LAW ON FOREIGN CREDIT RELATIONS

(CREDIT RELATIONS WITH FOREIGN COUNTRIES LAW)

 

(Published in the

Official Gazette of the Republic of Macedonia No. 31/93-716)

(Unofficial Translation)

 

 

 

I. GENERAL PROVISIONS

 

 

Article 1

 

This Law shall regulate the conditions and procedures under which local nationals may obtain credits abroad and extend credits to foreign nationals.

 

 

Article 2

 

Foreign credit relations represent legal affairs established between local and foreign nationals which are to regulate the acquisition and approval of credits for various activities, or from funds earned through an activity for which the local national has been registered (hereinafter: credit operations).

 

The Republic of Macedonia, banks, enterprises and other legal entities (hereinafter: legal entities), and physical persons who are residents of the Republic of Macedonia performing business or other activities independently (hereinafter: entrepreneur), shall be considered local nationals under this Law.

 

Legal entities situated abroad and physical persons with foreign residency shall be considered foreign national under this Law.

 

 

Article 3

 

Credit funds may be used for payment of imported goods and services, for financing of investment transactions abroad, for foreign investments and for extending credits to foreign nationals.

 

With the exception of paragraph 1 of this article, the National Bank of the Republic of Macedonia (hereinafter: National Bank) may assign the level and the process of utilizing credits for other purposes in order to reconcile the monetary effects of foreign exchange transactions with the defined monetary plan within the framework of the balance of payments projection of the Republic of Macedonia.

 

 

Article 4

 

Credits approved by international organizations are utilized in compliance with a ratified international agreement and the Law on State Guarantees and Super-guarantees.

 

 

Article 5

 

With the exception of credits obtained from the International Monetary Fund, the National Bank shall establish foreign credit operations in the manner and within the framework of its rights and duties assigned by the Law regulating the operation of the National Bank.

 

 

Article 6

 

Local nationals stipulated under article 2 paragraph 2 of this Law shall establish foreign credit operations within the framework of the balance of payments projection of the Republic of Macedonia in compliance with this Law.

 

 

 

II. CONDITIONS AND PROCEDURES OF ESTABLISHING

FOREIGN CREDIT OPERATIONS

 

1. General Provisions

 

 

Article 7

 

Foreign credit operations are regulated through an agreement which is concluded in writing.

 

Local nationals who have entered into an agreement on foreign credit operations are responsible to foreign nationals regarding the fulfillment of duties under the above mentioned agreement.

 

The Republic of Macedonia and the National Bank shall not guarantee

the fulfillment of duties under paragraph 2 of this article.

 

Local nationals may not establish foreign credit operations which impose liabilities on the Republic of Macedonia.

 

Agreements on foreign credit operations which are contrary to the provision under paragraph 4 of this article shall not be considered as valid.

 

 

Article 8

 

Agreements on foreign credits whose approval are conditioned by State guarantees can not be concluded until the passing of the Law on the State issuance of guarantees.

 

 

Article 9

 

Local nationals may enter into agreements on foreign credit operations in their own name and on their own behalf and in their own name on behalf of other entities, where as banks authorized for foreign operations may conclude agreements in the name of and on behalf of other entities.

 

Local nationals entering into agreements on foreign credit operations in their name and on behalf of other entities, or in the name of and on behalf of other entities must regulate reciprocal rights and duties by way of contract.

 

 

 

2. Banks

 

Article 10

 

 

Banks may conclude agreements for obtaining credits abroad, agreements for approval of credits to foreign nationals and issue and accept guarantees if they have been authorized by the National Bank to perform payment operations and foreign credit operations.

 

Banks which have not been authorized for foreign operations may conclude credit agreements solely for their own requirements, in their own name and on their own behalf.

 

 

 

3. Enterprises

 

 

Article 11

 

Enterprises may obtain credits from abroad and issue guarantees on behalf of foreign nationals if credits are used to perform activities for which enterprises have been registered.

 

Enterprises may approve credits to foreign nationals from funds earned through activities for which they have been registered.

 

With the exception of paragraph 2 of this article, enterprises may approve credits to foreign nationals from credit funds obtained to perform activities for which they have been registered.

 

When approving credits to foreign nationals, enterprises are obliged to provide instruments for payment of credits as legal insurance on such credit transactions.

 

 

 

4. The Republic of Macedonia

 

 

Article 12

 

The Republic of Macedonia enters into agreements on foreign credit operations on the basis of a law passed separately for each credit operation.

 

 

 

5. Other Legal Entities

 

 

Article 13

 

Other legal entities may enter into agreements on foreign credit operations under the conditions stipulated in article 11 of this Law.

