Statute of the Croatian Financial Services Supervisory Agency

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• 1 - Based on the provisions of Article 3, paragraph 3 of the Act on the Croatian Financial Services Supervisory Agency (Official Gazette, No. 140/05 and 12/12) and Article 6, paragraph 3 of the Act on Amendments and Supplements to the Act on the Croatian Financial Services Supervisory Agency (Official Gazette, No. 12/12), the Croatian Financial Services Supervisory Agency, based on the decision of the Board of Directors at its 7th session held on February 27, 2012, and its 10th session held on March 15, 2012, adopts

STATUTE OF THE CROATIAN FINANCIAL SERVICES SUPERVISORY AGENCY

I. GENERAL PROVISIONS

Legal Status of the Agency Article 1. (1) The Croatian Financial Services Supervisory Agency (hereinafter: the Agency) is an independent legal entity with public authority that independently and autonomously performs tasks within the scope and competence defined by the Act on the Croatian Financial Services Supervisory Agency (hereinafter: the Act) and other laws. (2) In performing the tasks established by the laws referred to in paragraph 1 of this Article, the Agency is accountable to the Croatian Parliament. (3) Any form of influence on the work of the Agency that could call into question the independence and autonomy established by law is prohibited.

Subject of the Statute Article 2. (1) This Statute regulates the internal organization and mode of operation of the Agency and other matters of significance for the performance of tasks within the scope and competence of the Agency. (2) The Statute of the Agency is adopted by the Board of Directors of the Agency and confirmed by the Croatian Parliament.

Name Article 3. (1) The name of the Agency is: Croatian Financial Services Supervisory Agency. (2) The abbreviated name of the Agency is: HANFA. (3) The name of the Agency in English is: Croatian Financial Services Supervisory Agency. (4) The abbreviated name of the Agency in English is: CFSSA. (5) The name of the Agency must be displayed on the building where its seat is located.

Seat Article 4. The seat of the Agency is in Zagreb.

• 2 - Seal and Stamp Article 5. (1) The Agency has a seal with the coat of arms of the Republic of Croatia, which is affixed to acts adopted by the Agency based on its public authority. The seal is circular with the content: "REPUBLIC OF CROATIA, CROATIAN FINANCIAL SERVICES SUPERVISORY AGENCY, ZAGREB" and diameters of 38 mm and 25 mm. (2) In other cases, a seal without the coat of arms of the Republic of Croatia is used. The seal is circular with the content: "CROATIAN FINANCIAL SERVICES SUPERVISORY AGENCY, ZAGREB" and a diameter of 35 mm, and contains the business address of the Agency. (3) In office business, the Agency uses a rectangular receiving stamp measuring 4 cm x 7 cm, which contains the text: "CROATIAN FINANCIAL SERVICES SUPERVISORY AGENCY, ZAGREB" and space for recording the registration number and date of receipt of the document.

II. OBJECTIVES, SCOPE AND COMPETENCE OF THE AGENCY

Objectives of the Agency Article 6. The fundamental objectives of the Agency are the promotion and preservation of the stability of the financial system and the supervision of the legality of the operations of supervised entities.

Scope and Competence of the Agency Article 7. In performing public authority, the Agency is, in accordance with the Act, authorized to:

1. adopt implementing regulations based on the Act, laws regulating the capital market, investment and other funds, takeover of joint-stock companies, pension insurance companies, insurance and reinsurance, and financial services, as well as other laws when authorized by those laws;
2. supervise the operations of supervised entities established in the regulations referred to in item 1 of this paragraph, and legal entities engaged in factoring activities, except when performed by banks within their registered activities, and order measures to eliminate identified illegality and irregularities;
3. issue and revoke permits, approvals, licenses, and consents for which it is authorized based on special regulations referred to in item 1 of this paragraph;
4. promote, organize, and supervise measures for the effective functioning of financial markets;
5. maintain books, records, and registers in accordance with the provisions of the Act and special regulations referred to in item 1 of this paragraph;
6. propose initiatives for the adoption of laws and other regulations and inform the public about the principles by which financial markets operate;
7. adopt sub-legislative acts to prescribe conditions, methods, and procedures for the unified performance of supervision within its scope and competence, and take other measures and perform other tasks in accordance with statutory authorizations;
8. report to other supervisory, administrative, and judicial bodies on all matters that directly or indirectly concern their competence and scope, regarding proceedings conducted before those bodies in connection with proceedings within the scope and competence of the Agency;
9. give opinions on the implementation of the Act and special regulations referred to in item 1 of this paragraph upon request by parties in proceedings or persons who prove their legal interest.

