Law on Financial Conglomerates

[unofficially consolidated translation]
LAW ON FINANCIAL CONGLOMERATES*
(OGM 024/25 of 12 March 2025, 014/26 of 9 February 2026) I BASIC PROVISIONS Subject matter
Article 1
This Law governs the identification of a financial conglomerate, supplementary supervision of the regulated entities which have obtained an authorisation or licence pursuant to the laws governing the operations of credit institutions, investment firms, insurance undertakings, reinsurance undertakings, management companies for open-ended investment funds with a public offering or alternative investment fund management companies or pension fund management companies, which are part of a financial conglomerate, and other issues relevant for the financial conglomerate. Use of gender-neutral language
Article 2
Terms used in this Law for natural persons in the masculine gender shall include the same terms in the feminine gender. Meaning of terms
Article 3
Terms used in this Law shall have the following meaning:

regulated entity means a credit intuition, an investment firm, an insurance undertaking, a
reinsurance undertaking, a management company for open-ended investment funds with a public offering, or an alternative investment fund management company and a pension fund management company;
credit institution means a legal person that has been licensed as a bank by the Central Bank of
Montenegro;
investment firm means an investment firm as specified in the regulations governing the capital
market;
insurance undertaking means a legal person with a head office in Montenegro which has
received authorisation of an independent regulatory authority for pursuit of insurance activity in accordance with the law governing insurance activities;
reinsurance undertaking means a legal person with a head office in Montenegro which has
received authorisation of an independent regulatory authority for pursuit of reinsurance activity in accordance with the law governing insurance activities;
financial institution means a legal person, other than an institution, the exclusive or main
activity of which is to acquire holdings in capital or to pursue one or more principal financial services set forth by the law governing credit institutions, including a financial holding company, a mixed financial holding company, a payment institution, an asset management company, but excluding insurance holding companies and mixed-activity insurance holding companies;
ancillary services undertaking means a business undertaking the principal activity of which
consists of owning or managing property, managing data-processing services, or a similar activity which is ancillary to the principal activity of one or more credit institutions;
insurance holding company means a parent undertaking, other than a mixed financial holding
company the principal activity of which is to acquire and hold participation in subsidiary undertakings, where those subsidiary undertakings are exclusively or mainly insurance undertakings or reinsurance undertakings, or member state or third-country insurance undertakings

or reinsurance undertakings, whereby at least one is insurance undertaking or reinsurance undertaking among its subsidiary undertakings;
9) management company for open-ended investment funds with a public offering means a legal
person with a head office in Montenegro which, pursuant to the authorisation of the competent authority, manages open-ended investment funds with a public offering;
10) open-ended investment fund with a public offering means an open-ended investment fund as
specified by the regulations governing open-ended investment funds with a public offering;
11) alternative investment fund means an alternative investment fund as specified by the regulations
governing alternative investment funds;
12) alternative investment fund management company means an undertaking as specified by the
regulations governing alternative investment funds;
13) company for managing pension funds means a joint stock company that manages voluntary
pension funds;
14) sectoral rules mean laws and special regulations governing the issuance of licences and granting
of authorisations, operations, supervision of regulated entities from the financial sector;
15) financial sector means a sector which includes:
-credit institutions, financial institutions, ancillary services undertakings and leasing companies (the banking sector); -investment firms, management companies for open-ended investment funds with a public offering, alternative investment fund management companies, pension fund management companies (the investment services sector); -insurance undertakings, reinsurance undertakings and insurance holding companies (the insurance sector);
16) significant holding means a participation in capital of another business undertaking of 20% or
more, or possibility to effectively exercise significant influence over the management or business policy of that undertaking;
17) close links mean a relationship in which two or more natural or legal persons are linked based
on the following:

a relationship of significant holding referred to in item 16) of this Article;
a control relationship between a parent and a subsidiary undertaking or a similar relationship
between any natural or legal person and a business undertaking;
a fact that both or all of the persons have permanent link to the same third person by a control
relationship;

undertakings linked by management on a unified basis means two or more persons not linked
by a control relationship, where at least one of the following forms of connection exists:

