Order on Resolution Planning and Resolution Readiness

Order on resolution planning and resolution readiness1)

Pursuant to Section 245 a, subsection 4, Section 259, subsection 10, Section 260, subsection 8, Section 261 a, Section 264, subsection 8, Section 265, subsection 8, and Section 373, subsection 4, of the Act on Financial Business, cf. Act No. 1447 of 11 September 2020, as amended by Act No. 2110 of 22 December 2020, and Section 182, subsection 3, Section 184, subsection 6, Section 186, subsection 8, Section 189, Section 192, subsection 8, and Section 270, subsection 1, of Act No. 1155 of 8 June 2021 on securities brokerage companies and investment services and activities, and after consultation with Finansiel Stabilitet (Financial Stability), it is hereby ordered:

Chapter 1 Scope and Definitions

Section 1. This Order applies to the following:

1. Credit institutions.
2. Real estate credit institutions.
3. Securities brokerage companies that have permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, items 3 and 6, of the Act on securities brokerage companies and investment services and activities.
4. Mixed holding companies, cf. Section 5, subsection 1, item 51, of the Act on Financial Business or Section 10, item 20, of the Act on securities brokerage companies and investment services and activities.
5. Financial holding companies, cf. Section 5, subsection 1, item 9, of the Act on Financial Business, when at least one subsidiary is a credit institution or a real estate credit institution. Securities brokerage holding companies, cf. Section 10, item 19, of the Act on securities brokerage companies and investment services and activities, with at least one subsidiary that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, items 3 and 6, of the Act on securities brokerage companies and investment services and activities.
6. Financing institutions, cf. Section 5, subsection 1, item 5, of the Act on Financial Business, if the financing institution is a subsidiary of a credit institution, a real estate credit institution, a financial holding company, or a mixed holding company, and the financing institution is included in the supervision of the parent company on a consolidated basis.

Subsection 2. This Order does not apply to subsidiaries of Finansiel Stabilitet.

Section 2. In this Order, the following definitions apply:

1. Undertaking: An undertaking as listed in Section 1, subsection 1, items 1-6.
2. Resolution entity: A resolution entity, cf. Section 5, subsection 1, item 72, of the Act on Financial Business or Section 10, item 61, of the Act on securities brokerage companies and investment services and activities.
3. Resolution group: A resolution group, cf. Section 5, subsection 1, item 73, of the Act on Financial Business or Section 10, item 62, of the Act on securities brokerage companies and investment services and activities.
4. Resolution tool: A resolution tool, cf. Section 2, item 5, of the Act on the Restructuring and Resolution of Certain Financial Undertakings.

Chapter 2 Resolution Planning

Section 3. An undertaking shall submit lists and information, cf. Annex 1, for use in the preparation, adoption, and maintenance of a resolution plan or group resolution plan, cf. Sections 259 and 260 of the Act on Financial Business or Sections 184 and 186 of the Act on securities brokerage companies and investment services and activities, if Finansiel Stabilitet requests this. Finansiel Stabilitet requests lists and information when these are not

1. already available to Finansiel Stabilitet, or
2. available in a format that is useful for the preparation, adoption, or maintenance of the resolution plan or group resolution plan.

Subsection 2. Finansiel Stabilitet sets a deadline for the submission of the lists and information, cf. subsection 1.

Chapter 3 Resolution Readiness

Necessary lists and information for use in resolution

Section 4. An undertaking must be able to produce a balance sheet for use in Finansiel Stabilitet's restructuring and resolution of the undertaking in accordance with the Act on the Restructuring and Resolution of Certain Financial Undertakings.

Subsection 2. The balance sheet must contain an inventory of assets, liabilities, and other obligations and must be prepared based on accounts with the necessary adjustments resulting from subsection 3 and in accordance with Annex 2. For credit institutions and real estate credit institutions, the balance sheet must be prepared in accordance with Annex 3 of the Order on financial reports for credit institutions and securities brokerage companies, etc.

Subsection 3. The accounts forming the basis for the balance sheet must be able to be prepared based on the undertaking's normal accounting practices. An undertaking must, to the greatest possible extent, have updated information for use in preparing the balance sheet. The balance sheet must as a starting point be prepared based on the latest day-end.

Subsection 4. Subsections 1-3 do not apply to undertakings mentioned in Section 1, subsection 1, items 3 and 6. Finansiel Stabilitet may, however, decide that subsections 1-3 shall apply to an undertaking mentioned in Section 1, subsection 1, items 3 and 6, if the resolution plan or group resolution plan, cf. Sections 259 and 260 of the Act on Financial Business or Sections 184 and 186 of the Act on securities brokerage companies and investment services and activities, stipulates a resolution other than bankruptcy.

