Circular No. 2017-03 - Information Obligations Regarding Corporate and Consolidated Financial Statements

Circular on information obligations regarding corporate and consolidated financial statements Year 2017 / Number 03 (Consolidated text as of 08/03/2026 – Update X)

Central Bank of the Republic of San Marino Circular No. 2017-03 – Information Obligations Regarding Corporate and Consolidated Financial Statements - Update X

INDEX 1 DEFINITIONS.........................................................................................................................................................3 2 PRELIMINARY REMARKS.......................................................................................................................................4 3 TARGET ENTITIES ...................................................................................................................................................4 4 PERIODICITY AND DEADLINES FOR SUBMISSION OF DOCUMENTATION AND REPORTS.........5 4.1 Transmission to BCSM of financial documentation and related deadlines.............................................................................. 5 4.2 Publication of the individual and consolidated financial statements ............................................................................................. 6 4.3 Transmission to BCSM of the financial report as of December 31 ........................................................................................ 6 4.4 Transmission to BCSM of the semi-annual financial report and documentation as of June 30............................. 6 4.5 Correction of supervisory reports following the approval of the financial statements .................................................................... 7 4.6 Transmission to BCSM of the analytical report on deteriorated credit exposures ...................................... 7 5 GENERAL GUIDELINES ...................................................................................................................................7 5.1 Fair value .............................................................................................................................................................................................. 8 5.2 Information on leasing transactions ......................................................................................................................................... 8 6 THE CONSOLIDATED FINANCIAL STATEMENTS.....................................................................................................9 6.1 General provisions .......................................................................................................................................................................... 9 6.2 Consolidation methods .............................................................................................................................................................. 9 7 FINAL PROVISIONS .......................................................................................................................................13 7.1 Entry into force................................................................................................................................................................................ 13 7.2 Transitional provisions.............................................................................................................................................................................. 14 8 ANNEX A: BALANCE SHEET AND INCOME STATEMENT SCHEMES ........................................15 9 ANNEX B: NOTES TO THE FINANCIAL STATEMENTS TABLES .......................................................................................19 9.1 Information on the Balance Sheet - Assets ........................................................................................................................... 19 9.2 Information on the Balance Sheet - Liabilities ......................................................................................................................... 36 9.3 Information on the Balance Sheet - Guarantees and Commitments ................................................................................................... 41 9.4 Information on the Balance Sheet - Off-balance sheet accounts............................................................................................................. 45 9.5 Information on the Income Statement .............................................................................................................................................. 47 9.6 Other Information Tables ................................................................................................................................................................ 55 9.7 Other Information ............................................................................................................................................................................ 59 10 ANNEX C: BALANCE SHEET AND INCOME STATEMENT SCHEMES OF THE CONSOLIDATED FINANCIAL STATEMENTS .................................................................................................................................................... 61 11 ANNEX D: CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS TABLES..........................................................66 11.1 General Part ................................................................................................................................................................................... 66 11.2 Information on the Balance Sheet - Assets ........................................................................................................................... 67 11.3 Information on the Balance Sheet - Liabilities ......................................................................................................................... 85 11.4 Information on the Balance Sheet - Guarantees and Commitments ................................................................................................... 92 11.5 Information on the Balance Sheet - Off-balance sheet accounts............................................................................................................. 96 11.6 Information on the Income Statement .............................................................................................................................................. 98 11.7 Other Information Tables ..............................................................................................................................................................108 11.8 Other Information ..........................................................................................................................................................................112

Central Bank of the Republic of San Marino Circular No. 2017-03 – Information Obligations Regarding Corporate and Consolidated Financial Statements - Update X 3 1 DEFINITIONS

