CEDH · CASELAW;JUDGMENTS;GRANDCHAMBER;ENG — 7 juillet 2020

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HUNGARY (Application no. 5294/14)     JUDGMENT   Art 34 • Victim • Impact on individual shareholders of legislation putting banks under central supervising authorities and resulting in significant loss of their operational autonomy • Drawing distinction between complaints brought by shareholders about measures affecting their rights as shareholders and those about acts affecting companies • Shareholders not considered victims of acts affecting their companies unless they are closely identified with each other and “exceptional circumstances” preclude the affected companies from bringing the cases to the Court on their own behalf • Incidental and indirect effect of legislation on applicant shareholders, not directly affecting their rights as such • Applicant shareholders not closely identified with their banks • No weighty and convincing reasons demonstrating exceptional circumstances for allowing shareholders to bring complaints on banks’ behalf   STRASBOURG 7 July 2020     This judgment is final but it may be subject to editorial revision. In the case of Albert and Others v. Hungary, The European Court of Human Rights, sitting as a Grand Chamber composed of:   Ksenija Turković, President ,   Robert Spano,   Linos-Alexandre Sicilianos,   Angelika Nußberger,   Síofra O’Leary,   Helen Keller,   André Potocki,   Dmitry Dedov,   Branko Lubarda,   Stéphanie Mourou-Vikström,   Pere Pastor Vilanova,   Lәtif Hüseynov,   Jolien Schukking,   Lado Chanturia,   Darian Pavli,   Erik Wennerström,   Saadet Yüksel, judges , and Søren Prebensen, Deputy Grand Chamber Registrar , Having deliberated in private on 18 December 2019, 28 May and 5 June 2020, Delivers the following judgment, which was adopted on that date: PROCEDURE 1.     The case originated in an application (no. 5294/14) against Hungary lodged with the Court under Article   34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by Ms   Józsefné Albert and 240 other Hungarian nationals, whose details are set out in the appendix, on 10 January 2014. 2.     The applicants were represented by Mr I. Gárdos, a lawyer practising in Budapest. The Hungarian Government (“the Government”) were represented by their Agent, Mr Z. Tallódi, from the Ministry of Justice. 3.     The applicants alleged, in particular, that the restriction of their rights to influence the operation of the banks in which they held shares, stemming from the Integration Act of 2013, had violated their rights under Article 1 of Protocol No. 1 to the Convention. 4.     The application was allocated to the Fourth Section of the Court (Rule   52 §   1 of the Rules of Court). On 4 April 2017 it declared the applicants’ complaints under Article 1 of Protocol No. 1 admissible and joined to the merits two objections by the Government concerning the applicants’ victim status. 5.     As Mr Péter Paczolay, the judge elected in respect of Hungary, withdrew from sitting in the case (Rule   28 § 3), the President decided to appoint Mr   Robert Spano, the judge elected in respect of Iceland, to sit as an ad hoc judge (Article   26   §   4 of the Convention and Rule   29   §   1). 6.     A Chamber of the Fourth Section composed of Ganna Yudkivska, Paulo Pinto de Albuquerque, Robert Spano, Faris Vehabović, Iulia Antoanella Motoc, Carlo Ranzoni, Marko Bošnjak, judges, and also of Marialena Tsirli, Section Registrar, delivered a judgment on 29   January   2019. The Court discontinued the proceedings in respect of some of the applicants, who had passed away without heirs or relatives expressing any wish to continue the proceedings before the Court. As regards the remaining applicants, it held, by a majority, that the impugned legislation had not interfered with the applicants’ rights in view of the scope of their complaints, that they could not therefore claim to be victims of the alleged violations within the meaning of Article 34 of the Convention, and that there had been no violation of Article   1 of Protocol No. 1. The dissenting opinion of Judge Pinto de Albuquerque was annexed to the judgment. 7.     On 29 April 2019 the applicants requested the referral of the case to the Grand Chamber in accordance with Article 43 of the Convention. On 24   June 2019 the panel of the Grand Chamber granted that request. 8.     The composition of the Grand Chamber was determined according to the provisions of Article 26 §§ 4 and 5 of the Convention and Rule 24 of the Rules of Court. 9.     The applicants and the Government each filed further written observations (Rule 59 § 1) on the merits. 10.     A public hearing took place in the Human Rights Building, Strasbourg, on 18 December 2019. There appeared before the Court: (a)     for the Government Mr   Z. Tallódi ,   Agent , Ms   M. Weller , Government Co-Agent, Mr   T. Kende , Mr   P. Sonnevend ,   Advisers ; (b)     for the applicants Mr   P. Gárdos ,   Counsel , Mr   R. Mosonyi , Mr   D. Karsai , Ms   O. Csaba ,   Advisers. The Court heard addresses by Mr Gárdos and Mr Tallódi and their replies to the questions from judges. THE FACTS 11 .     