undertakings are on an equal footing and are linked by management on a unified basis pursuant
to a contract or provisions of the Articles of Association;
they are controlled by the same third person; or
the majority of members of the board of directors or other relevant bodies performing a
management or supervisory function in such undertaking are the same persons; 19)mixed financial holding company means a parent undertaking, other than a regulated entity, which together with its subsidiary undertakings, at least one of which is a regulated entity with head office in Montenegro or a Member State, and other persons, constitutes a financial conglomerate; 20)Member State means the European Union Member State and a State signatory to the European Economic Area Agreement; 21)third country means a foreign state other than the Member State; 22)competent authority means the authority which is empowered to supervise credit institutions, insurance undertakings, reinsurance undertakings, investment firms, management companies for open-ended investment funds with a public offering, alternative investment fund management companies and pension fund management companies whether on an individual or group-wide basis; 23)relevant competent authority means:
a competent authority in Montenegro or in a Member State authorised for the sectoral groupwide supervision of all of the regulated entities in a financial conglomerate, in particular of the
ultimate parent undertaking of a sector,
a competent authority in Montenegro or in a Member State appointed as a coordinator if
different from the authority referred to in indent 1 of this item; or
other competent authority relevant to the opinion of the authorities referred to in indents 1 and
2 of this item;

coordinator means a relevant competent authority responsible for performing supplementary
supervision of the regulated entities in a financial conglomerate;
intra-group transactions mean all transactions by which regulated entities within a financial
conglomerate rely directly or indirectly on other undertakings within the same group or on any natural or legal person linked to the undertakings within that group by close links, for the fulfilment of an obligation, whether or not contractual, and whether or not for payment;
risk management means a set of procedures and methods for identifying, measuring, as well as
for assessing, monitoring and controlling risk, including reporting on the risks which the regulated entities in a financial conglomerate are exposed to or could be exposed to in their operations;
risk concentration means all risk exposures with a loss potential which is large enough to
threaten the solvency or the financial position in general of the regulated entities in a financial conglomerate, whether such exposures are caused by counterparty risk or credit risk, investment risk, insurance risk, market risk, other risks, or a combination or interaction of such risks.
II. IDENTIFICATION OF A FINANCIAL CONGLOMERATE
Financial conglomerate
Article 4
A financial conglomerate shall be a group or a subgroup with a regulated entity at the head of the group, or a group in which at least one of the subsidiary undertakings is a regulated entity, provided that the following conditions have been met:
where there is a regulated entity at the head of the group:

it is either a parent undertaking of an entity in the financial sector, an entity with a significant
holding in an entity in the financial sector or an entity linked with an entity in the financial sector by a relationship within the meaning of Article 6 paragraph (1) item 4) of this Law;
at least one of the entities in the group is within the insurance sector and at least one is within the
banking or investment services sector; and
the consolidated or aggregated activities of the entities in the group within the insurance sector
and the entities within the banking or investment services sector are both significant in accordance with Article 8 paragraph (2) or (4) of this Law;

where there is no regulated entity at the head of the group:

the group's activities mainly occur in the financial sector in accordance with Article 8 paragraph
(1) of this Law;
at least one of the entities in the group is within the insurance sector and at least one is within the
banking or investment services sector; and
the consolidated or aggregated activities of the entities in the group within the insurance sector
and the entities within the banking or investment services sector are both significant in accordance with Article 8 paragraph (2) or (4) of this Law. Parent undertaking and subsidiary undertaking
Article 5
(1) A parent undertaking shall be a business undertaking which in respect of another business undertaking (subsidiary undertaking) fulfils one of the following conditions:

has a majority of the voting rights in the subsidiary undertaking;
is a shareholder in or a holder of interest and has the right to appoint or remove majority of the
members of management board, supervisory board or another managing or supervisory body;
has the right to exercise dominant influence over a subsidiary undertaking pursuant to a contract
or an agreement;
has a significant holding in the subsidiary undertaking and exercises dominant influence over
that undertaking;
is a shareholder in or a holder of interest in the subsidiary undertaking pursuant to a contract or
an agreement with other shareholders or holders of interest, in such manner as to control majority of voting rights in that undertaking; or
has a significant holding in the subsidiary undertaking and has concluded a contract on
managing business of the undertaking with the subsidiary undertaking based on which it pursues business of the subsidiary undertaking. (2) A legal person that is a parent undertaking of another undertaking shall be deemed to be a parent undertaking of the undertakings having position of the subsidiary undertaking with respect to such other undertaking. (3) Voting rights and rights of appointment or removal of parent undertaking shall also include voting rights and rights of appointment or removal of the subsidiary undertaking, or those acting on behalf of that parent undertaking or on behalf of subsidiary undertakings of such parent undertaking, except when such undertaking:
holds shares in its own name and for the account of a person that is neither the parent nor a
subsidiary undertaking; or
holds shares by way of a security interest and exercise its rights in accordance with the
instructions received from other persons, or acquired them in connection with the granting of loans as part of normal business activities, while the voting rights are exercised in the interest of the person who pledged shares as security interest. (4) A parent undertaking shall also be the undertaking exercising dominant influence over another undertaking, in the opinion of the competent authority. (5) Subsidiary undertaking shall be an undertaking controlled by a parent undertaking in one of the ways referred to in paragraph (1) of this Article. (6) A control, within the meaning of this Article, shall be relationship referred to in paragraph (1) of this Article between a parent and a subsidiary undertaking or a similar relationship between any natural or legal person and a business undertaking. Group
Article 6
A group shall be a group of legal or natural persons, including any subgroup thereof, which consists of the following:
a parent undertaking, and a subsidiary undertaking, and the undertakings in which these
undertakings hold a significant holding;
undertakings linked by acting in concert;
legal or natural persons having a significant holding in a regulated entity; or
legal or natural persons having a significant influence over a regulated entity without
participation in capital of that regulated entity or in voting rights of such regulated entity and a person holding a significant influence over another regulated entity without participation in capital of that another regulated entity or in voting rights of such another regulated entity provided that these two regulated entities constitute a financial conglomerate. A member at a head of the group
Article 7
(1) A member at a head of the group shall be:
a legal person which is a parent undertaking, or a legal person which holds a significant holding
in a subsidiary undertaking;
a legal person which is linked with another legal person from the same group by acting in
concert; or
a legal person from the group designated by a coordinator in case of the links referred to in
Article 6 paragraph (1) item 4) of this Law.

(2) In the cases referred to in paragraph (1) items 2) and 3) of this Article, a member at the head of a group shall be a person with the highest balance sheet total in the most important financial sector, unless otherwise decided by the coordinator on a stand-alone basis or in cooperation with other relevant competent authorities of a financial conglomerate. Thresholds for identifying a financial conglomerate
Article 8
(1) The activities of a group shall mainly occur in the financial sector, if the ratio of the balance sheet total of the regulated and non-regulated financial sector entities in the group to the balance sheet total of the group as a whole exceeds 40%. (2) The activities of the entities in the group of different financial sectors shall be presumed to be significant, if for each financial sector the average of the ratio of the balance sheet total of that financial sector to the balance sheet total of the financial sector entities in the group and the ratio of the capital requirements of the same financial sector to the total capital requirements of the financial sector entities in the group exceeds 10%. (3) Capital requirements referred to in paragraph (2) of this Article shall be calculated in accordance with the sectoral rules. (4) The activities of different financial sector entities in the group shall be presumed to be significant also in the case where balance sheet total of the smallest financial sector in the group exceeds EUR 100,000,000. (5) When calculating indicators referred to in paragraphs (1) and (2) of this Article, the relevant competent authorities may, if they assess that these indicators are relevant for identifying a financial conglomerate and for the purposes of supplementary supervision, decide by a common agreement to replace the criterion based on balance sheet total or add the criteria in respect of:

income structure;
the share of off-balance-sheet items of entities from the different financial sectors; or
total asset under management.
Exemptions when identifying a financial conglomerate
Article 9
(1) Where a group does not meet the requirements referred to in Article 8 paragraph (2) of this Law, the relevant competent authorities may decide by common agreement not to regard the group as a financial conglomerate, or not to apply the supplementary supervision in the area of risk concentration, intra-group transactions, internal controls system and risk management process, if the supplementary supervision would be inappropriate or misleading with respect to the objectives of supplementary supervision. (2) Where a group meets requirements referred to in Article 8 paragraph (2) of this Law, and the smallest sector does not exceed EUR 100,000,000, the relevant competent authorities may decide not to consider the group as a financial conglomerate. (3) Relevant competent authorities may decide not to apply the supplementary supervision in the area of risk concentration, intra-group transactions, internal controls system and risk management process also in the case where the application of the supplementary supervision of that group would be inappropriate or misleading with respect to the objectives of the supplementary supervision. (4) Where a competent authority has reached a decision in accordance with paragraph (1) or (2) of this
Article, they shall notify other competent authorities thereof.
(5) The decision referred to in paragraph (4) of this Article shall be published on the website of the competent authority, unless it contains data representing business secret or the publication of which would jeopardise the operations of regulated entities or the financial system. The smallest and the most important financial sector
Article 10
(1) The smallest financial sector in the group shall be the sector with the lowest average. (2) The most important financial sector in the group shall be the sector with the highest average.

(3) For the purposes of calculating the average and for the measurement of the smallest and the most important financial sectors, balance sheet total and capital requirements from the banking sector and the investment services sector shall be considered together. (4) Management companies for open-ended investment funds with a public offering shall be included in the sector to which they belong in the group, and if they do not belong exclusively to one sector within the group, they shall be added to the smallest financial sector. (5) Alternative investment fund management companies shall be included in the sector to which they belong in the group, and if they do not belong exclusively to one sector within the group, they shall be added to the smallest financial sector. Exclusion of entities from the group
Article 11
(1) When identifying the fulfilment of the requirements for the financial conglomerate prescribed by this Law, the relevant competent authorities may, by a common agreement, reach the decision to:

exclude entities from the group when calculating the ratios referred to in Article 8 paragraphs
(1) and (2) of this Law, in the cases referred to in Article 22 of this Law, unless the entity moved its head office from a Member State to a third country and there is an evidence that the entity changed its location in order to avoid regulations;
apply the requirement referred to in Article 8 paragraphs (1) and (2) of this Law for three
consecutive years so as to avoid the impact of sudden shifts in the identification process, unless significant changes in the group's structure occurred; and
exclude one or more holders of significant holding in the smaller sector if such participations
are decisive for the identification of a financial conglomerate, and are collectively of negligible interest with respect to the objectives of supplementary supervision. (2) Where a financial conglomerate has been identified according to the requirements referred to in Articles 4, 8 and 9 of this Law, the decisions referred to in paragraph (1) of this Article shall be taken only on the basis of a proposal made by the coordinator of that financial conglomerate. Supplementary supervision of a financial conglomerate with lower ratios
Article 12
(1) Where a financial conglomerate ceases to meet the requirements referred to in Article 8 paragraphs (1) and (2) of this Law, supplementary supervision shall be exercised also for the following three years if the ratio of the balance sheet total of financial sector regulated and non-regulated entities within the group to balance sheet total of all entities within the group exceeds 35% or if the ratio of individual sector referred to in Article 8 paragraph (2) of this Law exceeds 8%. (2) Where a financial conglomerate subject to supplementary supervision in accordance with this Law ceases to meet the requirements referred to in Article 8 paragraph (4) of this Law, supplementary supervision shall be exercised also for the following three years if balance sheet total of the smallest financial sector within the group exceeds EUR 80,000,000. (3) In the cases referred to in paragraphs (1) and (2) of this Article, if the coordinator is the Central Bank of Montenegro, the Capital Market Authority or the Insurance Supervision Agency, the coordinator may, at any time, with the agreement of other relevant competent authorities, decide to cease the supplementary supervision of the financial conglomerate due to lower ratios or balance sheet totals referred to in paragraph (1) or (2) of this Article. Data to be used when identifying financial conglomerate
Article 13
(1) All calculations made in accordance with Articles 8 to 12 of this Law regarding the balance sheet total shall be made on the basis of the aggregated balance sheet total of the entities of the group, according to their annual accounts compiled in accordance with the law governing the accounting.