1. For the purposes of this Circular, the expressions used shall be understood with the following meaning: a) “Central Bank”: the Central Bank of the Republic of San Marino, also defined as “BCSM” or “Supervisory Authority”; b) “circular”: this circular; c) (repealed); d) “reference date”: the date to which the relevant accounting closing refers, equal to December 31 of the previous year (for informational content relating to the entire financial year) or June 30 of the current year (for informational content relating to the first half of the financial year); e) “credit institutions”: see art. I.I.2, paragraph 1, point 10 of BCSM Regulation No. 2016-02; e-bis) “deteriorated credit exposures”: see art. I.I.3, paragraph 3 of BCSM Regulation No. 2016-02; f) “investment firm”: companies authorized under Law No. 165 of November 17, 2005 to carry out the activity referred to in letter D) of Annex 1 to the aforementioned law; g) “electronic money institutions or IMEL”: companies, other than credit institutions, authorized to provide the services of issuing electronic money referred to in letter J, of Annex 1 to the LISF; h) “payment institutions”: companies, other than credit institutions and electronic money institutions, authorized under Law No. 165 of November 17, 2005 to carry out the activity referred to in letter I) of Annex 1 to the aforementioned law; i) “Companies Law”: Law No. 47 of February 23, 2006 and subsequent amendments; j) “LISF”: Law No. 165 of November 17, 2005 and subsequent amendments; k) “operational manual”: collection of operational rules and normative interpretations to be used for the compilation and submission to BCSM of reports; l) “reporting model”: informational tool used for the compilation of reports, also defined as “model”; m) “electronic money”: see art. I.I.2, paragraph 1, point 61 of BCSM Regulation No. 2020-04; n) “OIC”: collective investment schemes, see art. 1, paragraph 1, letter q) of BCSM Regulation No. 2006-03; o) “draft financial statements”: the economic and financial situation of the reporting entity, drawn up with reference to December 31 and approved by the administrative body in anticipation of the subsequent shareholders' meeting for the approval of the individual financial statements; the draft financial statements contain estimates regarding the valuation of company assets, the quantification of depreciation, and the determination of provisions, applied in accordance with the criteria and principles provided by financial reporting regulations; p) “regulation”: BCSM Regulation No. 2016-02 and subsequent amendments and integrations; q) “Resoaut”: register of authorized subjects referred to in Article 11 of Law No. 165 of November 17, 2005; r) “report”: periodic collection of information, drawn up in accordance with company accounting data and/or management information systems, functional to the fulfillment of the information obligations set forth in this circular, which also identifies the reporting model, the methods of compilation, and the deadlines for forwarding to BCSM, directly or through the specific operational manual; in the circular, the report is also defined as “Financial Data – Reg. 2016-02”; s) “sectorization”: aggregation of certain values into economic sectors, as qualified in Part II Title III of BCSM Regulation No. 2015-01; t) “management company or SG”: management companies authorized under Law No. 165 of November 17, 2005 to carry out the activities referred to in letters E) and/or F) of Annex 1 to the aforementioned law; u) “trust companies”: companies authorized under Law No. 165 of November 17, 2005 to carry out the activity referred to in letter C) of Annex 1 to the aforementioned law; v) “financial companies”: companies authorized under Law No. 165 of November 17, 2005 to carry out the activity referred to in letter B) of Annex 1 to the aforementioned law; w) “target entities”: subjects authorized to exercise one or more of the reserved activities indicated in Annex 1 to the LISF, excluding those indicated in letters G) and H); in this Circular, they are also defined as “reporting entities”.
2. Unless otherwise specified, for the purposes of this Circular, the definitions contained in Law No. 165 of November 17, 2005 and BCSM Regulations Nos. 2016-02, 2007-07, 2011-03, 2006-03, 2020-04, and 2015-01 apply.
3. In the following text, the use of the terms described above is highlighted in UPPERCASE.

2 PRELIMINARY REMARKS

1. This CIRCULAR is applicable with respect to BCSM Regulation No. 2016-02 and regulates the information obligations regarding corporate and consolidated financial statements concerning the balance sheet, income statement, and notes to the financial statements schemes.
2. The REGULATION transposes Directive 86/635/EEC of the European Union and subsequent amendments, also with the aim of progressively preparing the financial system for the application of IAS-IFRS principles.
3. The REGULATION implements art. VI.II.5 of BCSM Regulation No. 2007-07, BCSM Regulation No. 2011-03, and BCSM Regulation No. 2020-04, as well as art. 45, paragraph 1 of BCSM Regulation No. 2006-03.
4. In the CIRCULAR, pursuant to Part V of the REGULATION, along with the notes to the financial statements schemes, there are applicable provisions or interpretations of the norms contained therein, necessary for the fulfillment of the information obligations.
5. This CIRCULAR, in conformity with what is provided by Article 38, paragraph 5 of Law No. 165 of November 17, 2005 and the implementing BCSM Regulation No. 2006-02, has been subject to public consultation.