The applicants are two hundred and thirty-seven individual shareholders in two savings banks, Kinizsi Bank Zrt. (“Kinizsi Bank”) and Mohácsi Takarék Bank Zrt. (“Mohácsi Bank”). A list of the applicants is set out in the appendix, which also indicates the financial institution in which they hold shares. 12 .     At the time the application was lodged on 10 January 2014, the applicants as individual shareholders held collectively some 98.28% of shares in Kinizsi Bank and some 87.65% of shares in Mohácsi Bank. Among those who applied to the Court, the largest individual shareholder in Kinizsi Bank owned around 25% of shares with an average shareholder owning around 0.015%, whereas the largest individual shareholder in Mohácsi Bank owned around 16% with an average shareholder owning around 0.016%. KiNIzsi bank and mohácsi bank 13.     The two institutions were established in 1958 and originally belonged to the sector of savings cooperatives, with their clientele being mostly from the respective local communities. Voluntary integration of 1993 14.     In 1993 the whole sector of savings cooperatives, including the predecessor institutions of Kinizsi Bank and Mohácsi Bank, underwent a voluntary restricted integration involving 235 savings cooperatives with a view to enhancing the cooperatives’ market position and financial security. With the active support of the Hungarian Government and the PHARE Programme of the European Union, they entered into an integration agreement. 15.     The key institutions of the integration were the National Association of Savings Cooperatives ( Országos Takarékszövetkezeti Szövetség, “OTSZ”), the Savings Bank ( Takarékbank Zrt. ) and the National Fund for the Institutional Protection of Savings Cooperatives ( Országos Takarékszövetkezeti Intézményvédelmi Alap, “OTIVA”), the latter organisation having been created as part of the integration. 16.     OTIVA improved the security of deposits placed with the savings cooperatives, with a view to preventing crisis situations, and improved the stability of the participating cooperatives. The relations between the savings cooperatives and the Savings Bank prior to the 2013 reform 17.     The Savings Bank was founded by savings cooperatives in 1989 as a commercial bank with a “strategic aim ... to provide support for the savings cooperative industry...”. Until relevant changes were introduced by the “Integration Act” and the “Amendments” (see paragraphs 34-35 below), the total shareholding of the savings cooperatives and certain other banks in the Savings Bank had exceeded 60%. They held series “B” preference shares in the Savings Bank, ensuring that no decision on strategic matters could be made without the approval of the holders of these shares. Approval could be given by the majority of votes of the shareholders. 18 .     In 2012 the Hungarian Government became an indirect owner of the Savings Bank when the Hungarian Development Bank Ltd ( Magyar Fejlesztesi Bank Zrt., “the MFB”), which was fully owned by the State, purchased a stake in Deutsche Zentral-Genossenschaftsbank AG, which at the time owned 38.5% of the Savings Bank’s shares. Transformation into companies limited by shares 19.     In 2006 and 2008, respectively, Kinizsi Bank and Mohácsi Bank were transformed into companies limited by shares and obtained their licences for banking operations from the Hungarian Financial Supervisory Authority ( Pénzügyi Szervek Állami Felügyelete , “the Supervisory Authority”; in 2013, following a reform, the Supervisory Authority was replaced by the Hungarian National Bank, which has carried on all the relevant functions of the Supervisory Authority after 1 October 2013). They remained members of OTIVA and part of the integration. The licences and the regulations on their operation were equivalent to the licences and operating regulations of other Hungarian banks. Integration 20.     Act no. CXXXV of 2013 on the Integration of Cooperative Credit Institutions and the Amendment of Certain Laws Regarding Economic Matters (“the Integration Act”) entered into force on 13 July 2013, the day after its proclamation. 21 .     The Act was later amended in several respects by Act no. CXCVI of 2013 on the Amendment of Certain Laws Regarding the Integration of Cooperative Credit Institutions (“the Amendments”) with effect from 30   November 2013. 22.     