Same auditing company may conduct up to five successive audits of the annual financial statements in one bank.
   Article 106
   (1) The audit shall be focused on:

• the bank's annual financial statements and
• bank's operations,
  (2) The audit of annual financial statements of a bank shall be an assessment of the annual financial statements of a bank, in accordance with articles 103 and 104 of this law. (3) The audit of bank's operations shall include at least:

1. process of internal calculation and assessment of the required capital adequacy of the bank,

2. bank's risk management systems,

3. the functioning of internal control systems and the performance of internal audit function,

4. information security,

5. the accuracy and completeness of statements submitted by the bank to the National Bank for
   supervisory purposes,

6. the compliance of the bank's operations with the regulations,

7. data required to be released by the bank and

8. the bank's anti-money laundering system.
   (4) The National Bank Council shall prescribe in detail the contents of the audit of bank's financial statements and operations, in accordance with the international standards.
   Article 107
   (1) The auditing company shall immediately notify the Governor in writing if, during the audit, it finds out that:

9. bank's solvency or liquidity is compromised,

10. the bank is insolvent or illiquid,

11. the bank operated and/or has operated contrary to the regulations and/or a condition for revoking
    a license for founding and operating a bank has been fulfilled, in accordance with Article 154 of this law and

12. there are significant discrepancies and shortcomings in the functioning of internal control systems
    in the financial reporting process.
    (2) The auditing company shall immediately notify the Governor in writing if the audit of the legal entity the bank has close links with, shows that:

13. the entity faces liquidity or solvency problems, and

14. the entity operated and/or has operated contrary to the regulations
    (3) The Governor shall notify the Minister of Finance about the cases referred to in paragraph (1), items 1 and 2 of this Article within three days from the day the notification was received.
    Article 108
    (1) Auditing company shall submit the report on audit of the annual financial statements simultaneously to the Supervisory Board, the National Bank and the Ministry of Finance, not later than 30 April of the current year for the previous calendar year. The auditing company shall, together with the audit report on the annual financial statements, submit the audit report of the bank's operations to the Supervisory Board and to the National Bank. (2) The National Bank may require from the auditing company additional explanation and data with respect to the audit. (3) The auditing company shall make all work papers from the bank audit available to the National Bank on request. (4) The Governor shall not accept the audit report of the annual financial statements and the audit report of the bank's operations if it is found not to have been based on impartial facts on the financial standing of the bank, not to have been prepared as specified by Article 106 of this law, and/or if the audit company failed to observe the prescribed standards and procedures during the audit. (5) If the Governor does not accept the audit reports referred to in paragraph (1), a notification shall be submitted to the bank, the Ministry of Finance and the Chartered Auditor Institute thereon within 45 days after receiving the report. (6) In the cases referred to in paragraph (4) of this Article, the Governor shall require from the bank to appoint another auditing company to draft a new report. (7) The bank shall bear all costs arising from the appointment of another auditing company as defined by paragraph (6) of this Article.
    Article 109
    In the cases of Article 105 paragraph (2) or Article 108 paragraph (4) of this law, the Governor shall not accept an audit report prepared by that auditing company in the following three years.
    Article 110
    (1) The bank shall, within 8 days after the adoption of the annual report on the operations, submit to the National Bank a copy together with the audit report.

(2) A bank in which a foreign bank exercises control shall submit to the National Bank also an annual report on the operations and an audit report of the foreign bank that exercises control, within 30 days of their issuance. (3) The bank shall make the audit report and the annual financial statements including the notes to the report public and publish a balance sheet, income statement, report on the change in the capital, cash flows report and the auditor report to the annual financial statements, in at least one daily newspaper, within 15 days after the adoption of the report by the bank's General Meeting of Shareholders.
XI. BANKING SECRET
Article 111
Any documents, data and information acquired through banking and other financial activities on individual entities, and transactions with individual entities and on deposits of individual entities shall be considered banking secret the bank is required to protect and keep.
Article 112
(1) Persons with special rights and responsibilities, shareholders and bank employees, who have an access to the documents, data and information from Article 111 of this law, as well as other persons who, by rendering services to the bank, have an access to the documents, data and information referred to in Article 111 of this law, shall keep them, and may use them only for the purposes they were obtained for, and shall not disclose them to third parties. (2) The requirement under paragraph (1) of this Article shall not be applied in the following instances:

1. if the data and information disclosure is prescribed by a law, and

2. if the person gave a written consent to data disclosure.
   (3) For the persons with special rights and responsibilities, and bank employees, the requirement under paragraph (1) of this Article shall not apply also in the following instances:

3. on written request of the public prosecution office or by a competent court for conducting
   procedures within its competencies,

4. for the needs of the National Bank or another supervisory body authorized by law,
   2-a) if the data on inflows of money on accounts of natural persons are disclosed to the Public Revenue Office, in accordance with the law;

5. on written request of the Public Revenue Office for conducting procedures within its
   competencies, in accordance with the law;

6. if the data are disclosed to the Financial Intelligence Office, in accordance with the law,

7. if the data are disclosed to the Financial Police Office, in accordance with the law,

8. on written request of the State Foreign Exchange Inspectorate for foreign exchange
   operations control,
   6-а) on written request of the Customs Office for conducting procedures within its competence, in accordance with the law;

9. on written request of the Deposit Insurance Fund, in accordance with the law,

10. on written request of the Seized Property Management Agency, in accordance with the law,

11. on written request of a notary as part of a probate proceedings, as required by law;

12. if the data are disclosed for the needs of operating the National Bank Credit Registry and to
    the credit bureau, in accordance with the law,

13. if data are disclosed for the purposes of credit risk management of other members of a
    banking group or a banking group whose parent entity is seated outside the Republic of North Macedonia, the bank is a member of

14. on written request of the enforcement agents in accordance with the law, and

15. if data are provided to the Ministry of Labor and Social Policy, the Employment Agency of
    the Republic of North Macedonia and the Health Insurance Fund of Macedonia, for the purposes of performing their responsibilities and in accordance with data protection regulations, only if the bank has signed a memorandum of cooperation with these institutions, which governs the method of availability of the data referred to in Article 111 of this Law. (4) The persons who, in accordance with paragraph (3) of this Article, obtained the documents, data and information referred to in Article 111 of this law, shall keep them, may use them only for the purpose they were obtained for, and shall not disclose them to third parties, unless in cases and procedure stipulated by this or another law. (5) The requirement under paragraphs (1) and (4) of this Article shall continue being valid after the termination of the employment, i.e. after the termination of the ground and the status underlying the access to the data regarded as banking secret.
    XII. BANK ASSOCIATION
    Article 113
    (1) With a view of exercising joint interests and promoting their operations, banks established in the Republic of North Macedonia may create bank associations. (2) The activities and tasks of the bank associations shall be regulated by the articles of incorporation. (3) Amongst other activities, the association may:

16. organize additional, voluntary deposit guarantee system, in addition to the mandatory
    stipulated under the Law on the Deposit Insurance Fund,

17. organize exchange of data on the creditworthiness for the purposes of hedging credit risk,
    and

18. provide training for bank staff and issue certificates.
    (4) The banks may not conclude agreements that limit the principle of free market operations and banking competition.
    XIII. SUPERVISION, CONSOLIDATED SUPERVISION AND INSPECTION
    Article 114
    (1) The National Bank shall conduct supervision, consolidated supervision and inspection in a manner and procedure specified by this and/or other law. (2) The National Bank Council shall more precisely regulate the method of conducting supervision, consolidated supervision and inspection referred to in paragraph (1) of this Article. (3) Any entity subject to supervision, consolidated supervision and inspection by the National Bank shall, under their security procedures, provide to the persons authorized by the National Bank an

access to any premise, to the available documentation, including data kept electronically, and provide any documentation requested by the persons authorized by the National Bank. (4) During the supervision, consolidated supervision and inspection, the authorized persons may keep and take out only copies of the bank's documents, verified by a notary, if needed.

1. Supervision
   Article 115
   (1) Through the supervision, the National Bank shall assess the safety, soundness, risk and the compliance of the bank's operations with the regulations. (2) Supervision shall be conducted by persons authorized by the Governor.
   Article 116
   (1) The National Bank shall perform its supervisory function by:

1. permanent off-site supervision of the bank's operations by gathering and analyzing the
   reports and data submitted by the bank,
2. full-scope or targeted on-site, supervision in the bank,
3. keeping contacts with the bank's body members and with the audit company, and
4. cooperating and exchanging data and information with other supervisory authorities.
   (2) The National Bank shall conduct on-site supervision according to pre-specified plan and if needed.
   Article 117
   The bank shall provide the following for the supervision purposes:
5. reports and information on the bank's operations,
6. audit report and additional information on the audit conducted in the bank and the letter
   sent by the audit company to the bank's Management Board,
7. extraordinary reviews for the operations, and
8. reports of the bank's Internal Audit Department.

2. Consolidated supervision
   Article 118
   (1) The National Bank shall conduct consolidated supervision of a banking group on the basis of the consolidated reports of the group. (2) For the purposes of this law, the bank having a head office in the Republic of North Macedonia which is a parent entity of the banking group shall be responsible for fulfilling the obligations arising from the purposes of the consolidated supervision. (3) As an exception to paragraph (2) of this Article, in the case the parent entity of the banking group is a financial holding company with a head office in the Republic of North Macedonia, for the purposes of this law, the bank having a head office in the Republic of North Macedonia which is subordinated entity to such holding company shall be responsible for fulfilling the obligations arising from the purposes of the consolidated supervision. (4) The bank referred to in paragraphs (2) and (3) of this Article shall be considered a bank subject

to consolidated supervision.
(5) In the case the financial holding company with a head office in the Republic of North Macedonia controls two or more banks having a head office in the Republic of North Macedonia which are not interconnected in terms of control and participation, the bank with highest assets shall be a bank subject to consolidated supervision. If the amount of assets of the banks is equal, the bank subject to consolidated supervision shall be the bank that first obtained a founding and operating license by the Governor. (6) Other legal entities of the banking group which are subordinated entities in the banking group may have a head office on and outside the territory of the Republic of North Macedonia. (7) The members of the management bodies of the financial holding company referred to in paragraphs (3) and (5) of this Article must fulfill the requirements concerning the members of the Management Board specified by this law.
Article 119
(1) The banking group shall observe and follow the provisions of this law that defines the supervisory standards and risk management. (2) The parent entity shall organize and ensure transparency of the banking group, thus enabling identification and monitoring of:

1. the actual persons that exercise control in the group,
2. the financial standing of the banking group and each individual entity in the group,
3. the risk profile of the banking group and each individual entity in the group,
4. the internal control system and risk management systems, and
5. the interconnection between the individual entities and type of connection, including the
   amount of share in the capital and/or voting rights in other entities in the group. (3) The bank subject to consolidated supervision shall have adequate risk management, internal control and reporting and accounting systems in place, in order to identify, measure, monitor and control transactions with other entities in the banking group.
   Article 120
   The consolidated supervision shall refer at least to:
6. the amount of own funds,
7. the amount of large exposures,
8. the investments in other non-financial institutions,
9. the internal control system, and
10. the risk management.
    Article 121
    The National Bank Council shall specify the scope of the consolidation and the contents of the consolidated reports referred to in Article 122 of this law and the deadlines for their submission by the bank subject to consolidated supervision.

