Law on the Implementation of Regulation (EU) No 1286/2014 on Key Information Documents for Packaged Retail and Insurance-based Investment Products (PRIIPs) – Unofficial Consolidated Text

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Hrvatska agencija za nadzor financijskih usluga, 10000 Zagreb, Franje Račkoga 6, p.p. 164, Hrvatska t: 01 6173 200, f: 01 4811 507, e: info@hanfa.hr, OIB: 49376181407, MB: 02016419, w: www.hanfa.hr ZAKON O PROVEDBI UREDBE (EU) BR. 1286/2014 O DOKUMENTIMA S KLJUČNIM INFORMACIJAMA ZA UPAKIRANE INVESTICIJSKE PROIZVODE (Narodne novine br. 112/18 i 123/23 – neslužbeni pročišćeni tekst)

I. GENERAL PROVISIONS Subject of the Law Article 1. This Law establishes the competent authority, its area of operation and competences, as well as offence provisions for the implementation of the European Union regulation referred to in Article 2 of this Law. European Union Law Article 2. This Law ensures the prerequisites for the implementation of Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on packaged retail and insurance-based investment products (PRIIPs) (OJ L 352/1, 9. 12. 2014.) (hereinafter: Regulation (EU) No 1286/2014). Definitions Article 3. (1) For the purposes of this Law, individual terms have the following meanings:

1. Agency means the Croatian Financial Services Agency, whose competences and area of operation are defined by the law governing the area of operation and competences of the Croatian Financial Services Agency, this Law and other laws.
2. ESMA means the European Securities and Markets Authority, established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EZ (OJ L 331, 15. 12. 2010).
3. EIOPA means the European Insurance and Occupational Pensions Authority, established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EZ (OJ L 331, 15. 12. 2010).
4. EBA means the European Banking Authority, established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EZ (OJ L 331, 15. 12. 2010).
5. ESA is a collective term for the European supervisory authorities, namely: EIOPA, EBA and ESMA.
6. Total revenue means the total annual revenue based on the most recent available annual financial statements, which the offence perpetrator has generated from conducting its economic activity.
7. Annual financial statements mean annual financial statements in accordance with the law governing the accounting of entrepreneurs. (2) Other terms used in this Law have identical meanings to those used in Regulation (EU) No 1286/2014.

II. COMPETENT AUTHORITY, ITS COMPETENCES AND AREA OF OPERATION Competent Authority Article 4. The competent authority for the implementation of Regulation (EU) No 1286/2014 and this Law is the Agency. Subjects under the Agency's Supervision Article 5. The subjects under the Agency's supervision are PRIIP issuers and persons who advise on or sell PRIIPs, as determined by the laws governing the establishment and operations of these subjects. Competences of the Agency Article 6. The Agency's competences for the purposes of implementing Regulation (EU) No 1286/2014 and this Law relate to:

1. conducting supervision regarding compliance with the provisions of Regulation (EU) No 1286/2014 and this Law by the subjects under the Agency's supervision referred to in Article 5 of this Law;
2. imposing supervisory measures on the subjects under supervision referred to in Article 5 of this Law;
3. submitting prosecution proposals upon established breaches of the provisions of Regulation (EU) No 1286/2014 and this Law by the subjects under supervision referred to in Article 5 of this Law. Area of Operation of the Agency Article 7. The Agency performs the following tasks for the purposes of implementing Regulation (EU) No 1286/2014 and this Law:
4. supervises the compliance of subjects under supervision referred to in Article 5 of this Law with obligations under Regulation (EU) No 1286/2014 and this Law;
5. monitors the market for investment insurance products placed on the market, distributed or sold in the Republic of Croatia or from the Republic of Croatia, in accordance with Article 15(2) of Regulation (EU) No 1286/2014;
6. publishes on its website a notice of each decision imposing a prohibition or restriction under Article 17(1) of Regulation (EU) No 1286/2014, in accordance with Article 17(5) of Regulation (EU) No 1286/2014, as well as a notice regarding the reasons for acting contrary to EIOPA's opinion in accordance with Article 18(3) of Regulation (EU) No 1286/2014;
7. exchanges information and cooperates with competent authorities of other Member States and EIOPA in accordance with Article 17(3) and (4) of Regulation (EU) No 1286/2014;
8. reports to ESA on imposed sanctions and measures in accordance with Articles 27 and 29 of Regulation (EU) No 1286/2014;
9. publishes on its website each imposed sanction and other measure for breaches of the provisions of Regulation (EU) No 1286/2014 in accordance with Article 29 of Regulation (EU) No 1286/2014, which includes data on received non-final breach decisions, with a note indicating that the decision is non-final, as well as agreements on conditions for admitting guilt and agreements on sanctions and measures concluded with the offence perpetrator in accordance with the law governing the offence procedure, and in the case referred to in Article 29(1) point c. subpoint 4 of Regulation (EU) No 1286/2014 regarding unpublished imposed sanctions and other measures, informs ESA.