(2) For the purposes of calculations referred to in paragraph (1) of this Article, undertakings in which a participation is held shall be taken into account as regards the amount of their balance sheet total corresponding to the aggregated proportional share held by the group. (3) Where consolidated accounts are available for the group in accordance with the law governing the accounting, they shall be used instead of the aggregated accounts compiled on the basis of the aggregate balance sheet total of entities in the group. (4) The competent authorities shall, on an annual basis, reassess waivers of the application of supplementary supervision and shall review the quantitative indicators set out in Articles 8 to 12 of this Law and assess risks to which the financial groups are exposed. Deciding on the existence of a financial conglomerate
Article 14
(1) The competent authorities that have issued licenses or granted authorisations to regulated entities shall decide on the existence of the financial conglomerate that will be subject to supplementary supervision. (2) The competent authorities from Montenegro and other competent authorities that have issued licenses or granted authorisations to regulated entities that are included within the group shall, during the decision-making process on the existence of the financial conglomerate, cooperate with each other and share necessary information. (3) Where a competent authority from Montenegro which has issued a licence or granted an authorisation to a regulated entity deems that such person is a member of a group that could be identified as a financial conglomerate in accordance with this Law, it shall notify thereof the following:

other competent authority in Montenegro;
competent authorities from Member States that have granted authorisations to the regulated
entities within a group; and
Joint Committee.
Decision on the existence of a financial conglomerate
Article 15
(1) The Coordinator shall submit the decision on the existence of a financial conglomerate to a member at the head of the group, which shall, within eight days following that of the receipt of the decision, notify thereof all regulated entities from that financial conglomerate. (2) The decision on the existence of a financial conglomerate shall in particular include:
list of persons comprising a financial conglomerate and the name and the head office of the
member at the head of the group;
list of relevant competent authorities and information and data on the competent authority
designated as a coordinator;
invitation to a member at the head of the group to notify, within 15 days following that of the
receipt of the decision on the existence of the financial conglomerate, the coordinator on the name of the financial conglomerate. (3) The coordinator shall notify on the decision on the existence of a financial conglomerate also the following:
other relevant competent authorities that have issued licences or granted authorisations to
regulated entities in that financial conglomerate;
other competent authorities in a Member State in which the head office of the mixed financial
holding company is located;
other relevant competent authorities that have issued licences or granted authorisations to
persons in that financial conglomerate; and
Joint Committee.

Decision on termination of a financial conglomerate
Article 16
(1) Where a coordinator deems that the requirements for exercising supplementary supervision of a financial conglomerate in accordance with this Law are no longer met, it shall notify thereof other relevant competent authorities referred to in Article 14 paragraph (1) of this Law that have participated in reaching a common decision on the existence of the financial conglomerate. (2) Competent authorities referred to in paragraph (1) of this Article shall reach a common decision on the termination of the financial conglomerate if the requirements referred to in this Law for identifying a financial conglomerate are no longer met. (3) The coordinator shall submit the decision referred to in paragraph (2) of this Article to a member at the head of the group, which shall, within eight days following that of the receipt of the decision, notify all persons within that financial conglomerate thereof. (4) A member at the head of the group shall notify in writing the coordinator that the requirements for the existence of the financial conglomerate have been terminated and it shall do so within 30 days following that of the termination of the requirements for identifying the financial conglomerate. III SUPPLEMENTARY SUPERVISION Supplementary supervision
Article 17
(1) Supplementary supervision of a financial conglomerate shall be the supervision exercised over the operations of a financial conglomerate by authorities which are competent to supervise the regulated entities. (2) Authorities which are authorised for exercising the supplementary supervision of the regulated entities in Montenegro shall be the Central Bank of Montenegro, the Capital Market Authority and the Insurance Supervision Agency. Scope of supplementary supervision
Article 18
(1) Where a coordinator is from Montenegro, the supplementary supervision at the financial conglomerate level shall be exercised over each regulated entity:

which is a member at the head of the group and has a head office in Montenegro;
which parent undertaking is a mixed financial holding company with head office in Montenegro
or in another Member State;
which is a member at the head of the group and is linked with other entity in the financial sector
by acting in concert; or
which is a member at the head of the group in the linkage cases referred to in Article 6 paragraph
(1) item 4) of this Law.
(2) Supplementary supervision at the financial conglomerate level shall not be exercised in the financial conglomerate representing a subgroup of the same financial conglomerate. Prudential requirements at the financial conglomerate level
Article 19
(1) Regulated entity referred to in Article 18 of this Law shall at the financial conglomerate level:
maintain adequate level of capital adequacy as specified in accordance with regulation referred
to in Article 39 paragraph (1) item 1) of this Law;
monitor significant risk concentration; and
monitor significant transactions within the group of regulated entities in a financial
conglomerate.
(2) In addition to the requirements referred to in paragraph (1) of this Article each regulated entity shall:
adopt and carry out own funds adequacy policies;
establish and carry out an efficient and reliable risk management system; and
establish and carry out an efficient internal controls system in all business areas, in particular
in administrative and accounting procedures.
(3) A coordinator shall be authorised to exercise the supervision of a regulated entity with regard to the fulfilment of the obligations referred to in paragraphs (1) and (2) of this Article. (4) Competent authorities shall notify the Financial Conglomerate Committee, an expert body of the European Commission responsible for the issues regarding the regulation of financial conglomerates, of the changes in sectoral rules governing the supervision of transactions within the group and risk concentration. Capital adequacy
Article 20
(1) Regulated entities in a financial conglomerate shall maintain capital adequacy in the manner that the capital at the financial conglomerate level be always equal to or exceeds the sum of supplementary capital requirements of all entities included in the financial conglomerate. (2) Capital adequacy and supplementary capital requirements for entities from the financial sector within a financial conglomerate shall be calculated using one of the following methods:
accounting consolidation method;
deduction and aggregation method;
accounting deduction method; and
a combination of methods referred to in items 1) to 3) of this paragraph.
(3) A coordinator shall, in cooperation with the relevant competent authorities, decide which method will be used by the financial conglomerate when calculating own funds adequacy of the financial conglomerate. (4) A member at the head of the group shall regularly, and at least once a year, calculate own funds and supplementary capital requirements and notify the coordinator thereof. (5) When calculating supplementary capital requirements at the financial conglomerate level, all persons from the financial sector shall be included in the calculation. (6) When calculating own funds adequacy by applying accounting consolidation method, own funds and supplementary capital requirements for all entities in the group shall be calculated in the manner and within the scope as specified in the sectoral rules. (7) When calculating own funds adequacy by applying the deduction and aggregation method, the proportional share of the parent undertaking or an undertaking that holds a significant holding in other entity within the group shall be included in the calculation. (8) Proportional share shall be direct or indirect share in the subscribed capital. Exclusions when calculating capital adequacy
Article 21
(1) The coordinator may decide not to include a particular entity in calculation of the supplementary capital requirements if:
the entity is situated in a third country where there are legal impediments to the transfer of the
necessary information;
they assess that such entity is of negligible influence with respect to the objectives of the
supplementary supervision of regulated entities in a financial conglomerate; or
they assess that the inclusion of the entity would be inappropriate or misleading with respect to
the objectives of supplementary supervision.
(2) By way of derogation from paragraph (1) of this Article, if several entities, which are excluded individually from the calculation pursuant to paragraph (1) item 2) of this Article, are collectively of non-negligible influence according to the coordinator’s assessment, they shall be included in the calculation of supplementary capital requirements. (3) In the case referred to in paragraph (1) item 3) of this Article the coordinator shall reach a decision on the exclusion after consulting other relevant competent authorities, except in cases of urgency. (4) When a regulated entity with head office in Montenegro is not included in the calculation of supplementary capital requirements pursuant to paragraph (1) item 2) or 3) of this Article, the