• 3 - III. MANAGEMENT OF THE AGENCY

Board of Directors Article 8. (1) The Agency is managed by the Board of Directors. (2) The Board of Directors consists of five members, one of whom is the Chairman. (3) The Chairman and members of the Board of Directors are appointed and dismissed by the Croatian Parliament upon the proposal of the Government of the Republic of Croatia.

Conditions for Appointment of the Chairman and Members of the Board of Directors Article 9. The Chairman and a member of the Board of Directors may be appointed as a citizen of the Republic of Croatia who has higher education, appropriate professional knowledge, and work experience in the fields of finance, accounting, business management, actuarial science, or law, which makes them capable and worthy of being a member.

Term of Office of the Chairman and Members of the Board of Directors Article 10. The Chairman and members of the Board of Directors are appointed for a period of six years from the date of appointment and may be reappointed to the same position.

Conflict of Interest of the Chairman and Members of the Board of Directors Article 11. (1) The Chairman and a member of the Board of Directors cannot be a person who is a representative in the Croatian Parliament, who holds another position appointed by the Croatian Parliament or the Government of the Republic of Croatia, cannot be a member of the Government of the Republic of Croatia, and cannot be a person holding a position in local and regional (regional) self-government bodies and in bodies of political parties and trade union organizations. (2) The Chairman and members of the Board of Directors must behave in such a way as not to diminish their personal reputation or the reputation of the Agency, and not to call into question the independence and autonomy in the performance of their duties and the independence and autonomy of the Agency. (3) The Chairman and members of the Board of Directors must not accept any compensation, position, or employment, nor provide services in relation to supervised entities and persons considered related to them according to laws prescribing such connection. (4) The Chairman and members of the Board of Directors must not hold shares or ownership interests in insurance companies, legal entities engaged in insurance intermediation, investment fund management companies, pension fund management companies, pension insurance companies, investment companies, legal entities engaged in leasing and factoring activities, as well as persons related to them. (5) The Chairman and members of the Board of Directors must not, within a period of one year after the termination of their duties in the Agency, accept membership in the management or supervisory board of supervised entities or persons related to them. (6) Information obtained by the Chairman and members of the Board of Directors in the performance of their duties must not be used for any form of acquiring material benefit.

• 4 - (7) The Chairman and members of the Board of Directors are entitled to compensation in the amount of the last salary paid in the month before dismissal until new employment, for a maximum of one year from the date of termination of duties. (8) The Chairman and members of the Board of Directors have the right to publish professional or scientific papers and participate in the work of professional or scientific conferences. (9) The Chairman and members of the Board of Directors have the right to be members and participate in professional and scientific associations, associations, and projects, provided that this does not affect their independence and autonomy. (10) Conflict of interest of the Chairman and members of the Board of Directors in relation to supervised entities and persons related to them is regulated by the Code of Conduct.

Dismissal of the Chairman and Members of the Board of Directors Article 12. (1) The Croatian Parliament may dismiss the Chairman and a member of the Board of Directors before the expiration of their term upon the proposal of the Government of the Republic of Croatia in the following cases:

1. if they request dismissal themselves;
2. if circumstances from Article 11, paragraph 1, 3, and 4 of this Statute occur after appointment;
3. if they permanently lose the ability to perform the duty;
4. if sentenced by a final judgment to imprisonment for offenses in the field of business operations or for criminal offenses against the capital market;
5. if they violate the obligation to keep official secrets in connection with the performance of duties; and
6. if they perform a service or task that is incompatible with the duty of a member of the Board of Directors, or if their negligent or irregular work causes significant damage or major disruptions to the Agency's work. (2) The Board of Directors is obliged to inform the Government of the Republic of Croatia about the existence of grounds for dismissing the Chairman and a member of the Board of Directors before the expiration of their term. (3) Before making a decision on the dismissal of the Chairman or a member of the Board of Directors before the expiration of their term, they must be given the opportunity to comment on the reasons for dismissal. (4) In the event of fulfillment of the conditions from paragraph 1 of this Article, except for the condition from paragraph 1, item 3, the provision of Article 11, paragraph 7 of this Statute does not apply.

