Circular 1/2013 of 30 January from the National Securities Market Commission on the Communication of Information Relating to Investment Service Firms and Their Parent Companies and to Management Companies of Collective Investment Institutions

OFFICIAL STATE GAZETTE No. 43 Tuesday, 19 February 2013 Sec. I. Page 13930 I. GENERAL PROVISIONS NATIONAL SECURITIES MARKET COMMISSION 1785 Circular 1/2013 of 30 January from the National Securities Market Commission on the communication of information relating to investment service firms and their parent companies and to management companies of collective investment institutions.

Article 92(d) of Law 24/1988 of 28 July on the Securities Market (LMV) establishes that the National Securities Market Commission (CNMV) shall maintain, as official registers freely accessible to the public, a register of investment service firms (ISFs) operating in Spain and, where applicable, of their directors, executives, and equivalent personnel.

With regard to management companies of collective investment institutions (MCIs), Article 13(i) of Royal Decree 1082/2012 of 13 July approving the Regulation for the development of Law 35/2003 of 4 November on Collective Investment Institutions (RIIC) establishes that registers related to MCIs shall be kept at the CNMV, with the sections and subsections deemed necessary.

For these purposes, ISFs are obliged to notify the CNMV of any modifications to their authorization conditions and other circumstances that may be relevant, pursuant to various provisions contained in both Law 24/1988 of 28 July and Royal Decree 217/2008 of 15 February on the legal regime of investment service firms and other entities providing investment services, and partially amending the Regulation of Law 35/2003 of 4 November on Collective Investment Institutions, approved by Royal Decree 1309/2005 of 4 November. Among others, the aforementioned entities must notify changes in the composition of their governing bodies and executive positions, their shareholding structure, their activity programs, their articles of association, and their agents.

MCIs are likewise obliged to make analogous notifications to those of ISFs, regarding changes in authorization conditions, pursuant to various provisions of both Law 35/2003 of 4 November on Collective Investment Institutions (LIIC) and Royal Decree 1082/2012 of 13 July.

To facilitate and expedite communications to the CNMV, the second final provision of Royal Decree 217/2008 of 15 February, as amended by the second final provision of Royal Decree 1082/2012 of 13 July, empowers the CNMV to specify and develop the communication regime, the content of information obligations, the method of submission, which may be electronic, and the deadlines for communication regarding modifications to the authorization conditions of ISFs pursuant to the applicable provisions of Law 24/1988 of 28 July and Royal Decree 217/2008 of 15 February.

Similarly to ISFs, the single final provision of the Regulation approved by Royal Decree 1082/2012 of 13 July empowers the CNMV to specify and develop the communication regime, the content of information obligations, the method of submission, which may be electronic, and the communication deadlines regarding modifications to the authorization conditions of MCIs, pursuant to the applicable provisions of Law 35/2003 of 4 November.

For the foregoing, this Circular, in development of the aforementioned authorizations: (i) Regulates the communication regime to the CNMV of modifications to the authorization conditions of ISFs and MCIs, as well as modifications relating to the consolidatable groups of ISFs, and the dissemination of this information through the CNMV's public registers, in compliance with the provisions of Article 92 of Law 24/1988 of 28 July and Article 13 of Royal Decree 1082/2012 of 13 July mentioned above.

cve: BOE-A-2013-1785

OFFICIAL STATE GAZETTE No. 43 Tuesday, 19 February 2013 Sec. I. Page 13931 (ii) Systematizes the regulation regarding information obligations that:

1. Extends its scope of application to ISFs (Securities Firms, Investment Advisory Firms, and Financial Investment Firms) and to MCIs.
2. Specifies the content of the information, the communication scenarios, the obligated parties, the method of submission, which may be electronic, and the deadlines for sending it to the CNMV.

With the dual purpose of facilitating and simplifying the submission of documentation to the CNMV by the subject entities and ensuring adequate and timely dissemination of this information by the CNMV.

Accordingly, the Council of the National Securities Market Commission, following a report from the Advisory Committee, in its meeting of 30 January 2013, has ordered:

Rule 1. Scope of Application. The present Circular regulates the communication regime to the CNMV of modifications to the authorization conditions of ISFs and MCIs relating to appointments and resignations of administrative or executive positions, shareholding composition, opening and closing of branches within national territory, expansion or reduction of activities and instruments included in activity programs, amendments to articles of association, agency relationships and delegation of functions, as well as any other modification that entails a variation in the conditions of the granted authorization or other data recorded in the register held by the CNMV.