3 TARGET ENTITIES

1. All subjects authorized to exercise one or more of the reserved activities indicated in Annex 1 to the LISF, excluding those indicated in letters G) and H), are required to comply with the provisions of this CIRCULAR.
2. The subjects referred to in art. VII.I.1 of the REGULATION are required to prepare the consolidated financial statements, except for the exemption cases provided for in art. VII.I.2 of the REGULATION.

4 PERIODICITY AND DEADLINES FOR SUBMISSION OF DOCUMENTATION AND REPORTS 4.1 Transmission to BCSM of financial documentation and related deadlines

1. As provided by art. 84 of the COMPANIES LAW, within thirty days from the approval of the individual financial statement, which must take place within five months from the closing of the financial year, an authentic copy of the minutes of approval of the individual financial statement, to which all documents referred to in art. 83 of the aforementioned law must be attached, must be deposited with the Economic Activities Office by the administrators. 1-bis. Within thirty days from the approval of the consolidated financial statement, which must take place within six months from the closing of the financial year, an authentic copy of the resolution of approval of the consolidated financial statement by the Board of Directors of the parent company, to which all documents referred to in paragraph 2-bis of this section must be attached, must be deposited with the Economic Activities Office by the administrators of the parent company.
2. Within thirty days from the approval of the individual financial statement, the individual financial statement documentation provided for in art. II.I.2 of the REGULATION must also be transmitted to the CENTRAL BANK, listed as follows: a) Balance sheet, income statement, notes to the individual financial statements; b) Management report (including also a report on corporate governance in the cases provided for in art. VI.I.2 of the REGULATION) of the authorized subject; c) Report of the Board of Statutory Auditors on the individual financial statement; d) Report of the Audit Firm (see Part VIII of the REGULATION) on the individual financial statement; e) Copy of the shareholders' meeting minutes. 2-bis. Within thirty days from the approval of the consolidated financial statement, the consolidated financial statement documentation provided for in art. II.I.2 of the REGULATION must be transmitted to the CENTRAL BANK, listed as follows: a) Balance sheet, income statement, notes to the consolidated financial statements; b) Consolidated management report of the group of companies included in the consolidation; c) Consolidated audit report; d) Copy of the Board of Directors resolution approving the consolidated financial statement.
3. In addition to what indicated in the previous paragraph, by June 30 of each year, TARGET ENTITIES other than CREDIT INSTITUTIONS are required to transmit the nominal list of DETERIORATED CREDIT EXPOSURES (non-performing loans, probable defaults, overdue and/or overdrawn), indicating the amounts disbursed (credit value at the REFERENCE DATE of the REPORT gross of value adjustments made), recoveries, and expected losses. The aforementioned documentation must be compiled assuming the REFERENCE DATE as December 31 of the previous year and does not necessarily need to be subject to prior examination and approval by the Board of Directors.

Central Bank of the Republic of San Marino Circular No. 2017-03 – Information Obligations Regarding Corporate and Consolidated Financial Statements - Update X 6 If TARGET ENTITIES do not hold DETERIORATED CREDIT EXPOSURES, they must still proceed to send a negative communication.

4.2 Publication of the individual and consolidated financial statements

1. Authorized subjects must publish on their website, within thirty days from the approval of the individual financial statement by the shareholders' meeting, the financial documentation consisting of at least: a) Management report (including also a report on corporate governance in the cases provided for in art. VI.I.2 of the REGULATION); b) Financial statement schemes; c) Notes to the financial statements; d) Report of the Board of Statutory Auditors; e) Report of the Audit Firm. 1-bis. Authorized subjects who, pursuant to art. VII.I.1 of the REGULATION, must prepare the consolidated financial statement must publish on their website, within thirty days from the approval of the consolidated financial statement by the Board of Directors and in any case not prior to the publication of the individual financial statement, the consolidated financial documentation consisting of at least: a) Consolidated management report; b) Financial statement schemes drawn up according to consolidation criteria; c) Notes to the financial statements drawn up according to consolidation criteria; d) Consolidated audit firm report.
2. At least the individual and consolidated financial statements of the last three financial years must be published on the website.

