Royal Decree 303/2012 Regulating the Advisory Committee of the National Securities Market Commission

OFFICIAL STATE GAZETTE No. 30 Saturday, February 4, 2012 Sec. I. Page 9966 I. GENERAL PROVISIONS MINISTRY OF ECONOMY AND COMPETITIVENESS 1679 Royal Decree 303/2012, of February 3, regulating the Advisory Committee of the National Securities Market Commission.

Article 22 of Law 24/1988, of July 28, on the Securities Market, established the Advisory Committee of the National Securities Market Commission as an advisory body to the Council of said Commission. This article was recently modified by the second final provision of Law 21/2011, of July 26, on Electronic Money, which introduced changes in its composition with a dual objective. On the one hand, to adapt its composition to the emergence of new subjects in the securities markets, making room for experts from various professional fields related to the securities market. On the other, to guarantee the representativeness of this advisory body, whose functioning in recent times had revealed certain needs for improvement.

In accordance with the above and given the reference to regulatory development made by Article 22 of Law 24/1988, of July 28, regarding the determination of the number of members and the method of designation, this Royal Decree aims to adapt the regulatory regulation of the Advisory Committee to the modifications introduced by Law 21/2011, of July 26. Specifically, in addition to the representatives designated by each of the autonomous communities with competencies in matters of securities markets in whose territory there is an official secondary market, there will be seventeen members representing market infrastructures, issuers, investors, credit entities and insurance companies, and investment guarantee funds. Finally, the number of members is increased from fourteen to seventeen to accommodate three representatives of the professional groups designated by the National Securities Market Commission. However, as indicated in the single additional provision, these modifications will not entail an increase in public expenditure.

Additionally, in order to guarantee the representativeness of the members throughout their entire term, the system for designating members has been modified and new grounds for dismissal have been introduced.

For reasons of legal certainty, a new Royal Decree has been drafted to completely replace the previous regulatory regulation, constituted by Royal Decree 504/2003, of May 2, regulating the Advisory Committee of the National Securities Market Commission.

By virtue thereof, upon proposal of the Minister of Economy and Competitiveness, with the prior approval of the Minister of Finance and Public Administrations, in accordance with the Council of State and after deliberation by the Council of Ministers in its meeting on February 3, 2012,

I HEREBY ORDER:

Article 1. Composition of the Advisory Committee. The Advisory Committee of the National Securities Market Commission referred to in Articles 22 and 23 of Law 24/1988, of July 28, on the Securities Market, which shall be chaired by the Vice President of the Commission, is composed of the following members: a) Seventeen, representing market infrastructures, issuers, investors, credit entities and insurance companies, professional groups designated by the National Securities Market Commission, and investment guarantee funds, in accordance with the provisions of the following article.

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OFFICIAL STATE GAZETTE No. 30 Saturday, February 4, 2012 Sec. I. Page 9967 b) One designated by each of the autonomous communities with assumed competencies in the matter of the securities market, in whose territory there is an official secondary market.

Article 2. Members representing market infrastructures, issuers, investors, credit entities and insurance companies, professional groups designated by the National Securities Market Commission, and investment guarantee funds.

1. The group of seventeen members designated pursuant to paragraph a) of the previous article shall have the following composition: a) Three members representing market infrastructures, distributed as follows: two members representing official secondary markets and multilateral trading systems, and one member representing securities clearing and settlement systems and central counterparty entities. b) Two members representing securities issuers, distributed as follows: one member representing issuers of securities included in the IBEX 35 for a minimum period of three years, and one representative of the remaining securities issuers admitted to trading on an official secondary market. c) Four members representing investors, distributed as follows: one member representing collective investment institutions, one member representing pension funds, one representative of retail investors, and one representative of shareholders of listed companies and investors in general. d) Three members representing credit entities distributed among banks, savings banks, and credit cooperatives. e) One member representing insurance companies. f) Three members representing professional groups. g) One member representing investment guarantee funds.

