Circular No. 2008-01 — Obligations of Trust Companies

Page 1 of 5 THE GENERAL DIRECTOR OF THE CENTRAL BANK OF THE REPUBLIC OF SAN MARINO HAVING REGARD TO the amendments introduced by Delegated Decree No. 49 of 19 March 2008 to Articles 1 and 17 of Law No. 47 of 23 February 2006; HAVING REGARD TO the reference to the regulation by the Central Bank of the Republic of San Marino contained in paragraph 3 of the aforementioned Article 17 of Law No. 47 of 23 February 2006; HAVING REGARD to Article 39 of Law No. 165 of 17 November 2005, which attributes, among other things, to the Supervisory Authority the power to issue binding circulars in pursuit of the objectives set out 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 the acts of the Central Bank in matters of supervision, deliberated by the Supervisory Coordination, are issued by the General Director; HAVING REGARD to the resolutions of the Supervisory Coordination and the Board of Directors by which the text of the Circular of the Central Bank of the Republic of San Marino on the obligations of trust companies pursuant to Article 17 of the Companies Law was approved, ISSUES the attached Circular No. 2008-01 which will enter into force on today's date. San Marino, 26 March 2008 SIGNED: THE GENERAL DIRECTOR Luca Papi

Page 2 of 5 Circular No. 2008-01 OBLIGATIONS OF TRUST COMPANIES PURSUANT TO ARTICLE 17 OF THE COMPANIES LAW Definitions For the purposes of this Circular, the following terms are understood as:

• "authorization to operate": resolution issued by the Grand and General Council pursuant to Article 1 of Law No. 21/1986 and subsequent amendments (banks) or Article 3 of Law No. 24/1986 and subsequent amendments (financial companies);
• "Central Bank": the Central Bank of the Republic of San Marino;
• "certification": certificates provided for and described in Article 1 of the COMPANIES LAW;
• "Decree": the Delegated Decree No. 49 of 19 March 2008;
• "settlor": subjects who confer a mandate without representation to TRUST COMPANIES for the acquisition of shareholdings in San Marino companies;
• "Companies Law": Law No. 47 of 23 February 2006 and subsequent amendments;
• "LISF": Law No. 165 of 17 November 2005;
• "Register": the Register of Companies referred to in Article 6 of the COMPANIES LAW;
• "trust companies": companies authorized to exercise the reserved activity marked with the letter C in Annex 1 to the LISF; Preamble Among the novelties recently introduced by the DECREE, there are some that significantly impact the operations of TRUST COMPANIES in cases of fiduciary holding of shareholdings in San Marino companies. Unsuitability of legal persons Firstly, as a result of the DECREE, the legislative gap represented by the lack of provision of causes of unsuitability referring to legal persons is filled, even in the presence of the obligation to obtain their CERTIFICATION (certificate of validity). The aforementioned legislative gap made it difficult for TRUST COMPANIES to apply the prohibition set out in the second paragraph of Article 17 of the COMPANIES LAW in cases where the SETTLORS are not natural persons. Contemplatio "fiduciae" Then, in the first paragraph of Article 17 of the COMPANIES LAW, an additional obligation is introduced for TRUST COMPANIES, beyond the obligation to obtain the CERTIFICATION of the SETTLORS, namely that of "declare, respectively at the time of the company's deed of incorporation or acquisition of shareholdings, the fiduciary nature of their intervention, recalling the details of the authorization to exercise the reserved activity". Regulation on the "single shareholder" The DECREE has finally inserted a fourth paragraph into Article 17 of the COMPANIES LAW which, although specifically addressing the regulation on the "single shareholder", clarifies who, between the TRUST COMPANY and the SETTLOR, the San Marino legal system considers the "shareholder" for legal purposes. The principle was, however, already present, albeit implicitly, where the verification of the shareholder's suitability was transferred from the TRUST COMPANY to the SETTLORS.

Page 3 of 5 Purpose This Circular, pending a complete and organic regulation of trust activities, integrates the previous Circular No. 2007-03, on the same subject, in order to align the operations of TRUST COMPANIES resulting from the new obligations and prohibitions arising from the recent reform of the COMPANIES LAW, through the issuance of common binding rules of conduct, while maintaining the exclusive responsibility of each TRUST COMPANY to implement management methods that minimize the operational risks inherent in the specificity of the norm. In connection with this regulatory intervention, albeit in the aforementioned transitional perspective and limited to the matters affected by the legislative reform, it was also intended to introduce some supplementary supervisory provisions, anticipating the broader contents of the upcoming regulation on trust activities. Provisions