4.3 Transmission to BCSM of the financial report as of December 31

1. The INDIVIDUAL FINANCIAL STATEMENT REPORT as of December 31, drawn up on the basis of the DRAFT FINANCIAL STATEMENTS approved by the administrative body, must be transmitted to BCSM by April 15 following the REFERENCE DATE. 1-bis. The CONSOLIDATED FINANCIAL STATEMENT REPORT as of December 31 must be transmitted to BCSM by July 15 following the REFERENCE DATE.
2. Any variations that may subsequently be made during the approval of the individual financial statement or already in the DRAFT FINANCIAL STATEMENTS stage must be communicated to BCSM promptly via email to the address dipartimento.vigilanza@bcsm.sm, making the appropriate reporting corrections according to the methods provided for this purpose for the resubmission of the REPORT.

4.4 Transmission to BCSM of the semi-annual financial report and documentation as of June 30

1. The FINANCIAL STATEMENT REPORT relating to the first half of the financial year, subject to prior review by the Board of Directors, must be transmitted to BCSM by CREDIT INSTITUTIONS within the third month following the REFERENCE DATE.

Central Bank of the Republic of San Marino Circular No. 2017-03 – Information Obligations Regarding Corporate and Consolidated Financial Statements - Update X 7 2. Within the third month following the REFERENCE DATE, CREDIT INSTITUTIONS must send to BCSM the following documentation: a) Accompanying report, signed by the Head of the Executive Structure, illustrating the evolution of the company's management recorded in the first half of the financial year; b) Financial statement schemes; c) Notes to the financial statements. 3. The information transmitted as of June 30 must be compared, in absolute and percentage terms:

• for income statement data: with those as of June 30 of the previous financial year;
• for the remaining data: with those as of December 31 of the previous financial year.

4.5 Correction of supervisory reports following the approval of the financial statements

1. Following the approval of the financial data (by the Shareholders' Meeting for the entire financial year or, for CREDIT INSTITUTIONS, by the Board of Directors for the first half), if these values differ from those previously reported to BCSM, the REPORTING ENTITY must:

• update the data of the prudential supervision report with the correct values and proceed to resubmission to BCSM indicating in the notes field of the report the modifications made (e.g., different value of distributable profit; increases/decreases in provisions on loans and consequent update of the year's profit/loss, etc.) and the impacts on the report;
• take into account the modifications made during the approval of the financial statements for the various supervisory reports starting from the subsequent reference date (example, for CREDIT INSTITUTIONS, approval of the financial statement on May 20 with relative update of the accounting situation as of May 31, to be sent by the following month of June, or as of June 30 to be sent by the following month of July); regarding this, the update of any supervisory reports with a reference date prior to but not yet sent to BCSM does not matter (in the example above, the data as of April 30 of the accounting situation to be sent by May 31).

4.6 Transmission to BCSM of the analytical report on deteriorated credit exposures

1. CREDIT INSTITUTIONS are required to transmit to BCSM detailed information regarding each DETERIORATED CREDIT EXPOSURE.
2. The information obligation is fulfilled by transmitting to BCSM a periodic supervisory report. Specific operational manuals will define the compilation instructions and the methods of communication of the required information.

5 GENERAL GUIDELINES

1. Questions regarding the provisions present in the CIRCULAR may be presented to BCSM according to the methods provided for by current regulations.

Central Bank of the Republic of San Marino Circular No. 2017-03 – Information Obligations Regarding Corporate and Consolidated Financial Statements - Update X 8 2. The compilation of the notes to the financial statements must take place in respect of what indicated in Part V of the REGULATION. 3. If some notes to the financial statements tables are not filled in as “zero”, the REPORTING ENTITY must indicate the wording “Data not present” at the bottom of the headers of the individual tables or list in the introductory part of the notes to the financial statements the tables not compiled for this reason. 4. The exemptions from the obligation to compile the FINANCIAL STATEMENT REPORT are regulated by art. II.III.3 of BCSM Regulation No. 2015-01. 5. Active and passive relationships with CREDIT INSTITUTIONS, as defined in Article I.I.2 point 10 of the REGULATION, cannot in any case be classified among credits and debts towards customers.

5.1 Fair value

1. In the case of quoted shareholdings, fair value corresponds to market value. Regarding unquoted shareholdings, intangible and tangible fixed assets, fair value, although optional, is determined based on the value resulting from models and valuation techniques generally accepted, provided that these models and valuation techniques ensure a reasonable approximation to market value and are consistent with those used for assets quoted on markets. In the notes to the financial statements, it is