Article 122
(1) The bank subject to consolidated supervision shall compile and submit consolidated reports of the banking group to the National Bank. (2) The consolidated reports referred to in paragraph (1) of this Article shall consist of consolidated financial statements and consolidated supervisory reports. (3) The bank subject to consolidated supervision, when compiling the reports referred to in paragraph (1) of this Article, shall have all necessary information and data underlying the development of the consolidated reports of the banking group and shall establish a system for verifying the accuracy and reliability of the information and data provided by the entities in the group. (4) The parent entity in the banking group shall ensure application of uniform principles for validation and presentation of any financial statement of the subordinated entities.
Article 123
At request of the Governor, the bank subject to consolidated supervision shall also consolidate certain positions or activities within the banking group, if necessary for the purposes of full and impartial presentation of the financial position and results from the operations of the group as a whole and each bank in the group.
Article 124
(1) Any subordinated entity in the banking group and financial holding company shall submit to the bank subject to consolidated supervision any data and information necessary for the purposes of the consolidated supervision, have proper systems in place facilitating the generation of such data and information and proper internal control systems in place for verification of the accuracy and reliability of the submitted information and data. (2) For the purposes of determining the scope of consolidation that is to be made by the bank subject to consolidated supervision, any subordinated entity in the banking group shall submit to the bank data on the amount of their share in the capital and/ or voting rights in other entities. (3) In the case the subordinated entities in the group and the financial holding company fail to submit the data and information necessary for the purposes of consolidated supervision to the bank subject to consolidated supervision, the bank shall immediately notify the National Bank thereon.
Article 125
(1) In cases when there is no banking group, the Governor may request from the bank subordinated to other legal entity to perform full consolidation or consolidation of certain positions or activities, if necessary for full and impartial presentation of the financial position and results from the bank's operations. (2) The Governor may request from the bank which is a parent entity of other legal entity which is not a bank or financial holding company to carry out full consolidation or consolidation of certain positions or activities of the entities of the group, irrespective of their activity, if necessary for full and impartial presentation of the financial position and results from the bank's operations. (3) The bank referred to paragraphs (1) and (2) of this Article shall have and maintain adequate risk management, internal control and reporting and accounting systems in place, in order to identify,

measure, monitor and control transactions with the parent entity, its subsidiaries and/or the bank's subsidiaries. (4) The legal entities referred to in paragraphs (1) and (2) of this Article shall submit to the bank, referred to in paragraphs (1) and (2) of this Article, any data and information required for the purposes of consolidated supervision. (5) The bank shall immediately notify the National Bank in case the legal entities referred to in paragraphs (1) and (2) of this Article fail to submit the required data and information under paragraph (4) of this Article. (6) The bank shall immediately notify the National Bank of any significant transactions with the entities referred to in paragraphs (1) and (2) of this Article.
Article 126
(1) The bank subject to consolidated supervision shall immediately notify the National Bank on:

1. any change relevant to determining an existence of a banking group, as defined by the
   provisions of this law, and
2. any change in each legal entity or in the interconnections between the entities in the group,
   relevant to the purposes of consolidated supervision.
   (2) For the purposes of consolidated supervision, the Governor may also require from the bank subject to consolidated supervision, financial holding company or subordinated entities to submit other data and information. (3) The Governor may prohibit execution of transactions of the bank subject to consolidated supervision and/or the bank which is a subordinated entity in the banking group, with entities in the group or entities related thereto, if determined that such transactions are likely to seriously compromise the bank's safety and soundness.
   Article 127
   (1) If a bank with a head office in the Republic of North Macedonia is a member of a banking group that includes one or more entities subject to supervision of other supervisory body/bodies, the National Bank and that/those supervisory body/bodies shall develop a uniform method of consolidated supervision of the banking group. (2) The National Bank and other supervisory bodies shall precisely regulate the uniform method of consolidated supervision of the banking group by concluding agreements underlying the permanent exchange of data and information for the purposes of consolidated supervision. (3) The exchange of information between the National Bank and other supervisory bodies shall at least refer to:
3. identification of the banking group structure, including the actual persons that exercise
   control in the group,
4. changes in the shareholder, management and organizational structure of the group,
5. business and strategic plans of the banking group,
6. financial position of the group members, particularly focusing on the capital adequacy,
   transactions with related entities, exposure between the entities in the group, earnings, etc.,
7. corporate governance, risk management and internal control systems,
8. measures undertaken against certain entities in the group,
9. any other information that might considerably affect any entity in the group or the group as

a whole.
3. Inspection
Article 128
The National Bank may conduct an inspection of the operations of entities related to the bank, other entities in the banking group and the ancillary banking services undertaking. If such persons are subject to inspection by other authorized body, the National Bank shall conduct the inspection in cooperation with such body.
XIV. INSPECTION OF THE LEGITIMACY OF OPERATIONS OF NON-BANKING ENTITIES
Article 129
(1) If the National Bank or a body authorized to carry out inspection in accordance with the law have found that natural persons and legal entities perform activities contrary to Article 5 of this law, they shall immediately report to the Financial Police Office. (2) The Financial Police Office shall, immediately after receiving the notification referred to in paragraph (1) of this Article, carry out inspection of the operations of persons/entities acting contrary to Article 5 of this law, and take action within its competences.
Article 130
The Financial Police Office shall make a decision specifying a period within which the person/entity, acting contrary to Article 4 paragraph (1) of this law, has to change the name. In the case it fails to change the name within the specified period, the Financial Police Office shall forthwith request a deletion of such words of the name from the registry.
XV. MEASURES
Article 131
(1) The Governor shall undertake measures and shall determine deadlines for their implementation in case the bank, banking group, shareholders or bank's bodies fail to adhere to the regulations governing the bank's operations or its internal procedures, or if necessary for preserving safety and soundness of the bank or the overall banking system. (2) Measures undertaken by the Governor:

1. regular measures,

2. additional measures

3. introduction of administration,

4. withdrawal of an approval, and

5. revocation of a license.
   (3) When choosing the measures to be undertaken, the Governor shall be guided by the following:

6. type and severity of illegality and/or irregularity;

7. the effect or possible effect of the measure on the bank or its depositors in order to prevent from
   further deterioration of the bank's position,

8. the need to maintain the safety and soundness of the bank or the banking system as a whole;

9. whether the illegality, i.e. irregularity was made on purpose and/or is recurrent, and

10. willingness of the bank's bodies to eliminate the identified illegitimacies and irregularities.

1. Regular measures
   Article 132
   (1) The Governor shall undertake regular measures in cases of illegalities and/or irregularities in the operations of the bank or the banking group, if, particularly, but not exclusively:

1. the management system, information system, internal control system and internal policies
   and procedures are not in compliance with the regulations or are not observed,
2. the accounting policies, procedures and practice are not in conformity with the accounting
   regulations,
3. the obligation and deadlines for submitting data, information and reports to the National
   Bank, and their public disclosure, have not been observed,
4. there is no proper audit,
5. it does not adhere or acts contrary to the supervisory standards,
6. there is no adequate level of own funds and/or adequate level of capital conservation buffers,
   and
7. it fails to meet the obligations for anti-money laundering and combating the financing of
   terrorism.
   (2) In the cases listed under paragraph (1) of this Article and provided that they do not seriously compromise the safety and soundness of the bank, the Governor may undertake the following measures:
8. 1. issue a recommendation to the bank specifying periods for: training of the staff and
      persons with special rights and responsibilities or recruitment of adequate staff, changes in the bank's organizational structure, development of new policies and procedures in certain areas and development and implementation of an action plan for addressing the illegitimacies and irregularities and complying with the regulations,
9. issue a written warning to the bank,
10. sign a memorandum with the majority members of the bank's supervisory board and/or
    board of directors with deadlines to eliminate any irregularities, comply with regulations, achieve and maintain more stringent supervisory standards than the standards laid down in Articles 68, 71, 72, 73, 74, 78, 79 and 81 of this law, attain and maintain higher amount of own funds and/or higher capital adequacy ratio or achieve and maintain adequate amount of capital buffers, individually and jointly, and
11. give the bank additional obligation to submit extraordinary data and reports in a period, type,
    scope and frequency specified by the Governor.
    (3) The bank shall, within 5 days from the expiration of the deadlines under paragraph (2) items 1, 2 and 3 of this Article, submit to the National Bank a report on the undertaken activities and documented evidence that it has complied with the regulations.

2. Additional measures
   Article 133
   (1) The Governor shall undertake additional measures against any bank or bank shareholder particularly when:

1. identified that there is a risk to the maintenance of the safety and soundness of the bank or

the banking system as a whole;
2) they fail to undertake, on time, the measures under Article 132 paragraph (2) of this law,
3) they repeat the irregularities referred to in Article 132 paragraph (1) of this law, which have
already been subject to a measure or sanction for an infraction,
4) the bank performs activity without obtaining a license or approval,
5) the bank performs activities through branch abroad without obtaining an license by the
Governor,
6) the bank no longer meets the requirements underlying the issuance of the founding and
operating license, i.e. the approval for performing financial activities,
7) the capital adequacy ratio and/or own funds and/or capital conservation buffers are below
the level defined by this law,
8) they failed to allocate the required level of special reserves, i.e. failed to make adequate
correction of value of the bank assets,
9) they permanently or considerably violate the supervisory standards,
10)they frequently fail to meet the obligation for timely submission of data, information and reports to the National Bank and other institutions specified by law, 11)they impede the National Bank in the conduct of supervision, consolidated supervision and taking action; 12)they hinder the audit company to perform audit; 13)the shareholder was not granted an approval for acquiring shares. 14)the existence of close connections of the bank, the entities/persons where the bank has equity holding or of the other members of the group where the bank belongs with other persons/entities hinders the supervision and consolidated supervision or the enforcement of measures taken pursuant to this law. (2) In the cases under paragraph (1) of this Article, the Governor shall adopt a decision on undertaking one or more of the following measures:

1. authorize persons for on-site supervision of the bank's operations,
2. order the bank and/or shareholder to:

• review the internal procedures and policy,

• reduce the operating costs,

• reach adequate level of reserves,

• replace a person with special rights and responsibilities,

• conduct additional audit by the audit company, different from the audit company engaged
  by the bank, in a scope and under terms defined by the Governor and at the expense of the bank,

• achieve and maintain own funds and/or capital adequacy ratio higher than the one stipulated
  by this law, including increase in own funds by allocation of profit at the year end,

• establish and maintain stricter supervisory standards than those specified in Articles 68,71,
  72, 73, 74, 78, 79 and 81 of this law,

• sell equity holdings in other legal entities,

• develop and implement a plan for improving the condition of the bank, provided that the
  bank is undercapitalized, and

• recapitalize the bank, and

3. prohibit, limit and impose special terms for:

• payment of dividend or other consideration paid by the bank for instruments that are part of
  its Tier I capital,
• exercising the rights arising from shares,
• payments to the members of the management bodies,
• exposure to connected persons, unless they are backed by a pledge on securities issued or
  guaranteed by the Republic of North Macedonia or the European Union, kept by an independent third party - depository institutions, the market value of which exceeds 125% of the credit amount at all times, or other type of exposure,
• transactions with other entities in the banking group or persons/entities connected with the
  bank or with other persons/entities,
• exposure to an entity for which, as specified by the methodology of the National Bank,
  correction of value is made or special reserve is allocated of at least 20%,
• prolonging of approved credits,
• performing all or certain financial activities,
• opening units of a bank,
• participation in a foreign exchange market,
• acquiring equity holdings in other legal entities, and
• launching new financial activities.
  Article 134
  (1) The Governor may authorize a person - supervisor from the National Bank who will monitor the implementation of the measures listed under Article 133 paragraph (2) of this law. (2) The person referred to in paragraph (1) of this Article shall be entitled to verify the payment order, attend the sessions of the Supervisory Board and the Management Board without voting right and obtain any information and data necessary for the implementation of the measures under Article 133 paragraph (2) of this law.
  2.1. Bank improvement plan
  Article 135
  (1) The bank shall be considered undercapitalized provided that its own funds or capital adequacy ratio are below those required by this law. (2) If the bank is undercapitalized or owing to the operating losses it faces undercapitalization, the Governor shall adopt a decision requiring from the bank's Supervisory Board to submit a plan for improving the condition, within 10 days. (3) The plan referred to in paragraph (2) of this Article shall contain precisely elaborated measures and activities and period for reaching and maintaining own funds and achieving the capital adequacy ratio set in accordance with this law. (4) The Governor shall adopt a decision on approving or rejecting the plan under paragraph (2) of this Article within 10 days after the date of receiving the plan.

(5) Should the plan under paragraph (2) of this Article also allow for increase in the initial capital, the bank shall, within 30 days after receiving the decision of the Governor on approving the plan, convene meeting of shareholders. If the General Meeting of Shareholders passes a decision on increasing the initial capital, the payment shall be made within 90 days after the date of adopting the decision. (6) In the case the Governor rejects the plan under paragraph (2) of this Article or the General Meeting of Shareholders of the bank does not pass the decision on increasing the initial capital, the Governor shall adopt a decision on introducing an administration or revoke the founding and operating license.
Article 136
(1) The bank required to submit a plan for improving the condition shall not perform the following activities without prior approval of the Governor:

1. launch a new financial activity,
2. increase the risk weighted assets by more than 5% annually,
3. pay dividend or make any other payment in the form of bonuses, grants, etc. to the
   shareholders, the persons with special rights and responsibilities and to the bank's employees, and
4. increase the total exposure of the bank.
   (2) In addition to the restrictions listed under paragraph (1) of this Article, the Governor may also require from the bank that implements a plan for improving the condition, to undertake any of the measures under Article 132 paragraph (2) and Article 133 paragraph (2) of this law.
   2.2. Restriction of rights arising from shares
   Article 137
   (1) For shares acquired contrary to Article 59 of this law and shares for which the approval issued in accordance with Article 153 of this law has been withdrawn, the Governor shall adopt a decision declaring that the shareholder who has acquired those shares shall not bear any voting rights and requires from them to dispose of the shares within a specified period, which may not be longer than 180 days, except in the cases of Article 59 (2) of this law when the Governor may determine a longer period. (2) The shareholder shall dispose of such shares within the period set in the decision of paragraph (1) of this Article. (3) A shareholder who fails to dispose of the shares within the period set in the decision of paragraph (1) of this Article, the Governor shall adopt a decision and order to authorize, within 10 days of receipt of the decision, the National Bank to dispose of the shares on its behalf. (4) The shareholder shall submit the authorization within the period specified in paragraph (3) of this Article. (5) A shareholder who will not give authorization within the specified period, the Governor shall adopt a decision declaring that the shares, despite voting right, shall also not bear the right to dividend payment and that it can not be or become a shareholder with qualifying holding in the bank. (6) The Governor shall, within eight days of the adoption of the decision referred to in paragraph (5) of this Article, adopt a decision to sale the shares on behalf of the shareholder under

paragraph (5) of this Article.
(7) Provided that in the period after adoption of the decision under paragraph (5) of this Article until the sale of shares, the bank pays a dividend to the other shareholders, the dividend of the shareholder referred to in paragraph (5) of this Article shall be distributed to the bank's general reserve.
Article 138
(1) The sale of shares under Article 137 paragraph (6) of this law shall be conducted by a person authorized by the Governor, at a public stock exchange auction, according to the rules of a licensed stock exchange, approved by the Securities and Exchange Commission. (2) The person under paragraph (1) of this Article shall, within 8 days after the decision-making referred to in of Article 137 paragraph (6) of this law, publish the date of holding the public stock exchange auction in the Official Gazette of the Republic of North Macedonia, in at least two daily newspapers and on the National bank website. (3) In the announcement referred to in paragraphs (2) and (8) of this Article, the person under paragraph (1) of this Article shall indicate:

1. the initial price of the shares to be sold on the date of the first public stock exchange
   auction,
2. date/dates of holding one or more public stock exchange auctions,
3. the requirements for acquiring a shareholder status having a qualified holding in a
   bank as stipulated by this law and the deadline for submitting the request along with the documentation for obtaining an approval for acquiring shares, in case of selling shares that represent a qualified holding in a bank,
4. the requirement for submitting to the National Bank, a written statement of the
   interested persons to pay-in funds for purchasing shares and a deadline for submitting such statement. (4) In cases of sale of shares that represent qualified holding in a bank, only persons who have received prior approval by the Government stating that they have fulfilled the conditions required for obtaining the status of a shareholder with a qualifying holding in a bank in accordance with the provisions of this law and who submitted a written statement to the National Bank that they will pay-in the funds to purchase the shares, may participate in the public stock exchange. In cases of sale of shares that do not represent a qualified holding in a bank, only persons who submitted a written statement to the National Bank that they will pay-in the funds to purchase the shares may participate in the public stock exchange. (5) The Governor shall make a decision within 30 days after the submission of the request for issuing an approval for acquiring shares with qualified holding. (6) The initial price of shares shall be:
5. an average of the official daily average price of shares in the last three months prior to
   the date of making the decision referred to in Article 137 paragraph (6) of this law, or
6. book value of shares, provided that in the last three months prior to the date of making
   the decision referred to in Article 137 paragraph (6) of this law no transactions in shares have been conducted. In this light, transactions in shares shall not include a block transaction and non-commercial transfer of shares. (7) If an announcement includes holding of several public stock exchange auctions, at each following public stock exchange auction the shares shall be offered at a price by 10% lower

than the price offered for sale at the previous public stock exchange auction. (8) If the public auctions are not held, or if after holding one or more published public stock exchange auctions some shares remain unsold, the person referred to in paragraph (1) of this Article shall re-announce one or more public stock exchange auctions within a period of 30 days from:

1. last held public stock exchange auction or
2. the date on which the person referred to in paragraph (1) of this Article notified the
   authorized stock exchange that the auction / auctions have not been held.
   (9) At each subsequent announcement of one or more public stock exchange auctions, the initial stock price shall be by 10% lower than:
3. the price of the last held public stock exchange auction or
4. the initial price of the first auction of the previous announcement, if public stock
   exchange auctions from the previous announcement have not been held.
   (10) The initial price of paragraph (9) of this Article may not be lower than 50% of the average of the official daily average share price determined in the last three months before the date of announcing the public stock exchange auction. If in the last three months before the date of announcing the public stock exchange, there were no transactions in the shares of the bank, where transactions in shares does not imply block transaction and non-commercial transfer of shares, the initial price of paragraph (8) of this Article may not be lower than 50% of the book value of the shares. (11) While making the decision referred to in Article 137 paragraph (6) of this law, the Governor shall also issue a decision to the Central Securities Depository to register a ban on holding the shares subject to sale by their owners referred to in Article 137 paragraph (6) of this law. (12) The funds risen from the sale of shares less the costs for organizing and holding the public stock exchange auction shall belong to the shareholder referred to in Article 137 paragraph (6) of this law. (13) The person referred to in paragraph (1) of this Article shall sign the order for selling the shares at the public stock exchange auction. (14) The Central Securities Depositary shall abolish the ban under paragraph (11) of this Article after receiving a notification by the Governor.

3. Administration
   Article 139
   (1) The Governor shall pass a decision on introducing an administration and appoint members to the administration - administrators in a bank if:

1. the circumstances has appeared that may seriously compromise the bank's solvency,
2. the bank and/or shareholders refuse to fulfill or fail to undertake proper activities for fulfilling
   the additional measures imposed by the Governor, thus compromising the liquidity and solvency of the bank,
3. the bank's Supervisory Board fails to submit a plan for improving the condition in the bank,
4. the National Bank rejects the plan for improving the condition in the bank,
5. the bank fails to implement the plan for improving the condition in the bank within the set
   periods,
6. the bank fails to reach the required level of own funds within the period set by the plan for

improving the condition in the bank, and
7) the capital adequacy ratio of the bank drops below 50% of the level specified by this law.
(2) The decision on introducing an administration in a bank shall determine the number of administrators, the authorizations of any administrator and the duration of the administration which may not be longer than one year after the date of submitting the decision to the bank subject to administration, with a possibility to be prolonged for another 6 months. The decision authorizes one of the administrators to sign the decisions.
Article 140
(1) The administration shall consist of maximum of three administrators.
(2) Any person, including a person employed with the National Bank, who fulfills the requirements of this law that refer to a member of a bank's Management Board and an independent member may be appointed as an administrator. (3) The administrators shall receive remuneration for their work defined by the Governor, and shall be paid by the bank subject to administration. (4) The administrator shall not be held liable for damages to third parties that might arise from the implementation of the administration in a bank if they have acted in accordance with their duties and authorization and committed no felony. (5) The Governor may restrict the bank's payment operations or exclude it from the payment operations for a certain period by adopting a decision on introducing an administration in a bank. (6) The decision on introducing an administration in a bank shall be published in the Official Gazette of the Republic of North Macedonia and in at least one daily newspaper and shall be submitted to the Trade Registry for registration.
Article 141
(1) All responsibilities of the Supervisory Board and the Management Board of the bank and the responsibilities of the General Meeting of Shareholders, other than the responsibility for adopting a decision on increasing the capital shall cease on the date of submitting the decision on introducing an administration to the bank, and shall be conferred to the administrators. (2) On the date of submitting the decision on introducing an administration to the bank, only payments on order signed by the administrators may be made from the account of a bank subject to administration and excluded from the payment operations. (3) On the date of submitting the decision on introducing an administration to the bank, the decisions on forced payment and other payment instruments on the burden of the account of the bank excluded from the payment operations, submitted to the National Bank shall be recorded and returned to the submitter within 3 days, with the bank being notified thereon. (4) On the date of submitting the decision on introducing an administration to the bank, the forced payment decisions and other payment instruments on the burden of accounts maintained by the bank subject to administration and excluded from the payment operations, submitted to the bank shall be recorded and returned to the submitter within 3 days.
Article 142
(1) The administrators, when performing the duties specified by this law, shall have an access and control over the business premises, property, business records and other documentation of the bank and shall protect the property and the documentation of the bank.