The 2013 Integration Act and the Amendments abolished the integration of cooperatives which had been organised on a voluntary basis, with voluntary membership, and terminated OTIVA. In their place they introduced a forced integration under close State control; in particular: (a)     they introduced a mandatory integration headed by, inter alia , the newly created Integration Organisation of Cooperative Credit Institutions ( Szövetkezeti Hitelintézetek Integrációs Szervezete , “the Integration Organisation”), a body under indirect State control, which had been set up as legal successor of OTIVA and other voluntary institutional protection funds, and the Savings Bank, which continued to be the central bank of the integration, now having more extensive powers; (b)     they set up the State-owned Hungarian Post ( Magyar Posta , “Hungarian Post”) as a new shareholder of the Savings Bank (with a stake of 20%), the central bank of the previous integration, over which the savings cooperatives had previously had a controlling majority (the majority of the votes in the general assembly of the Savings Bank were now in the control of various State-owned institutions); (c)     they recapitalised the Integration Organisation; (d)     they restricted the economic independence and autonomy of the former savings cooperatives, targeting, amongst others, Kinizsi Bank and Mohácsi Bank; (e)     they provided for possible restrictions of the rights of the members and shareholders of the savings cooperatives and banks falling under the scope of the Integration Act. Modalities of integration of Kinizsi Bank and Mohácsi Bank 23 .     The Integration Act applied to all cooperative credit institutions, this group having been defined to include savings cooperatives operating as cooperatives, and banks operating as companies limited by shares, which on 1   January 2013 had been members of OTIVA. 24.     The scope of the Act, therefore, extended to Kinizsi Bank and Mohácsi Bank. It made the cooperative credit institutions ipso jure members of the Integration Organisation, imposing on them a number of conditions, if they chose to remain members of the integration as well as certain other conditions in case they wished to leave. 25 .     Under section 17 of the Integration Act (see paragraph 72 below), cooperative credit institutions which repeatedly failed to comply with the relevant requirements of the Integration Act could be excluded from the integration and their operating licences could be revoked. In such cases, their shares in the Savings Bank could be bought by the MFB, which had a call option in this respect (see section 20(10), paragraph 81 below). 26 .     The Integration Organisation could, as a sanction applied for a number of reasons, exclude one of the institutions from among its members, resulting in the withdrawal of its operating licence. Moreover, the Integration Act included several provisions directly stipulating that the Supervisory Authority had the power to withdraw the licence, which would result in the liquidation of the relevant institution (ibid. and section 15(13) in paragraph 69 below). Obligations incumbent upon the banks if they wished to continue their membership 27 .     The banks were under an obligation to subscribe for one “C”   preference share in the Savings bank (see section 3(3) in paragraph 66 below) and sell their “B” series shares (see section 20(3) and (10) in paragraph 81 below). 28 .     In addition, the applicants as the banks’ shareholders had a separate obligation henceforth to accept, during general meetings of shareholders in their respective banks, model articles of association with their content having been determined by the Savings Bank and any future amendments (see sections 17/D and 17/H(2) respectively in paragraphs 74 and 75 below). 29 .     More specifically, sections 17/H(2) (see paragraph 75 below) and   19(3) (see paragraph 80 below) prescribed that the general meeting of shareholders had to amend their own articles of association in line with the proposals by the Savings Bank within the following sixty days. A failure of the majority of the shareholders, as required by law for such decisions, to do so could result in the withdrawal of the operating licence by the Supervisory Authority (see sections 17(1) and 17/H(1) in paragraphs 72 and 75 below). Obligations incumbent upon the banks if they wished to leave the integration 30 .     Under section 11(7) of the Integration Act, a cooperative credit institution wishing to leave the integration had to apply to the Supervisory Authority for an operating permit within eight days following the notification of its exit, and the permit had to be obtained within 120 days from that notification (see paragraph 67 below). 31.     The applicants maintained that this time-frame was in practice difficult or impossible to comply with, as under the applicable rules the Supervisory Authority had ninety days within which to take a decision upon such application and that this term could be freely extended for a further ninety days. Given the objective complexity of the procedure, compliance with the 120-day term set out in section 11(7) of the Integration Act was, in essence, at the discretion of the Supervisory Authority. 32 .     