Regulation on Conditions for Membership in the Management and Supervisory Boards of a Pension Company Managing Voluntary Pension Funds (NN, Nos. 52/14, 41/17, 51/18, 112/19 and 51/24)

UNOFFICIAL CONSOLIDATED TEXT (Official Gazette Nos. 52/14, 41/17, 51/18, 112/19, 51/24) REGULATION ON THE CONDITIONS FOR MEMBERSHIP IN THE MANAGEMENT AND SUPERVISORY BOARDS OF A PENSION COMPANY MANAGING VOLUNTARY PENSION FUNDS

INTRODUCTORY PROVISIONS Article 1. This Regulation further regulates:

1. the conditions for performing the function of a member of the management board of a pension company and the documentation submitted with the application for approval to perform that function,
2. the conditions for exemption from the application of Article 42(3) of the Act regarding the minimum number of members of the management board of a pension company managing closed pension funds,
3. the content of the business management program of a pension company, the procedure and criteria for evaluating the program and candidates presenting it, as well as justified reasons for which HANFA may issue approval for a term shorter than requested,
4. the conditions for performing the function of a member of the supervisory board of a pension company and the criteria for assessing them.

Article 2. Certain terms, within the meaning of this Regulation, have the following meanings:

1. HANFA is the Croatian Financial Services Supervisory Agency.
2. The Act is the Voluntary Pension Funds Act (Official Gazette Nos. 19/14, 29/18, 115/18 and 156/23).
3. A pension company is a pension company for managing voluntary pension funds.
4. A pension fund is a voluntary pension fund.

CONDITIONS FOR MEMBERSHIP IN THE MANAGEMENT BOARD OF A PENSION COMPANY Article 3. (1) A member of the management board of a pension company may be a person who permanently meets the conditions prescribed by Article 42 and Article 43 of the Act as well as this Regulation. (2) When deciding on an application for approval to perform the function of a member of the management board of a pension company, HANFA shall take into account all elements that may affect the assessment of whether the candidate meets the set conditions, with a view to ensuring the continuous operation of the pension company.

Professional Qualifications of Members of the Management Board of a Pension Company Article 4. (1) A person who has completed one of the following studies holds the professional qualifications prescribed by Article 42(1)(1) of the Act necessary for performing the function of a member of the management board of a pension company: a) university pre-graduate and graduate studies or integrated university pre-graduate and graduate studies or professional graduate studies and university specialist studies, having acquired at least 300 ECTS points upon completion, b) pre-graduate and graduate university studies or integrated pre-graduate and graduate university studies or professional studies and specialist graduate professional studies, having acquired at least 300 ECTS points upon completion, or c) university undergraduate studies, having acquired higher professional education upon completion, or professional undergraduate studies of at least four years' duration, having acquired higher professional education. (2) The provisions of paragraph 1(b) and (c) of this Article apply to persons who completed their studies under the regulations in force prior to the entry into force of the Act on Higher Education and Scientific Activity (Official Gazette No. 119/22) and have the right to use the corresponding academic or professional title or academic degree established by the Act on Academic and Professional Titles and Academic Degrees (Official Gazette No. 123/23), in accordance with Article 15 of the Act on Academic and Professional Titles and Academic Degrees. (3) When assessing a candidate's professional knowledge, HANFA may, in addition to the achieved level of education in accordance with paragraphs 1 and 2 of this Article, also verify the candidate's continuous professional development in the following areas: a) operations of pension funds, b) financial markets, c) accounting framework, d) regulatory framework, e) strategic planning and knowledge of business strategy, business plan and its implementation, f) risk management, g) corporate governance, including the internal control system, and h) financial data analysis. (4) When assessing a candidate's capability as a member of the management board within the meaning of Article 42(1)(1) of the Act, HANFA may evaluate strategic thinking and the ability to create short-term and long-term business plans, risk assessment and management, organizational capability and company leadership, independence of opinion, as well as the candidate's ability and readiness for continuous learning and professional development.

Experience of Members of the Management Board of a Pension Company Article 5. (1) Experience necessary for managing the operations of a pension company, within the meaning of Article 42(1)(1) of the Act, is considered to be:

1. experience in the management board and/or managing organizational units of a pension company,
2. experience as an authorized signatory in a pension company. (2) Experience in managing operations comparable to the activities of a pension company, within the meaning of Article 42(2) of the Act, is considered to be management primarily in financial institutions or legal entities/public authorities, for which financial operations are fundamental activities or constitute their core business, and for which HANFA considers that the candidate could acquire knowledge about pension company operations and capital market functioning while performing such activities. (3) When assessing the duration of experience, HANFA may take into account multiple short-term or temporary positions if it establishes that, together with other previous activities performed by the candidate, they amount to at least three or five years of continuous experience in the activities specified in paragraphs 1 and 2 of this Article.

