Circular No. 2008-05 — Procedure for Authorization under Article 64, Paragraph 7 of Law No. 165 of 17 November 2005

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THE GENERAL DIRECTOR OF THE CENTRAL BANK OF THE REPUBLIC OF SAN MARINO

HAVING REGARD TO Article 64, paragraph 7, of Law No. 165 of 17 November 2005, as amended by Article 45 of Law No. 129 of 21 December 2007;

HAVING REGARD TO Article 39 of Law 17 November 2005, No. 165, which attributes, among other things, to the Supervisory Authority the power to issue binding circulars in pursuit of the objectives set forth in Article 37 of the aforementioned Law;

HAVING REGARD TO the Statute of the Central Bank of the Republic of San Marino approved by Law No. 96 of 29 June 2005, and in particular Article 30, paragraph 3 of the said Statute, according to which acts of the Central Bank regarding supervision, deliberated by the Supervisory Coordination, are issued by the General Director;

HAVING REGARD TO the deliberations of the Supervisory Coordination and the Board of Directors by which the text of this Circular was approved;

ISSUES

the attached Circular No. 2008-05, which will enter into force on today's date.

San Marino, 11 July 2008

SIGNED: THE GENERAL DIRECTOR

Luca Papi

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Circular No. 2008-05 Procedure for Authorization under Article 64, paragraph 7 of Law 17 November 2005 No. 165

Definitions For the purposes of this Circular, the following terms are understood as:

• "reserved activity": one of the activities listed in Annex 1 of the LISF;
• "supervisory authority": the Central Bank of the Republic of San Marino in the performance of its role under the LISF;
• "authorized subjects": the subjects defined as such by the LISF;
• "financial instruments": the set of assets defined in Annex 2 of the LISF;
• "LISF": Law 17 November 2005 No. 165 and its subsequent amendments;

Preamble With Article 45 of Law 21 December 2007 No. 129, paragraph 7 of Article 64 was inserted, according to which "contracts concluded in the exercise of reserved activities, including those relating to the issuance of financial instruments, may provide that the regulation of the relationship be governed by a law other than San Marino law, as well as provide clauses derogating from San Marino jurisdiction, subject to prior authorization by the supervisory authority."

Objectives With this Circular, pursuant to Article 39 of the LISF, criteria are provided that the supervisory authority will apply when examining authorization requests submitted pursuant to Article 64, paragraph 7, of the LISF, both regarding the prerequisites that make it possible to submit such applications and regarding the evaluation elements for specific cases.

In this context, the possibility of derogating from the provisions of the San Marino legal system regarding applicable law and competent forum cannot be identified solely in the circumstance that the applicant is an "authorized subject." It is also necessary to justify, especially when the authorized subject concludes contracts with San Marino counterparties, the existence of well-founded reasons that, in the absence of the derogation, would prevent or make extremely difficult the provision of services connected to the exercise of a reserved activity.

Provisions Authorized subjects wishing to request authorization from the supervisory authority under Article 64, paragraph 7, of the LISF must attach a draft of the contract and provide detailed justification of the reasons that, in the specific case, prevent agreement with the counterparty on the applicability of San Marino law and forum, or the identification of a different counterparty that

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accepts such applicability. They must also document that they have evaluated the legal risks inherent in accepting a foreign governing law and competent forum, and the measures that will be adopted to manage them.

The supervisory authority, within sixty days from the date of receipt of the application, will communicate the acceptance or rejection of the application, with the right to suspend or interrupt the deadline in case of a request for further information. In adopting the decision, the supervisory authority will take into account, in addition to the reasons provided by the applicant, the occurrence of one or more of the following circumstances:

• the contract concerns the issuance of financial instruments (a circumstance expressly provided for by Article 64, paragraph 7, of the LISF) intended also for placement through foreign circuits or counterparties;
• the contract concerns the provision of services or products, even if intended exclusively for San Marino clientele, for which the authorized subject acts as an intermediary for foreign operators and which would not otherwise be readily available in San Marino;
• the contract concerns products or services without which it would be impossible or extremely difficult for the authorized subject to carry out its characteristic activity.

Transitional and Final Provisions This Circular enters into force on today's date.

San Marino, 11 July 2008.