2. The members referred to in this article must meet the following requirements: a) Have recognized business or professional honorability. b) Not have been declared bankrupt in Spain or abroad without having been rehabilitated; not be under prosecution or, in the case of summary proceedings and rapid trial referred to in Titles II and III of Book IV of the Criminal Procedure Law, that no order for the opening of oral trial has been issued; not have criminal records for crimes of falsity, against Public Treasury and Social Security, infidelity in the custody of documents, violation of secrets, money laundering, embezzlement of public funds, discovery and revelation of secrets, against property and against the socio-economic order, abuse of inside information in the stock market; perjury, omission of the duty to prosecute crimes, bribery, trafficking in influence, frauds and illegal exactions, or not be disqualified or suspended, penally or administratively, from holding public office or administration or direction of financial entities. c) Possess adequate knowledge and experience in matters related to the securities market.

3. For each of the seventeen positions provided for in paragraph 1, a principal member and an alternate member shall be designated. The latter shall perform the functions mentioned in paragraph 2 of Article 10. The designation of alternate members shall be carried out by those who designate the principal members, with the exception of those members who have been designated by lottery among candidates proposed by entities or persons on an individual basis. In this case, the alternate member shall be designated by lottery and cannot have been proposed as a candidate by the same entity or person that proposed the principal member.

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OFFICIAL STATE GAZETTE No. 30 Saturday, February 4, 2012 Sec. I. Page 9968 4. The term of office of the members shall be four years, extending from April 1 of the initial year of the term to March 31 of the year in which it concludes, and members may be re-elected. This duration is understood without prejudice to cases of dismissal for causes other than the ordinary passage of time of their term, in accordance with the provisions of Article 10. The alternate member shall hold the position only until the end of the term of the principal member affected by a cause for early dismissal.

5. In the case of designation of members by lottery, the members shall not be bound by a mandatory mandate from the entities that supported their candidacy.

Article 3. Designation of members representing market infrastructures.

1. The members representing market infrastructures shall be designated as follows: a) One member shall be designated upon proposal by official secondary markets and multilateral trading systems that have equity securities admitted to trading. b) One member shall be designated upon proposal by official secondary markets and multilateral trading systems that have exclusively fixed-income securities and financial derivatives admitted to trading. c) One by securities clearing and settlement systems and central counterparty entities.

2. The markets and systems referred to in the previous paragraph must be established in Spain for a minimum period of three years and subject to supervision by the National Securities Market Commission. The designation of members shall be carried out by the National Securities Market Commission from among the candidates proposed by the entities mentioned in the previous paragraphs, with priority in designation given to the candidacy that represents those markets and systems that present a higher average operational volume in the last three years.

Article 4. Designation of members representing issuers. The members representing issuers shall be designated as follows: a) One member designated by lottery among issuers of securities included in the IBEX 35 for a minimum period of three years, who present their candidacy.

Candidacies shall be presented by the issuers referred to in this letter to the Council of the CNMV, and the lottery shall be carried out in accordance with the provisions of Article 9. b) One member designated by the most representative association of issuers and, in its absence, by the presentation of candidacies by those holding the status of issuers of securities not included in the IBEX 35 to the Council of the CNMV and subsequent designation by lottery, pursuant to the provisions of Article 9.

For the purposes of designating the members referred to in this article, credit entities and insurance companies shall be understood to be excluded.

Article 5. Designation of members representing investors. The members representing investors shall be designated as follows: a) One member designated by the most representative association of collective investment institutions and, in its absence, by the presentation of candidacies by those holding the representation of these institutions to the Council of the CNMV and subsequent designation by lottery, pursuant to the provisions of Article 9.

This member cannot represent a credit entity or an insurance entity.

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OFFICIAL STATE GAZETTE No. 30 Saturday, February 4, 2012 Sec. I. Page 9969 b) One member designated by the most representative association of pension funds and, in its absence, by the presentation of candidacies by those holding the representation of these institutions to the Council of the CNMV and subsequent designation by lottery, pursuant to the provisions of Article 9.

