Regulation No. 8 of 03.09.2020 on Requirements for the Activity of Central Securities Depositories, the Central Securities Register, and Other Persons Carrying Out Activities Related to the Settlement of Securities

REGULATION No. 8 of 03.09.2020 on the Requirements for the Activity of Central Securities Depositories, the Central Securities Register, and Other Persons Carrying Out Activities Related to the Settlement of Securities

Publ. - State Gazette, No. 81 of 15.09.2020, effective from 15.09.2020; amended and supplemented, No. 62 of 27.07.2021; amended and supplemented, No. 37 of 17.05.2022; amended and supplemented, No. 36 of 21.04.2023; supplemented, No. 90 of 25.10.2024.

Adopted by Decision No. 212-N of 03.09.2020 of the Financial Supervision Commission

Chapter One GENERAL PROVISIONS

Art. 1. (Amended and supplemented - State Gazette, No. 37 of 2022) (1) This Regulation regulates:

1. additional requirements for central securities depositories that have received a license from the Financial Supervision Commission, hereinafter referred to as "the Commission", for the provision of services in accordance with the Annex to Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 (OJ, L 257/1 of 28 August 2014), hereinafter referred to as "Regulation (EU) No 909/2014", to central securities depositories licensed in another Member State providing services on the territory of the Republic of Bulgaria under the conditions of Art. 23 of Regulation (EU) No 909/2014, and to central securities depositories from third countries providing services on the territory of the Republic of Bulgaria under the conditions of Art. 25 of Regulation (EU) No 909/2014;
2. the cases in which exceptions are permitted from the rule in Art. 227b, para. 2, first sentence of the Law on Markets in Financial Instruments (LMFI) and from the rule in Art. 138, para. 2, first sentence of the Law on the Public Offering of Securities (LPOS);
3. the requirements for the rules and procedures of central securities depositories for any system for the settlement of securities managed by them in the event of non-performance by one or more participants;
4. the procedure for calculating the indicators for determining the currencies in which settlement is most frequently carried out;
5. the risks that are taken into account in accordance with Art. 53, paragraph 3 of Regulation (EU) No 909/2014, when carrying out an overall risk assessment when a central securities depository applies for access to a central counterparty or a trading venue, respectively when considering complaints under Art. 53, paragraph 3 of Regulation (EU) No 909/2014 regarding refused access;
6. the procedure for calculating the indicators for determining the significant importance of central securities depositories when the Republic of Bulgaria is the home Member State;
7. additional requirements regarding the consideration of internalised settlement under Art. 227g, para. 1 of LMFI;
8. the procedure for the payment of dividends, interest, principal, and other payments by public companies and issuers, as well as the persons through whom dividend payments can be made;
9. additional requirements for "Central Depository" - AD, and the central securities register maintained by it;
10. requirements regarding the implementation of Art. 6, paragraph 2, para. 2 of Regulation (EU) No 909/2014.

(2) The Financial Supervision Commission maintains and, if necessary, updates the list of central securities depositories for which it is the competent authority. (3) (Amended and supplemented - State Gazette, No. 37 of 2022) The provisions of this Regulation apply to the central securities depositories referred to in para. 1, item 1, with the exception of the provisions of Sections I and II and Art. 19, 21 and 23 - 25 of Chapter Two, Chapters Three, Four, Six, and Eight "a", which apply only to central securities depositories that have received a license from the Commission, unless otherwise specified therein.

Chapter Two ADDITIONAL REQUIREMENTS FOR CENTRAL SECURITIES DEPOSITORIES IN CONNECTION WITH THE PROVISION OF SERVICES IN ACCORDANCE WITH THE ANNEX TO REGULATION (EU) NO 909/2014

Section I Registration of Issues of Financial Instruments

Art. 2. (1) The central securities depository maintains an electronic database and keeps:

1. accounts of issuers of financial instruments;
2. accounts for financial instruments;
3. accounts of participants in the system for the settlement of securities managed by it;
4. accounts of holders of financial instruments, when the obligation under Art. 127, para. 2 of LPOS is not secured in another way, and accounts of persons under Art. 133 of LMFI;
5. registers of transfers of financial instruments and of transactions with financial instruments;
6. accounts of rights on registered shares under Art. 112b, para. 13 of LPOS;
7. other registers and accounts, when this is provided for in its rules.

(2) The central securities depository ensures access to the registers it maintains, with Art. 131, para. 1 and 2 of LPOS applying accordingly.

Art. 3. The central securities depository opens for each registered issue of financial instruments that confer equal rights:

1. an account for the financial instruments issued by the company;
2. accounts of participants in the system for the settlement of securities managed by it;
3. where applicable, accounts of holders of financial instruments and accounts of persons under Art. 133 of LMFI.

