Regulation on the Conditions for Performing Key Functions in an Insurance/Reinsurance Company – Unofficial Consolidated Text (NN, No. 68/19, 15/20)

Unofficial Consolidated Text (“Narodne novine” No. 68/19, 15/20) PRAVILNIK ON THE CONDITIONS FOR PERFORMING KEY FUNCTIONS IN AN INSURANCE/REINSURANCE COMPANY Preliminary Provisions Article 1. With this Regulation, the Croatian Financial Services Supervisory Agency (hereinafter: Hanfa) specifies in detail the conditions that holders of key functions in an insurance or reinsurance company (hereinafter: Company) must meet, as well as the documentation by which compliance with these conditions is demonstrated. Conditions for Performing Key Functions Article 2. (1) Holders of key functions prescribed by Article 93(1) of the Insurance Act (hereinafter: Act) must, upon appointment to a key function and for the entire duration of performing that function, meet the conditions prescribed by Article 93 of the Act, Article 273 of Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EU of the European Parliament and of the Council on the taking up and pursuit of the business of Insurance and Reinsurance (Solvency II), EIOPA Guidelines on governance, and this Regulation. (2) The Company is obliged to verify the existence of the conditions set out in paragraph 1 of this Article before adopting a decision on appointing a holder of a key function, and in the event that such conditions cease to exist, to dismiss the holder of the key function. (3) A holder of a key function must without delay notify the Company upon cessation of the conditions set out in paragraph 1 of this Article. Article 3. A holder of a key function meets the knowledge condition in Croatian language, pursuant to Article 93(5)(1) of the Act, if they know Croatian in speech and writing for the unimpeded performance of that function. Article 4. A holder of a key function meets the conditions under Article 93(5)(2) of the Act necessary for performing entrusted duties with the care of a competent expert, if they meet the conditions under the Act and possess:

1. completed pre-undergraduate and undergraduate university studies or – integrated pre-undergraduate and undergraduate university studies or – professional study and specialist postgraduate professional study, having acquired at least 300 ECTS points upon completion, or – undergraduate university study having acquired a high level of professional qualification, or – undergraduate professional study lasting at least four years having acquired a high level of professional qualification,
2. at least three years of experience in management or performing insurance business in a company or other legal entity on appropriate positions in the fields of finance, banking, law, actuarial science, audit, or risk management, including several short-term or temporary positions for which it can be established that such experience was gained while performing those duties. Article 5. (1) Suitability, namely good repute and integrity prescribed by Article 93(5)(3) and (4) of the Act applies to a person in respect of whom there are no circumstances casting doubt on that person’s good repute and who is not finally convicted of a criminal offense under Article 36(8) of the Act, a criminal offense prescribed by the Capital Market Act (“Narodne novine” No. 84/02 and 138/06), the Act on Criminal Offences against the Capital Market (“Narodne novine” No. 152/08), or the Companies Act (“Narodne novine” No. 111/93, 34/99, 121/99, 52/00, 118/03, 107/07, 146/08, 137/09, 152/11, 111/12, 144/12 and 68/13). (2) When assessing suitability under Article 93(5)(3), the Company must in particular take into account the following circumstances that may cast doubt on a person’s good repute or integrity:
3. whether that person has had an appropriate consent or approval for performing business revoked or refused due to non-compliance with regulations under the competence of Hanfa or another competent authority;
4. whether an investigation has been initiated or criminal proceedings are pending against that person for the criminal offenses set out in paragraph 1 of this Article;
5. whether that person has been subject to a measure or whether competent courts or authorities are conducting proceedings against them for irregularities or non-compliance with any regulations governing banking, financial, or insurance business, the capital market, provision of financial services, investment and pension funds, in particular regulations preventing money laundering, corruption, market abuse, usury, or any other relevant regulations;
6. whether that person has been finally convicted of an administrative offense constituting a gross or permanent breach of regulations under the competence of Hanfa, the Croatian National Bank, or another competent authority of the Republic of Croatia, a Member State, or a third country;
7. whether that person is managing or was managing at the time of committing the criminal offense a company that has been finally convicted for one of the criminal offenses under this Article, against which measures have been imposed or proceedings and other actions from point 3 of this paragraph are pending;
8. whether there is data in the central database of administrative sanctions of European supervisory authorities, including all permanent bans imposed for breaches relating to operating permits and consent requirements for acquiring a qualifying holding, as well as data on submitted legal remedies concerning those measures and the outcomes of those legal remedies;
9. previous professional work and personal integrity of the person;
10. whether business results and/or financial stability endanger the person’s reputation;