(2) The members of the Supervisory Board and Management Board and the other persons with special rights and responsibilities that performed this function by that time, shall provide the administrators an access to the entire documentation of the bank, as well as supply them with all necessary information and additional reports on the bank's operations. (3) If the administrators are hindered, in any way, from entering the premises of the bank, such access shall be enabled with the assistance of the Ministry of Internal Affairs. (4) The administrators shall be entitled to remove any person who impedes their work, and when needed, they may also request assistance from the Ministry of Internal Affairs. (5) The administrators shall, in their work, adhere to the laws and other regulations and observe the written instructions and guidelines provided by the Governor.
Article 143
(1) The administrators shall, within 21 days after the appointment determine the conditions in the bank. (2) After the expiration of the period under paragraph (1) of this Article, the administrators shall submit a report on the condition of the bank to the Governor, including:

1. Bank Rehabilitation Plan, or

2. a proposal for revoking the founding and operating license, which may include a plan for
   transfer of the bank's assets and liabilities to other bank.
   (3) The period for submitting the report under paragraph (2) item 1 of this Article may be even shorter, if determined by the decision under Article 139 paragraph (1) of this law. (4) The National Bank Council shall more precisely set the requirements and the procedure for conducting the rehabilitation plan and the plan for transfer of the bank's assets and liabilities to other bank.
   Article 144
   (1) The rehabilitation plan shall include:

3. assessment of the amount of own funds, the bank's solvency and liquidity position,

4. assessment of the willingness of the bank's shareholders to invest additional capital for
   covering the bank's losses,

5. method of conducting the bank rehabilitation, and

6. calculation of the expenses incurred from the implementation of the administration-related
   activities.
   (2) The bank rehabilitation plan may be implemented through one or more of the following methods:

7. by selling the bank's assets,

8. by increasing the bank's own funds by issuing shares for the creditors or for new investors
   as specified by this law,

9. by selling the shares, and

10. by status changes of the bank.
    Article 145
    The plan for transfer of the bank's assets and liabilities to other bank shall include at least:

11. assessment of the amount of own funds, the bank's solvency and liquidity position,

12. assessment of the value of the total assets and determination of the bank's liabilities,

13. assessment of the bank's assets and liabilities that would be transferred to other bank, and

14. effects of the transfer.
    Article 146
    (1) The Governor shall decide on the report referred to in Article 143 paragraph (2) of this law within 15 days from the date of receiving. (2) In the decision-making under paragraph (1) of this Article, the Governor shall be guided by the need to protect the interests of the bank's creditors, and the feasibility of the rehabilitation plan during the administration. (3) Provided that the Governor approves the bank rehabilitation plan or the proposal for revoking the founding and operating license that includes a plan for transfer of the bank's assets and liabilities to other bank, they shall adopt a decision authorizing the administrators to undertake further activities for delivery of the plans. (4) After being approved, the administrators shall implement the bank rehabilitation plan or the plan for transfer of the bank's assets and liabilities to other bank. (5) Once the plan for transfer of the bank's assets and liabilities to other bank is being implemented, the Governor shall pass a decision on revoking the founding and operating license and for fulfilling the requirements for opening a bankruptcy proceeding in the bank. (6) Provided that the Governor rejects the bank rehabilitation plan or approves the proposal for revoking the license for founding and operating a bank, they shall adopt a decision on revoking the founding and operating license and on fulfilling the requirements for opening a bankruptcy or implementing a liquidation procedure in the bank.
    Article 147
    (1) If the Governor determines, on the basis of the rehabilitation plan, that reaching of the set capital adequacy ratio requires an increase in the bank's own funds, they shall adopt a decision requiring from the administrators to convene a General Meeting of Shareholders and to propose to its shareholders to adopt a decision on covering the loss at the burden of the own funds and decision on increasing the bank's own funds (2) The administrators shall publish the convening of the General Meeting of Shareholders in at least three daily newspapers within 8 days after receiving the decision referred to in paragraph (1) of this
    Article.
    Article 148
    (1) If the General Meeting of Shareholders rejects the proposal referred to in Article 147 paragraph (1) of this law, or if the announced issue of shares in accordance with the decision adopted by the bank's General Meeting of Shareholders on the basis of the proposal referred to in Article 147 paragraph (1) of this law fails, the Governor may adopt a decision authorizing the administrators to organize a sale of shares of the existing shareholders to investors willing to rehabilitate the bank. (2) The sale of shares of the existing shareholders of the bank referred to in paragraph (1) of this Article to new investors shall be conducted by a public stock exchange auction, as required by this law.

(3) The administrators shall, within 90 days from the day of adopting the decision under paragraph (1) of this Article, announce the date of the public stock exchange auction in the Official Gazette of the Republic of North Macedonia and in at least two daily newspapers. (4) Within the period referred to in paragraph (3) of this Article, the administrators shall elect an auditing company to audit the financial statements of the bank and to determine the book value of the shares. The audit expenses shall be borne by the bank. (5) In the announcement for the public stock exchange auction, the administrators shall indicate the initial price of the shares which may not be lower than 70% of the book value determined in the audited financial statements of the bank, the amount of funds needed for recapitalization and the payment deadline, the requirements for acquiring a shareholder status in a bank as set by this law and the deadline for submitting the documentation to the National Bank proving that the aforementioned requirements are met. (6) The order for selling the shares at public stock exchange auction shall be signed by the administrators. (7) Simultaneously with the announcement for selling the existing shares, the Governor shall issue an order to the Central Securities Depositary to register a ban on holding the shares of the bank by their owners. (8) Investors who

1. have submitted an application and obtained a prior approval by the Governor for fulfilling
   the requirements necessary for acquiring a shareholder status in a bank as set by the provisions of this law, and
2. have submitted a written statement to the National Bank to pay funds for bank
   recapitalization within the period set by the announcement under paragraph (5) of this
   Article
   may participate in a public stock exchange auction.
   (9) If no one accepts the initial price at the public stock exchange auction, at the following public stock exchange auction the shares shall be offered at a price by 10% lower than the initial one, with the sale price being reduced by another 10% until one or more investors express willingness to purchase the offered shares. The decrease may not be below 50% of the initial price. (10)The Governor shall decide on the application for issuing an approval referred to in paragraph (8) item 1 of this Article, within 30 days from the day the request is submitted. (11)The funds risen from the sale of shares less the costs for organizing and holding the public stock exchange auction shall belong to the shareholders of the bank. (12)The Central Securities Depositary shall abolish the ban referred to in paragraph (7) of this
   Article, once the Governor informs it that the public stock exchange auction is over, that the
   new investors settled the assumed liabilities to the former shareholders and recapitalized the bank, if there is such a requirement.
   Article 149
   (1) The administrators shall, by the 15th in the current month, submit an operations report and report on the course of implementation of the bank rehabilitation plan for the preceding month.

(2) The report under paragraph (1) of this Article shall contain an assessment of the amount of own funds and the solvent and liquidity position of the bank during the administration and calculation of the expenses incurred by the implementation of the administration. (3) In addition to the report under paragraph (1) of this Article, the administrators shall also submit other reports in line with the needs and requests of the National Bank.
Article 150
(1) If the Governor finds that the bank rehabilitation plan has been fulfilled and that the financial position of the bank has improved and the bank reached the required amount of own funds and capital adequacy ratio set under this law, as well as that the bank is capable of settling its due liabilities, they shall order the administrators to summon the bank's General Meeting of Shareholders. (2) At the bank's General Meeting of Shareholders, the shareholders shall nominate members of the bank's Supervisory Board and shall submit an application for obtaining a prior approval for their appointment to the National Bank. Upon obtaining prior approval by the Governor, the Supervisory Board shall submit an application to the Governor for obtaining a prior approval to appoint members of the bank's Management Board. On the date the members of the Management Board are registered in the Trade Registry, the administration and the authorizations of the administrators shall cease.
Article 151
If the Governor finds that during the administration, the financial position of the bank in terms of
Article 150 paragraph (1) of this law have not improved, they shall make a decision on revoking the
founding and operating license and on opening a bankruptcy proceeding or initiating liquidation procedure in the bank.
Article 152
(1) The function of the administrator shall cease:

1. after the expiration of the term of their appointment,

2. in case of their resignation,

3. in case of death,

4. in case of their dismissal, and

5. in case of termination of the administration.
   (2) The Governor shall make a decision on dismissing a member of the administration:

6. if the member fails to implement the bank rehabilitation plan,

7. in case of lengthy severe disease that prevents them from carrying out the duties,

8. in case of loss of the working ability,

9. if the court has ruled a ban on carrying out a profession, activity or duty and
   4-a) who has been convicted, by an effective court judgment, for unconditional imprisonment of more than six months, in the period of duration of the legal consequences of the conviction, for crimes against property, crimes against public finances, payment operations and economy, criminal offenses against official duty, as well as crimes of forging document, specific cases of forging documents, computer forgery, using a document with untrue content and pettifoggery of the Criminal Code,

10. in case they are convicted of a crime.6
    (3) The discontented party may seek a protection by the competent court against the decision referred to in paragraph (2) of this Article.