Another condition for such a permit was that the existing or new owners had to provide, beyond the credit institution’s own capital already existing when the Integration Act entered into force, a sum of 2 billion Hungarian forints (HUF) (around 6 million euros (EUR)) from external sources for the formation of a new bank (see sections 11(7) and (8), and   20/A(12) and (13) of the Integration Act in paragraphs 67 and 82 below and capital requirements in paragraph 62 below). In addition, the exiting cooperative credit institutions had to keep a sum in cash, equivalent to the sum of their own capital as held on the date when the Integration Act became effective, on an account in the Savings Bank for a two-year period (ibid.). 33 .     One cooperative credit institution operating in the form of a bank, D.   Bank Zrt., to which the Integration Act applied, decided to exit the system and this decision was ultimately accepted by the Supervisory Authority on 9   December 2013. Provisions regarding the situation of the Savings Bank 34 .     The Integration Act contained several provisions affecting ownership ratios among the shareholders of the Savings Bank, in effect modifying the status quo. It forced the existing shareholders into the exchange of shares, imposed certain restrictions on the exercise of rights by them and increased the Savings Bank’s capital by introducing the Hungarian Post as its new shareholder, thus diluting the shareholdings of the existing shareholders. 35 .     Owing to the changes in the ownership of the Savings Bank pursuant to the Integration Act and the Amendments (see, in particular, sections 13 and 20, cited in paragraphs 68 and 81 below), the shareholdings of Kinizsi Bank and Mohácsi Bank in the Savings Bank became proportionally reduced. While the two banks had previously possessed 0.15% and 2.27% respectively in the Savings Bank, they had respectively 0.12% and 1.83% stakes following the implementation of the Integration Act and the Amendments. Recapitalisation of the Integration Organisation by the State 36.     Apart from the capital increase mentioned above, the State has directly paid HUF   136   billion, approximately EUR 420 million, to the Integration Organisation through the Joint Capital Coverage Fund of Cooperative Credit Institutions (hereinafter referred to as “the Fund”). Provisions affecting economic independence and operational autonomy of Kinizsi Bank and Mohácsi Bank 37.     The Integration Act and the Amendments contained various provisions affecting both strategic and day-to-day aspects of the management of savings cooperatives, including the two banks. Direct and indirect powers over the banks’ managers 38 .     The Savings Bank now had the power to suspend the term of office of the bank’s managers or to appoint an executive officer for an interim period if the cooperative credit institutions did not comply with the instructions or their operations were not in compliance with the law or regulations, or if they were in a so-called “crisis situation” (see section   15(4), (7) and (12) in paragraph 69 below). 39 .     The Savings Bank had exclusive power to give prior approval to the acquisition of any stake by the banks in any other business entity or to the sale of such property if its value or purchase price exceeded 0.1% of the equity capital of the integration, calculated on a consolidated basis (see section 15(19) in paragraph 69 below). In certain cases the transactions and undertakings of the members were subject to prior approval by the Integration Organisation on a case-by-case basis. Mutualisation of risks within the Integration Organisation 40.     The Integration Act also created a financial risk pool, encompassing the whole of the cooperative credit institutions sector. The Act made the participating institutions jointly and severally liable for any claims that might arise for one year and a half following the entry into force of the Integration Act. This rule did not apply to any of the claims which had already arisen prior to the establishment of the rule (see section 20/A in general and subsection (2) paragraphs (b), (e) and (f) specifically, paragraph   82 below). 41.     The Integration Organisation’s assets were included in the consolidated equity capital of the Savings Bank and the cooperative credit institutions. The equity capital of the cooperative credit institutions was determined collectively, incorporating the assets of the Savings Bank and the Integration Organisation (ibid . ). Provisions affecting the functioning of the meetings of the boards of directors and the meetings of the supervisory boards of both banks 42 .     The precondition for a valid resolution by the board of directors and supervisory board of the institutions was that the invitation to the relevant meeting of the board of directors or the supervisory board, together with all related material, was to be sent simultaneously to the Savings Bank (see section   15/A in paragraph 70 below). 43.     