Rulebook on the Conduct of Factoring Business by Factoring Companies from Other Member States and Third Countries in the Republic of Croatia

UNOFFICIAL CONSOLIDATED TEXT RULEBOOK ON THE CONDUCT OF FACTORING BUSINESS BY FACTORING COMPANIES FROM MEMBER STATES AND THIRD COUNTRIES IN THE TERRITORY OF THE REPUBLIC OF CROATIA (Narodne novine No. 58/15 and 142/22)

The Rulebook on Amendments to the Rulebook on the Conduct of Factoring Business by Factoring Companies from Other Member States and Third Countries in the Territory of the Republic of Croatia (NN No. 142/22) entered into force and is applied from January 1, 2023.

Rulebook on the Conduct of Factoring Business by Factoring Companies from Other Member States and Third Countries in the Territory of the Republic of Croatia – Unofficial Consolidated Text (NN, No. 58/15 and 142/22)

I. INTRODUCTORY PROVISIONS

Article 1. This Rulebook specifies in detail the manner of application of the provisions of the Factoring Act ("Narodne novine", No. 94/14) to the conduct of factoring business:

1. by factoring companies from other Member States in the territory of the Republic of Croatia,
2. by factoring companies from third countries in the territory of the Republic of Croatia.

Article 2. The terms used in this Rulebook have the following meanings:

1. Agency – Croatian Financial Services Supervisory Agency,
2. Act – Factoring Act ("Narodne novine", No. 94/14),
3. ZOKI – Credit Institutions Act ("Narodne novine", No. 159/13 and 19/15) or the law regulating the conditions for establishment, operation, and cessation of credit institutions, as well as the provision of banking and/or financial services,
4. Direct conduct of factoring business – the conduct of factoring business by a company from another Member State in the territory of the Republic of Croatia, if it concludes legal transactions in the territory of the Republic of Croatia where the subject matter is factoring, or if it offers such business to a natural or legal person with domicile or residence, or registered office, in the territory of the Republic of Croatia through its representatives, intermediaries, or in any other way,
5. Member State – a state that is a member of the European Union or a state that is a signatory to the Agreement on the European Economic Area,
6. Third Country – a state that is not a member of the European Union nor a signatory to the Agreement on the European Economic Area,
7. Factoring company from another Member State – a legal entity with its seat in another Member State other than the Republic of Croatia, which is authorized to conduct factoring business in accordance with the regulations of that Member State,
8. Factoring company from a third country, or foreign factoring company – a legal entity with its seat outside the territory of the Republic of Croatia and outside another Member State, which is authorized to conduct factoring business in accordance with the regulations of that third country,
9. Branch – a branch of a commercial company within the meaning of the Companies Act.

II. CONDUCT OF FACTORING BUSINESS BY FACTORING COMPANIES FROM OTHER MEMBER STATES IN THE TERRITORY OF THE REPUBLIC OF CROATIA

Conduct of factoring business by factoring companies from other Member States that meet the conditions for the provision of mutually recognized services

Article 3. A factoring company from another Member State that meets the conditions for conducting factoring business as a mutually recognized service under ZOKI may conduct factoring business in the territory of the Republic of Croatia in the manner and under the conditions prescribed by the provisions of ZOKI.

Direct conduct of factoring business by factoring companies from other Member States that meet the conditions for the provision of mutually recognized services

Article 4. (1) A factoring company from another Member State referred to in Article 3 of this Rulebook that meets the conditions under Article 84 of ZOKI and other conditions prescribed by ZOKI may directly and temporarily conduct factoring business in the territory of the Republic of Croatia as a mutually recognized service it is authorized to provide in its home Member State. (2) The factoring company from paragraph 1 of this Article may begin to directly conduct factoring business in the territory of the Republic of Croatia under the conditions and in the manner prescribed by the provisions of ZOKI. (3) The provisions of the Act and regulations adopted on the basis of the Act relating to the factoring contract (Articles 13 and 14), certain rights and obligations of subjects in factoring business (Articles 15–17), confidential data (Articles 101–103), penalty provisions (Articles 110–113), and the provisions of the regulations of the Republic of Croatia governing the prevention of money laundering and terrorist financing shall apply mutatis mutandis to the direct conduct of factoring business by the factoring company from paragraph 1 of this Article.