Section 5. For use in Finansiel Stabilitet's restructuring and resolution of an undertaking in accordance with the Act on the Restructuring and Resolution of Certain Financial Undertakings, an undertaking must be able to calculate and produce a specified inventory of the undertaking's liabilities in accordance with Annex 3.

Subsection 2. Subsection 1 does not apply to undertakings mentioned in Section 1, subsection 1, items 3 and 6. Finansiel Stabilitet may, however, decide that subsection 1 shall apply to an undertaking mentioned in Section 1, subsection 1, items 3 and 6, if the resolution plan or group resolution plan, cf. Sections 259 and 260 of the Act on Financial Business or Sections 184 and 186 of the Act on securities brokerage companies and investment services and activities, stipulates a resolution other than bankruptcy.

Section 6. For use in Finansiel Stabilitet's restructuring and resolution of a credit institution in accordance with the Act on the Restructuring and Resolution of Certain Financial Undertakings, an undertaking must be able to calculate and produce a specified inventory of eligible deposits, cf. Section 2, subsection 2, of the Order on the Guarantee Fund's coverage of depositors and investors, and covered deposits, cf. Section 9 of the Act on a Depositor and Investor Guarantee Scheme, including a breakdown by the different types of deposits covered by the Guarantee Fund.

Subsection 2. A real estate credit institution or a securities brokerage company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, items 3 and 6, of the Act on securities brokerage companies and investment services and activities, must be able to calculate and produce a specified inventory of the undertaking's covered cash funds, cf. Section 10 of the Act on a Depositor and Investor Guarantee Scheme.

Subsection 3. The inventory, cf. subsection 1, must for a credit institution be prepared in accordance with Annex 3 of the Order on the Guarantee Fund's coverage of depositors and investors. Deposits covered by Section 9, subsections 3-5, of the Act on a Depositor and Investor Guarantee Scheme must be included to the extent that the undertaking has knowledge thereof.

Subsection 4. The inventory, cf. subsection 2, must for a real estate credit institution and a securities brokerage company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, items 3 and 6, of the Act on securities brokerage companies and investment services and activities, be prepared in accordance with Annex 3 of the Order on the Guarantee Fund's coverage of depositors and investors.

Section 7. Finansiel Stabilitet may request an undertaking to provide balance sheets and inventories pursuant to Sections 4-6, when Finansiel Stabilitet can use the powers set out in Section 243 a-c of the Act on Financial Business or Sections 177-179 of the Act on securities brokerage companies and investment services and activities. Finansiel Stabilitet may additionally make a request pursuant to the first sentence when Finansiel Stabilitet intends to make a decision that an undertaking is, or there is a significant risk that an undertaking will within a short period be found to be or expected to become, failing or likely to fail, cf. Section 224 a of the Act on Financial Business or Section 165 of the Act on securities brokerage companies and investment services and activities, regardless of whether recovery or early intervention has been initiated.

Subsection 2. An undertaking established in Denmark must be able to produce the balance sheets and inventories pursuant to Sections 4-6 for subsidiaries.

Subsection 3. The balance sheets and inventories pursuant to Sections 4-6 must, after an undertaking has received a request therefrom from Finansiel Stabilitet, be delivered to Finansiel Stabilitet within 12 hours after day-end. If Finansiel Stabilitet has not yet assessed that an undertaking is failing or likely to fail, cf. Section 224 a of the Act on Financial Business or Section 165 of the Act on securities brokerage companies and investment services and activities, Finansiel Stabilitet may set a longer deadline for delivering the inventories, taking into account the specific situation.

Subsection 4. Series balance sheets, cf. Annex 2, must, after an undertaking has received a request therefrom from Finansiel Stabilitet, be delivered to Finansiel Stabilitet within 24 hours after day-end. If Finansiel Stabilitet has not yet assessed that an undertaking is failing or likely to fail, cf. Section 224 a of the Act on Financial Business or Section 165 of the Act on securities brokerage companies and investment services and activities, Finansiel Stabilitet may set a longer deadline for delivering the inventories, taking into account the specific situation.

Efficient workflows and systems

Section 8. An undertaking must have a system for general orientation of customers and creditors, etc., in connection with resolution measures pursuant to Chapters 4-8 of the Act on the Restructuring and Resolution of Certain Financial Undertakings.

Subsection 2. An undertaking must have a system for individual orientation of customers and creditors, etc., in connection with resolution measures, including transfer of all or part of the undertaking's activities.

Subsection 3. Subsections 1 and 2 do not apply to undertakings mentioned in Section 1, subsection 1, items 3 and 6. Finansiel Stabilitet may, however, decide that subsections 1 and 2 shall apply to an undertaking mentioned in Section 1, subsection 1, items 3 and 6, including if the resolution plan or group resolution plan, cf. Sections 259 and 260 of the Act on Financial Business or Sections 184 and 186 of the Act on securities brokerage companies and investment services and activities, stipulates a resolution other than bankruptcy.