4. Revocation of approvals
   Article 153
   The Governor shall revoke the approval for acquiring shares in a bank, the approval for appointing a member of the Supervisory Board and the Management Board and for performing financial activities that require special approval if:

1. such approval was obtained on the basis of false data,
2. in the period after the issuance of the approval receives a documented evidence that any of
   the requirements specified under Articles 13, 18, 58, 59, 83, 88 and 92 of this law are no longer fulfilled,
3. a member of the supervisory board and/or board of directors does not implement the bank's
   business policy;
4. a member of the supervisory board and/or the board of directors fails to comply with the
   provisions of this law, thus jeopardizing the safety and soundness of the bank and its creditors and;
5. member of the Supervisory Board and/or Management Board cuts across the responsibilities
   defined by this law.

5. Revocation of a founding and operating license and license for status changes
   Article 154
   (1) The Governor shall adopt a decision on revoking the license for founding and operating a bank or the license for status changes in the case:

1. such license was obtained on the basis of false data,
2. the bank failed to adopt a statute within 30 days upon receipt of the decision stipulated under
   Article 20 paragraph (5) of this law, i.e. it failed to make a decision on status changes within
   45 days from obtaining the decision referred to in Article 22 paragraph (3) of this law,
3. the bank failed to submit an application for registration in the Trade Registry within the
   specified period,
4. the bank failed to commence operating within 90 days following the issuance of the founding
   and operating license,
5. the bank performs financial activities for which it did not obtain a license, i.e. consent by the
   Governor,
6. the bank fails to meet the technical, organizational, personnel or other requirements for
   conducting banking activities, as specified by the provisions of this law and regulations adopted on the basis of this law,
7. the bank performs no financial activities for more than six months,

6 Article 152 paragraph 2 item 5 is abolished with Decision of the Constitutional Court of the Republic of Macedonia No. 182/07 dated 9 July 2008 (Official Gazette of Republic of Macedonia No. 88/08).

8. the effective decision of a competent authority determines that the bank has been involved
   in money laundering and other felonies,
9. the terms for introducing a bankruptcy or liquidation procedure in the bank have been
   fulfilled, as specified by this law,
   10)for the purposes of covering the losses, the bank's initial capital dropped below the level set in Article 14 paragraph (1) of this law, and the bank, along with the decision on reducing failed to adopt a decision on increasing the initial capital or failed to register or pay in the initial capital within 90 days after the adoption of the decision, 11)the conduct of efficient supervision of the National Bank is impaired, 12)the bank fails to implement or acts contrary to the measures imposed by the National Bank, 13)the number of members of the Supervisory Board and/or Management Board dropped below the minimum set by the law, and the bank failed to submit an application for obtaining a prior approval for appointing a member of the Supervisory Board i.e. Management Board for a period longer than 60 days after the termination of the term, 14)the number of members of the supervisory board and/or board of directors fell below the legal requirement, and the bank failed to receive an approval for a member of the board of directors or the supervisory board more than six months because it failed to nominate a person who meets the requirements of this law. (2) The Governor shall also adopt a decision on revoking the license for founding and operating license in the cases under Article 146 paragraphs (5) and (6) and Article 151 of this law. (3) From the date of adoption of the decision on revoking the founding and operating license referred to in paragraph (1) of this Article to the date of effectiveness of the court decision on introducing a bankruptcy proceeding in a bank, i.e. to the date of registering the liquidation trustees in the Trade Registry, the bank shall be excluded from the payment operations, and shall cease performing all activities, other than claim collection.
   5.1. Notification on issuing and revoking a license
   Article 155
   (1) The National Bank shall notify the Ministry of Finance in writing on any issuance and revocation of a license for founding and operating a bank and status changes within five days after the date of adoption of the decision on issuing, i.e. revoking the license. (2) The notification under paragraph (1) of this Article shall contain:
10. name and head office of the bank,
11. name of the members of the Management Board,
12. name of natural persons, i.e. name and head office of the legal entities - shareholders of the
    bank holding voting shares of more than 5% of the total number of voting shares,
13. financial activities performed by the bank,
14. date of issuance, i.e. revocation of the license, and
15. reasons for revoking the license.
    (3) The National Bank shall also notify the Ministry of Finance on each change in the data referred to in paragraph (2), items 1, 2, 3, 4 and 5 of this Article.

Article 156
The National Bank shall immediately announce the decision on issuing i.e. revoking a license for founding and operating a bank in the mass media and its web site.
XVI. BANKRUPTCY PROCEEDING
Article 157
(1) The Governor shall pass a decision on fulfillment of the requirements for opening bankruptcy proceeding in a bank. (2) The Governor shall pass the decision under paragraph (1) of this Article in the cases listed in paragraph (4) of this Article, ex officio, upon proposal of the creditors and of the bank. (3) The Governor shall decide on the proposal of the creditors and of the bank, stipulated in paragraph (2) of this Article, within 15 days from the submission of the proposal. (4) Bankruptcy procedure shall be initiated in the following cases:

1. when a bank is insolvent,
2. the administrator report, or the implementation of the rehabilitation plan show that the bank
   is insolvent, or
3. the liquidation procedure shows that the bank's assets are insufficient to pay all the claims
   of its creditors.
   (5) The bank is insolvent when:
4. the capital adequacy ratio is below one fourth of that specified under Article 65 of this law,
   or
5. it is unable to settle its due liabilities uninterruptedly for more than ten days.
   (6) The provisions under paragraph (4), item 1 of this Article shall not be applied when during the administration the bank is excluded from the payment operations. (7) Only the Governor may file a proposal for opening bankruptcy proceeding in a bank to a competent court, in accordance with this law. The proposal for opening bankruptcy proceeding in a bank to a competent court shall be submitted on the first working day after the adoption of the decision on fulfillment of the requirements for opening bankruptcy proceeding in a bank. The proposal for opening bankruptcy proceeding in a bank shall also enclose decision of the Governor on fulfillment of the requirements for opening a bankruptcy proceeding in a bank. (8) The court shall adopt a decision on the proposal for opening a bankruptcy proceeding in a bank within 3 working days from the receipt of the proposal under paragraph (7) of this Article, without conducting prior procedure. (9) The provisions of the Bankruptcy Law shall respectively apply to the bank bankruptcy proceeding, unless otherwise set under this law.
   Article 158
   (1) From the day the Governor passes the decision on fulfillment of requirements for opening a bankruptcy proceeding to the effectiveness of the court decision on opening bankruptcy proceeding in the bank, the Governor shall, in order to protect the property of the bank, adopt a decision on appointing at least one authorized officer in the bank. (2) The rights and duties of the authorized officer referred to in paragraph (1) of this Article shall be determined in the decision on appointment.

Article 159
(1) The decision on fulfillment of the requirements for opening a bankruptcy proceeding in a bank shall be submitted to the bank which fulfilled the requirements for opening a bankruptcy proceeding, to the bank which assumed the payment of insured deposits, to the proposer referred to in Article 157 paragraph (2) of this law, to the Deposit Insurance Fund and to the Ministry of Finance, within 3 days from the day of adoption. (2) The National Bank shall publish the decision on fulfillment of the requirements for opening of a bankruptcy proceeding in a bank through the mass media and display it on a noticeable place in the bank.
Article 160
(1) A person who fulfills the requirements referred to in the Bankruptcy Law and who, in accordance with the provisions of this law, fulfills the requirements for member of the Management Board of a bank may be appointed as a bank bankruptcy trustee. (2) If during the bankruptcy proceeding conditions are created for dismissal of the bankruptcy trustee, the court shall obtain an opinion of the Governor on the appointment of a new bankruptcy trustee. The Governor shall submit the opinion within three days from receiving the request from the court.
Article 161
(1) The bankruptcy trustee shall record the balance of all claims and liabilities of the bank under bankruptcy on the day of opening the bankruptcy proceeding and submit the records to the National Bank within 10 days upon publishing of the announcement for opening a bankruptcy proceeding in the Official Gazette of the Republic of North Macedonia. (2) The records referred to in paragraph (1) of this Article shall be inspected by the National Bank and submit them to the bankruptcy court and to the Deposit Insurance Fund, within 10 days upon the receipt.
Article 162
(1) The period for reporting creditors' claims, determined by the court's decision for opening a bankruptcy proceeding in a bank, shall not exceed 20 days. (2) The deadline referred to in paragraph (1) of this Article shall not apply to claims of legal entities and individuals on the basis of deposits in the bank and shall be deemed reported on the date of opening of bankruptcy proceedings of the bank. (3) If the National Bank is creditor in a bankruptcy proceeding of a bank, the National Bank shall propose one of the members of the Board of Creditors.
Article 163
(1) On the day of opening the bankruptcy proceeding, the claims of natural persons on the bank under bankruptcy based on a deposit up to the insured deposit amount in accordance with the Law on the Deposit Insurance Fund shall cease. (2) Prior to refunding the creditors, the costs for the proceeding including the costs of the bank, which takes over the deposit operations of the bank under bankruptcy, shall be deducted from the bankruptcy estate.

(3) The claims of the Deposit Insurance Fund based on payment of insured deposits shall be settled before the claims of all other creditors. (Repealed with a Decision of the Constitutional Court of the Republic of North Macedonia published in the Official Gazette of the Republic of North Macedonia No. 125/21)
Article 164
Any sale of assets of the bank under bankruptcy shall be previously approved by the Board of Creditors.
Article 165
(1) The provisions of the Bankruptcy Law regulating the reorganization procedure and personal management shall not apply in a bankruptcy proceeding of a bank. (2) The provisions of the Bankruptcy Law that regulate the refuting of legal action shall not apply to the legal actions undertaken during the administration, unless the effective court decision determines that they served for committing a felony. (3) Rights arising from agreements on loan of last resort approved in accordance with the provisions of the Law on the National Bank of the Republic of North Macedonia shall be legally effective, and after the opening of a bankruptcy proceeding, shall not be included in the bankruptcy estate and the National Bank shall have the right to separate settlement. (4) The provisions of the Bankruptcy Law pertaining to challenging legal actions shall not apply in the case of right to settlement arising from an agreement on loan of last resort and from financial collateral agreement.
Article 166
A copy of all reports of the bankruptcy trustee regarding the economic and financial position of the bank under bankruptcy and the course of the bankruptcy proceeding shall be submitted to the National Bank.
Article 167
If assets remain in the bankruptcy estate after the completion of the bankruptcy proceeding and settlement of all claims of creditors, those assets shall be divided among the shareholders of the bank.
XVII. LIQUIDATION PROCEDURE
Article 168
The liquidation procedure shall be initiated in a bank when:

1. the shareholders pass a decision on termination of the bank's operations, and there are no
   conditions for bankruptcy, and
2. the National Bank revokes the founding and operating license of a bank, and there are no
   conditions for bankruptcy.