Chairman of the Board of Directors Article 13. The Chairman of the Board of Directors performs the following tasks:

1. convenes and chairs meetings of the Board of Directors;
2. signs acts and decisions adopted by the Board of Directors;
3. coordinates the work of Board members and proposes to the Board of Directors the delegation of certain tasks to another member or members of the Board of Directors;
4. proposes his deputy from among the other members of the Board of Directors;
5. represents the Board of Directors and represents the Agency in relation to international organizations, other bodies, and third parties, unless these are tasks of the General Secretary based on the provisions of this Statute;
6. signs the decision on the appointment and dismissal of the General Secretary of the Agency in accordance with the decision of the Board of Directors of the Agency;
7. performs other tasks established by the Act, this Statute, or other acts of the Agency and decisions of the Board of Directors.

Deputy Chairman of the Board of Directors Article 14. (1) The Deputy Chairman of the Board of Directors is elected by the Board of Directors upon the proposal of the Chairman of the Board of Directors, by a majority of votes. (2) The Deputy Chairman of the Board of Directors replaces the Chairman of the Board of Directors in the event of his absence or inability to perform duties. (3) The Deputy Chairman of the Board of Directors is elected for a period of 18 months, after which he may be re-elected. (4) The Board of Directors may dismiss the Deputy Chairman of the Board of Directors before the expiration of the period for which he was elected, by a majority of votes. (5) The Chairman of the Board of Directors will designate another member of the Board of Directors to perform the duties of deputy if the Deputy Chairman of the Board of Directors from paragraph 1 of this Article is absent or unable to perform duties.

Rules of Procedure of the Board of Directors Article 15. The Board of Directors adopts the Rules of Procedure of the Board of Directors, which regulate the mode of operation of the Board of Directors, as well as the rights and obligations of the Chairman of the Board of Directors, the Deputy Chairman of the Board of Directors, and members of the Board of Directors.

Mode of Decision Making Article 16. (1) The Board of Directors makes decisions for which it is competent at meetings by a majority of at least three votes, with the Chairman or a member of the Board of Directors not being allowed to abstain from voting. (2) Three members of the Board of Directors of the Agency constitute the quorum necessary for making decisions, and the Chairman or, in his absence, the Deputy must attend every meeting.

Scope and Competence of the Board of Directors Article 17. (1) In managing the work of the Agency, the Board of Directors performs the following tasks in accordance with the Act:

1. adopts implementing regulations based on the Act, laws regulating the capital market, investment and other funds, takeover of joint-stock companies, pension insurance companies, insurance and reinsurance, and financial services, as well as other laws when the Agency is authorized by those laws;
2. issues orders, guidelines, and instructions to appropriate organizational units of the Agency for organizing, implementing, and supervising supervision of the operations of supervised entities established in the regulations referred to in item 1 of this paragraph, and legal entities engaged in factoring activities, except when performed by banks within their registered activities, and orders measures to eliminate identified illegality and irregularities;
3. issues and revokes permits, approvals, licenses, and consents from Article 7, item 3 of this Statute;
4. promotes, organizes, and supervises measures for the effective functioning of financial markets by issuing orders, guidelines, and instructions to appropriate organizational units of the Agency;

