The management board of a credit institution shall consist of at least two members which shall collectively have the knowledge, skills and experience necessary to perform its duties independently and without undue influence from other persons and in particular to understand the credit institution’s activities and significant risks to which the credit institution is exposed. One of the members of the management board shall be appointed chairperson of the management board. Only a person who has obtained prior approval from the Croatian National Bank to perform the function of the chairperson or a member of the management board of a credit institution may be appointed chairperson or member of the management board of a credit institution.

Criteria for the appointment of the chairperson and management board members of a credit institution

The Croatian National Bank shall grant prior approval to perform the function of the chairperson or a member of the management board to a person it assesses as suitable. A person shall be considered as suitable if he/she:

• meets the criteria laid down in Article 38 of the Credit Institutions Act, and ensures, in accordance with Article 35, paragraph (2) of the Credit Institutions Act, that the management board collectively has sufficient knowledge, skills and experience to perform its duties independently and without undue influence from other persons, and that it has a sufficiently diversified structure; and
• proves by his/her work programme that he/she will ensure lawful, safe and stable operation of a credit institution.

In accordance with Article 38, paragraph (1) of the Credit Institution’s Act, the chairperson and members of the management board of a credit institution shall, at all times, meet the following criteria:

1. they are of good repute;
2. they possess adequate knowledge, skills and experience to direct the business of a credit institution;
3. they are not in a conflict of interest in relation to the credit institution, shareholders, supervisory board members, key function holders or senior management of the credit institution;
4. based on their conduct thus far it may be reasonably concluded that they will perform the duties of members of the credit institution's management board diligently and conscientiously;
5. they meet the criteria for management board members under the provisions of the act governing the operation of undertakings; and
6. they are able to commit sufficient time to perform their functions.

The criteria, the procedure for granting prior approval, the documentation to be enclosed with the application for granting prior approval to perform the function of the chairperson and/or management board member of a credit institution are specified by the Decision on the assessment of the suitability of the chairperson of the management board, members of the management board, members of the supervisory board and key function holders in a credit institution.

Application for granting prior approval to perform the function of the chairperson or a member of the management board of a credit institution

The application for granting prior approval to perform the function of the chairperson or a member of the management board of a credit institution is to be submitted by the supervisory board of the credit institution no later than three months before the expiry of the term of office of the chairperson and/or a management board member, for a term of office not exceeding five years.

The application is to be submitted on the form for the application for granting prior approval for the appointment of the chairperson or members of the management board or members of the supervisory board, enclosing:

1. the decision on the appointment of a candidate for the chairperson or a member of the management board or supervisory board;
2. the results of the suitability assessment carried out by the credit institution, including the statement of grounds with information on the persons who carried out the suitability assessment shown in the form set out in Appendix 4 of the Decision on the assessment of the suitability of the chairperson of the management board, members of the management board, members of the supervisory board and key function holders in a credit institution;
3. a certified copy of the identity card or, for foreign nationals, a certified copy of the passport;
4. a certified copy of the diploma or the Croatian translation of a foreign university diploma certified by a certified court interpreter;
5. for candidates who, at the time of application, do not perform the function of the chairperson or a member of the management board or supervisory board of a credit institution in the Republic of Croatia, a certificate issued by the legal person in which the candidate has acquired the experience referred to in Article 6, paragraphs (4) and (5) and Article 8, paragraph (2) of the Decision on the assessment of the suitability of the chairperson of the management board, members of the management board, members of the supervisory board and key function holders in a credit institution, specifying the type of function and its position in the hierarchy, the knowledge that the candidate acquired in that function, the nature and complexity of the candidate's activities, including the organisational structure in which these activities were performed, the scope of his/her competences, decision-making powers and responsibilities and, where appropriate, the number of subordinates;
6. the completed Questionnaire for the candidate for the chairperson or a member of the management board or a member of the supervisory board of a credit institution (Appendix 2 of the Decision on the assessment of the suitability of the chairperson of the management board, members of the management board, members of the supervisory board and key function holders in a credit institution);
7. where available, the references given by immediate superiors of the employer at least for the last three years;
8. a statement that the candidate for the chairperson or a member of the management board or a member of the supervisory board has not committed a criminal offence or misdemeanour, and that no criminal or misdemeanour proceedings have been initiated against him/her; 
9. a statement by the credit institution on the existence of circumstances which might lead to a conflict of interest and the measures taken to mitigate or eliminate it shown in the form set out in Appendix 4 of the Decision on the assessment of the suitability of the chairperson of the management board, members of the management board, members of the supervisory board and key function holders in a credit institution; 
10. an excerpt from criminal history records and misdemeanour records:
    • for the nationals of the Republic of Croatia, the statement issued by a municipal court on whether criminal offence proceedings have been initiated against the candidate, not older than three months; and
    • for foreign nationals, information showing that the candidate has not been convicted of a misdemeanour, if criminal offence or misdemeanour proceedings have been initiated against the candidate and if the candidate has been convicted by a judgement with final force and effect of any of criminal offences, not older than three months, and where this is not possible, a statement to that effect;
11. for the candidate appointed as chairperson or member of the management board, the work programme referred to in Article 13 of the Decision on the assessment of the suitability of the chairperson of the management board, members of the management board, members of the supervisory board and key function holders in a credit institution; and
12. a list of short-listed candidates or an explanation why it has not been submitted.

Decision-making procedure

In the course of decision-making procedure regarding prior approval, the Croatian National Bank may request from the candidate and the credit institution to supply additional documents or information necessary to assess the suitability of the candidate to perform the function of the chairperson or a member of the management board of a credit institution and invite the candidates to present to the Licensing Committee their work programme, detailing how they propose to direct the part of the business of the credit institution which falls within the area of competence of the candidate.

The decision on the application for granting approval to perform the function of the chairperson or a member of the management board of a credit institution is adopted by the Council of the Croatian National Bank, within 60 days of the delivery date of a valid application. The Croatian National Bank shall issue this approval for the duration of the proposed term of office, but should it consider it appropriate, the approval may be issued for a shorter term.

A person who has been granted prior approval to perform the function of a credit institution's management board member is obligated, before being reappointed to the same office with the same or another credit institution, to obtain a new prior approval from the Croatian National Bank.

Revocation of the decision

The Croatian National Bank shall revoke legal approval to perform the function of the chairperson or a member of the credit institution's management board:

1. where the chairperson or a member of the management board breaches the provisions of the Companies Act on the duties of the management board, resulting in the removal of the management board member;
2. where the chairperson or a member of the management board no longer meets the criteria for membership in the management board of a credit institution;
3. where the chairperson or a member of the management board receives his or her third warning within a period of five years;
4. where the designated person is not appointed to office or does not assume the office to which the approval relates within six months of the approval;
5. where the term of office to which the approval relates expires, on the date of expiry of the term of office;
6. where the contract of employment with the credit institution of the person in office expires, on the date of expiry of the contract;
7. where the chairperson or a member of the management board obtained approval by providing false or inaccurate documentation or through false presentation of data relevant for performing the function of the chairperson or a member of the management board.

The Croatian National Bank may revoke legal approval to perform the function of the chairperson or a member of the credit institution's management board:

1. where the chairperson or a member of the management board fails to ensure the implementation or fails to implement supervisory measures imposed by the Croatian National Bank;
2. where the chairperson or a member of the management board materially breaches the duties of a management board member referred to in Article 41 of the Credit Institutions Act or breaches the duties referred to in Article 42 of the Credit Institutions Act;
3. where the credit institution that obtained the permission for an internal model does not comply with terms of the permission;
4. where the conditions for early intervention have arisen in accordance with Article 235a of this Act.