Joint liability (the "Liability") within OP Financial Group is based on the Amalgamations Act. OP Cooperative and its Member Credit Institutions are liable for each other's debts and commitments in accordance with the Amalgamations Act.
In accordance with the Amalgamations Act OP Cooperative is responsible for issuing guidelines on risk management, reliable administration, internal surveillance and guidelines for the application of coherent accounting principles in compiling the consolidated financial statements of OP Financial Group to the Member Credit Institutions, with the aim of ensuring their liquidity and capital adequacy. OP Cooperative also supervises the Member Credit Institutions' compliance with the applicable rules and regulations in respect of their financial position, any provisions issued by the relevant supervising authorities, their statutes and articles of associations.
The obligation to issue guidelines and exercise supervision does not however give OP Cooperative the power to determine the business operations of the Member Credit Institutions or the Member Cooperative Banks. Each Member Credit Institution carries on its business independently within the scope of its own resources.
On the basis of this Liability, OP Cooperative must pay to each Member Credit Institution an amount that is necessary in order to prevent such Member Credit Institution's liquidation. OP Cooperative is responsible for the payments of any debts of a Member Credit Institution that cannot be paid using such Member Credit Institution's own funds.
A Member Credit Institution must pay to OP Cooperative a proportionate share of the amount which OP Cooperative has paid either to another Member Credit Institution as part of the support action described above, or to a creditor of such Member Credit Institution as payment of a due debt for which the creditor has not received payment from his debtor. Furthermore, upon the insolvency of OP Cooperative a Member Credit Institution has an unlimited liability to pay the debts of OP Cooperative as set out in Chapter 15 of the Cooperative Bank Act.
Each Member Credit Institution's liability, for the amount which OP Cooperative has paid on behalf of one Member Credit Institution to its creditors, is divided between the Member Credit Institutions in proportion to their last confirmed balance sheet totals.
If the funds of any Member Credit Institution fall below the minimum set out in the Act on Credit Institutions or the Amalgamations Act, as the case may be, OP Cooperative is entitled to receive credit from the other Member Credit Institutions by collecting from such other Member Credit Institutions additional repayable payments to be used to support actions to prevent liquidation of the Member Credit Institution. The annual aggregate amount of the payments collected from the Member Credit Institutions on this basis may in each accounting period be a maximum amount of five thousandths of the last confirmed balance sheet total of each Member Credit Institution.
A creditor who has not received payment from a Member Credit Institution on a due receivable (principal debt) may demand payment from OP Cooperative, when the principal debt falls due.