III. SUPERVISION Supervisory Procedure Conducted by the Agency Article 8. (1) The Agency conducts supervision over the implementation of Regulation (EU) No 1286/2014 and subjects under supervision referred to in Article 5 of this Law within its competence, in accordance with the provisions of Regulation (EU) No 1286/2014, this Law, laws governing the establishment and operations of subjects under supervision referred to in Article 5 of this Law, and the law governing the area of operation and competences of the Agency. (2) The Agency conducts supervision referred to in paragraph 1 of this Article:

1. by monitoring, collecting and verifying published data and notices submitted to the Agency in accordance with the provisions of Regulation (EU) No 1286/2014, and by conducting supervision in accordance with the laws governing the establishment and operations of subjects under supervision referred to in Article 5 of this Law and the law governing the area of operation and competences of the Agency;
2. by imposing supervisory measures under Article 10 of this Law. Powers of the Agency in Conducting Supervision Article 9. (1) If necessary for the purpose of supervising compliance with the provisions of Regulation (EU) No 1286/2014 and this Law, the Agency may require subjects under supervision referred to in Article 5 of this Law to provide access to any document in any form and deliver a copy thereof. (2) The Agency may also request all other documentation and information for the purpose of verifying the compliance of subjects under supervision with Regulation (EU) No 1286/2014, this Law, regulations adopted on the basis of this Law and other relevant regulations. (3) If necessary for the purpose of supervising compliance with the provisions of Regulation (EU) No 1286/2014 and this Law, the Agency may conduct direct supervision with prior notice of supervision or without it. Supervisory Measures of the Agency Article 10. (1) When the Agency, in accordance with its competences under Article 6 of this Law, establishes breaches of the provisions of Regulation (EU) No 1286/2014 and/or this Law, it is authorized to impose supervisory measures by decision:
3. order the publication of the Key Information Document for retail investors on its website;
4. require amendment of an existing Key Information Document for retail investors if it is inaccurate, untrue, unclear or ambiguous;
5. require alignment of the content of the Key Information Document with all binding contractual documents, relevant parts of prospectuses and PRIIP terms;
6. prohibit or suspend promotional material that: a) includes statements contrary to the information contained in the Key Information Document or which diminishes the significance of the Key Information Document; b) does not state that the Key Information Document is available and does not provide information on how and where it can be obtained, including the PRIIP issuer's website;
7. require revision of the Key Information Document when changes are deemed necessary, prohibit delivery before amendments are made and order publication of the revised version without delay;
8. require timely delivery of the Key Information Document to retail investors before they are bound by any contract or offer relating to that PRIIP, except in the case referred to in Article 13(3) of Regulation (EU) No 1286/2014;
9. prohibit the charging of delivery fees for the Key Information Document to retail investors by persons who advise on or sell PRIIPs;
10. publicly publish a warning stating the person responsible for the breach and the nature of the breach of the provisions of Regulation (EU) No 1286/2014. (2) When the Agency establishes breaches of the provisions of Regulation No 1286/2014 or this Law by subjects under supervision referred to in Article 5 of this Law, the Agency may, subject to the conditions of Article 17 of Regulation (EU) No 1286/2014, in addition to the supervisory measures prescribed in paragraph 1 of this Article, by decision prohibit or restrict in the Republic of Croatia or from the Republic of Croatia:
11. advertising, distribution and/or sale of certain investment insurance products and/or investment insurance products with special characteristics;
12. the type of financial activity and/or practice of an insurance company or reinsurance company. (3) The Agency may by decision order a subject under supervision referred to in Article 5 of this Law to directly notify the retail investor about the imposed sanction or other measure and the possibility of lodging a complaint or obtaining legal protection. (4) Against decisions of the Agency referred to in paragraphs 1, 2 and 3 of this Article, an appeal is not permitted, but administrative proceedings may be initiated.