Article 169
(1) The shareholders can pass the decision referred to in Article 168 paragraph (1) item 1 of this law, upon prior consent of the Governor. (2) The application submitted by the shareholders to the National Bank for obtaining the consent referred to in paragraph (1) of this Article shall contain information on the following:

1. the reasons behind the intention of the shareholders to make a decision for termination of
   the bank's operations,
2. the level of the bank's own funds as of the last date of notification to the National Bank
   before passing the decision on terminating the bank's operations,
3. estimate of the level of assets remaining after the completion of the liquidation procedure.
   (3) The Governor shall decide on the application for obtaining the consent referred to in paragraph (2) of this Article within 30 days from the date of submission of the application. (4) The application under paragraph (2) of this Article shall underlie the decision of the Governor on determining the conditions for introducing a liquidation procedure or on refusing the application if considered that that bank's property is insufficient for settlement of the liabilities to all creditors of the bank.
   Article 170
   (1) The Governor shall pass a decision on determining the conditions for carrying out liquidation proceeding in a bank in the instances referred to in Article 168 of this law. (2) The National Bank shall submit the decision referred to in paragraph (1) of this Article to the competent court which will carry out the liquidation procedure in accordance with the provisions of
   Section XVI Bankruptcy Proceeding of this law.
   (3) The decision referred to in paragraph (1) of this Article shall, within three days of its adoption, be submitted to the bank in liquidation, to the bank that assumed to pay the insured deposits, the Deposit Insurance Fund and the Ministry of Finance. (4) From the date the Governor passes the decision on fulfillment of requirements for opening a liquidation procedure to the date of opening the liquidation procedure in the bank, the Governor shall, in order to protect the property of the bank, appoint at least one authorized officer in the bank. (5) The rights and duties of the authorized officer referred to in paragraph (4) of this Article shall be determined in the decision on appointment. (6) The National Bank shall publish the decision referred to in paragraph (1) of this Article through the mass media and display it on a noticeable place in the bank.
   XVIII. ANTI MONEY LAUNDERING AND COMBATING THE FINANCING OF TERRORISM
   Article 171
   (1) The banks shall act pursuant to the regulations on anti-money laundering and combating the financing of terrorism. (2) The National Bank shall conduct supervision on AML/CFT systems in the bank.

XIX. SAVINGS HOUSES
Article 172
(1) Savings houses established and operating until the day of effectiveness of this law shall continue operating in the manned and under terms as defined by the founding and operating licenses, the provisions of this law and the individual acts adopted by the Governor. (2) The following provisions of Section I, Section II, Articles 7 paragraph (2), 10 and 11, Section III
part 2, part 3, Article 14 paragraph (5), part 4, part 5, Article 18 paragraph 5, part 6 and part 7,
Section VII, part 1 Article 57, part 2 and part 3, Section VIII parts 1, 2 and 3, Articles 70, 73 and
74, paragraphs (1) and (2), parts 4 and 6, Section IX, Articles 83, 84 and 85 and parts 6 and 8, Sections X, XI, XII, XIII, XIV, XV Article 131 parts 1, 2, 4 and 5, Section XVI, XVII, XVIII, XX and XXI of this law shall apply to the savings houses under paragraph (1) of this Article. (3) Upon prior license obtained from the Governor, the savings houses referred to in paragraph (1) of this Article may transform into banks and perform the following status changes: merger of savings houses for the purposes of founding a bank and acquisition of a savings house by a bank. (8) The National Bank Council may determine in detail the application of the provisions under paragraph (2) of this Article to savings houses.7
XX. DECISION-MAKING, COURT PROTECTION AND SUBMISSION PROCEDURES

1. Decision-making procedure
   Article 173
   Provisions from the Law on General Administrative Procedure shall respectively apply in the decision￾making procedure in accordance with the provisions of this law, unless otherwise stipulated by this law.
   Article 174
   The decisions of the Governor passed on the basis of this law shall not be subject to appeal and shall be final in an administrative procedure.
2. Court protection procedure
   Article 175
   Administrative dispute can be initiated against the decisions of the Governor passed on the basis of this law, in accordance with the Law on Administrative Disputes.
   Article 176
   (1) The appeal against the decisions passed on the basis of this law shall be lodged within 30 days from the day of the receipt of the decision.

7 In the Law on amending the Banking Law (Official Gazette of the Republic of Macedonia No. 26/13), a technical error has been made in Article 43 paragraph (2) that reads as follows: "Paragraphs (4), (5), (6) and (7) shall be deleted.“ It has not been regulated that paragraph (8) becomes paragraph (4).

(2) The person lodging the appeal referred to in paragraph (1) of this Article may not indicate new facts and bring new evidence in the procedure to the court 8 .
Article 177
The appeal against the decisions for revoking the founding and operating license, i.e. the decisions on determining the existence of requirements for initiating bankruptcy proceeding or requirements for implementing liquidation procedure in a bank may be lodged by:

1. the bank,
2. the shareholders holding shares in an amount of at least one tenth of the amount of the
   initial capital specified under Article 14 paragraph (1) of this law.
   Article 178 9
   (1) The person lodging the appeal may indicate new facts and bring new evidence in the procedure to the court, if the appeal is lodged against a decision on initiating administration and revoking the founding and operating license, i.e. decision on determining the existence of requirements for initiating bankruptcy proceeding or requirements for initiating liquidation procedure in a bank. (2) If the person lodging the appeal referred to in paragraph (1) of this Article refers to new evidence, they shall enclose them with the appeal. (3) In the cases referred to in paragraph (1) of this Article, the National Bank, in its response to the appeal, may indicate new facts and bring new evidence. (4) If, in its response to the appeal referred to in paragraph (1) of this Article, the National Bank refers to new evidence, it shall enclose them with the response to the appeal. (5) After the expiry of the deadline for lodging the appeal referred to in paragraph (1) of this Article or the response to the appeal referred to in paragraph (3) of this Article, the parties shall not be entitled to indicate new facts or bring new evidence.
   Article 179
   (1) In a procedure based on an appeal lodged against a decision of the Governor on:
3. introducing an administration in a bank,
4. non-issuance or revocation of the license for founding and operating a bank, or
5. determining the existence of requirements for initiating bankruptcy or liquidation procedure
   in a bank,
6. the court shall examine the legitimacy of the disputed act in accordance with the law.
   (2) When the court accepts the appeal, it shall not annul the disputed act, but only ascertains its illegitimacy, and the person submitting the appeal may, through the court, initiate a procedure for claiming damages by the National Bank.10

8 Article 176 paragraph 2 is abolished with Decision of the Constitutional Court of the Republic of Macedonia No. 149/08 dated 11 March 2009 (Official Gazette of Republic of Macedonia No. 42/09). 9 Article 178 is abolished with Decision of the Constitutional Court of the Republic of Macedonia No. 149/08 dated 11 March 2009 (Official Gazette of Republic of Macedonia No. 42/09); 10 Article 179 paragraph 2 is abolished with Decision of the Constitutional Court of the Republic of Macedonia No. 228/07 dated 9 July 2008 (Official Gazette of Republic of Macedonia No. 88/08).

3. Submission procedure
   Article 180
   (1) The submission of the correspondence (summons, the decision, conclusions and other official acts) shall be made:

1. by mail,
2. by handing from the National Bank, and
3. by public announcement.
   (2) The correspondence shall be submitted in an order specified under paragraph (1) of this Article.
   XXI. PENALTY PROVISIONS

1. Felonies
   Causing bankruptcy of a bank
   Article 181
   (1) A person who throughout the work violates the provisions of this law thereby contributing to the initiation of a bankruptcy procedure in a bank and causing damage to the creditors of the bank shall be punished with imprisonment from three to ten years. (2) If the act from this Article is performed by a legal entity it shall be punished by a fine. (3) The court shall impose the perpetrator under paragraph (1) of this Article also prohibition on performing professional activity or duty under conditions specified in Article 38-b of the Criminal Code. Unauthorized use of the word bank
   Article 182
   (1) A person who uses the word bank contrary to Article 4 of this law thereby causing harm to others shall be punished with imprisonment from five to ten years. (2) If the act from this Article is performed by a legal entity it shall be punished by a fine. (3) The court shall impose the perpetrator under paragraph (1) of this Article also prohibition on performing professional activity or duty under conditions specified in Article 38-b of the Criminal Code. Unauthorized collection of deposits
   Article 183
   (1) A person who accepts deposits contrary to Article 5 of this law thereby causing harm to others shall be punished with imprisonment of at least five years. (2) If the act from this Article is performed by a legal entity it shall be punished by a fine.

(3) The court shall impose the perpetrator under paragraph (1) of this Article also prohibition on performing professional activity or duty under conditions specified in Article 38-b of the Criminal Code.
2. Misdemeanors and sanctions
Article 184
(1) For the misdemeanors of this law, misdemeanor procedures shall be conducted and misdemeanor sanctions shall be sentenced by a competent court.
Article 185 - deleted
Article 186
(1) For the misdemeanors of this law, persons authorized by the Governor to conduct bank supervision shall propose a settlement procedure to the perpetrator of the misdemeanor, by issuing a misdemeanor payment order, in accordance with the Law on Misdemeanors. (2) The National Bank Council shall prescribe the form and the contents of the misdemeanor payment order.
Article 187
(1) A fine in the amount of denar equivalent of Euro 8,000 to 10,000 shall be imposed to a bank for misdemeanor, if:

1. fails to disclose a copy of the Governor's decision on license for founding and operating a
   bank, the interest rates in effect, the general terms for operating with deposits of natural persons and the type and the amount of the deposit guarantee for natural persons (Article 11);
2. fails to submit a copy of the decision on registration to the National Bank within 15 days after
   the registration in the Trade Registry (Article 26);
3. fails to notify the National Bank on the instances and within the periods specified under Article
   61 of this law;
4. provides untrue data and information or reports untimely to the National Bank as specified by
   Articles 64 paragraph (3), 65-g paragraph (2), 68, 69 paragraph (2), 71 paragraph (8) and 72 paragraph (3) of this law;
5. fails to submit and publish reports and data referred to in Article 101, 102 paragraphs (6) and
   (7) 103 paragraph (2) and 110 paragraphs (1) and (2) of this law,
6. fails to publish reports and data referred to in Article 110 paragraph (3) of this law in
   accordance with the deadlines specified by this Article;
7. fails to submit reports on the banking group as specified by Article 122 of this law for the
   purposes of consolidated supervision, and
8. fails to consolidate or fails to report or reports contrary to Articles 123, 124 paragraph (3),
   125 paragraph (5) and (6), and 126 paragraph (1) of this law.
   (2) A fine in the amount of denar equivalent of Euro 500 shall also be imposed for the misdemeanors referred to in paragraph 1 of this Article on the responsible person in the bank.