Conduct of factoring business by factoring companies from other Member States through a branch that meets the conditions for the provision of mutually recognized services

Article 5. (1) A factoring company from Article 4, paragraph 1 of this Rulebook may, in addition to direct conduct, conduct factoring business in the territory of the Republic of Croatia as a mutually recognized service through a branch. (2) The provisions of ZOKI shall apply to the establishment and cessation of a branch of a factoring company from a Member State referred to in Article 4, paragraph 1 of this Rulebook that provides a mutually recognized service. (3) The provisions of the Act and regulations adopted on the basis of that Act relating to the factoring contract (Articles 13 and 14), certain rights and obligations of subjects in factoring business (Articles 15–17), business books and reporting to the Agency (Articles 66–70), supervision (Articles 71–99), confidential data (Articles 101–103), penalty provisions (Articles 110–113), and the provisions of the regulations of the Republic of Croatia governing the prevention of money laundering and terrorist financing shall apply mutatis mutandis to the business operations of the branch of the factoring company from Article 4, paragraph 1 of this Rulebook.

Conduct of factoring business by factoring companies from other Member States that do not meet the conditions for the provision of mutually recognized services

Article 6. (1) A factoring company from another Member State (hereinafter: Founder) that is authorized to conduct factoring business in that Member State in accordance with the regulations of that Member State, but does not meet the conditions for business as a financial institution conducting factoring business as a mutually recognized service and other prescribed conditions in accordance with ZOKI, may conduct factoring business in the territory of the Republic of Croatia only through a branch. (2) The Founder may conduct factoring business in the territory of the Republic of Croatia through a branch on the condition that it is authorized to conduct such business in the country where it has its registered seat and that it has been operating for at least two years.

Establishment of a branch

Article 7. (1) A Founder intending to establish a branch of a factoring company in the territory of the Republic of Croatia must obtain approval for the conduct of factoring business from the Agency. (2) The branch may be entered into the court register only after obtaining the Agency's approval from paragraph 1 of this Article. (3) The Founder may establish only one branch in the territory of the Republic of Croatia; if it wishes to conduct business in multiple locations within the Republic of Croatia, it may open one or more organizational units of the branch.

Article 8. (1) In addition to the application for the issuance of approval under Article 7, paragraph 1 of this Rulebook, the documentation prescribed by Article 61, paragraph 5 of the Act must be attached. (2) The Agency may, within one month from the date of receipt of the application from paragraph 1 of this Article, request additional information and documentation. If the Agency has requested additional information or documentation, the date of their delivery is considered the date of receipt of a proper application. (3) The Agency may, as a condition for issuing approval for the conduct of factoring business for the branch, require the Founder to deposit a monetary amount not less than 132,722.81 euros into the account of a credit institution with its seat in the Republic of Croatia as a guarantee for the settlement of obligations arising from transactions concluded in the territory of the Republic of Croatia. Upon the entry of the Founder's branch into the court register, the aforementioned funds may be transferred to the branch's account maintained in the Republic of Croatia. (4) The Agency shall reject the application for the issuance of approval for the conduct of factoring business for the branch for the reasons listed in Article 61, paragraph 8 of the Act.

Management and representation of the branch

Article 9. (1) Only persons who have obtained the Agency's consent for the management of the branch business may manage the business and represent the branch. (2) The business of the branch shall be managed and represented by at least two persons, one of whom must know the Croatian language sufficiently to perform that function, must conduct such business from the territory of the Republic of Croatia, on a full-time basis, and be in an employment relationship with the Founder. (3) Persons responsible for the management of the branch business must meet the conditions prescribed for a member of the management board of a factoring company under the Act and regulations adopted on the basis of the Act. (4) The Founder may authorize a procurist to represent the branch or conclude contracts and undertake legal acts in the name and on behalf of the branch arising from the business for which the branch has obtained the Agency's approval, only jointly with the person responsible for the management of the branch business. (5) Persons responsible for the management of the branch business must ensure that the branch operates in accordance with the provisions of the Act, regulations adopted on the basis of the Act, other regulations applicable to factoring companies, according to professional rules and standards, and ensure the implementation of supervision and supervisory measures ordered by the Agency and other supervisory authorities.