Section 9. An undertaking must have a system that, upon request from Finansiel Stabilitet, can temporarily and permanently write down deposits exceeding the coverage of the Guarantee Fund, cf. the Act on a Depositor and Investor Guarantee Scheme. The write-down, cf. the first sentence, must be able to be made in full and in part.

Subsection 2. Subsection 1 does not apply to undertakings mentioned in Section 1, subsection 1, items 3 and 6. Finansiel Stabilitet may, however, decide that subsection 1 shall apply to an undertaking mentioned in Section 1, subsection 1, items 3 and 6, including if the resolution plan or group resolution plan prepared pursuant to Sections 259 and 260 of the Act on Financial Business or Sections 184 and 186 of the Act on securities brokerage companies and investment services and activities stipulates a resolution other than bankruptcy.

Section 10. An undertaking must have effective forms of business management that ensure that necessary information for use in valuations pursuant to Chapter 3 of the Act on the Restructuring and Resolution of Certain Financial Undertakings as well as the restructuring and resolution of an undertaking is updated. Necessary information is the information specified in Annex 4, to the extent that it is relevant for the type of undertaking in question.

Subsection 2. The information, cf. subsection 1, must be produced as quickly as possible after an undertaking has received a request therefrom from Finansiel Stabilitet. If Finansiel Stabilitet has not yet made a decision that an undertaking is failing or likely to fail, cf. Section 224 a of the Act on Financial Business or Section 165 of the Act on securities brokerage companies and investment services and activities, Finansiel Stabilitet may set a longer deadline for delivering the information, taking into account the specific situation.

Subsection 3. Finansiel Stabilitet may request information pursuant to subsection 2 when Finansiel Stabilitet can use the powers set out in Section 243 a-c of the Act on Financial Business or Sections 177-179 of the Act on securities brokerage companies and investment services and activities, when an undertaking is, or there is a significant risk that an undertaking will within a short period be found to be failing or likely to fail, cf. Section 224 a of the Act on Financial Business or Section 165 of the Act on securities brokerage companies and investment services and activities, regardless of whether recovery or early intervention has been initiated. If Finansiel Stabilitet assesses that information is not updated or not representative, Finansiel Stabilitet may request that the undertaking update the information.

Subsection 4. Subsections 1-3 do not apply to undertakings mentioned in Section 1, subsection 1, items 3 and 6. Finansiel Stabilitet may, however, decide that subsections 1-3 shall apply to an undertaking mentioned in Section 1, subsection 1, items 3 and 6, including if the resolution plan or group resolution plan prepared pursuant to Sections 259 and 260 of the Act on Financial Business or Sections 184 and 186 of the Act on securities brokerage companies and investment services and activities stipulates a resolution other than bankruptcy.

Section 11. An undertaking must have sound administrative practices, such that the undertaking has an overview of the scope, significance, and location of critical or mutually burdensome contracts, including contracts that are central to the immediate continuation of the institution.

Subsection 2. An undertaking must have updated methods for estimating the special costs and obligations that will arise upon the undertaking's bankruptcy, including obligations upon withdrawal from data centers, lease obligations, or other costs that must be balanced as obligations because they relate to a bankruptcy.

Subsection 3. Subsection 1 does not apply to undertakings mentioned in Section 1, subsection 1, items 3 and 6. Finansiel Stabilitet may, however, decide that subsection 1 shall apply to an undertaking mentioned in Section 1, subsection 1, items 3 and 6, including if the resolution plan or group resolution plan prepared pursuant to Sections 259 and 260 of the Act on Financial Business or Sections 184 and 186 of the Act on securities brokerage companies and investment services and activities stipulates a resolution other than bankruptcy.

Section 12. Undertakings must keep a register of financial contracts. The register must contain the information specified in Commission Delegated Regulation (EU) 2016/1712 of 7 June 2016 supplementing Directive 2014/59/EU of the European Parliament and of the Council on the establishment of a framework for the recovery and resolution of credit institutions and investment firms with regard to regulatory technical standards specifying a minimum set of information on financial contracts that should be covered by the detailed registers, and the circumstances under which this requirement should apply, if it appears from the undertaking's resolution plan or group resolution plan, cf. Sections 259 and 260 of the Act on Financial Business or Sections 184 and 186 of the Act on securities brokerage companies and investment services and activities, that the undertaking is to be resolved.

Section 13. An undertaking's external or internal auditor must once a year review the undertaking's organization and implementation of workflows and systems for compliance with the requirements in Sections 4-12.

Subsection 2. An undertaking's external or internal auditor must also once a year ensure that the undertaking can at all times calculate and produce the required inventories and information in Section 6 and Annex 3. The work performed must include a sample check of the specified information.