11. whether there are other reasons for doubting that person’s good repute. (3) Establishing the existence of circumstances under paragraph 1 of this Article does not call into question the application of the presumption of innocence under regulations governing criminal proceedings. (4) When determining whether circumstances under points 2.–6. of paragraph 2 of this Article affect a person’s good repute or integrity, the Company is obliged to take into account all available data related to the type of criminal sanctions, the stage at which proceedings are located, submitted legal remedies, imposed fines or other criminal sanctions, effects of rehabilitative measures, existing aggravating and mitigating circumstances, significance of the criminal offense or administrative offense, period elapsed since the time of committing the act, and the person’s behavior during that time. The Company is obliged to take into account a larger number of lighter offenses that individually do not impair, but together may impair, the person’s good repute or integrity. (5) Additionally, when determining circumstances under points 2.–6. of paragraph 2 of this Article, the Company is obliged to take into account all data on all relevant previous measures, convictions, and proceedings concerning the person or company managed by that person, which have been conducted or are being conducted by Hanfa or another competent authority. (6) When determining whether circumstances under point 7 of paragraph 2 of this Article affect a person’s good repute or integrity, the Company is obliged to analyze data indicating improper behavior of the person in previous professional work, such as non-transparent handling, lack of cooperation with competent authorities, refusal or revocation or withdrawal of approvals or licenses for performing management functions or professional occupations/businesses, and, if available, will also analyze the reasons for termination of employment contracts, as well as reasons for dismissals from key or similar functions and prohibitions on conducting business or representing a legal entity imposed by the competent authority or non-compliance with measures imposed by Hanfa or another competent authority, as well as all other information or evidence indicating that the person’s conduct is in line with high standards of professional behavior. (7) When determining circumstances under points 8 and 9 of paragraph 2 of this Article, the Company is obliged to take into account the financial and business results of the trading company in which that person has or had a significant share and/or management function, particularly in a trading company where the person has or had a significant share and/or management function before a pre-bankruptcy settlement was conducted, bankruptcy proceedings were opened, a decision on compulsory liquidation was adopted, or an operating permit was withdrawn or revoked, which could affect the person’s reputation or integrity. The Company is obliged to assess whether that person’s conduct influenced the occurrence of these events. (8) When determining circumstances under points 8 and 9 of paragraph 2 of this Article, the Company is obliged to take into account the financial stability of the person and the possible impact of financial stability on the person’s reputation or integrity. In doing so, it is obliged to analyze:
12. whether the person’s assets call into question the fulfillment of their financial obligations in the future;
13. whether the person is on the list of delinquent debtors (e.g., HROK, tax debtor list of the Ministry of Finance, credit registers, etc.);
14. whether bankruptcy proceedings for consumers have been conducted or are being conducted over the person’s assets;
15. whether the person has been finally convicted and criminal proceedings are pending against them for any of the criminal offenses not listed in paragraph 1 of this Article;
16. data on non-conviction for administrative offenses and whether administrative proceedings are pending against the person;
17. large investments, exposure, and indebtedness of the candidate. (9) A key function may not be held by a person who serves as a member of the management board or prokurist and a member of the supervisory board of an insurance company, or who directly or indirectly holds a share in an insurance company greater than 1‰. Documentation Proving Fulfillment of Conditions for Performing Key Functions Article 6. (1) The Company is obliged to assess the conditions prescribed by Article 93(5) based on verifiable documentation. (2) For the purpose of verifying compliance with conditions prescribed by Article 93(5) and this Regulation, the Company is authorized to collect from a person considered for appointment as a holder of a key function the following documentation:
18. certified copy of proof of completed prescribed level of education of the candidate, and in case of a foreign qualification (diploma), a copy of the document on recognition of foreign higher education qualification for employment or continuation of studies issued by the competent authority in the Republic of Croatia, where applicable;
19. appropriate documents showing the candidate’s working experience;
20. Hanfa licenses for performing duties of an authorized actuary or based on proof of meeting conditions under Article 103(2) and (3) of the Act, when adopting a decision on appointing an actuary;
21. licenses for auditor or authorized internal auditor acquired in accordance with the law governing audit, or acquired in accordance with rules and programs of a competent professional organization for professional education of internal auditors, when adopting a decision on appointing an internal audit holder;
22. certificates from competent authorities that the person has not been finally convicted of criminal offenses under Article 36(8) of the Act, where applicable, or a certified statement by the person that they have not committed a criminal offense or administrative offense, or that no criminal or administrative proceedings are pending against them;
23. certificates from competent authorities that bankruptcy proceedings for consumers have not been opened over the person’s assets;
24. written statements by the candidate regarding whether and in what manner they meet the conditions under Article 5 of this Regulation and Article 93(5)(5) of the Act. (3) The Company may request additional information and/or documentation when determining whether a person proposed as a holder of a key function meets the conditions under Article 2 of this Regulation. (4) The Company is obliged to document the assessment of suitability of a holder of a key function in writing, with reference to the documentation on which the assessment was made. Entry into Force Article 7. (1) With the entry into force of this Regulation, the Regulation on Conditions for Performing Key Functions in an Insurance/Reinsurance Company (“Narodne novine” No. 7/16) ceases to be valid. (2) This Regulation enters into force on the eighth day from the date of publication in “Narodne novine”. PRAVILNIK AMENDING THE REGULATION ON CONDITIONS FOR PERFORMING KEY FUNCTIONS IN AN INSURANCE/REINSURANCE COMPANY (“Narodne novine” No. 15/20) Article 2. This Regulation enters into force on the eighth day from the date of publication in “Narodne novine”.