Good Reputation of Members of the Management Board of a Pension Company Article 6. (1) When assessing the good reputation prescribed by Article 42(1)(2) of the Act necessary for performing the function of a member of the management board, particular attention shall be paid to: a) whether the candidate's approval or consent for performing certain activities under laws within HANFA's jurisdiction or another competent authority has been withdrawn due to non-compliance with regulations, or whether a foreign supervisory authority has withdrawn consent or imposed a prohibition measure on performing relevant activities in the fund industry, banking, or capital markets; b) whether proceedings have been initiated against the candidate, criminal proceedings are being conducted, or the candidate has a final conviction for offenses prescribed by the Securities Market Act (Official Gazette Nos. 84/02 and 138/06), the Capital Market Crimes Act (Official Gazette No. 152/08) and the Companies Act (Official Gazette Nos. 111/93, 34/99, 121/99, 52/00, 118/03, 107/07, 146/08, 137/09, 125/11, 152/11, 111/12, 68/13, 110/15, 40/19, 34/22, 114/22, 18/23 and 130/23), or for a foreign person, whether proceedings have been initiated against them, criminal proceedings are being conducted, or they have a final conviction for offenses that correspond in description and consequences to the aforementioned criminal offenses; c) whether proceedings have been initiated against the candidate, criminal proceedings are being conducted, or the candidate has a final conviction for the following criminal offenses prescribed by the Criminal Code (Official Gazette Nos. 125/11, 144/12, 56/15, 61/15, 101/17, 118/18, 126/19, 84/21, 114/22 and 114/23): − offenses against property (except for unauthorized use of another's movable property and damage to another's property), where criminal proceedings are initiated ex officio, − offenses against humanity and human dignity, − offenses against the economy, − forgery offenses, − offenses against official duty, − offenses against the judiciary, − offenses against labor relations and social insurance, or for a foreign person, whether proceedings have been initiated against them, criminal proceedings are being conducted, or they have a final conviction for offenses that correspond in description and consequences to the aforementioned criminal offenses; d) whether proceedings have been initiated against the candidate, criminal proceedings are being conducted, or the candidate has a final conviction for criminal offenses from the Criminal Code (Official Gazette Nos. 110/97, 27/98, 50/00, 129/00, 51/01, 111/03, 190/03 - Constitutional Court decision, 105/04, 84/05, 71/06, 110/07, 152/08 and 57/11) that are in legal continuity with the criminal offenses specified in point c) of this Article, or for a foreign person, whether proceedings have been initiated against them, criminal proceedings are being conducted, or they have a final conviction for offenses that correspond in description and consequences to the aforementioned criminal offenses; e) the candidate's previous professional work and personal integrity, f) whether business results and/or financial stability affect the person's reputation, taking into account the financial and business results of the trading company in which the candidate holds a significant share and/or executive position. g) whether there are other reasons for doubt regarding the candidate's good reputation.

(2) When assessing the conditions specified in paragraphs 1(a) to (d) of this Article, HANFA shall take into account all available information regarding the type of judgment, the stage of proceedings, declared legal remedies, imposed sanctions, existing circumstances, significance of the offense or misdemeanor, the period elapsed since the commission of the act, and the person's behavior during that time. HANFA shall also consider a larger number of minor offenses that individually do not impair, but together may impair, the person's good reputation. (3) Additionally, when assessing the condition specified in paragraph 1(e) of this Article, HANFA shall analyze information indicating improper behavior by the candidate in previous professional work, such as non-transparent conduct, lack of cooperation with competent authorities, or failure to comply with measures imposed by HANFA or another competent authority.

Documentation Submitted with the Application for Approval to Perform the Function of a Member of the Management Board Article 7. (1) Before making a decision on the appointment of a member of the management board, the applicant must obtain HANFA's approval in accordance with the provisions of the Act. (2) Along with the application for approval to perform the function of a member of the management board, written consent of the supervisory board, or the body competent for appointing members of the management board of a pension company, is submitted, containing: − key reasons that influenced the submission of the application and objectives to be achieved by appointing the candidate to the management board, − function and responsibilities for which the candidate intends to be appointed, along with the reasoning of the decision on selecting the candidate, containing criteria and procedures followed by the pension company when assessing the candidate's suitability. (3) The application specified in paragraph 2 of this Article must contain at least the following data:

1. personal data of the appointed person, including name, surname, maiden name, OIB (Personal Identification Number), place and date of birth, domicile or residence, citizenship, and other personal data;
2. information on education, including a chronological list of all degrees with year of completion, duration, and acquired academic title;
3. information on professional development, including a chronological list of all forms of professional development, specifying topics, organizers, duration, years of passing professional exams, certificates, licenses, etc.;
4. for foreign citizens, information on knowledge of the Croatian language;
5. information on work experience, including a chronological list of all previous employers and positions held outside employment, specifying the periods during which specific functions were performed;
6. for positions or functions held in the last ten years, the following are specified: − description of activities performed by the candidate in that position or function; − organizational structure of the employer at which activities were performed or functions held while the candidate worked in that position, unless the candidate declares it would violate their duty to keep business secrets; − scope of responsibilities, decision-making powers, and accountability; − number of subordinate employees.
7. information on whether proceedings are being conducted against the person or if the candidate has a final conviction for one or more criminal offenses listed in Article 6(1) of this Regulation, or any other criminal offense;
8. information on whether the candidate has a final conviction, whether a measure has been imposed against them, and whether competent courts or bodies are conducting proceedings against the candidate for irregularities or non-compliance with the Act and subordinate regulations, or any other regulations governing banking, financial, or insurance activities, payment instruments, or provision of financial services, which may cast doubt on the candidate's good reputation;
9. information on whether proceedings are being conducted against the candidate or if the candidate has a final conviction for certain misdemeanors that may negatively affect the candidate's financial stability and reputation;
10. information on whether the candidate or a company managed by them has become a debtor in bankruptcy or similar proceedings;
11. information on the candidate's financial state, including whether the candidate's assets cast doubt on fulfilling future financial obligations, whether the candidate is listed as an irregular debtor (e.g., HROK, tax debtors list of the Ministry of Finance, "black list", credit register, etc.), and whether enforcement or bankruptcy proceedings, pre-bankruptcy agreement proceedings, or personal bankruptcy proceedings have been initiated against the candidate's assets;
12. information on financial and business results of trading companies in which the candidate is or was a significant shareholder, holds or held significant business shares, or performed the function of a member of the management board or other executive position, unless the candidate declares it would violate their duty to keep business secrets, including information on whether pre-bankruptcy agreement proceedings were conducted, bankruptcy proceedings opened, a decision on compulsory liquidation was made, or approval for operation was withdrawn;
13. information on whether another competent authority has already conducted a suitability assessment of the person (including data on that authority and evidence of assessment results);
14. information on the result of the suitability assessment conducted by the supervisory board or body competent for appointing a member of the management board of a pension company, and the reasoning of the assessment.

Article 8. (1) Along with the application for approval to perform the function of a member of the management board of a pension company, the following documentation is submitted: a) certified copy of ID card or passport, or for foreign citizens, a certified copy of ID card or travel document in accordance with laws governing the conditions for entry, movement, stay, and work of foreigners in the Republic of Croatia; b) certified copy of proof of completed relevant education, where applicable; c) document on recognition of foreign higher education qualification issued by the competent authority in the Republic of Croatia, where applicable; d) CV with detailed information on education, professional development, and work experience; e) relevant document proving the candidate's length of service; f) employer certificates on previous work experience (company name, period of employment, description of duties), in relation to Article 42(2) of the Act; g) for foreign citizens, relevant document required to establish an employment relationship in accordance with laws governing the conditions for entry, movement, stay, and work of foreigners in the Republic of Croatia (e.g., residence and work permit, approval of stay, EU Blue Card, etc.); h) in cases where all candidates for management board members are foreign citizens, at least one must have a certificate from the competent authority on knowledge of the Croatian language; i) certificate that no criminal proceedings are being conducted against the candidate, issued by the competent authority of the Republic of Croatia, or for foreign citizens, a certificate from the competent authority of their country of citizenship (not older than 3 months); j) business management program for the pension company for the term; k) electronically completed Form No. 1 - Questionnaire for a Candidate for the Function of a Member of the Management Board of a Pension Company (published on HANFA's website), which is an integral part of this Regulation, with a signature certified by a notary public (not older than one month from the date of submission of the application for approval); l) results of the suitability assessment conducted by the supervisory board or body competent for appointing a member of the management board of a pension company, with reasoning; m) proof of paid fee; n) list of persons who, within the meaning of Article 3(1)(39) of the Act, are collaborators of a candidate for the function of a member of the management board of a pension company, with a description of the collaborative relationship or established method of cooperation, where applicable. This list, regarding Croatian citizen collaborators, in addition to the name and surname of the collaborator, contains data on OIB, maiden name, gender, citizenship, father's and mother's names, date of birth, place and country of birth, domicile. For foreign citizen collaborators, proof is submitted that they have not been finally convicted for criminal offenses specified in Article 42(1)(8) and (3) of the Act. (If the relevant competent authority of the collaborator's country does not issue such proof, a statement by the candidate (Form No. 2) with the candidate's signature certified by a notary public, not older than one month from the date of submission of the application for approval to perform the function of a member of the management board, is accepted subsidiarily); o) additional documentation upon HANFA's request. (2) Foreign documents from this Article are submitted translated into Croatian by an authorized court interpreter, and foreign documents from paragraph 1(a), (b) and (e) are also certified in accordance with domestic law and international regulations (Apostille - Hague Convention of 5 October 1961 on abolishing the requirement of legalization for foreign public documents). (3) When the same person is reappointed to the management board, it is not necessary to attach documents specified under points (b), (c), (f) and (h) of paragraph 1 of this Article. (4) In addition to the documents specified in paragraph 1 of this Article, other documents may be attached to the application to confirm the candidate's good reputation, professional knowledge, capability, and experience. (5) HANFA may request additional documents, data, and information from the applicant to prove that the candidate meets the prescribed conditions.

