Basic rule

Acquisition of the (already incorporated and registered) bank in Montenegro can only be done by means of acquisition of the qualified participation in the bank, following the approval of the CBoM.

Acquisition of qualified participation qualified participation is:

• independently or mutually with other related parties, direct or indirect participation in capital or voting rights of a bank of at least 5%,
• possibility of making significant influence on management i.e. policy of a legal person based on agreement or contract with other party, or in any other way, regardless of the amount of participation in capital or voting rights in a bank.

Acquisition of qualified participation without approval of the CBoM

Condition precedent for acquisition of the bank in Montenegro is obtaining approval of the CBoM.

If there are facts that point out that a party has a qualified participation in a bank for which it does not have appropriate approval, the CBoM may require such party, other bank shareholders, parent legal person of such party and the bank to submit all information and documentation which is relevant for establishing the existence of qualified participation of such party in the bank.

The parties shall submit requested data and information to the CBoM no later than eight days as of the day of the reception of the request. If the CBoM determines that a party has acquired or increased qualified participation in a bank without appropriate approval, the CBoM shall inform such party in writing within eight days after the day of the reception of the information that it may submit the request to the CBoM for issuance of appropriate approval and shall notify such party on the consequences.

Legal consequences of illegal acquisition of qualified participation

A party may not exercise voting rights above the level of voting rights which the party has had prior to the acquisition or increase of qualified participation in a bank nor exercise the right to dividend payment on the basis of the shares acquired in such way until it obtains appropriate approval of the CBoM.

The CBoM shall order a party to dispose of shares within the timeframe that may not be shorter than three or longer than six months, on the basis of which such party would exercise rights above the level of qualified participation for which it has had appropriate approval of the CBoM. If illegal acquirer of shares does not alienate the shares within the time period specified in the respective, such illegally acquired shares shall become shares carrying no voting rights until their alienation. If shares are alienated, the new legal acquirer of such shares shall acquire all rights on the basis of these shares.

Cessation of validity of approval

A party that has been granted the approval for acquiring qualified participation in a bank shall acquire, within six months as of the date of the approval granted, qualified participation in the bank. Exceptionally, the CBoM may, upon the request of the party, extend the timeframe for a period no longer than another six months.

If a party that has been granted the approval for acquisition of qualified participation in a bank acquires, within the timeframes specified in the law, qualified participation in a bank below the level for which the approval has been requested, the approval shall be valid only for the participation in capital or voting rights in the bank such party has acquired. If a party with qualified participation in a bank decreases its qualified participation through the disposal of shares or in any other way, the approval shall be valid only for the level of participation in capital or voting rights which such party has had after the decrease in qualified participation.

Revoking the approval for acquisition of qualified participation

The CBoM may revoke the approval for acquisition of qualified participation:

• if the acquirer of the qualified participation, which is a superior company in a banking group, violates the provisions of this law referring to the supervision of banks on consolidated basis;
• the applicant does not submit to the CBoM the prescribed and/or requested documentation within the given timeframe;
• the applicant does not meet eligibility and financial condition criteria;
• the qualified participation would exceed the time limits for delivery of documents;
• the granting of approval would lead to the concentration of the participants at financial market which significantly prevents, restricts or violates the competition, primarily through the creation or strengthening of dominant position at financial market.

Informing the CBoM by qualified acquirers

A party with qualified participation in a bank that intends to decrease qualified participation in the bank, through the sale of shares or in any other way below the level for which it has been granted the approval, shall previously inform the CBoM thereof.

A legal person that has qualified participation in the bank shall immediately inform the CBoM on restructuring of that legal person. The financial or mixed holding that represents a superior company in a banking group shall inform the CBoM on each change in the composition of the board of directors or on change of the executive directors.

Shareholder’s agreement

A group of bank shareholders whose total participation in capital or voting rights does not represent qualified participation in a bank, and have signed written or verbal agreement on mutual performance of managerial functions shall inform the CBoM on such agreement.

The shareholder’s agreement shall not be signed by the new shareholder without the prior approval of the CBoM, if by joining of such shareholder total participation in capital or voting rights has increased up to the level that represents qualified participation in a bank.

A group of bank’s shareholders whose total participation in capital or voting rights represents qualified participation shall not sign shareholder’s agreement without prior approval of the CBoM.

Participants in the agreement shall not, without new approval of the CBoM, increase participation in capital or voting rights which increases total participation in capital of participants in the agreement or voting rights in the bank, above the level for which the approval has been granted.

New shareholder shall not sign the shareholder’s agreement, without prior approval of the CBoM, if by joining of such shareholder the total participation in capital of the participants in the agreement or voting rights in a bank has increased above the level for which the approval has been granted.

The provisions of the law referring to the granting of approval for acquisition of qualified participation in a bank shall be applied to the granting of the approval for signing of the shareholder’s agreement.

Approval for the signing of the shareholder’s agreement shall be considered as approval for acquisition of qualified participation in a bank.