Art. 4. The central securities depository, in connection with the account of the issuer of financial instruments, maintains at least the following data:

1. account number;
2. data on the issuer: a) name, seat, EIK or other identification number; b) correspondence address; c) Legal Entity Identifier code (LEI code); d) other data provided for in its rules;
3. list of identification codes of issues registered in the central securities depository.

Art. 5. (1) The central securities depository, in connection with the account for financial instruments that confer equal rights, maintains at least the following data:

1. securities identification code (ISIN code);
2. quantity;
3. nominal value.

(2) The central securities depository opens separate accounts under para. 1 for the financial instruments of the issuer registered with different ISIN codes.

Art. 6. (1) The central securities depository, in connection with the accounts of participants in the system for the settlement of securities managed by it, maintains at least the following data:

1. account number;
2. name and seat of the participant;
3. EIK or other identification number of the legal entity;
4. Legal Entity Identifier code;
5. correspondence address;
6. data on the financial instruments in the account: a) ISIN code; b) quantity; c) nominal value.

(2) The central securities depository, in connection with the accounts of holders of financial instruments and the accounts of persons under Art. 133 of LMFI, where applicable, maintains at least the following data:

1. account number;
2. data on the holder of the financial instrument, respectively the person under Art. 133 of LMFI: a) names (name), seat (for legal entities); b) EGN/LNCH (foreigner number) of a natural person, respectively EIK or other identification number of a legal entity; c) Legal Entity Identifier code, if such exists; d) correspondence address;
3. data on the held financial instruments: a) ISIN code; b) quantity; c) nominal value;
4. data regarding the preservation, respectively transfer, of the right to vote and the right to dividend in transactions involving the transfer, respectively preservation, of ownership rights over the financial instruments;
5. data regarding the payment of dividends, interest, principal, and other payments;
6. type of account - personal account or client sub-account at a participant in its settlement system, respectively at a person under Art. 133 of LMFI.

(3) The central securities depository keeps separate accounts under para. 1, and where applicable - under para. 2, for the financial instruments held by one person:

1. with different ISIN codes;
2. with the same ISIN code, which are kept as different client sub-accounts to the accounts of participants in its settlement system, respectively to the persons under Art. 133 of LMFI, where applicable.

(4) In the regulations of a central securities depository that does not keep accounts of holders of financial instruments, for each account under para. 2, it is specified how the provision by the participant of the necessary information for the fulfillment of the obligation under Art. 127, para. 2 of LPOS by the central securities depository is secured.

Art. 7. (1) The central securities depository registers an issue of financial instruments based on an application, to which the following are attached:

1. EIK or other identification number of the issuer;
2. Legal Entity Identifier code;
3. decision of the competent authority of the issuer for the issuance of financial instruments, where applicable;
4. certificate of ISIN code for the issue;
5. data on the financial instruments, including their quantity, nominal value, and term of issue, where applicable;
6. list of holders of the financial instruments outside the cases of initial public offering: a) for local natural persons - the three names of the shareholder, EGN, address, quantity of financial instruments; b) for local legal entities - name of the company, seat and management address, EIK, quantity of financial instruments; c) for foreign natural persons - names, official number assigned by the central securities depository, address, quantity of financial instruments; d) for foreign legal entities - name, legal-organizational form, registration number in the register of the respective country, identification number (if they have such), seat, registered address, quantity of financial instruments;
7. contract for the administration of the issue;
8. documents in accordance with the rules of the central securities depository, on the basis of which it can carry out a risk assessment under Art. 49, paragraph 3 of Regulation (EU) No 909/2014.

(2) The application under para. 1 is submitted by:

1. the issuer of the issue of financial instruments;
2. a person under Art. 131, para. 2, items 1 and 2 of LPOS;
3. the Agency for Public Enterprises and Control;
4. another body or person in cases provided for by law.

(3) In cases where the application for registration and changes to registered circumstances is submitted by a person under Art. 131, para. 2, items 1 and 2 of LPOS, a certified copy of the contract for undertaking/servicing the issue or an explicit power of attorney for carrying out the corresponding actions for registration is applied.

(4) The procedure for submitting applications is regulated in the rules of the central securities depository. The rules of the central securities depository may provide for the application of other data and documents besides those specified in para. 1, as well as the requirements they must meet.

(5) The central securities depository rules on the application under para. 1 under the conditions and procedure of Art. 49 of Regulation (EU) No 909/2014.

(6) The registration of an issue of financial instruments in the central securities depository is certified by a registration act.

(7) The central securities depository administers the registered issue of financial instruments and provides related services based on a contract concluded with the issuer.

Art. 8. The central securities depository registers existing financial instruments that are not bearer instruments, including those issued by foreign persons, for the purpose of their public offering in the country or their admission to trading on a regulated market under the conditions and procedure of Art. 7 after their immobilization in accordance with the depository's rules.