IV. COOPERATION Cooperation Article 11. For the purposes of implementing Regulation (EU) No 1286/2014 and this Law, the Agency cooperates with other authorized bodies and exchanges data with them, in accordance with the provisions of Regulation (EU) No 1286/2014, relevant statutory provisions and cooperation agreements.

V. LANGUAGE, DELIVERY DEADLINES AND PUBLICATION OF NOTICES Delivery of the Key Information Document Article 12. (1) A PRIIP issuer from the Republic of Croatia or a person selling a PRIIP in the Republic of Croatia is obliged to deliver to the Agency the Key Information Document for that PRIIP. (2) The Agency prescribes by regulation the deadlines and method of delivery of the Key Information Document. Language and Publication of Notices Article 13. (1) The Key Information Document for a PRIIP distributed in the Republic of Croatia must be written in Croatian or translated into Croatian in accordance with Article 7(1) of Regulation (EU) No 1286/2014. (2) By way of exception to paragraph 1 of this Article, the Agency may permit the use of another language in the Key Information Document in cases where it is evident that this does not negatively affect the interests of retail investors to whom the product is distributed. (3) All notices that subjects under supervision referred to in Article 5 of this Law are obliged to deliver to the Agency and publish publicly in accordance with the provisions of Regulation (EU) No 1286/2014 and this Law are subject to the provisions on language of publication in laws governing the establishment and operations of subjects under supervision referred to in Article 5 of this Law, unless delegated acts of the European Commission or other implementing regulations adopted on the basis of Regulation (EU) No 1286/2014 prescribe explicit publication in a specific language in certain cases.

VI. MECHANISMS ENCOURAGING REPORTS OF POSSIBLE OR ACTUAL BREACHES OF REGULATION (EU) NO 1286/2014 Mechanisms Encouraging Reports of Possible or Actual Breaches of Regulation (EU) No 1286/2014 Article 14. (1) An employee's address to the Agency regarding a report of a possible or actual breach of Regulation (EU) No 1286/2014 committed within their employer or made in good faith to the Agency regarding that suspicion does not constitute a justified reason for termination of employment contract. (2) In the event of a dispute regarding placing an employee in a less favorable position than other employees due to addressing the Agency regarding a report of a possible or actual breach of Regulation (EU) No 1286/2014 committed within their employer or made in good faith to the Agency regarding that suspicion, which has led to a breach of one of the employee's rights under the employment relationship, if the employee proves that they have been placed in a less favorable position and that one of their employment rights has been breached, the burden of proof shifts to the employer, who must prove that the employee was not placed in a less favorable position than other employees or that their employment right was not breached. (3) The Agency prescribes by regulation effective mechanisms for receiving and investigating reports of possible or actual breaches of Regulation (EU) No 1286/2014 and subsequent proceedings, including the establishment of secure communication channels for such reports, whereby Article 28 of Regulation (EU) No 1286/2014 applies mutatis mutandis. Powers of the Agency Article 15. The Agency prescribes by regulation, for the implementation of Regulation (EU) No 1286/2014, delegated acts and regulatory technical standards: – details of the procedure used to determine whether a PRIIP has specific environmental or social objectives, which the European Commission adopts on the basis of Article 8(4) of Regulation (EU) No 1286/2014; – details related to the content of information, risk and reward presentation and cost calculation methodology in the Key Information Document, which the European Commission adopts on the basis of Article 8(5) of Regulation (EU) No 1286/2014; – details regarding the procedure for reviewing information contained in the Key Information Document by PRIIP issuers, which the European Commission adopts on the basis of Article 10(2) of Regulation (EU) No 1286/2014; – details related to determining the conditions for fulfilling the requirement to secure the Key Information Document, which the European Commission adopts on the basis of Article 13(5) of Regulation (EU) No 1286/2014; – details related to criteria and factors that competent authorities should consider when determining whether there is significant concern about investor protection or a threat to the orderly functioning and integrity of financial markets or commodity markets, as well as financial system stability, which the European Commission adopts on the basis of Article 17(7) of Regulation (EU) No 1286/2014.