This member cannot represent a credit entity or an insurance entity. c) One member representing retail investors designated by the Consumer and User Council referred to in Article 38 of the Consolidated Text of the General Law for the Defense of Consumers and Users and other complementary laws, approved by Royal Legislative Decree 1/2007, of November 16. d) One member designated by the most representative association of shareholders of listed companies and investors in general and, in its absence, by the presentation of candidacies by shareholders of listed companies and investors and their subsequent designation by lottery, pursuant to the provisions of Article 9. In the absence of the above, the designation shall be carried out by the Council referred to in the previous paragraph.

Article 6. Designation of members representing credit entities and insurance companies. The members representing credit entities and insurance companies shall be designated as follows: a) Three members shall be designated by the most representative associations of banks, savings banks, and credit cooperatives. No association may be represented by more than one member. The most representative association of savings banks may attribute the designation to another association if the banks through which banking activity is exercised are integrated into one different from the most representative association of banks. b) One member shall be designated by the most representative association of insurance companies.

In the event that any of the associations provided for in this article does not designate its representative, the latter shall be chosen by the presentation of candidacies by the entities themselves and subsequent designation by lottery, in accordance with the provisions of Article 9.

Article 7. Designation of members representing professional groups. The members representing professional groups shall be designated as follows: a) One member designated jointly by the public law corporations representative of accountants, and in its absence, by the presentation of candidacies by accountants on an individual basis and their subsequent designation by lottery, pursuant to Article 9. b) One member designated by the most representative association of financial analysts, and in its absence, by the presentation of candidacies by financial analysts on an individual basis and their subsequent designation by lottery, pursuant to Article 9. c) One member designated by the Council of the CNMV among persons of recognized prestige in view of their special technical qualification, experience, and professional prestige, within the scope of the CNMV's competence, prior to the presentation of their candidacies on an individual basis.

Article 8. Designation of the member representing investment guarantee funds. The member representing investment guarantee funds shall be designated by the Management Company of the Investment Guarantee Fund in accordance with the regulations governing its internal regime and, if there are several, by that which, in the last fiscal year immediately preceding the opening of the renewal process, accredits the largest number of affiliated companies.

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OFFICIAL STATE GAZETTE No. 30 Saturday, February 4, 2012 Sec. I. Page 9970 Article 9. Procedure for the appointment of members.

1. At least two months before the expiration date of the appointment of the members, the Council of the National Securities Market Commission shall adopt an agreement to initiate the procedure, which shall contain the following provisions: a) Declaration of initiation of the procedure. b) Designation of the members of a board responsible for the supervision and control of said procedure, which shall ex officio drive all steps. The designation of the members of the board shall be carried out in accordance with what is established in the internal regulations of the Advisory Committee.

2. The initiation agreement shall be published in the "Official State Gazette" and in the quotation bulletins of the official secondary markets, starting the corresponding periods for the proposal of candidates, in accordance with the following criteria: a) Representative associations, public law corporations representative, and other entities authorized in accordance with the provisions of Articles 3 to 8 of this Royal Decree shall communicate to the National Securities Market Commission the designation of the candidates whose proposal corresponds to them, as well as a written justification of the required representation, indicating the number of members during the year prior to the opening of the renewal process of the Committee, within a period of 15 business days from the publication of the initiation agreement in the "Official State Gazette". b) The issuers referred to in letter a) of Article 4 shall send to the CNMV a written justification of the required status, along with the proposal of their candidacy on an individual basis within a period of 15 business days from the publication of the initiation agreement in the "Official State Gazette". Each candidate may submit a single candidacy. c) Persons of recognized prestige referred to in letter c) of Article 7 shall send to the CNMV a written justification of the required status, indicating their professional background, along with the proposal of their candidacy on an individual basis within a period of 15 business days from the publication of the initiation agreement in the "Official State Gazette".

3. After the period of 15 days referred to in paragraph a) of the previous section has elapsed, in the event that any representative association, or the public law corporations referred to in Article 7, have not designated the candidate corresponding to them, the procedure board shall publish in the "Official State Gazette" and in the quotation bulletins of the official secondary markets this fact, announcing the possibility of presenting candidacies on an individual basis. Candidates shall send to the CNMV a written justification of the required status along with the proposal of their candidacy within a period of 15 business days from the publication of the agreement in the "Official State Gazette". Each candidate may submit a single candidacy.

