Regulation on the Issuance of Operating Licenses for UAIFs (Official Gazette Nos. 136/20 and 100/22 – Unofficial Consolidated Text)

HANFA (Croatian Financial Services Agency), 10000 Zagreb, Franje Račkoga 6, P.O. Box 164, Croatia t: 01 6173 200, f: 01 4811 507, e: info@hanfa.hr, OIB (Tax ID): 49376181407, MB (Reg. No.): 02016419, w: www.hanfa.hr REGULATION ON THE ISSUANCE OF OPERATING LICENSES FOR UAIFs (Official Gazette, Nos. 136/20 and 100/22 – Unofficial Consolidated Text)

I. GENERAL PROVISIONS Article 1. (OG 100/22) This Regulation further regulates:

1. the content of applications for operating licenses for large, medium and small UAIFs (large/medium/small) as well as the documentation attached to the application and its content,
2. the content of applications for extension of operating licenses, the required documentation attached to the application, and the content of such documentation.

II. APPLICATION FOR ISSUANCE OF OPERATING LICENSES FOR UAIFs Applicants and the activity for which the license is sought Article 2. (1) Applications for the issuance of operating licenses for UAIFs shall be submitted by the founders of such future UAIF. (2) An already established joint-stock company or limited liability company may also apply for an operating license, with the application submitted by the company's management. (3) Applications for the extension of operating licenses, as well as applications for issuance upon change of UAIF category, shall be submitted by the management of an existing UAIF.

Application of other regulations Article 3. (1) If a UAIF intends to manage UCITS funds, it must submit an application to HANFA for the issuance of an operating license in accordance with the provisions of the law governing the establishment and operation of open-ended investment funds with public offering. (2) If an application for issuance or extension of operating licenses relates to the activities under Article 11(1)(2)(a), (b) and (c) of the Law, the UAIF is obliged to attach, in addition to the documentation under Articles 4 and 5 of this Regulation, the documentation prescribed for issuance by the capital markets law and regulations adopted thereunder.

Documentation attached to applications for operating licenses of large UAIFs Article 4. (OG 100/22) (1) Along with the application for a large UAIF operating license, the applicant must submit:

1. Articles of Association with the amendment adopted if the UAIF is established as a joint-stock company or European Company (Societas Europea), or the partnership agreement/declaration of establishment if established as a limited liability company,
2. a schematic representation of the UAIF's ownership structure, including share/capital and voting rights, and a list of all legal and natural persons holding qualified participations, specifying for each person: a. for natural persons: names, surnames, Tax ID (OIB), and residence; or for legal entities: company name/title, Tax ID, and registered office b. number and type of shares or participations subscribed or to be subscribed c. nominal value of shares or participations d. amount paid or to be paid for shares/participations e. existence of any pledges on shares/participations with data on persons in whose favor the pledge is registered f. declarations by founders that the UAIF will comply with capital requirements
3. a declaration by founders/members of the UAIF regarding compliance with conditions for members and holders of qualified participations under Article 31 of the Law,
4. data on close links between holders of qualified participations in the UAIF in accordance with Article 4(25) of the Law,
5. a list of members of the supervisory board, where applicable,
6. specific requirements for the issuance of licenses to perform the functions of UAIF management under the Law and regulations adopted pursuant to Article 42(10) of the Law,
7. a declaration on compliance with organizational requirements prescribed by the Law and regulations adopted under Article 68 of the Law, along with a detailed overview of the UAIF's organizational structure,
8. data on capital and proof of available capital sources: a. confirmation from a credit institution regarding earmarked funds in a special-purpose account opened for paying the UAIF's share capital, b. if the share capital is not fully paid at the time of application, a payment plan for the full amount must be attached, to be fully paid before issuance of the operating license, c. a list of private funds, with descriptions of availability and sources, d. copies of contracts under which funds are raised for share capital, with details on borrowed or to-be-borrowed funds, data on fund usage and lender/borrower; if the lender is a supervised/regulated credit or financial institution, data on sources of borrowed funds,
9. projections of financial indicators for the UAIF and, as legal entities, founders' financial reports for the past three years (or each year since establishment if founded within the last three years); if audited, audited financial reports must be attached,
10. data on revenue policies under Articles 61 and 62 of the Law,
11. where applicable, data on activities the UAIF will delegate to third parties in accordance with Articles 71 to 75 of the Law,
12. where applicable, name, surname, residence, or company name and registered office, plus contact details of the UAIF's legal representative in accordance with Article 127(4) of the Law,
13. proof of paid fees for the issuance of operating licenses,
14. additional documentation upon HANFA's request. (2) Evidence under point 7 of paragraph 1 must contain:
15. a business plan, prepared for at least the first three business years, containing information on planned UAIF activities including: a. an overview and detailed explanation of the business model's sustainability, identification of operational and legal risks (including money laundering and terrorist financing risks), and an explanation of how the UAIF will manage these risks, b. a description of the UAIF's strategy, including strategic objectives and advantages, reasons for establishment, and activities for which the license is sought.
16. data on auditors, if available at the time of application,
17. organizational structure and internal control structure, which must contain: a. personal data of persons assigned to internal control functions, including name, surname, Tax ID, contact address, and function, b. description of resources (especially human and technical) assigned to various planned activities, c. a list of delegated (or to-be-delegated) activities and a list of concluded or planned contracts with external suppliers, d. description of measures to identify and prevent or manage conflicts of interest regarding licensed activities, e. details on money laundering and terrorist financing risk assessment and management systems, f. business continuity plans, including systems and human resources (key personnel), g. record management, record keeping, and data retention policies. (3) Data on organizational structure under point 3 of paragraph 2 must contain a schematic overview and the following information and documents:
18. a description of mutual relationships between different functions or organizational parts of the UAIF, and
19. information on the internal control system, which must include: a. an overview and detailed description of internal organization (including allocated financial and human resources), compliance monitoring functions, and where applicable, risk control and internal audit functions, with descriptions of financial/human resources and explanations of how the UAIF intends to meet regulatory and capital requirements, including money laundering/terrorist financing prevention, b. a description of compliance monitoring systems and, where applicable, internal controls and risk controls, their internal procedures, reporting lines to management, and where applicable, the supervisory board. (4) Financial indicator projections must contain the following data:
20. projections of financial reports for at least the first three business years, including: a. balance sheet projections b. income statement projections c. cash flow statement projections
21. assumptions for projections and explanations of amounts under point 1, as well as explanations of numerical data,
22. where applicable, a projection of capital requirement calculations and solvency ratio for the first year.
23. data on existing and future obligations expected before the UAIF begins operations, together with lender/borrower data, maturity dates, and other borrowing conditions, plus fund allocation; if the lender is not a supervised credit/financial institution, data on sources of approved loans must be attached,
24. data on all pledges, guarantees, and securities issued or expected to be issued before operations begin,
25. if available, the credit rating of founders or, where applicable, the UAIF and its group members. (5) Along with the application under paragraph 1, the applicant must attach, for intended direct or indirect holders of qualified participations who are natural persons, a list of associates under Article 4(63) of the Law. This list must include, besides name and surname, Tax ID, maiden name, gender, nationality, parents' names, date of birth, place and country of birth, residence; for foreign nationals, proof of no final convictions for ex officio prosecutable offenses and other documentation per regulations governing open-ended investment funds with public offering, where applicable. (6) When submitting the application under paragraph 1, for a closed AIF with legal personality and internal management, the management of such closed AIF as applicant must also act in accordance with Article 108 of the Law. (7) If an application is submitted by an already established company that is not a UAIF, the management must attach financial reports for three preceding business years (or each year since establishment if founded within the last three years). If the company is subject to consolidated and/or audited financial reports, management must submit consolidated and/or audited reports for three preceding years (or each year since establishment). (8) Exception to paragraphs 1 to 5, if an application for a large UAIF operating license is submitted by a UAIF that already holds a medium or small UAIF license issued by the Agency, it must attach only documentation not previously submitted; if previously submitted documentation requires amendment or updating, the amended/updated version must also be provided.