Communications shall be made, where applicable, by ISFs or their parent companies and by MCIs, except those referred to in paragraph 1 of Rule 4, which shall be made by the acquirer of the participation, and in Rule 10, which shall be made by the obligated entities.

Rule 2. Prior Communication of Appointments of Administrative or Executive Positions of ISFs and Their Parent Companies.

1. The appointment of new administrative or executive positions of ISFs and, where applicable, their parent entities, shall be subject to prior communication.

For the purposes of Article 68.3 of Law 24/1988 of 28 July and its implementing regulations, the following shall be subject to the prior communication requirement to the CNMV: a) The appointment of new directors or executive positions. b) The appointment as managing director or equivalent or chief executive officer of a director appointed less than three years prior. c) The appointment of a natural person representative of a legal person director.

Executive positions are considered to include managing directors and those who perform senior management functions within the entity under the direct dependence of its governing body, executive committees, or chief executive officers.

2. The following shall not be subject to the prior communication requirement provided for in paragraph 1: a) The modification of an existing director's position (Chairman, Vice-Chairman, Secretary or Vice-Secretary, the latter two only when they are directors) when there have been no changes in the circumstances relating to their good repute. b) The re-election of directors. c) The appointment of a non-director Secretary or Vice-Secretary. d) The appointment of new administrative or executive positions of the parent company of an ISF when it is subject to authorization by other supervisory bodies or has already been verified and registered by the CNMV.

cve: BOE-A-2013-1785

OFFICIAL STATE GAZETTE No. 43 Tuesday, 19 February 2013 Sec. I. Page 13932 Rule 3. Communication Regime for Appointments and Resignations of Administrative or Executive Positions of ISFs and Their Parent Companies and of MCIs.

1. The appointment of new administrative or executive positions of ISFs and, where applicable, their parent entities, shall be communicated to the CNMV: a) Once the prior communication procedure has been completed and the CNMV has not raised an objection as referred to in the previous rule, within fifteen business days following its acceptance. b) Within fifteen business days following their acceptance, in the scenarios provided for in paragraphs 2.a) and 2.d) of Rule 2.

The re-election of directors nor the appointment of a non-director Secretary or Vice-Secretary shall not be subject to communication.

2. The appointment of new administrative or executive positions of MCIs shall not require prior communication. MCIs, once the verification of the good repute, knowledge, and experience requirements mandated by regulation has been completed, as well as the existence of adequate mechanisms for compliance with depositary separation rules and the avoidance of conflicts of interest, where applicable, shall communicate such appointments to the CNMV within fifteen business days following the acceptance of the position. For these purposes, the following shall be subject to communication: a) The appointment of new directors or executive positions. b) The appointment as managing director or equivalent or chief executive officer of an existing director. c) The appointment of a natural person representative of a legal person director. d) The modification of an existing director's position (Chairman, Vice-Chairman, Secretary or Vice-Secretary, the latter two only when they are also directors).

Executive positions are considered to include managing directors and those who perform senior management functions within the entity under the direct dependence of its governing body, executive committees, or chief executive officers.

The re-election of directors nor the appointment of a non-director Secretary or Vice-Secretary shall not be subject to communication.

3. The resignation of administrative or executive positions of ISFs and, where applicable, their parent companies, as well as of MCIs, shall be communicated as soon as it occurs and at the latest within fifteen business days.

Rule 4. Communication Regime for Shareholding Structure of ISFs and MCIs.

1. Any natural or legal person who, alone or acting in concert with others, has acquired a significant participation or increased, directly or indirectly, their participation or percentage of voting rights in an ISF or an MCI above the thresholds established in Articles 69 of Law 24/1988 of 28 July and 45 of Law 35/2003 of 4 November, respectively, or whose percentage of capital held or voting rights results equal to or greater than 5 percent, shall notify the CNMV, within seven business days from the date of the transaction, of the acquisition made, indicating the amount of the participation or the percentage of voting rights reached and the date thereof, without prejudice to the prior communication regime provided for in said Articles 69 and 45 mentioned above.