4. After the period for sending candidates referred to in the previous paragraph 3 and paragraph b) of paragraph 2 has elapsed, the list of candidates and the date of the lotteries to designate the principal and alternate members from among them shall be announced in the quotation bulletins of the markets, opening a period of two business days for the presentation of claims that shall be resolved by the board within a period of two business days.

5. After the lotteries are carried out, the provisional list of all candidates designated in accordance with the provisions of this article shall be published in the "Official State Gazette" and in the quotation bulletins, and a period of two business days shall be opened for the presentation of claims, which shall be resolved by the procedure board within two business days following their presentation.

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OFFICIAL STATE GAZETTE No. 30 Saturday, February 4, 2012 Sec. I. Page 9971 6. After the period referred to in the previous paragraph has elapsed, the candidates referred to in this article shall be appointed members of the Advisory Committee by the Council of the National Securities Market Commission.

7. In all cases where periods are granted for the presentation of documents before the board in the procedure for the election of members referred to in this article, the date of their receipt shall be understood as the date of their entry registration at the National Securities Market Commission.

8. For the purposes of this Royal Decree, the most representative association shall be understood to be that which accredits the largest number of members in the natural year immediately preceding the opening of the renewal process of the Committee.

Article 10. Dismissal of members.

1. The members of the Advisory Committee contemplated in paragraph a) of Article 1 shall cease in their office for the following causes: a) Passage of the ordinary term of office. b) Resignation accepted by the Council of the National Securities Market Commission. c) Dismissal agreed by the Council of the National Securities Market Commission, prior report from the Advisory Committee, for serious or repeated non-compliance with their duties. d) Dismissal agreed by the Council of the National Securities Market Commission, prior report from the Advisory Committee, for alteration of the circumstances concurrent in the members at the date of their appointment, and, in particular, for those that may affect the adequate representation of the respective groups. e) Imposition of a sanction of suspension of the exercise of the office or separation from the office with disqualification to hold positions of administration or direction in financial entities from the moment it becomes final in the administrative route. f) Lack of attendance at the sessions of the Advisory Committee in a repeated manner and without duly justified cause. g) Any other causes that, according to the current legislation, make it impossible to exercise the position.

In the cases provided for in the previous letter f), the dismissal shall occur prior to communication of the circumstance causing it by the entity, association, or public law corporations represented.

2. Alternate members shall replace the principal member in cases of absence or illness duly justified, or in cases of dismissal of the latter before the end of the ordinary term of their mandate, until their replacement is carried out, pursuant to the following paragraph.

3. In the event of dismissal of principal or alternate members for causes other than the ordinary passage of time of the mandate and once the agreement on the same adopted by the CNMV Council has been communicated, immediate replacement shall be carried out in accordance with the procedure provided for in Article 9.

Article 11. Members designated by autonomous communities.

1. Each of the autonomous communities with competencies in the matter, in whose territory one or more official secondary markets are located, shall designate a principal member and an alternate member. The designation shall take effect before the National Securities Market Commission from the moment it is notified to its President.

2. The nature of the representation of these members, the procedure for their designation, and the system of substitution and dismissal shall be those established by the competent authorities of each autonomous community. The ordinary term of office of the members designated by the autonomous communities shall be that determined by them, although it must correspond to one or more full periods of time, coinciding with that indicated in paragraph 4 of Article 2.

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OFFICIAL STATE GAZETTE No. 30 Saturday, February 4, 2012 Sec. I. Page 9972 3. The autonomous communities that designate members of the Advisory Committee, as provided for in this article, shall officially communicate to the President of the Council of the National Securities Market Commission the regulations governing the aforementioned points, the designation and dismissal of members, and the competent authority regarding said points.

Article 12. Exercise of the functions of the Advisory Committee. In the event that the designation or election of any of the members of the Advisory Committee does not occur in due time, it may perform its functions as long as it has a minimum of ten members that