The rules of procedure of the board of directors and the supervisory board of the institutions could not be in conflict with the Charter and relevant regulations established by the Savings Bank; and these rules of procedure had to be amended within fifteen days upon, and in accordance with, a request of the Savings Bank to that effect (ibid . ). 44.     Minutes of the general meetings and meetings of the board of directors of the institutions had to be submitted to the Savings Bank, and the minutes of the supervisory board meetings had to be sent to the Savings Bank in certain cases (ibid . ). 45 .     The cooperative credit institutions were also required to inform, inter alia , the Integration Organisation and the Savings Bank of any legal proceedings in which they were involved (see section 15/C in paragraph 71 below). New regulatory environment and the Savings Bank’s role 46.     The Integration Organisation had the power to issue mandatory regulations covering essential issues regarding the operation of the member institutions, such as accounting principles, internal audits, and eligibility of their executive officers. The Savings Bank was authorised to issue mandatory regulations covering essential issues regarding the operation of the institutions, such as risk management, credit authorisation, risk monitoring, receipt of deposits, cash flow management, etc. (see section   15(1) to (3) in paragraph 69 below). 47.     The Savings Bank supervised the operation of the institutions and was authorised to issue instructions in order to ensure compliance with the law and the regulations issued by the Integration Organisation and by the Savings Bank (ibid.). Obligation to entertain exclusive economic relations with the Savings Bank 48.     Bank accounts and securities accounts of the banks could only be held at the Savings Bank; and they had to keep their free monetary assets in financial instruments traded by the Savings Bank; other organisations holding bank accounts of the institutions were obliged to terminate such bank account agreements (see section 15(9) in paragraph 69 below). Provisions affecting the general meetings of the shareholders of Kinizsi Bank and Mohácsi Bank 49.     The Integration Act and the Amendments contained several provisions modifying the functioning of the banks’ general meetings. Provisions affecting the functioning of the general meetings of shareholders 50 .     As a precondition for passing a valid resolution at general meetings, the Savings Bank now had to be informed of such meetings and their respective agendas simultaneously with the shareholders by means of an official invitation with copies of all its annexes (see section   15/A in paragraph 70 below). 51.     Minutes of the general meetings had to be sent to the Savings Bank (ibid.). Provisions affecting the powers of the general meetings of shareholders in respect of the managers and key decisions 52.     The Integration Act contained provisions which directly affected the distribution of powers within the banks’ institutional structure. In particular, as regards the powers of the general meetings of shareholders over the management of the banks: (a)     the prior approval of the Savings Bank was now required for a decision by the applicants and other owners on the election, dismissal and remuneration of the members of the board of directors and supervisory board members of the institutions (see section 15(12) of the Integration Act, paragraph 69 below); (b)     the board of directors of the Savings Bank was now authorised to suspend or terminate the term of office of the executive officers of the institutions (see section 15(4), paragraph 69 below); (c)     it could now appoint an executive officer for an interim period if the institutions did not comply with the orders of the Savings Bank, their operations were not in compliance with the law or regulations, or if they were in a so-called crisis situation (see section 15(4), (7) and (12), paragraph 69 below). 53 .     As regards certain key decisions, the following measures were now subject to the prior approval of the Savings Bank, and could only be taken on the basis of such approval: (a)     approval of the Annual Report (see section   15(11) and 17/J(2) in paragraphs 69 and 76 below); (b)     issuing of bonds (see section 17/K(1) in paragraph 77 below); (c)     reduction or increase in capital (ibid.); (d)     reduction in subscribed capital or any payment made to the applicants under any legal title connected to their status as owners (e.g. dividend, reduction in capital) (see section 17/Q(3) and (4), cited in paragraph   78 below); (e)     acquisition of equity capital (see section 17/Q(6) in paragraph   78 below); (f)     conversion, mergers and demergers of the banks (see section   17/S(3) in paragraph 79 below). Provisions affecting the rights of individual shareholders 54 .     The Integration Organisation was now able to suspend the voting rights of the shareholders of the cooperative credit institution for one year if they threatened the reliable and secure operation of the cooperative credit institutions (see section 17/C(5), cited in paragraph 73 below). 