2. ISFs and MCIs shall notify the CNMV of any transfer of shares forming part of their capital within seven business days from the date they become aware of it, informing of the final composition of their shareholding.

3. Annually, in the first month of each calendar year, ISFs and MCIs shall submit to the CNMV a list of all their direct shareholders, as well as, where applicable, the person or persons who, at the end of the participation chain, hold control of the entity. In the event that control is held through a listed or supervised entity, national or foreign, the information shall be limited to the participation of said entity in the ISF or MCI.

cve: BOE-A-2013-1785

OFFICIAL STATE GAZETTE No. 43 Tuesday, 19 February 2013 Sec. I. Page 13933 Rule 5. Branches of ISFs and MCIs. The opening and closing of branches within national territory of ISFs or MCIs authorized in Spain shall be communicated to the CNMV within seven business days from the date such circumstance occurs, indicating address, director, geographic scope of operation, and date of opening or closing.

Changes in the communicated circumstances shall be reported to the CNMV within seven business days from the date they occur.

Rule 6. Expansion or Reduction of Activities and Instruments Included in Activity Programs of ISFs and MCIs.

1. For the purposes of Article 68.2 of Law 24/1988 of 28 July and Article 11 of RD 217/2008 of 15 February, the following shall not require authorization, as they are considered alterations of already authorized services and activities for ISFs, among others: a) Provision of investment and auxiliary services on any of the negotiable securities provided for in Article 2.1 of Law 24/1988 of 28 July, when the ISF was already providing those same services on other negotiable securities provided for in said article. b) Provision of investment and auxiliary services to professional clients or eligible counterparties when the ISF was already providing those same services to retail clients. c) Incorporation of advisory services, in case the ISF already had discretionary portfolio management in its program.

2. For the purposes of Article 112 of Royal Decree 1082/2012 of 13 July, the following shall not require authorization, as they are considered alterations of already authorized services and activities for MCIs, among others: a) Incorporation of advisory services, in case the MCI already had discretionary portfolio management in its program. b) Inclusion of the management of collective investment institutions of collective investment institutions of long-term investment entities, provided the MCI already had in its program the management of collective investment institutions of long-term investment entities, or inclusion of the management of subordinate long-term investment entities if the MCI already had in its program the management of collective investment institutions of long-term investment entities and/or collective investment institutions of collective investment institutions of long-term investment entities.

All modifications to the activities and instruments included in the activity programs of ISFs and MCIs that do not require CNMV authorization shall be communicated to it fifteen business days in advance of the date they are to take effect, for incorporation into the register.

Rule 7. Amendment of Articles of Association of ISFs and MCIs.

1. The following shall not require authorization, although they shall be subsequently communicated to the CNMV for recording in the register: amendments to the articles of association of ISFs that have as their purpose: a) Change of domicile within national territory as well as change of name. b) Incorporation into the articles of legal or regulatory provisions of a voluntary, mandatory, or prohibitive nature, or compliance with judicial or administrative resolutions. c) Modification of the corporate purpose to include or eliminate activities and services provided for in the regulations. d) Cash increases of share capital and those carried out from reserves. e) Reductions of share capital to offset losses or to establish or increase the legal reserve.

cve: BOE-A-2013-1785

OFFICIAL STATE GAZETTE No. 43 Tuesday, 19 February 2013 Sec. I. Page 13934 f) Reductions of capital by return of contributions or to establish or increase voluntary reserves, provided they do not exceed 20 percent of the share capital. g) The establishment or elimination of restrictions on the free transferability of shares. h) The incorporation into the articles of shareholders' agreements, provided they do not imply a change of control of the entity. i) The regulation of the governing body regarding the maximum and minimum number of members, remuneration system, or term of office. j) The modification of the legal and reinforced majorities necessary for taking decisions at the shareholders' meeting, provided they do not imply a change of control of the entity. k) The approval of consolidated texts. l) Any other modifications for which the CNMV, in response to a prior consultation, has deemed unnecessary, due to their low relevance, the authorization procedure.