Article 187-а
(1) A savings house shall be fined for misdemeanor in the amount of denar equivalent of Euro 4,000 to 5,000 if it:

1. fails to disclose a copy of the Governor's decision on license for founding and operating a
   bank, the interest rates in effect, the general terms for operating with deposits of natural persons and the type and the amount of the deposit guarantee for natural persons (Article 11);

2. fails to submit a copy of the decision on registration to the National Bank within 15 days after
   the registration in the Trade Registry (Article 26);

3. fails to notify the National Bank on the instances and within the periods specified under Article
   61 of this law;

4. fails to submit and publish reports and data defined by Articles 101, 102 paragraphs (6) and
   (7), 103 paragraph (2) and 110 paragraph (1) of this law;

5. fails to publish reports and data referred to in Article 110 paragraph (3) of this law in
   accordance with the deadlines specified by this Article;

6. fails to submit reports on the banking group as specified by Article 122 of this law for the
   purposes of consolidated supervision, and

7. fails to consolidate or fails to report or reports contrary to Articles 123, 124 paragraph (3),
   125 paragraph (5) and (6), and 126 paragraph (1) of this law.
   (2) A fine in the amount of denar equivalent of Euro 500 shall also be imposed for the misdemeanors referred to in paragraph 1 of this Article on the responsible person in the savings house.
   Article 187-b
   (1) A bank shall be fined for misdemeanor in the amount of denar equivalent of Euro 8,000 to 10,000 if it:

8. directly performs operations from the area of industry, trade, or other non-financial activity
   (Article 7 paragraph (2));

9. fails to issue a document or fails to keep records on every inflow and outflow from a deposit
   account (Article 10);

10. fails to obtain an approval by the Governor for the activities referred to in Article 57 paragraph
    (1) items 1, 3, 4, 5, 6, 7, 8, and 9 of this law;

11. executes a purchase order i.e. transaction in shares of a bank for which no approval by the
    Governor has been presented (Article 59 paragraph (3));

12. acts contrary to Articles 71 paragraphs (6) and (7) and 74 paragraphs (1) and (2) of this law;

13. buys back own shares, contrary to, or fails to dispose of the own shares according to, Articles
    75 and 76 of this law;

14. invests contrary to Article 78 paragraphs (1) and (5) of this law;

15. fails to hold a General Meeting of Shareholders within the specified periods or fails to submit
    the adequate data as specified by Article 87 of this law;

16. the Supervisory Board and the Management Board fail to perform activities defined by Articles
    89 paragraph (3), 93 and 99 paragraph (1) of this law,

17. fails to appoint an audit company as required by Article 105 of this law;

18. fails to keep and protect or fails to disclose a bank secret as specified by Articles 111 and 112
    of this law and

19. fails to provide the reports, information and other data defined by Article 117 of this law for
    the purposes of bank supervision.
    (2) A fine in the amount of denar equivalent of Euro 500 shall also be imposed for the misdemeanors referred to in paragraph 1 of this Article on the responsible person in the bank.
    Article 187-c
    (1) A savings house shall be fined for misdemeanor in the amount of denar equivalent of Euro 5,000 to 7,500 if it:

20. directly performs operations from the area of industry, trade, or other non-financial activity
    (Article 7 paragraph (2));

21. fails to issue a document or fails to keep records on every inflow and outflow from a deposit
    account (Article 10);

22. fails to obtain an approval from the Governor for the activities referred to in Article 57
    paragraph (1) items 1, 3, 4, 5, 6, 7, 8, and 9 of this law;

23. acts contrary to Articles 71 paragraphs (6) and (7) and 74 paragraphs (1) and (2) of this law;

24. buys back own shares, contrary to, or fails to dispose of the own shares according to, Articles
    75 and 76 of this law;

25. fails to appoint an audit company as required by Article 105 of this law;

26. fails to keep and protect or fails to disclose a bank secret as specified by Articles 111 and 112
    of this law and

27. fails to provide the reports, information and other data defined by Article 117 of this law for
    the purposes of bank supervision.
    (2) A fine in the amount of denar equivalent of Euro 500 shall also be imposed for the misdemeanors referred to in paragraph 1 of this Article on the responsible person in the savings house.
    Article 187-d
    (1) A fine in the amount of denar equivalent of Euro 8,000 to 10,000 shall be imposed for a misdemeanor on:

28. a brokerage house for executing a purchase order i.e. transaction in shares of a bank for
    which no approval of the Governor has been presented (Article 59 paragraph (3));

29. a financial holding company who acts contrary to Article 118 paragraph (7) of this law;
    (2) A fine in the amount of denar equivalent of Euro 500 shall also be imposed on the responsible person of the legal entity for the misdemeanors referred to in paragraph (1) of this
    Article.
    Article 187-e
    (1) A fine in the amount of denar equivalent of Euro 800 to 1,000 shall be imposed for a misdemeanor on a micro trader - auditing firm, a fine in the amount of denar equivalent of Euro 1,500 to 2,000 shall be imposed for a misdemeanor on a small trader - auditing firm, a fine in the amount of denar equivalent of Euro 5,000 to 6,000 shall be imposed for a misdemeanor on a medium trader - auditing firm and a fine in the amount of denar equivalent of Euro 8,000 to 10,000 shall be imposed for a misdemeanor on a large trader - auditing firm for an audit conducted contrary to

Articles 105 paragraph (5) and 106 of this law and failure to report in accordance with Articles 107 and 108 paragraphs (1), (2), (3) and (4) of this law. (2) A fine in the amount of denar equivalent of Euro 100 to 500 shall be imposed on the responsible person in the auditing firm for the misdemeanors referred to in paragraph (1) of this
Article.
Article 188
(1) A fine in the amount of denar equivalent of Euro 800 to 1,000 shall be imposed for a misdemeanor on a micro trader, a fine in the amount of denar equivalent of Euro 1,600 to 2,000 shall be imposed for a misdemeanor on a small trader, a fine in the amount of denar equivalent of Euro 5,000 to 6,000 shall be imposed for a misdemeanor on a medium trader and a fine in the amount of denar equivalent of Euro 8,000 to 10,000 shall be imposed for a misdemeanor on a large trader i.e. financial institution if it:

1. acquires shares in a bank contrary to the manner and the terms specified in Article 59 of
   this law,
2. fails to notify the National Bank that it, directly or indirectly, reduced the total number of
   shares or the total number of issued voting shares in a bank below 5%, 10%, 20%, 33%, 50% or 75% in the bank, at least one month prior to the reduction of its holding (Article 62), and
3. concludes an agreement on joining the voting rights arising from the shares in the bank
   and fails to notify the National Bank thereon within 5 days after the conclusion of the agreement (Article 62 paragraph (2)),
4. fails to act in accordance with Articles 124 and 126 paragraph (2) of this law and 5) fails
   to act in accordance with Article 125 paragraph (4) of this law.
   (2) A fine in the amount of denar equivalent of Euro 100 to 500 shall also be imposed on the responsible person of the legal entity for the misdemeanors referred to in paragraph (1) of this
   Article.
   (3) A fine in the amount of denar equivalent of Euro 250 shall be imposed on the sole proprietor for the misdemeanors referred to in paragraph (1) of this Article.
   Article 188-а
   (1) A fine in the amount of denar equivalent of Euro 800 to 1,000 shall be imposed for a misdemeanor on a micro trader - bank shareholder, a fine in the amount of denar equivalent of Euro 1,600 to 2,000 shall be imposed for a misdemeanor on a small trader - bank shareholder, a fine in the amount of denar equivalent of Euro 5,000 to 6,000 shall be imposed for a misdemeanor on a medium trader - bank shareholder and a fine in the amount of denar equivalent of Euro 8,000 to 10,000 shall be imposed for a misdemeanor on a large trader - bank shareholder if they fail to authorize the National Bank within the period prescribed by a decision of the Governor (Article 137 paragraph (4)). (2) A fine of denar equivalent of Euro 250 shall be imposed on a sole proprietor for misdemeanor, if they fail to authorize the National Bank within the period prescribed by a decision of the Governor (Article 137 paragraph (4)).

Article 189
(1) The person with special rights and responsibilities in the bank shall be fined in the amount of denar equivalent of Euro 500 for misdemeanors if it:

1. is determined that a decision of the bank's body is contrary to the law, and fails to inform
   the Supervisory Board and the National Bank (Article 84);
2. fails to notify the National Bank in accordance with Article 94 paragraphs (5) and (6) of
   this law and
3. fails to act or acts contrary to the provisions concerning conflict of interests under Article
   100 of this law.
   (2) The responsible person in the Internal Audit Department shall be fined in the amount of denar equivalent of Euro 500 for misdemeanors if such person:
4. fails to prepare semiannual and annual report and fails to submit them to the Supervisory
   Board, the Management Board and the Audit Committee (Article 97 paragraph (1)) and
5. fails to notify the Supervisory Board and the Management Board in accordance with Article
   98 of this law.
   (3) The banks' compliance officer or the responsible person in the Compliance Department shall be fined in the amount of denar equivalent of Euro 500 for misdemeanors if they fail to submit a monthly report to the Management Board and a semiannual report to the Supervisory Board (Article 99 paragraph (5)). (4) A fine of denar equivalent of Euro 500 shall be imposed on a person with special rights and responsibilities in a savings house, if it fails to act or acts contrary to the provisions of conflict of interests under Article 100 of this law.
   Article 189-а
   A fine of denar equivalent of Euro 250 shall be imposed to a shareholder - natural person for misdemeanor, if they fail to authorize the National Bank within the period prescribed by a decision of the Governor (Article 137 paragraph (4)).
   Article 190
   A natural person shall be fined for misdemeanor in the amount of denar equivalent of Euro 250 if they:
6. acquire shares in a bank contrary to the manner and terms specified under Article 59 of this
   law,
7. if a natural person fails to notify the National Bank that they, directly or indirectly, reduced the
   total number of shares or the total number of issued voting shares in a bank below 5%, 10%, 20%, 33%, 50% or 75% in the bank, at least one month prior to the reduction of its holding (Article 62), and
8. if the natural person conclude agreement on joining the voting rights arising from the shares
   in the bank and fails to notify National Bank within 5 days after the conclusion of the agreement (Article 62 paragraph (2)),
   Article 190-а
   The amount of the fine for the legal entity, i.e. sole proprietor shall be set pursuant to the Law on Misdemeanors.