1. Verification of suitability of legal person settlors and consequent obligations The TRUST COMPANY, pursuant to Art. 17.2 of the COMPANIES LAW, must refuse to accept the mandate or resign immediately if already in place, in cases where the CERTIFICATION shows that the SETTLORS, even when legal persons, are "unsuitable subjects" pursuant to Art. 1 of the aforementioned law. In compliance with the general principle of "sound and prudent management", and in particular the interest in containing legal and reputational risks connected to the exercise of trust activities, TRUST COMPANIES are invited, as a supplementary prudential supervision norm, to verify in the aforementioned cases not only the suitability of the legal person SETTLOR, for legal purposes, but also that of the natural persons who manage it and who, therefore, manage the relationship with the TRUST COMPANY, prudently refraining from accepting the mandate or resigning immediately, as indicated above, if the subjects called upon at any time to manage and/or represent the SETTLOR appear to be "unsuitable subjects" pursuant to law. An adequate information framework on the "substantial suitability" of a SETTLOR, a legal person, cannot in fact prescind from a verification of the honorability of the natural persons organically connected to it, save, obviously, the further information that the TRUST COMPANY prudently and diligently deems necessary to obtain or collect to achieve adequate customer knowledge of the nature and riskiness of the service required (the "know your customer" principle). For all matters concerning the formal requirements, the periodicity of updates, and the terms for the retention of CERTIFICATIONS, "extended" as specified above, reference is made to Circular No. 2007-03.
2. Invocation of the fiduciary cause and reference to one's own legitimacy Currently operating TRUST COMPANIES are authorized to exercise trust activities, identified in letter C of Annex 1 to the LISF, as a result of the AUTHORIZATION TO OPERATE received and Article 156, paragraph 1 of the LISF. It follows that as "details of the authorization", pursuant to Article 17.1 of the COMPANIES LAW, currently operating TRUST COMPANIES must indicate both; those that will be constituted and authorized in the future pursuant to Articles 7 and 9 of the LISF will obviously avoid reference to Article 156 and the Grand and General Council as the authority granting the authorization.

Page 4 of 5 To facilitate control by the Notary public and/or the third counterparty on the truthfulness of the aforementioned declaration, thus establishing an effective safeguard against possible phenomena of "unauthorized trust activity", it is also ordered, as a supplementary supervision norm, that TRUST COMPANIES request the insertion in deeds of their registration number in the Register of Authorized Subjects referred to in Article 11 of the LISF. As a result of the above provision, the declaration referred to in Article 17.1 of the COMPANIES LAW is thus formulated: "XXXXXXXXXX, registered at no. XX of the Register of Authorized Subjects kept by the Central Bank of the Republic of San Marino, declares that it intervenes in the present deed not in its own name but in the exercise of the trust activity referred to in Law No. 165 of 17 November 2005 and subsequent amendments, to which it is authorized pursuant to Article 156, paragraph 1 of the aforementioned law and authorized by virtue of resolution no. XX of the Grand and General Council of DD/MM/YYYY, Application no. XXXX." 3) Applicability to the settlor of the single shareholder regulation By virtue of what is currently clarified in paragraph 4 of Article 17 of the COMPANIES LAW, TRUST COMPANIES may accept mandates aimed at the fiduciary holding of a shareholding in San Marino capital companies, even when total (100% of Share Capital). In such cases, however, taking into account the declaration made obligatorily in deeds pursuant to the first paragraph of the aforementioned article (so-called contemplatio fiduciae), the TRUST COMPANY has no "in its own name" reason to request registration in the REGISTER of the existence of the single shareholder. However, it is necessary to define, for each hypothetically verifiable scenario, what behaviors TRUST COMPANIES must adopt in the interest of the settlor, in compliance with the general obligation of professional diligence. HYPOTHESIS 1: Total shareholding on the mandate of a single SETTLOR In this hypothesis, in the absence of registration in the Register, the SETTLOR risks having to respond unlimitedly for the obligations assumed by the company entirely held, albeit indirectly. It is therefore obligatory for the TRUST COMPANY to proceed ex officio, in the interest of the SETTLOR, in order to obtain, in the ways and terms provided by law, the registration in the REGISTER of the existence of the single shareholder, also given the fact that this does not involve the revelation to third parties of the identity of the shareholder. HYPOTHESIS 2: Non-total shareholding on the mandate of a single SETTLOR If the trust mandate concerns a non-total shareholding in a held company, for the residual part, from its SETTLOR and/or other TRUST COMPANIES, even foreign ones, the agent has the obligation to collect from the SETTLOR a written declaration in which the latter, after confirming knowledge of the single shareholder regulation derived from the combined provisions of Articles 12 and 17.4 of the COMPANIES LAW, disposes regarding the registration or non-registration in the REGISTER of the existence of the single shareholder, relieving the agent of any responsibility consequent to its choice, also for the purposes of Article 36.6 letter a) of the LISF.

HYPOTHESIS 3: Total shareholding on the mandate of a plurality of SETTLORS In this hypothesis, even from the settlor side, there is no interest in registration in the REGISTER, therefore the trust company can consider itself relieved of any obligation, save that of declaring in deeds, following the so-called contemplatio fiduciae, the existence of a plurality of SETTLORS for the purpose of excluding that social creditors, in the event of insolvency of the held company on a total basis,

Page 5 of 5 believe they can attack the assets of third parties, unlimitedly liable pursuant to Article 12 of the COMPANIES LAW. The declaration will thus be formulated: "........ XXXXXXX also declares, for the purposes of Article 12 of the Companies Law, that it intervenes in the present deed on behalf of a plurality of settlors." Final and transitional provisions. This Circular integrates the previous Circular No. 2007-03 on the same subject, which, due to the references to the COMPANIES LAW, remains fully applicable. This Circular enters into force on today's date with effect on all relationships of fiduciary holding of shareholdings in San Marino capital companies, including, with the exception of the provisions in point 2), those already in place. With reference to existing relationships on a mandate conferred by a legal person, the CERTIFICATION relating to the natural persons who manage and/or represent it, pursuant to the provisions of the previous point 1), must be obtained within the term represented by the next triennial update deadline of the SETTLOR's CERTIFICATION, mandatory pursuant to law, and renewed with the same periodicity. With reference to existing relationships configurable in hypothesis no. 2, the written declaration of the SETTLOR must be obtained by the TRUST COMPANY within the term represented by the next triennial update deadline of its CERTIFICATION.

San Marino, 26 March 2008.