VII. OFFENCE PROVISIONS Introductory Provisions Article 16. (1) If the offence perpetrator, within the meaning of the law governing accounting by entrepreneurs, is a parent company or a subsidiary of a parent company obliged to prepare consolidated financial statements, the total revenue under Articles 17, 18 and 19 of this Law is determined based on the consolidated financial statements approved by the governing body of the ultimate parent company. (2) If official annual financial statements for the year in which the offence was committed are not available at the time of imposing a fine, the last official annual financial statements preceding that year shall be applied as the basis for calculating the amount of fines for offences under Articles 17, 18 and 19 of this Law. (3) When determining the type of supervisory measures and submitting prosecution proposals upon established breaches of the provisions of Regulation (EU) No 1286/2014 and this Law, the Agency takes into account all relevant circumstances, particularly those determined by Article 25 of Regulation (EU) No 1286/2014. Serious Breaches by the PRIIP Issuer Article 17. (NN123/23) (1) A legal entity, PRIIP issuer, shall be fined for an offence with a fine that is a multiple of 1000, which cannot be less than 0.01% nor greater than 3% of the total revenue generated by the PRIIP issuer in the year the offence was committed, as determined by official financial statements for that year, in the event of a systematic and severe impact of the committed offence on the interests of retail investors if:

1. it does not prepare a Key Information Document before the PRIIP becomes available to retail investors, or does not publish it on its website in accordance with Article 5(1) of Regulation (EU) No 1286/2014;
2. it does not prepare a Key Information Document in an accurate, true, clear and unambiguous manner in accordance with Article 6(1) of Regulation (EU) No 1286/2014;
3. it does not prepare a Key Information Document in accordance with Article 6(1) of Regulation (EU) No 1286/2014 that provides key information;
4. it prepares a Key Information Document that is not aligned with all binding contractual documents, relevant parts of prospectuses and PRIIP terms contrary to Article 6(1) of Regulation (EU) No 1286/2014;
5. it prepares a Key Information Document that is not independent or not clearly separated from promotional materials contrary to Article 6(2) of Regulation (EU) No 1286/2014;
6. it prepares a Key Information Document containing cross-references to promotional materials contrary to Article 6(2) of Regulation (EU) No 1286/2014;
7. in cases where all information regarding the basic investment option cannot be provided in one concise, independent document, the Key Information Document does not provide a generic description of basic investment options nor states where and how more detailed pre-contractual informational documentation regarding the investment products supporting the basic investment options can be found, in accordance with Article 6(3) of Regulation (EU) No 1286/2014;
8. it does not prepare a Key Information Document in accordance with Article 7(1) of Regulation (EU) No 1286/2014;
9. it does not prepare a Key Information Document in accordance with Article 7(2) of Regulation (EU) No 1286/2014 in cases where the PRIIP is promoted in the Republic of Croatia via promotional materials;
10. it prepares a Key Information Document that is not correctly titled or structured in accordance with Article 8(1) of Regulation (EU) No 1286/2014;
11. it prepares a Key Information Document that does not contain the prescribed reasoning in accordance with Article 8(2) of Regulation (EU) No 1286/2014;
12. it prepares a Key Information Document that does not contain all prescribed information or does not contain any information or element in its form and content in accordance with Article 8(3) of Regulation (EU) No 1286/2014;
13. it prepares promotional content with information about PRIIPs whose data are contrary to the data in the Key Information Document contrary to Article 9 of Regulation (EU) No 1286/2014;
14. it prepares promotional content with information about PRIIPs whose data diminish the significance of the Key Information Document or do not contain a notice regarding the availability of the Key Information Document contrary to Article 9 of Regulation (EU) No 1286/2014;