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5. organizes and supervises the maintenance of books, records, and registers in accordance with the provisions of the Act and special regulations referred to in item 1 of this paragraph;
6. proposes initiatives for the adoption of laws and other regulations and enables informing the public about the principles by which financial markets operate;
7. adopts sub-legislative acts to prescribe conditions, methods, and procedures for the unified performance of supervision within its scope and competence;
8. organizes and supervises reporting to other supervisory, administrative, and judicial bodies on all matters that directly or indirectly concern their competence and scope, regarding proceedings conducted before those bodies in connection with proceedings within the scope and competence of the Agency;
9. gives opinions on the implementation of the Act and special regulations referred to in item 1 of this paragraph upon request by parties in proceedings or persons who prove their legal interest;
10. takes other measures and performs other tasks in accordance with the statutory authorizations of the Agency. (2) The Board of Directors also performs the following tasks in managing the Agency:
11. adopts the annual report on the work of the Agency in accordance with Article 35 of this Statute;
12. adopts the annual plan of income and expenses in accordance with Article 28 of this Statute and the Agency's procurement plan;
13. adopts the Statute of the Agency and other acts necessary for organizing the work of the Agency, especially those regulating activities, internal organization, internal controls, and internal audit, conditions for employment and work of employees, regulation of conflicts of interest, official secrets, and financing of the Agency;
14. announces a public competition for the appointment of the General Secretary and appoints and dismisses the General Secretary;
15. represents the Agency towards the General Secretary;
16. adopts decisions on the employment, assignment, and termination of employment of Agency employees;
17. approves the conclusion and termination of employment contracts;
18. supervises the work of the General Secretary and other Agency employees;
19. adopts a regulation on the amount of compensation and fees from Article 27 of this Statute;
20. adopts decisions related to the exchange of data and information and cooperation with the Croatian National Bank, the Government of the Republic of Croatia, and other state bodies;
21. adopts decisions related to membership in international organizations competent for the area of supervision of financial institutions and markets, and cooperation and exchange of information with similar foreign institutions performing supervision of financial institutions and markets;
22. adopts a decision on the change of the Agency's business address;
23. performs other tasks determined by Agency acts and decisions of the Board of Directors.

IV. INTERNAL ORGANIZATION OF THE AGENCY

Internal Organization of the Agency Article 18. (1) For the uninterrupted, rational, and successful performance of tasks, the Agency has a Board of Directors, the Office of the General Secretary, and Sectors, and, as necessary, other organizational units by decision of the Board of Directors. (2) Sectors and other organizational units from paragraph 1 of this Article implement decisions, conclusions, orders, instructions, and other acts of the Board of Directors, provide proposals and prepare decisions, rulings, measures, and opinions from Article 17, paragraph 1 of this Statute, and perform other tasks upon the order of the Board of Directors, and are accountable to the Board of Directors for their work. (3) The Office of the General Secretary is responsible for organizing work in accordance with the general acts of the Agency and for the business operations of the Agency in the fields of finance and accounting, human resources, information technology, and general administrative and technical tasks, and is accountable to the General Secretary for its work.

Rights and Obligations from Employment Article 19. (1) The Chairman of the Board of Directors and members of the Board of Directors are entitled to salary and other material and other rights in accordance with the general acts of the Agency and labor regulations. (2) For the realization of rights and obligations from employment of employees, general labor regulations, general acts of the Agency, and employment contracts apply.

Conflict of Interest of Employees Article 20. (1) Employees of the Agency must behave in such a way as not to diminish their personal reputation or the reputation of the Agency, and not to call into question the independence and autonomy in the performance of their duties and the independence and autonomy of the Agency. (2) Employees of the Agency must not accept any compensation, position, or employment, nor provide services in relation to supervised entities and persons considered related to them according to laws prescribing such connection. (3) Employees must not hold shares or ownership interests in insurance companies, legal entities engaged in insurance intermediation, investment fund management companies, pension fund management companies, pension insurance companies, investment companies, legal entities engaged in leasing and factoring activities, as well as persons related to them. (4) Employees must not, within a period of one year after the termination of employment in the Agency, accept membership in the management or supervisory board of supervised entities or persons related to them. (5) Information obtained by employees in the performance of their tasks must not be used for any form of acquiring material benefit. (6) Employees of the Agency, with prior approval of the Board of Directors, have the right to publish professional or scientific papers and participate in the work of professional or scientific conferences. (7) Employees of the Agency, with prior approval of the Board of Directors, have the right to be members and participate in professional and scientific associations, associations, and projects, provided that this does not affect their independence and autonomy. (8) Prevention of conflict of interest of Agency employees in relation to supervised entities and persons related to them is regulated by the Code of Conduct from Article 11, paragraph 10 of this Statute.