Art. 9. (1) Upon establishing data on incorrect entries in the registers of a central securities depository, as well as upon request from a person under Art. 131, para. 2 of LPOS, a participant in the system for the settlement of securities, or the issuer, the central securities depository carries out an immediate check.

(2) During the check under para. 1, the central securities depository may require from the persons under Art. 131, para. 2 of LPOS, the participants in the system for the settlement of securities, the regulated market, the issuer of the financial instruments, as well as from other persons, the necessary documents and information.

(3) If an incorrect entry is established during the check, the central securities depository corrects it and immediately notifies the affected persons. Correction of an incorrect entry cannot lead to a change in the parameters of a completed transaction with regard to compliance with the requirements for irrevocability of the transfer order and finality of settlement.

(4) The central securities depository corrects the data in its registers in cases where this is established by a final court decision, in the procedure provided for in the depository's rules.

Art. 10. (Amended and supplemented - State Gazette, No. 62 of 2021) (1) The register of shareholders, respectively the register of holders of other financial instruments, has the following minimum content:

1. the names (name) and address, EGN/LNCH (foreigner number) or EIK, or other identification number of the holders of financial instruments;
2. (amended - State Gazette, No. 62 of 2021) the type, quantity, and nominal value of the held financial instruments;
3. the share of the financial instruments held by the person out of the total number of issued financial instruments that confer equal rights;
4. the share of voting rights held by the respective person.

(2) The registers under para. 1 also include the persons under Art. 133 of LMFI, and the data under para. 1 for these persons.

(3) (New - State Gazette, No. 62 of 2021) The central securities depository separates the information in the registers under para. 1 into separate sections for legal entities, persons under Art. 133 of LMFI, and natural persons.

(4) (Previous para. 3 - State Gazette, No. 62 of 2021) The central securities depository is obliged to provide the respective register under para. 1 to the issuer upon request by the issuer and to the bondholders upon request by the trustee representing them.

(5) (Previous para. 4 - State Gazette, No. 62 of 2021) The entries for securities under Art. 127, para. 1 of LPOS in the register of shareholders, respectively in the register of holders of other financial instruments, issued by the central securities depository, must correspond to the entries in the central securities register maintained by "Central Depository" - AD.

(6) (Previous para. 5 - State Gazette, No. 62 of 2021) For the securities under Art. 127, para. 1 of LPOS, the central securities depository, when different from "Central Depository" - AD, issues a register of shareholders, respectively a register of holders of other financial instruments, after receiving confirmation of the entries from "Central Depository" - AD, in connection with the central securities register maintained by it.

Art. 11. (1) Upon request by the holder of financial instruments, the central securities depository issues a certificate of ownership of the held financial instruments through a person under Art. 131, para. 2 of LPOS or a participant in the settlement system after confirmation of the entries from "Central Depository" - AD, in connection with the central securities register maintained by it.

(2) The certificate under para. 1 contains at least the following data:

1. name of the document and of its issuer;
2. document number and date of issue;
3. name of the issuer of the financial instruments, seat, EIK or other identification number;
4. ISIN code, quantity, and nominal value of the held financial instruments as of the date of issue of the certificate;
5. names and EGN/LNCH (foreigner number), respectively EIK or other identification number of the holder of the financial instruments;
6. names and signature of the person authorized by the issuer of the document to issue certificates under para. 1.

Art. 12. (1) The central securities depository is not liable for damages related to the organization and management of the registers under Art. 2, para. 1, caused as a result of incomplete, untrue, and/or inaccurate information provided by the participants in the system for the settlement of securities or by issuers of financial instruments.

(2) The central securities depository is not liable for the accuracy of the data received from the persons under Art. 131, para. 2 of LPOS, issuers, and other authorized bodies and persons, nor for the legality of the actions of these persons related to entries in the registers under Art. 2, para. 1, unless its employee had data that the information presented to the depository was incomplete, untrue, and/or inaccurate.

(3) The central securities depository is liable for damages caused as a result of its or its employees' illegal actions and omissions, including if they are in violation of the rules and procedures of the depository. Claims for damages are filed under the general civil procedure.

Art. 13. (1) The central securities depository issues corresponding codes for the issues of dematerialized financial instruments that are registered with it.

(2) When a central securities depository is also the national numbering agency, it issues an ISIN code for issues of dematerialized financial instruments.

(3) An ISIN code is issued for each issue of dematerialized financial instruments conferring equal rights to their owners.

(4) An application for the issuance of an ISIN code is submitted to the central securities depository under para. 2.

(5) The central securities depository under para. 2 carries out the registration of the ISIN code within 2 working days from the submission of the application. After registration, the central securities depository under para. 2 issues a certificate of ISIN code, which it provides to the issuer.