Subsection 3. An undertaking's external auditor must issue a declaration regarding subsections 1 and 2. The declaration must be issued according to a standard found on Finansiel Stabilitet's website. If the declaration is issued with reservations or supplementary information, the auditor must prepare a separate declaration with the necessary modifications.

Subsection 4. The auditor's declaration, cf. subsection 3, must be issued no later than simultaneously with the signing of the undertaking's annual accounts and must be sent to Finansiel Stabilitet no later than 14 days after the issuance of the declaration. Finansiel Stabilitet forwards a copy of the declaration to Finansiel Stabilitet.

Subsection 5. Subsections 1-4 do not apply to undertakings mentioned in Section 1, subsection 1, items 3 and 6. Finansiel Stabilitet may, however, decide that subsections 1-4 shall apply to an undertaking mentioned in Section 1, subsection 1, items 3 and 6, including if the resolution plan or group resolution plan prepared pursuant to Sections 259 and 260 of the Act on Financial Business or Sections 184 and 186 of the Act on securities brokerage companies and investment services and activities stipulates a resolution other than bankruptcy.

Subsection 6. The internal or external auditor for undertakings mentioned in Section 1, subsection 1, items 3 and 6, must once a year ensure that the undertaking can at all times produce the required inventories in Section 6.

Subsection 7. For undertakings covered by subsection 6, the external auditor must issue a declaration regarding subsection 6. Subsections 3 and 4 apply correspondingly to the declaration pursuant to the first sentence.

Chapter 4 Penal Provisions

Section 14. Violation of Section 3, subsection 1, Section 5, subsection 1, Section 6, Section 7, subsection 3, Section 8, subsections 1-2, Section 9, subsection 1, Section 10, subsections 1-2, Section 11, subsections 1-2, Section 12, and Section 13, subsections 1-2 and 4, may be punishable by a fine.

Subsection 2. Companies, etc. (legal persons) may be subject to criminal liability according to the rules in Chapter 5 of the Criminal Code.

Chapter 5 Entry into Force, etc.

Section 15. This Order enters into force on 1 January 2022.

Subsection 2. Order No. 962 of 25 June 2018 on resolution planning and resolution readiness is repealed.

Ministry of Industry, Business and Financial Affairs, 26 October 2021

Simon Kollerup / Hans Høj

Annex 1 Information and lists for use in resolution planning

1. Undertakings covered by this Order must, upon request from Finansiel Stabilitet, deliver the following lists and information with a view to the preparation, adoption, and maintenance of resolution and group resolution plans: a) A detailed description of the undertaking's organization as well as a group overview if the undertaking is part of a group. b) Indication of owners of a qualifying holding in the undertaking, the size of the qualifying owners' share in the undertaking, and their percentage share of the voting rights in the undertaking. In a group, the information must be delivered for each individual legal person in the group. c) The undertaking's location, country of establishment, permissions granted in accordance with financial legislation, and members of the board and management. In a group, the information must be delivered for each individual legal person in the group. d) A list with a mapping and description of the undertaking's critical functions and central business areas, including significant assets and liabilities related to such functions and business areas. e) A detailed description of the elements of the undertaking's liabilities, at a minimum divided by type and size of short-term and long-term debt as well as secured, unsecured, and subordinated obligations. f) Detailed information on the liabilities eligible for write-down, cf. Section 267 of the Act on Financial Business or Section 201 of the Act on securities brokerage companies and investment services and activities. g) A description of the procedures necessary to determine to whom the undertaking has provided security, who is in possession of the security, and in which jurisdiction the security is located. h) A list and description of the undertaking's off-balance sheet exposures. i) A list of the undertaking's significant hedges. j) Identification of the undertaking's largest and most critical counterparties and an analysis of the consequences that these counterparties' default would have on the undertaking's financial situation. k) A list of any system in which the undertaking executes a significant number of transactions or transactions for a significant value, including a mapping of the use of these systems in the undertaking generally and on the undertaking's critical functions and central business areas. l) A list of each payment, clearing, or settlement system of which the undertaking is a direct or indirect member, including a mapping for each system distributed across the undertaking, its critical functions, and central business areas. m) A detailed register and a detailed description of the central management information systems, including systems for risk management, bookkeeping, and financial and regulatory reporting, used by the undertaking, including a mapping for each system distributed across the undertaking, its critical functions, and central business areas. n) Identification of the owners of the systems mentioned in letter m, as well as associated service, software, system, and license agreements, including a mapping for each system and associated agreement distributed across the undertaking, its critical functions, and central business areas. o) The undertaking's supervisory authority and resolution authority(ies). p) The member of the management responsible for submitting the information necessary to prepare the undertaking's resolution plan, and any other persons responsible for the undertaking's critical functions and central business areas.

q) A description of the arrangements the undertaking has established to ensure that Finansiel Stabilitet, in the event of a resolution of the undertaking, has access to the necessary information.