General Secretary of the Agency Article 21. (1) The General Secretary represents and manages the Agency in accordance with the Act and this Statute. (2) The Board of Directors appoints and dismisses the General Secretary. The appointment of the General Secretary is conducted through a public competition, for a term of six years, and he may be reappointed. (3) After the expiration of the term or dismissal, the General Secretary is assigned to another position in the Agency by decision of the Board of Directors in accordance with work experience, knowledge, education, and the needs of the Agency, in accordance with the provisions of this Statute. (4) In the event of absence or inability of the General Secretary, tasks from his competence are performed by the Chairman of the Board of Directors or a member of the Board of Directors designated by the Chairman.

Conditions for Appointment of the General Secretary Article 22. The General Secretary may be appointed as a person of public reputation, a citizen of the Republic of Croatia, who has completed undergraduate and master university studies or integrated undergraduate and master university studies and acquired the appropriate title in accordance with regulations governing the higher education system, actively uses the English language, has at least five years of work experience acquired after completing the aforementioned university studies in managerial positions in the fields of finance, accounting, law, or business management, and has not been convicted of criminal offenses in the field of business operations or for criminal offenses against the capital market.

Dismissal of the General Secretary Article 23. (1) The General Secretary is dismissed by the Board of Directors. (2) The Board of Directors will dismiss the General Secretary of the Agency before the expiration of the period for which he was appointed:

1. if he requests dismissal in accordance with the employment contract;
2. if it is established that he provided false information about himself in the public competition procedure for appointment or failed to provide information about circumstances significant for the decision on appointment;
3. in the case of a serious violation of duties established in accordance with Agency acts;
4. in the case of inability to regularly perform duties for more than six months continuously or one year with interruptions;
5. in the case of permanent loss of ability to perform duties;
6. in the case of a final conviction for a criminal offense in the field of business operations or against the capital market;
7. if such reasons arise that, according to special regulations or regulations governing employment, lead to the termination of the employment contract;
8. if he seriously and permanently violates the provisions of the Statute, general acts of the Agency, or other regulations, or unjustifiably fails to execute decisions of the Board of Directors or acts contrary to them;
9. if his negligent or irregular work causes significant damage to the Agency, if he abuses the position of General Secretary, if his behavior violates the reputation of the duty he performs or harms the reputation and interests of the Agency, if he neglects or negligently performs his duties such that major disruptions in the performance of the Agency's activities have occurred or may occur. (3) The Board of Directors evaluates the professionalism and conscientiousness of the General Secretary in performing his duties at least once a year. If the Board of Directors establishes that the General Secretary is not performing his duties satisfactorily, it will adopt a decision on his dismissal. (4) Before making a decision on dismissal, the Board of Directors must enable the General Secretary to comment on the reasons for dismissal. (5) In the event of dismissal from paragraph 2 and 3 of this Article, the employment contract of the General Secretary is terminated, and he does not acquire the right from Article 21, paragraph 3. (6) In the event of dismissal of the General Secretary, the Board of Directors will, within 15 days from his dismissal, appoint an acting General Secretary of the Agency, and is obliged to announce a public competition for the appointment of a new General Secretary within 30 days from the date of appointment of the acting General Secretary of the Agency.

Tasks of the General Secretary Article 24. (1) The General Secretary performs the following tasks:

1. organizes and supervises work within the competence of the Office of the General Secretary;
2. is responsible for keeping business books and financial operations and financial reporting of the Agency in accordance with regulations, the plan of income and expenses, and other acts of the Agency;
3. is responsible for the legality of work and timeliness of performance of tasks for which he is competent, and proposes measures to the Board of Directors to ensure efficiency in work;
4. prepares and implements the plan of income and expenses of the Agency;
5. coordinates the preparation of the annual report from Article 35 of this Statute;
6. implements the procurement plan of the Agency adopted by the Board of Directors;
7. prepares and proposes to the Board of Directors the adoption of general and other acts of the Agency in the field of his competence and other acts when so prescribed by this Statute;
8. regularly reports to the Board of Directors on the implementation and realization of the annual work program and plan of income and expenses of the Agency, and other programs, plans, and acts within the competence of the Office of the General Secretary;
9. proposes to the Board of Directors measures for investment maintenance and procurement, proposes the sale of fixed assets in accordance with the plan of income and expenses, and implements public procurement procedures;
10. ensures the orderly and correct use of property and working funds in accordance with regulations and general acts of the Agency;
11. independently concludes contracts provided for in the plan of income and expenses of the Agency up to the amount of 150,000.00 kuna per contract,

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