55 .     It was also authorised to define from time to time the level of the banks’ equity capital on a case-by-case (not consolidated) basis (see section   17/C(1), paragraph 73 below); if the capital did not reach the level so defined, the Integration Organisation could increase the capital of the banks, even if the shareholders and the other owners had not decided on such capital increase, or even contrary to the resolution of the owners (see section 17/C(2), cited in paragraph 73 below). Implementation of the integration act and the amendments 56 .     On unspecified dates, Kinizsi Bank and Mohácsi Bank adopted articles of association in line with the model provided by the Integration Organisation following the entry into force of the Integration Act. 57 .     It appears that some shareholders of the two banks who disagreed with the resolution adopting those articles of association challenged it in court. On 12   March 2015 the Pécs High Court found for the plaintiffs in the case brought by some of Mohácsi Bank’s shareholders. The court held that the model articles of association issued by the Savings Bank and the Integration Organisation could not in any way deviate from the mandatory provisions of the Companies Act. On 30 March 2015 a similar judgment was given by the Veszprém High Court in a case brought by shareholders of Kinizsi Bank. In both cases, the decision adopting the impugned articles of association at the general meetings of the bank was annulled. No information has been provided to the Court on the final outcome of those legal proceedings. 58.     It appears that the requisite equity capital of Kinizsi Bank and Mohácsi Bank was at some point raised. However, both banks were able to comply with the new requirements. 59.     The Savings Bank was to transfer its entire contractual portfolio to the base bank by the end of 2019 and the remaining 11 cooperatives, created as a result of the merger of the 113 savings cooperatives originally involved in the 2013 integration, would be merged into the base bank as well. Relevant legal framework and practice RELEVANT DOMESTIC LAW and practice Basic Law of Hungary 60.     Article XIII: “(1)     Everyone shall have the right to property and inheritance. Property shall entail social responsibility. (2)     Property may only be expropriated exceptionally, in the public interest and in the cases and ways provided for by an Act, subject to full, unconditional and immediate compensation.” Act V of 2013 on the Civil Code 61.     Section 3: 325(1) defines a cooperative as “a legal entity established on capital made up by the contributions of members, operating under the principle of open membership and variable capital, pursuing activities serving the purpose of satisfying the members’ economic and social needs, where obligations of the members extend to providing monetary contribution to the cooperative and personal participation as provided for in the articles of association. Members shall not be liable for the liabilities of the cooperative”. Act CXII of 1996 on credit institutions and financial enterprises (in effect until 31 December 2013) 62 .     Under section 9(1) a bank may be established with a minimum initial capital of two billion forints, while section 9(3) of the same law sets the amount of minimum initial capital required for a cooperative credit institution at 250 million forints. The 2006 Companies Act 63 .     Act no. IV of 2006 on Companies (“the 2006 Companies Act”, as in force on 12 July 2013, a day before the Integration Act’s entry into force) provided, with respect to a general meeting of a limited liability company, as follows: Section 231 “(1)     The general meeting is the supreme body of a private company limited by shares, and consists of all shareholders. (2)     The following shall fall within the exclusive competence of the general meeting: (a)     decisions to approve and amend the articles of association, unless otherwise provided herein; (b)     decisions on changing the operating form of the private limited company; (c)     decisions on converting or terminating the company without succession; (d)     with the exception of the provisions in section 37 (concerning the delegation of certain competences to the supervisory board), the election and removal of members of the management board or the general director, members of the supervisory board and the auditor, and their remuneration; (e)     approval of the annual report prepared pursuant to the Accounting Act; (f)     decisions to pay interim dividends, unless otherwise provided herein; (g)     decisions to convert printed share certificates into dematerialised shares; (h)     alteration of the rights attached to the various series of shares, and the conversion of categories or classes of shares; (i)     decisions to issue convertible bonds or bonds with subscription rights, unless otherwise provided herein; (j)     decisions to increase the share capital, unless otherwise provided herein; (k)     decisions to reduce the share capital, unless otherwise provided herein; (l)     decisions to abolish preferential subscription rights, or to authorise the management board for the exclusion or restriction of preferential subscription rights; (m)     decisions on all matters falling within the remit of the general meeting by law or under the articles of association.” 