Content of the Pension Company Business Management Program Article 9. (1) The business management program for the pension company for the term specified in Article 45(8) of the Act is submitted to HANFA in written and electronic form on appropriate durable media and must contain: − a brief description of the state in the pension company and the company's organizational chart with the number of employees by organizational units (to the extent that relevant data are available to the candidate); − a description of the environment in which the pension company operates and its position relative to the entire sector in which it operates, as well as relative to competitors (it is desirable to note identified advantages and weaknesses compared to comparable groups); − a detailed description of planned activities during the term (preferably specifying the planned implementation schedule), including planned significant changes compared to the existing state; − projections of financial statements of the pension company for the term, which must be prepared on prescribed forms and submitted with the program in written form, as well as electronically on appropriate durable media (forms are available on HANFA's official website); − a description of assumptions and facts considered when preparing the program; − a detailed description of activities that will support planned core activities, all with the aim of effectively identifying, measuring, and managing all risks arising from undertaken activities, a description of the risk management system (strategies, policies, procedures, risk management measures, risk measurement techniques, and division of responsibilities regarding risk management), as well as a description of activities to improve the existing state in the pension company; − a description of the anticipated decision-making process, and delineation of powers among members of the management board of a pension company with highlighted changes compared to the existing state; − a description of the anticipated policy for preventing conflicts of interest; − a plan for handling pension company insolvency; − a description of the anticipated procedure for monitoring the decline in value of assets under management, including thresholds for asset value declines that must be reported to the management board; − a description of the anticipated internal audit system, and systems for internal controls and compliance monitoring of the pension company with statutory and subordinate regulations; − a review of supervisory measures imposed by HANFA, if any, and follow-up actions; − a description of the plan for delegating activities to third parties; − in conclusion, a summary of all the above points. (2) When preparing the program specified in paragraph 1 of this Article, a candidate for a member of the management board must particularly elaborate in detail those points of the business management program that are crucial for the implementation and effects of planned activities within their future scope of work and responsibility.

Procedure and Criteria for Evaluating Candidates and Programs of a Member of the Management Board of a Pension Company, as well as Justified Reasons for Which HANFA May Issue Approval to Perform the Function of a Member of the Management Board on a Shorter Term Article 10. (1) In cases where HANFA, during the approval procedure for a candidate to perform the function of a member of the management board of a pension company, requests that the candidate present a business management program, it shall invite the candidate to present the program and may instruct the applicant to also participate in the presentation of the candidate's program. (2) HANFA conducts an evaluation of the pension company's business management program, taking particular account of: − realism of the program's assumptions; − goals and strategies for achieving objectives; − planned activities during the term, and − alignment of planned activities with set goals and best practice. (3) HANFA conducts an evaluation of the capability and professionalism of candidates presenting a business management program, taking particular account of: − professional reputation and work experience; − knowledge of regulations applicable to pension company operations and capital markets; − knowledge of risks and methods of risk management to which the pension company is exposed; − knowledge of vision, strategy and objectives as well as business processes of the pension company; − knowledge of internal audit systems and internal control systems for pension company operations; − knowledge of operations of funds managed by the pension company and knowledge of the economic environment. (4) HANFA may issue approval to perform the function of a member of the management board of a pension company on a term shorter than requested in cases:

1. when the candidate is applying for the first time as a member of the management board of a pension company, having met all necessary conditions under the Act and this Regulation, but did not sufficiently demonstrate during the program presentation that they possess professional knowledge of pension company business processes, though it is estimated that they will gain this experience in the foreseeable future;
2. when the candidate is applying for a new term in the same pension company, and during the previous term supervisory measures were imposed on the pension company which it has not fully complied with, and deadlines for eliminating them have not yet expired;
3. when the candidate is applying for a new term...