Article 191 - deleted
Article 192
The penalty provisions of this law shall also apply to foreign persons that perpetrated the act on the territory of the Republic of North Macedonia and to foreign banks branches, and to the persons with special rights and responsibilities in the foreign banks branches.
XXII. TRANSITIONAL AND CLOSING PROVISIONS
Article 193
(1) Banks established and operating by the day this law enters into force shall continue their operations in a manner and under the terms indicated in the founding and operating licenses and the individual acts passed by the Governor. (2) Banks shall comply with the provisions of this law pertaining to the statute, the amount of the initial capital, the financial activities, and the bank bodies, within a period of eighteen months from the day this law enters into force. (3) The banks shall, within 12 months before the expiry of the period under paragraph (2) of this
Article, submit to the National Bank an application for issuance of approval for harmonization of the
Statute, application for issuance of approval for the existing or for appointing new members of the Supervisory Board and application for an approval for harmonization of the financial activities which, as specified by this law, require prior approval. (4) The Governor shall revoke the founding and operating license of the banks that fail to harmonize, within the period under paragraph (2) of this Article, i.e. fail to acquire an approval for the Statute and for the members of the Supervisory Board or fail to adjust the level of the initial capital. (5) The members of the bank's executive body who perform this function, until this law enters into force, shall continue performing the function of members of the bank's Board of Directors pursuant to the provisions of this law, without an approval of the Governor only to the expiration of the period the approval for their appointment as members of the bank's executive body refer to. (6) The existing shareholders with qualified holding in a bank shall, for the purposes of complying with the provisions of this law concerning the acquisition of shares in a bank, submit to the National Bank an application for obtaining an approval within four months after the date of effectiveness of this law.
Article 194
(1) The application for issuing licenses for founding and operating a bank and for issuing approvals submitted to the National Bank before the day this law enters into force, shall be completed in accordance with the provisions of the Banking Law (Official Gazette of the Republic of Macedonia No. 63/00, 103/00, 37/02, 51/03 and 85/03). (2) By the day the decision on appointing a conservator or introducing a receivership in a bank is abolished, adopted before the day this law enters into force, the conservator or receiver shall exercise their rights and authorizations in accordance with the decision of the National Bank and with the provisions of the Banking Law (Official Gazette of the Republic of Macedonia No. 63/00, 103/00, 37/02, 51/03 and 85/03). (3) Bankruptcy proceedings and liquidation procedures in a bank initiated before the date this law enters into force will be completed according to the regulations valid before the date this law enters into force.

Article 195
The provisions of Section IV - Branches of Banks from European Union Member-States shall be applied starting from the day the Republic of Macedonia becomes a full member of the European Union. By the time the Republic of Macedonia acquires full membership in the European Union, the branches of banks from European Union member-states shall be subject to the provisions of the
Section V - Foreign Bank Branches.
Article 196
On the date this law enters into force, the Banking Law (Official Gazette of the Republic of Macedonia No. 63/00, 103/00, 37/02, 51/03 and 85/03) shall cease being valid, other than the provisions of
Article 122 pertaining to Section II - Savings Houses of the Law on Banks and Savings Houses
(Official Gazette of the Republic of Macedonia No. 31/93, 78/93, 17/96, 37/98 and 25/00).
Article 197
The National Bank shall adopt the bylaws arising from this law within nine months from the date this law enters into force, other than the bylaws related to Section V - Foreign Bank Branches, which are to be adopted within three months from the date this law enters into force.
Article 198
This Law shall enter into force on the eighth day following that of its publication in the Official Gazette of the Republic of Macedonia.

_____________________________________________________________________________ The claims of legal entities and natural persons on the basis of bank deposits in the bankruptcy or liquidation proceedings initiated by the day this law entered into force, shall be considered reported. 11
Article 51
Provisions of Article 13 of this law shall start to apply from the date of accession of the Republic of Macedonia to the European Union.
Article 52
The National Bank shall, ex officio, without a request being submitted by banks, comply the banks' founding and operating license concerning financial activities, within six months from the date of entry into force of this law.
Article 53
The provisions of this law shall apply to public auctions for sale of shares that have been announced by the date of entry into force of this law. Dividend not paid to the shareholder whose shares are sold at a public stock exchange auction to the date of entry into force of this law in accordance with the decision of the Governor under Article 137 paragraph (3) of the Banking Law (Official Gazette of the Republic of Macedonia No. 67/07, 90/09 and 67/10), shall be allocated to the general reserve of the bank on the date of entry into force of this law.
Article 54
Savings banks established in the Republic of Macedonia to the date of entry into force of this law may perform a transformation into a bank or a financial company or a status change for acquisition of a savings house by a bank. During the transformation, savings houses may make a status change of merging savings houses for the purposes of establishing a bank. Transformation of a savings house into a bank or a financial company shall denote reorganization of a savings house into a bank or a financial company without liquidation. Acquisition of a savings house by a bank shall mean acquisition of one or more savings houses by a bank, by transferring the entire assets and liabilities of the savings house, or the acquired savings houses without being liquidated, in exchange for shares of the acquiring bank. Merger of savings houses for the purposes of establishing a bank shall mean merger of two or more savings houses, without liquidation, by incorporating a bank which will be transferred the entire assets and liabilities of the merged savings houses, in exchange for shares of the incorporated bank.
Section III part 6 of the law shall apply to the implementation of status changes referred to in
paragraphs (3) and (4) of this Article.

11 This provision is Article 10 in the Law amending the Banking Law (Official Gazette of the Republic of Macedonia No. 90/09)

Section III of the law shall apply to the transformation of a savings house into a bank.
Article 55
Any status change or transformation of a savings house into a bank shall require permission from the Governor of the National Bank. After the request for status change or transformation of a savings house into a bank, the Governor shall make a decision on issuing a license or denying the request within the time limits specified in
Article 22 paragraph (3) of the law.
Article 56
The National Bank shall prescribe the procedure and documentation for issuing license for status change and/or transformation of a savings house into a bank under Article 56 of this law.
Article 57
Transformation of a savings house into a financial company shall require an approval of the Governor the National Bank. After the submission of a request for transformation of a savings house into a financial company, the Governor shall make a decision on issuing an approval or denying the request within the time limits specified in Article 22 paragraph (3) of the law.
Article 58
(1) The savings house shall enclose the following documentation in the request for issuing an approval for transformation of a savings house into a financial company to the National Bank:

1. Decision on transformation,
2. evidence of a public notice published in at least one daily newspaper, on the decision on
   transformation of a savings house into a financial company, informing the public that the savings house will no longer collect deposits,
3. evidence that the savings house has paid the total amount of deposits or that it has
   transferred deposits to another bank established and seated in the Republic of Macedonia,
4. an agreement between the savings house and the bank to which the deposits have been
   transferred binding the bank to facilitate withdrawal of their depositors at any time and/or continue exercising the rights and obligations arising from transferred deposits as agreed between the depositor and the savings house, which may be changed by the bank only after prior written notice to the depositor and
5. evidence that the savings house notified the depositors on the transfer of deposits and how
   can they withdraw deposits.
   (2) The Governor shall make a decision on issuing an approval for transformation of a savings house into a financial company, if it is determined that the savings house fully paid or transferred the collected deposits to the bank. (3) From the date of submitting the request referred to in paragraph (1) of this Article, savings houses may not collect deposits. (4) The National Bank shall inform the Ministry of Finance on the issued approval pursuant to paragraph (2) of this Article within three days from the date of making the decision on issuing the approval. The notification shall be accompanied by a copy of the decision.

(5) Savings Bank shall, within five days from the receipt of the approval referred to in paragraph (2) of this Article, submit to the Ministry of Finance a request for issuance of a license for funding and operating a financial company in accordance with the Law on Financial Companies. The request shall enclose the decision referred to in paragraph (2) of this Article. (6) If the Ministry of Finance issues a license for founding and operating to a financial institutions based on the request referred to in paragraph (5) of this Article, within five days from the date of adoption of the decision on issuing a license shall notify the National Bank and the Central Registry of the Republic of Macedonia. The notification shall be accompanied by a copy of the decision. (7) Upon receipt of the notification referred to in paragraph (6) of this Article, the Governor shall make a decision on revoking the license for founding and operating a savings house, informing the Central Registry within five days from the date of adoption of the decision. The notification shall be accompanied by a copy of the decision. (8) To register the transformation of a savings house into a financial company, the financial company shall submit to the Central Registry the decision referred to in paragraph (7) of this Article in addition to the documentation for entry into the registry prescribed by the Law on Financial Institutions. (9) If the Ministry of Finance rejects the request referred to in paragraph (5) of this Article, it shall notify the National Bank within five days from the date when the decision on refusal of the request has become final. The notification shall be accompanied by a copy of the decision. (10) If the Ministry of Finance does not issue a license for founding and operating a financial company to the savings house, the Governor shall make a decision on revoking the license for founding and operating a savings houses and fulfilling the conditions for opening of bankruptcy proceeding or liquidation procedure.
Article 59
The National Bank shall adopt the bylaws in accordance with this law, within 90 days of the entry into force of this law. 12

12 Articles from 51 through 59 indicated in the revised unofficial text the Banking Law are a part of the text of the Law the Amending Banking Law (Official Gazette of the Republic of Macedonia No. 26/13).

Excerpt from the Law amending the Banking Law (Official Gazette of the Republic of Macedonia No. 90/16)
Article 42
(1) Banks shall harmonize their operations with the provisions of this law within nine months from the date of entry into force of this law. (2) Independent members of the supervisory bodies of the bank appointed to the date of entry into force of this law shall continue to perform their functions until the expiry of their terms.
Article 43
The by-laws stipulated by this Law shall be adopted within five months after the enactment of this Law.
Article 44
Article 9 that adds a new paragraph (2) in Article 65, and Article 10 that adds eight new Articles 65-
a, 65-b, 65-c, 65-d, 65-e, 65-f, 65-g and 65-h of this law shall apply from 1 March 2017.
Article 45
This Law shall enter into force on the eighth day following that of its publication in the Official Gazette of the Republic of Macedonia. Excerpt from the Law amending the Banking Law (Official Gazette of the Republic of Macedonia No. 7/19)
Article 6
The initiated procedures for issuance of prior approval for acquisition of qualified holding in a bank and for appointment of a member of the Management Board of a bank until the day of effectiveness of this law, shall be completed in accordance with the Banking Law (Official Gazette of the Republic of Macedonia No. 67/2007, 90/2009, 67/10, 26/13, 15/15, 153/15 and 190/16). APPLICABLE TRANSITIONAL PROVISIONS OF THE NOVELS OF THE LAW Official Gazette No. 122/21
Article 18
The bylaw prescribed in this Law shall be adopted within 30 days of the date of entry into force of this Law.
Article 19
Any misdemeanor procedure commenced prior to the entry into force of this law shall be regulated by the Banking Law (Official Gazette of the Republic of Macedonia No. 67/2007, 90/2009, 67/10, 26/13, 15/15, 153/15, 190/16, 7/19 and 101/19).