64 .     Act X of 2006 on Cooperatives (as in force from 12 July 2013, one day before the Integration Act’s entry into force – “the 2006 Cooperatives Act”) provided, in respect of a general meeting of cooperatives, as follows: The General Meeting Section 20 “(1) The general meeting is the supreme decision-making body of a cooperative and consists of all members. (2) The following shall fall within the powers of the general meeting: (a) amendment of the articles of association; (b) election and removal of the chairman (managing director) and members of the administrative body, the chairman and members of the supervisory body, and fixing of their remuneration; (c) election and removal of the auditor and fixing of his/her remuneration; (d) transfer of a certain part of the cooperative’s assets into the fellowship fund, and decisions on the general principles for the appropriation of the fellowship fund; (e) approval of the Annual Report prepared pursuant to the Accounting Act, decisions regarding the appropriation of taxed profits; (f) exclusion of members in the cases specified in the articles of association, or a review of resolutions for exclusion; (g) decisions to bring any action in damages against an executive officer of the cooperative; (h) decisions to join a federation of cooperatives, or to withdraw from one; (i) decisions concerning the merger or demerger of the cooperative, conversion into a business association or winding up without legal succession; (j) decisions to file a petition for bankruptcy, and on the approval of a composition agreement; (k) decisions to wind up the cooperative going into liquidation, and on the approval of a composition agreement reached during liquidation proceedings; (l) decisions to admit an investor member, including an agreement with the investor member concerning the date and manner of settlement for the eventuality of termination of the investor’s membership; (m) decisions to order supplementary payments; (n) changing the nominal value of shares; (o) where membership is terminated by either party, setting a date for the payment of any excess over the nominal value of shares, which shall be determined in the light of all other obligations of the cooperative no later than eight years after the date of termination of membership; (p) all other matters falling within the remit of the general meeting by law or under the articles of association.” The Integration Act and the Amendments (Act CXXXV of 2013 on the integration of cooperative credit institutions and amendment of certain laws regarding economic matters) 65 .     Section 1: “... (3) Cooperative credit institutions are members of the Integration Organisation and – having acquired shares in the Savings Bank– shareholders in the Savings Bank. The Savings Bank is a member of the Integration Organisation. (4)     [The Savings Bank] shall approve a new risk management policy uniformly applicable to members of the integration within 120 days following the entry into force of this Act. The Integration Organisation, [the Savings Bank] and the cooperative credit institution shall bear joint and several liability for obligations assumed after the thirtieth day following the issuance of the new risk management policy of [the Savings Bank].” 66 .     Section 3: “(1)     Membership of the Integration Organisation shall consist of the cooperative credit institutions, the Savings Bank and the MFB, and the persons and organisations admitted to the Integration Organisation. ... (3)     In order to maintain the operational authorisation of the cooperative credit institution, the said institution shall maintain its membership in the Integration Organisation on a continuous basis and hold one series ‘C’ preference share in the Savings Bank, of two thousand forints at nominal value.” 67 .     