15. in regard to reviewing information contained in the Key Information Document or revising that document, it does not act in accordance with Article 10(1) of Regulation (EU) No 1286/2014;
16. it does not establish effective and adequate procedures and mechanisms that give retail investors all possibilities for efficient complaint submission and efficient legal protection proceedings in accordance with Article 19 of Regulation (EU) No 1286/2014. (2) For offences under paragraph 1 of this Article, a legal entity, PRIIP issuer, shall be fined with an amount from 26,540.00 euros to 99,540.00 euros if the committed offence does not systematically and severely affect the interests of retail investors, provided that this amount is not greater than the prescribed maximum amount under paragraph 1 of this Article. (3) By way of exception to paragraph 1 of this Article, if the amount of the fine determined on the basis of paragraph 1 of this Article is less than 66,360.00 euros, the PRIIP issuer shall be fined for an offence under paragraph 1 of this Article with a fine from 66,360.00 euros to 132,720.00 euros. (4) In cases where the PRIIP issuer has obtained a benefit or prevented a loss through an offence under paragraphs 1 and 2 of this Article, and the amount of such obtained benefit or prevented loss can be determined, it shall be fined for an offence under paragraphs 1 and 2 of this Article with a fine equal to double the determined amount of such obtained benefit or prevented loss, if that amount is greater than the prescribed maximum fine under paragraph 1 or 2 of this Article. (5) For an offence under paragraph 1 of this Article, a responsible person in the PRIIP issuer shall also be fined with an amount from 2,650.00 to 700,000.00 euros. (6) For an offence under paragraph 2 of this Article, a responsible person in the PRIIP issuer shall also be fined with an amount from 2,650.00 euros to 6,630.00 euros. (7) For an offence under paragraph 1 of this Article, a natural person conducting the registered activity as a PRIIP issuer shall be fined with an amount from 66,360.00 euros to 700,000.00 euros. (8) For an offence under paragraph 1 of this Article, a natural person conducting the registered activity as a PRIIP issuer shall be fined with an amount from 1,320.00 euros to 30,000.00 euros if the committed offence does not systematically and severely affect the interests of retail investors. (9) When a natural person under paragraph 7 of this Article has obtained a benefit or prevented a loss, and the amount of such obtained benefit or prevented loss can be determined, the natural person under paragraph 7 of this Article shall be fined for an offence under paragraphs 1 and 2 of this Article with a fine up to the amount of double the determined amount of such obtained benefit or prevented loss, if that amount is greater than the prescribed maximum under paragraph 7 of this Article. Less Serious Breaches by the PRIIP Issuer Article 18. (NN 123/23) (1) A legal entity, PRIIP issuer, shall be fined for an offence with a fine that is a multiple of 1000, which cannot be less than 0.01% nor greater than 1.5% of the total revenue generated by the PRIIP issuer in the year the offence was committed, as determined by official financial statements for that year, if it frequently:
17. does not act in accordance with Article 6(4) of Regulation (EU) No 1286/2014 regarding the form and manner of preparing the Key Information Document;
18. does not act in accordance with Article 6(5) of Regulation (EU) No 1286/2014 because it uses colors in the Key Information Document that diminish the understandability of information;
19. does not act in accordance with Article 6(6) of Regulation (EU) No 1286/2014 because it uses corporate branding or its logo in a manner that diverts the retail investor's attention from information contained in the document, or makes the text in the document unclear;
20. does not act in accordance with Article 12 of this Law because it does not deliver or fails to deliver within the prescribed deadline a notice under Article 12 of this Law to the supervisory authority. (2) For an offence under paragraph 1 of this Article, a legal entity, PRIIP issuer, shall be fined with an amount from 9,950.00 euros to 26,540.00 euros if the conduct under paragraph 1 of this Article is not established as frequent. (3) By way of exception to paragraph 1 of this Article, if the amount of the fine determined on the basis of paragraph