2. The following shall not require authorization, although they shall be subsequently communicated to the CNMV for recording in the register: amendments to the articles of association of MCIs that have as their purpose: a) Change of domicile within national territory as well as change of name. b) Incorporation into the articles of legal or regulatory provisions of a voluntary, mandatory, or prohibitive nature, or compliance with judicial or administrative resolutions. c) Modification of the corporate purpose to include or eliminate activities and services provided for in the regulations. d) Increases and reductions of share capital. e) The establishment or elimination of restrictions on the free transferability of shares. f) The incorporation into the articles of shareholders' agreements, provided they do not imply a change of control of the entity. g) The regulation of the governing body regarding the maximum and minimum number of members, remuneration system, or term of office. h) The modification of the legal and reinforced majorities necessary for taking decisions at the shareholders' meeting, provided they do not imply a change of control of the entity. i) The approval of consolidated texts. j) Any other modifications for which the CNMV, in response to a prior consultation, has deemed unnecessary, due to their low relevance, the authorization procedure.

3. Copies of the public deeds documenting the amendments to the articles of association shall be submitted to the CNMV for registration in the register, within fifteen business days from the date of registration in the Commercial Registry.

Rule 8. Agency Relationships of ISFs. ISFs that engage agents shall ensure, prior to their establishment, that these possess sufficient good repute, capacity, and professionalism, in accordance with Article 65 bis.2 of Law 24/1988 of 28 July. Likewise, they shall notify the CNMV, before the start of their activity, of the list of their agents, indicating identifying data, geographic and material scope of operation, as well as partners and board members of legal person agents.

When an ISF terminates its relationship with an agent, it shall notify the CNMV immediately for incorporation into the register.

cve: BOE-A-2013-1785

OFFICIAL STATE GAZETTE No. 43 Tuesday, 19 February 2013 Sec. I. Page 13935 Rule 9. Delegation of Administrative, Internal Control, and Investment Analysis and Selection Functions of MCIs. MCIs that delegate internal audit, compliance, risk management, and/or investment analysis and selection activities and/or collective investment institution administration functions shall notify the CNMV fifteen business days in advance of the date it is to take effect, for incorporation into the register. Such communication shall include the identification of the delegate as well as the detail of the delegated functions and activities, including, where applicable, delegation to entities within the group to which the entity belongs.

MCIs that delegate the investment analysis and selection activities of collective investment institutions of collective investment institutions of long-term investment entities or the administration of collective investment institutions of long-term investment entities and/or collective investment institutions of collective investment institutions of long-term investment entities, shall verify that the delegate has sufficient means to carry out the activity and submit to the CNMV, accompanying the communication referred to in the preceding paragraph, an express declaration of sufficiency of means signed by the delegator and delegate.

MCIs shall communicate the termination of delegation agreements within seven business days from the date it occurs.

Rule 10. Consolidatable Groups of ISFs. Obligated entities of ISF groups, constituted in accordance with Article 86.4 of Law 24/1988 of 28 July, shall notify within fifteen business days from when they occur, modifications relating to the entities that integrate the perimeter of consolidation of their consolidatable groups and that entail an alteration thereof.

Likewise, when, as a result of the acquisition of new entities by an ISF or any shareholder thereof, or for any other reason, a consolidatable group of ISFs as provided for in Article 86.4 of Law 24/1988 of 28 July is configured, the obligated entities shall notify the CNMV within fifteen business days from when such circumstance occurs.

Rule 11. Communications. The communications provided for in this Circular may be made using the models established by the CNMV at any given time for this purpose and published on its website www.cnmv.es, on the medium and with the technical requirements determined by it.

ISFs that engage agents shall notify the CNMV of their agency relationships in accordance with the telematic procedure established for this purpose by the CNMV within the electronic headquarters/telematic register service by using the CIFRADOC/CNMV electronic encryption and signature system, or whichever the CNMV may have established for this purpose at any given time.

Repealing Rule. Circular 5/1989 of 25 October from the CNMV on the communication and dissemination of information relating to securities companies and agencies is hereby repealed. Rule 3: "Form and deadlines for communicating representation relationships" of Circular 5/1998 of 4 November from the CNMV on representatives of companies and securities agencies and portfolio management companies is hereby repealed.

Final Rule. This Circular shall enter into force twenty days after its publication in the "Boletín Oficial del Estado".

Madrid, 30 January 2013.–The President of the National Securities Market Commission, María Elvira Rodríguez Herrer. cve: BOE-A-2013-1785 http://www.boe.es OFFICIAL STATE GAZETTE D. L.: M-1/1958 - ISSN: 0212-033X