Issuance of consent for persons responsible for the management of the branch

Article 10. (1) The provisions of the Act and regulations adopted on the basis of the Act relating to the issuance of consent for the performance of the function of a member of the management board of a factoring company shall apply mutatis mutandis to the issuance and revocation of consent for persons who will manage the business and represent the branch. The mutatis mutandis application from this paragraph implies the alignment of procedures with regard to the differences in the legal status of the company and the branch of the company. (2) The person responsible for the management of the branch business is appointed for a term that cannot exceed five years, and the Founder may revoke the aforementioned person before the expiration of the mandate. (3) The application for consent from paragraph 1 of this Article must be submitted by the candidate at least three months before the expiration of the mandate of each person responsible for the management of the branch business. (4) When the person responsible for the management of the branch business is unable to perform their function, the Founder is obliged, no later than within 15 days from the establishment of that fact, without the Agency's consent, to temporarily appoint a person responsible for the management of the branch business who is missing for a maximum of three months and to notify the Agency thereof without delay. (5) Within 30 days from the date of appointment of the person who will temporarily manage the business of the branch, the Founder is obliged to submit an application to the Agency for the issuance of consent for the appointment of a new person or persons responsible for the management of the branch business.

Cessation of the branch

Article 11. (1) Persons responsible for the management of the branch business must notify the Agency and the management of the Founder without delay if circumstances arise under which the approval for the establishment of the branch ceases to be valid or if grounds for the revocation of the approval for the establishment of the branch appear, and on other grounds in accordance with the instruction on the manner of submitting data to the Agency. (2) The approval for the establishment of a branch of a factoring company is revoked if the conditions under Article 62, paragraph 1 of the Act occur. (3) Except in the cases under Article 62, paragraph 1 of the Act, the Agency shall revoke the Founder's approval for the establishment of the branch if the conditions under Article 62, paragraph 2 of the Act occur. (4) The Founder may submit an application for the deletion of the branch from the court register only after the settlement of all obligations arising from the business operations of that branch.

Application of other provisions of the Act to the branch

Article 12. The provisions of the Act and regulations adopted on the basis of that Act relating to the factoring contract (Articles 13 and 14), the management of the factoring company (Articles 46–52), business books and reporting to the Agency (Articles 66–70), supervision (Articles 71–99), confidential data (Articles 101–103), liquidation (Articles 106–107), penalty provisions (Articles 110–113), and the provisions of the regulations of the Republic of Croatia governing the prevention of money laundering and terrorist financing shall apply mutatis mutandis to the business operations of the branch of the factoring company from Article 6 of this Rulebook.

III. CONDUCT OF FACTORING BUSINESS BY FACTORING COMPANIES FROM THIRD COUNTRIES OR FOREIGN FACTORING COMPANIES

Article 13. (1) A factoring company from a third country, or a foreign factoring company, may conduct factoring business in the territory of the Republic of Croatia only through a branch, on the condition that it is authorized to provide such business in that country and has been operating for at least two years. (2) A factoring company from a third country, or a foreign factoring company, intending to establish a branch in the territory of the Republic of Croatia, is obliged to obtain approval for the conduct of factoring business from the Agency. (3) The provisions of Articles 6–12 of this Rulebook shall apply to the branch of a factoring company from a third country, or a foreign factoring company.

IV. COOPERATION OF COMPETENT AUTHORITIES AND MUTUAL INFORMATION EXCHANGE

Article 14. (1) The Agency collects and processes data on facts and circumstances that are essential for the conduct of business within its competence and may provide them to other competent and supervisory authorities as prescribed by the provisions of Article 100 of the Act. (2) Before deciding on an application for the issuance of approval for the establishment of a branch, the Agency shall take all actions necessary to conclude an agreement on cooperation in the field of supervision, exchange of relevant information, and regulation of other matters in the implementation of the Act, its subordinate regulations, and other laws applicable to factoring companies in the Republic of Croatia with the body or institution competent for the supervision of the Founder in the country where its seat is located, if applicable according to the regulations of the country where the Founder's registered seat is located. (3) If illegality and irregularities are identified in the course of supervising the business operations of the branch, the Agency shall order supervisory measures in accordance with the Act, and inform the management of the Founder and the body or institution competent for the supervision of the Founder's business in accordance with concluded agreements of the findings and measures from the supervision procedure. (4) Independently of the exchange of information in accordance with the agreement from paragraph 2 of this Article, the persons responsible for the management of the branch business or the Founder are obliged to notify the Agency without delay if the competent body or institution has taken measures to eliminate illegality and irregularities against the Founder or any of its branches, which could affect the business operations of the branch in the Republic of Croatia. (5) Persons responsible for the management of the branch business are obliged to notify the management of the Founder without delay, in writing, of all measures taken by the Agency and other supervisory authorities in the supervision procedure of the branch.

V. FINAL PROVISION

Article 15. This Rulebook enters into force on the eighth day from the date of its publication in "Narodne novine".