Section 11: “(1)     The Board of the Integration Organisation shall adopt rules to be complied with by the members of the Integration Organisation, save for the MFB, on the following: (a)     accounting procedures; (b)     internal audit procedures; (c)     suitability criteria for executive officers and the verification of such suitability; (d)     provision of financial aid for eligible cooperative credit institutions; (e)     building-up of the assets of the Integration Organisation described in section   4(4). (2)     Upon the initiative of the Board of [the Savings Bank], the Board of the Integration Organisation shall decide on the admission of a cooperative credit institution into the Integration Organisation and on its exclusion from the Organisation. ... (4)     For the purpose of institutional protection, in the event that the measure(s) taken under section 17/C(2) yield(s) no result, the Integration Organisation may acquire ownership in [the Savings Bank] and the cooperative credit institution by means of a capital increase. The Integration Organisation shall, within two years, dispose of the shares and bonds thus acquired in [the Savings Bank] or the cooperative credit institution. ... (7)     Exiting from the Integration Organisation shall be regulated by the statute of the Organisation. Cooperative credit institutions exiting the Integration Organisation shall apply to the Supervisory Authority for an operating permit, within [eight] days following the notification of its exit issued by the Integration Organisation, as if the financial institution were being newly established. If the cooperative credit institution exiting or excluded from the Integration Organisation fails to apply to the Supervisory Authority for an operating permit ..., or the said permit is not granted within 120 days from the date of the Integration Organisation’s notification of its exit or exclusion, the Supervisory Authority shall revoke its operating permit and the provisions of section   17 shall be applied to the cooperative credit institution. (8)     In the event of exit or exclusion from the Integration Organisation, with respect to the exiting or excluded member, the joint and several liability of the members of the Integration Organisation shall terminate for the obligations assumed by the member as of the day of its exit or exclusion ...” 68 .     Section 13: “(1) The authorised share capital of the Savings Bank shall be a minimum of HUF   3,389,704,000, that is three billion, three hundred and eighty-nine million, seven hundred and four thousand forints. (2) Magyar Posta shall acquire ownership in the Savings Bank by subscribing for ordinary shares. (3) The cooperative credit institution shall hold series ‘C’ preference shares in the Savings Bank. (4) Shareholders of the Savings Bank may only hold one kind of preference share.” 69 .     Section 15: “(1) the Savings Bank shall be the central bank of the integration of cooperative credit institutions. (2) The Savings Bank shall adopt rules to be complied with by cooperative credit institutions on the following matters: (a) the detailed rules of risk management, including credit authorisation, risk monitoring, deposit allocation, cash management and investment policy, rules of evaluation and depreciation and rules on additional specific capital requirements in addition to laws, regulations and other binding rules; (b) the applicable business policy; (c) the joint marketing activity; (d) the establishment of an integrated IT system. (3) The Savings Bank shall exert control over the activity of the cooperative credit institutions, and it may give instructions to a cooperative credit institution in order to ensure compliance with the laws and regulations, or with the rules issued by or the instructions given by the Integration Organisation and the Savings Bank. The cooperative credit institution shall comply with such instruction. The instruction must be justified and the deadline for compliance must be set. As to whom the instruction is addressed, the cooperative credit institution has the right to have recourse to a court in order to determine if the instruction is in accordance with the Act, other laws and regulations and the rules issued by the Savings Bank and the Integration Organisation. Recourse to the courts will have no suspensive effect; irrespectively, the instruction shall be complied with by the deadline set therein. (4) In the event that the cooperative credit institution fails to comply with the instruction or operates in disregard of the laws, regulations or rules: (a) the Board of the Savings Bank may decide to suspend the term of office of the executive officer of the cooperative credit institution for a maximum of 180 days; such suspension may be extended for an additional 180 days on the condition that this decision is notified without delay to the Supervisory Authority, which will take steps to appoint a commissioner; (b) upon the initiative of the Board of the Savings Bank or upon its own initiative, the Board of the Integration Organisation shall decide on the suspension of membership of the cooperative credit institution in the Organisation and – if justified – on the exclusion of the cooperative credit institution from the Integration Organisation. (5) The Board of the Savings Bank shall decide to terminate the suspension of the term of office of the executive officer(s) of the cooperative credit institution, or the Board of the Integration Organisation shall decide to terminate the suspension of membership in the Integration Organisation, if the cooperative credit institution complies with the instruction and has restored operations in comp