 

 

 

6. Entrepreneurs

 

 

Article 14

 

Entrepreneurs may enter into agreements on foreign credit operations solely in their own name and on their own behalf under the conditions stipulated in article 11 of this Law.

 

 

 

7. Registration of Foreign Credit Operations

 

 

Article 15

 

The registration of foreign credit operations in the National Bank is compulsory.

 

Agreements on concluded foreign credit operations, amendments, cancellations of the agreement, utilization, repayments and collections are all subject to registration.

 

Prior to entering into an agreement on credit operations, local nationals are obliged to notify the National Bank of the purpose for establishing credit operations.

 

The National Bank assigns the procedure, terms and form for the registration and record maintenance of foreign credit operations.

 

 

 

8. Measures Restricting Agreements

on Foreign Credit Operations

 

 

Article 16

 

Should disturbances arise in foreign trade and the balance of payments of the Republic of Macedonia, the National Bank may assign the following measures restricting the establishment of foreign credit operations in order to maintain the general solvency of the State:

 

1) Restricting the establishment of agreements on foreign credit

operations when notifying the National Bank of the purpose for

establishing credit operations;

 

2) Seeking approval from the National Bank for the establishment of

foreign credit operations;

 

3) Determining the amounts which local nationals may employ when

establishing agreements on foreign credit operations; and

 

4) Designating the liabilities on Denar deposits proportionate to

the credit amount in the agreement on foreign credit relations.

 

When disturbances can not be eliminated in the balance of payments of the Republic of Macedonia, and insolvency in foreign payments continues over 15 days throughout the year, in spite of the undertaken measures according to paragraph 1 of this article, the National Bank may enforce the following supplementary measures:

 

1) Temporary restriction of credit payments before the agreement

period;

 

2) Temporary termination of performance and approval of debt

conversion operations; and

 

3) Temporary restriction on establishment of agreements on foreign

credit operations.

 

Disturbances stipulated under paragraphs 1 and 2 of this article refer to the disruptions under the law which regulates foreign trade operations and the law regulating foreign exchange transactions.

 

The National Bank shall notify the Assembly of the Republic of Macedonia of the measures under paragraphs 1 and 2 of this article latest within a period of 30 days from the date of their assignment.

 

The measures of the National Bank under paragraphs 1 and 2 of this article can not be effective longer than six months from the date of their enforcement. If disturbances can not be eliminated within the set period, the National Bank shall propose measures to the Assembly of the Republic of Macedonia for the obliteration of the mentioned disturbances, whereby the measures of the National Bank may be implemented until the Assembly of the Republic of Macedonia passes a decision on the proposed measures.

 

 

 

III. PAYMENT AND COLLECTION ON AGREEMENTS

FOR ESTABLISHED FOREIGN CREDIT OPERATIONS

 

 

Article 17

 

Local nationals may effect payment of credits in advance of the agreement period and withdraw issued guarantees following the fulfillment of obligations, in compliance with the established agreement on foreign credit operations and the law which regulates foreign exchange transactions.

 

Local nationals may place receivables from established agreements of foreign credit operations as security, sell or collect receivables in advance of the agreement period, in compliance with the particular agreement or according to the law which regulates foreign exchange transactions.

 

 

Article 18

 

Local nationals may not effect advance payments abroad in cases when the Republic of Macedonia assumes the obligation of a guarantor or super-guarantor for established agreements on foreign credit relations, which are being re-financed or re-programmed, or when the Republic of Macedonia is to assume obligations directly during re-financing or re-programming.

 

The obligations stipulated under paragraph 1 of this article may be settled in advance by local nationals in the Republic of Macedonia, either through payment of the Denar counter value at the exchange rate on the date of payment, provided that the bank has been authorized for foreign transactions, or through debtors, i.e., by agreement with guarantors of credit operations that will regulate reciprocal rights and obligations.

 

 

Article 19

 

With the exception of article 18 under this Law, local nationals may settle obligations in advance pertaining to established agreements on foreign credit operations which are re-financed or re-programmed as follows:

 

1) By conversion of the debt into a share of the enterprise or

bank;

 

2) By conversion of the debt to the right of temporary

utilization of tourist facilities;

 

3) By conversion of the debt into new forms of obligations

undertaken towards the foreign side;

 

4) By conversion of the debt on foreign receivables into deferred

collection; and

 

5) By redemption of the debt.

 

 

Article 20

 

The National Bank and banks which have been authorized for foreign transactions shall administer the conversion of debts stipulated under article 19 of this Law.

 

 

Article 21

 

The National Bank approves the administration of the conversion of debts stipulated under article 19 of this Law on the basis of previously collected assertions from the state authorities in charge of finances and foreign economic affairs.