Documentation attached to applications for operating licenses of medium or small UAIFs Article 5. (OG 100/22) (1) Along with the application for a medium or small UAIF operating license, the applicant must attach documentation from Article 4(1), except for items 10, 11, and 12 of that article, and where applicable, documentation from Article 4(5). (2) Regarding documentation from Article 4(5), the applicant must submit documentation in accordance with the regulation under Article 76(13) of the Law. (3) Along with the application under paragraph 1, the applicant must additionally attach: a) proof of designation of the UAIF and AIFs it manages, b) information on investment strategies of managed AIFs, c) a declaration that shares of managed AIFs will not be offered to retail investors. (4) When submitting the application under paragraph 1, for a closed AIF with legal personality and internal management, the management must act in accordance with Article 108 of the Law. (5) Exception to paragraph 1, if an application for a medium UAIF operating license is submitted by a UAIF that already holds a UAIF license issued by HANFA, it must attach only the documentation from paragraph 3 and items 13 and 14 of Article 4(1). (6) If an application is submitted by an already established company that is not a UAIF, the management must attach financial reports for three preceding business years (or each year since establishment if founded within the last three years). If subject to consolidated/audited reports, management must submit consolidated/audited reports for three preceding years (or each year since establishment).

Article 6. (1) In addition to documentation under this Regulation, HANFA may during the procedure request other documentation it deems necessary for deciding on issuance, including information prescribed by the law governing money laundering and terrorist financing prevention collected by obligated entities. (2) Documentation prescribed by this Regulation must be submitted in original or certified copy. Foreign documents under Articles 4 and 5 must be translated into Croatian by an authorized court interpreter, authenticated in accordance with the law and international regulations (Apostille – Hague Convention of 5 October 1961) or EU regulations governing exemption from legalization/simplification for documents issued by Member States.

III. SUBMISSION OF APPLICATIONS AND DATA Article 7. (1) All applications and documentation prescribed by this Regulation may be submitted to HANFA electronically in addition to in writing, in accordance with the technical instruction for using the web form entry service and electronic document submission, and the Instruction for filling out web forms for management companies where applicable. (2) When applications and documentation are submitted electronically, the UAIF is deemed to have submitted the required documentation at the time it is recorded on the server for such submission.

IV. FINAL PROVISIONS Article 8. (1) This Regulation enters into force on the eighth day after publication in the Official Gazette. (2) Upon entry into force, the Regulation on Issuance of Operating Licenses for UAIFs and Documentation Submitted with Notice of Acquisition of Qualified Participations in UAIFs (Official Gazette No. 20/19) ceases to apply. (3) Proceedings initiated before entry into force shall be completed in accordance with regulations valid until entry into force.

FINAL PROVISION Regulation on Amendments and Supplements to the Regulation on Issuance of Operating Licenses for UAIFs (Official Gazette, No. 100/22), entered into force on September 8, 2022. Article 4. This Regulation enters into force on the eighth day from the date of publication in the Official Gazette.