(6) In case of a change in the rights on financial instruments for which an ISIN code has been issued, the central securities depository under para. 2, following a written application from the issuer, determines a new ISIN code for the financial instruments to which the change refers.

Art. 14. (1) The rules of the central securities depository regulate:

1. additional rules regarding the conditions and procedure for the provision of services, detailed rules for the maintenance of registers, as well as the conditions and procedure for providing information on the services offered by it;
2. rules for the management of risks related to its activity;
3. rules for the transfer of financial instruments;
4. the procedure and manner for cooperation and exchange of necessary information with other central securities depositories in connection with the registers maintained by it, to preserve the integrity of the issue.

(2) The central securities depository notifies the participants in the system for the settlement of securities managed by it of the changes in its rules and publishes them on its website no later than the end of the next working day after receiving approval from the Commission.

(3) Amendments and additions to the rules of a central securities depository can only be made after prior approval by the Commission upon proposal by the Vice-Chairman of the Commission, heading the "Supervision of Investment Activity" management, hereinafter referred to as "the Vice-Chairman". Art. 167, para. 4 and 5 of LMFI apply accordingly.

Section II Deregistration of Issues of Financial Instruments

Art. 15. (1) Deregistration of an issue of financial instruments is carried out by the central securities depository upon application from the issuer.

(2) Deregistration of an issue of financial instruments from the registers of the central securities depository is carried out under conditions and procedure determined in the depository's rules.

Art. 16. For the deregistration of an issue due to the change of share securities from dematerialized to physical form and in the presence of registered encumbrances on the issue, declared for deregistration, a declaration from the issuer that it undertakes to reflect the registered encumbrances in the register of physical shares is attached to the application under Art. 15, para. 1.

Art. 17. (1) For the deregistration of an issue of non-share securities, the issuer submits an application after the expiration of the term of the issue.

(2) After the issuance of an act for the deregistration of the issue, the issuer and the trustee bank can apply for and obtain a statement on the date, type, and amount of payments made on the deregistered issue. The application for the issuance of the statement specifies the name and EIK of the issuer and the ISIN code of the bond issue. The statement is issued within a period determined in the rules of the central securities depository.

Art. 18. The central securities depository issues an act of deregistration, in which it specifies the holders of financial instruments from the respective issue and the quantity of instruments they hold at the moment of deregistration, and immediately notifies "Central Depository" - AD, in connection with the central securities register maintained by it.

Section III Registration and Settlement of Transactions with Financial Instruments

Art. 19. (1) The rules of the central securities depository regulate the conditions and procedure for the admission of new participants to the system for the settlement of securities and for their temporary or final removal from it.

(2) The rules of the central securities depository regulate the conditions and procedure for the electronic exchange of data with other persons, as well as other methods of data exchange.

(3) The central securities depository ensures the carrying out of settlement of monetary payments through its system for the settlement of securities.

Art. 20. (1) The system for the registration of issues of financial instruments and of transactions in the central securities depository must meet the following requirements:

1. keeping all registration entries in chronological order;
2. assigning a sequential registration number to the entries;
3. storing data on the accounts of issuers and on the accounts of participants in the system for the settlement of securities managed by it and the sub-accounts of their clients;
4. the possibility of timely restoration of the system in case of damage to the database or equipment;
5. timely and accurate processing of transfer orders to the persons under Art. 131, para. 2 of LPOS and to the participants in the settlement system in connection with the provision of services in accordance with the Annex to Regulation (EU) No 909/2014;
6. maintaining a database for all correspondence and storage of all orders, inquiries, and responses in connection with the activity of the central securities depository;
7. meeting the requirements of the procedures and measures of the central securities depository for suitable internal organization in connection with its activity.

(2) The central securities depository accepts operational instructions and procedures and maintains a document classification system that ensures compliance with the requirements under para. 1.

Art. 21. (1) Transactions with financial instruments are registered in the central securities depository based on information submitted by a direct or indirect participant in the system for the settlement of securities or in another system with finality of settlement of financial instruments.

(2) Transactions with financial instruments carried out outside a regulated market are registered in the central securities depository based on data provided by an investment intermediary.

Art. 22. (1) Ownership of financial instruments is reflected in the registers under Art. 2, para. 1 by:

1. accounts of participants in the system for the settlement of securities managed by the central securities depository;
2. accounts of holders of financial instruments and accounts of persons under Art. 133 of LMFI, where applicable.

(2) The accounts under para. 1 can be kept as personal or as client sub-accounts at a participant or a person under Art. 133 of LMFI.

Art. 23. (1) The central securities depository, in its capacity as the system operator of a system for the settlement of securities, regulates in operational rules the organization, management, functioning, and o