 

The authorities stipulated under paragraph 1 of this article are obliged to present their conclusions to the National Bank within 15 days from the receipt of the request for submission of conclusions.

 

 

Article 22

 

The Governor of the National Bank approves the administration of debt conversion operations stipulated under article 19 of this Law within 30 days from the receipt of the request.

 

Should the Governor fail to resolve the request within the period stipulated under paragraph 1 of this article, it shall be considered the local national has been granted approval to perform debt conversion operations.

 

Should the Governor of the National Bank reject the request for granting approval of debt conversion operations, the local national may lodge a complaint to the Council of the National Bank within eight days from the receipt of the notification declining approval.

 

The National Bank assigns the administering procedure of the debt conversion operations and monitors the realization of those operations.

 

 

Article 23

 

Following the establishment of debt conversion operations, the National bank may effect advance payment of debts on foreign credits in its name and on its behalf within the framework of the regulations which define the aims and assignments of the monetary credit policy and the projection of the balance of payments of the Republic of Macedonia.

 

The National Bank may perform debt conversion operations either in its name and on behalf of the Republic of Macedonia, or in the name of and on behalf of the Republic of Macedonia in compliance with the provisions of this Law and from funds of the State budget.

 

 

 

IV. PENALTY CLAUSES

 

 

Article 24

 

Banks, enterprises and other legal entities shall be fined from 50 to 100 salaries for violations in the following instances:

 

1) For failing to use credit funds in compliance with this Law

(articles 3 and 4);

 

2) For establishing foreign credit operations which impose

liabilities on the Republic of Macedonia (article 7 paragraph 4);

 

3) For obtaining foreign credits, issuing guarantees to foreign

nationals or accepting foreign guarantees, which are contrary to

the provisions of this Law (articles 10, 11 and 13);

 

4) For failing to register agreements on foreign credit operations

and all incurring amendments to agreements, their utilization,

repayment and collection, and for not submitting prior

notification regarding the purpose for establishing the

agreement in compliance with this Law and the National Bank

regulations (article 15);

 

5) For establishing foreign credit operations, and for utilizing

and repaying credits contrary to the measures of the National

Bank (article 16, paragraphs 1 and 2);

 

6) For effecting advance payments abroad during re-financing or re

-programming of foreign credit operations, for which the

Republic of Macedonia has assumed the obligation of a guarantor

or super-guarantor, or for failing to pay the Denar counter value

at the exchange rate on the date of payment (article 18,

paragraphs 1 and 2); and

 

7) For failing to administer debt conversion operations in

compliance with this Law, with the regulations of the National Bank

and the granted approval (articles 19 and 22).

 

The individual in charge of the bank, enterprise or other legal entity shall be fined from five to fifteen salaries for actions stipulated under paragraph 1 of this article.

 

In addition to the fine for actions stipulated under paragraph 1 item 4 of this article, the realization of the agreement on credit operations shall be terminated until actions are undertaken according to article 15 of this Law.

 

Should a bank, enterprise or other legal entity act contrary to the provision under article 18 paragraph 1 of this Law, they shall be prohibited to establish agreements on foreign credit operations for a period assigned by the National Bank, which may not exceed one year from the determined date of the advance payment.

 

In addition to the fine imposed on the individual responsible for the actions stipulated under paragraph 1 of this article, a protective measure shall also be pronounced forbidding the individual to hold a responsible position for a period of one year.

 

 

Article 25

 

Entrepreneurs shall be fined from five to fifteen salaries for concluding credit operation agreements contrary to this Law (article 14) and for actions stipulated under article 24 paragraph 1 of this Law.

 

In addition to the fine for actions stipulated under paragraph 1 of this article, a protective measure forbidding the performance of operations for a period of one year shall also be pronounced.

 

 

Article 26

 

The State financial inspector shall conduct violation proceedings and pass decisions accordingly.

 

A complaint against the decision under paragraph 1 of this article may be lodged with the Ministry of Finance.

 

 

 

V. TRANSITIONAL AND CONCLUDING PROVISIONS

 

 

Article 27

 

Agreements on foreign credit operations that have not been registered prior to the enforcement of this Law may be implemented by legal entities and entrepreneurs in compliance with the regulations effective on the date of their conclusion, or if more convenient, in compliance with the provisions of this Law.

 

Commenced activities regarding collection of funds and issuance of securities shall be conducted in the manner and under conditions effective prior to the enforcement of this Law.

 

 

Article 28

 

On the date this Law enters into force, the Law on Foreign Credit Relations (Official Gazette of SFRJ No. 84/90) shall no longer be enforced on the territory of the Republic of Macedonia.

 

 

 

Article 29

 

This Law shall enter into force on the eighth day from the date of publication in the Official Gazette of the Republic of Macedonia.