Qualifying holding means a direct or indirect holding in a credit institution which represents 10% or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of that credit institution.

Article 24, paragraph (1) of the Credit Institutions Act prescribes that a holder of a qualifying holding may only be a legal or natural person and persons acting in concert who have obtained prior approval to acquire a qualifying holding, in the amount for which they obtained the prior approval.

A legal or natural person and persons acting in concert shall submit to the CNB an application for prior approval for the acquisition of shares of a credit institution on the basis of which they, individually or jointly, directly or indirectly, acquire a qualifying holding in the credit institution.

For the acquisition of shares of a credit institution which account for 10% of the capital or voting rights and a further direct or indirect increase of a qualifying holding in the amount equalling or exceeding 20%, 30% or 50% of the capital or of the voting rights of a credit institution, it is necessary to obtain an ECB's decision giving prior approval for the acquisition of a qualifying holding.

The ECB is responsible for approving the proposed acquisition of a qualifying holding for all credit institutions from the Member States including those from the Republic of Croatia.

The proposed acquisition of a qualifying holding is approved on the basis of an assessment of the defined criteria prescribed by the Credit Institutions Act (the assessment ensures that the proposed acquirer is of a good reputation and financially sound, that the credit institution will continue to comply with the prudential requirements, that the persons proposed to perform the functions in the governing bodies will be fit and proper and that there is no reasonable doubt about the increase of the risk of money laundering or terrorist financing). The approval process aims to ensure that significant participations in credit institutions can only be acquired by suitable shareholders. This helps to prevent disturbances to the smooth functioning of the banking system. More information on the ECB's approach to the qualifying holding acquisition procedure is available in its Guide on qualifying holdings procedure.

The proposed acquirer submits to the CNB an application for prior approval to acquire a qualifying holding, which must contain the documents defined by the Decision on the approval to acquire a qualifying holding in a credit institution. The CNB conducts an initial assessment and prepares and submits to the ECB a draft decision on the acquisition of a qualifying holding. In cooperation with the CNB, the ECB conducts its assessment and informs the proposed acquirer and the CNB of the decision.

The assessment should be carried out within 60 working days from the date of issuance of the acknowledgement of receipt. If additional information is required, this period may be extended by an additional 20 working days (30 working days in specific cases).

The proposed acquirers are recommended to establish pre-notification contacts with the CNB before the submission of the application for prior approval in order to clarify the documentation requirements for notification of the proposed acquisition, the time frame, etc. Pre-notification is especially recommended in the case of complex transactions.