competent authority may require the entity which is at the head of group for information which may facilitate its supplementary supervision of the regulated entity. Risk concentration
Article 22
(1) A member at the head of the group shall report on a regular basis and at least annually to the coordinator any significant risk concentration at the level of the financial conglomerate. (2) For the purpose of attaining the objectives of the supplementary supervision, a coordinator may, in cooperation with other competent authorities and taking into account the specificities of each individual financial conglomerate, set risk exposure limits for individual financial conglomerate or impose supervisory measures which would achieve the objectives of supplementary supervision, with regard to any risk concentration at the level of a financial conglomerate. (3) Competent authorities shall, within the scope of supplementary supervision of the risk concentration at the level of a financial conglomerate, monitor in particular the danger of risk spreading to other members of the financial conglomerate, risk of conflict of interests, risk of avoiding the sectoral rules, and the amount or level of those risks. (4) Where there are sectoral rules on risk concentration of the most important financial sector and the parent undertaking in a financial conglomerate is a mixed financial holding company, the sectoral rules shall be applied at the level of the entire financial conglomerate, including mixed financial holding company. Intra-group transactions
Article 23
(1) A member at the head of the group shall report on a regular basis and at least annually to the coordinator any significant intra-group transactions between the regulated entities within the financial conglomerate. (2) Intra-group transaction shall be presumed to be significant if its amount exceeds at least 5% of the total amount of own funds adequacy requirements at the level of a financial conglomerate, unless the coordinator in cooperation with the relevant competent authorities and financial conglomerate decides otherwise. (3) Relevant competent authorities may establish quantitative limits and qualitative requirements or impose supervisory measures which would achieve the objectives of supplementary supervision, with regard to any intra-group transactions between the regulated entities within the financial conglomerate. (4) Where there are sectoral rules on intra-group transactions of the most important financial sector and the parent undertaking in a financial conglomerate is a mixed financial holding company, the sectoral rules shall be applied at the level of the entire financial conglomerate, including mixed financial holding company. Risk management and internal controls system
Article 24
(1) Regulated entities in a financial conglomerate shall establish and carry out adequate risk management processes and internal controls systems, including adequate administrative and accounting procedures. (2) Risk management shall include at least the following:

efficient and reliable governance system and the approval and periodical review of the risk
management strategies and policies by the appropriate governing bodies at the level of the financial conglomerate;
adoption and implementation of adequate own funds adequacy policies at the level of a financial
conglomerate in order to anticipate the impact of their business strategy on risk profile and capital requirements as determined in accordance with Article 20 of this Law;
consistency of individual regulated entity in a financial conglomerate when establishing and
implementing adequate risk monitoring procedures and systems which are integrated into their

organisation and which ensure that the risks are measured, monitored and controlled at the level of the financial conglomerate;
4) arrangements in place to contribute to and develop, if required, adequate recovery and
resolution arrangements and plans, which shall be updated regularly.
(3) The internal controls system should, in particular, include the establishment and the implementation of the following:

adequate mechanisms as regards identification and measurement of all significant risks that
may arise, and which shall ensure maintenance of the adequate level of own funds in relation to the level of risks; and
reporting and accounting procedures to identify, measure, monitor and control the intra-group
transactions and the risk concentration.
(4) All regulated entities subject to supplementary supervision pursuant to Article 18 of this Law shall establish adequate internal control mechanisms for the production of any data and information which would be relevant for the purposes of the supplementary supervision. (5) All regulated entities shall, at the level of the financial conglomerate, provide, on an annual basis, details to their competent authorities in Montenegro on their legal structure and governance and organisational structure including such data on all regulated entities, non-regulated subsidiary undertakings and significant branches. (6) Regulated entities shall disclose publicly, at the level of the financial conglomerate, either in full or by way of references to equivalent information, a description of their legal structure and governance and organisational structure. (7) Competent authorities shall align the application of the supplementary supervision of internal control mechanisms and risk management processes as provided for in this Article with the supervisory review processes as provided for by sectoral rules. (8) The coordinator shall exercise the supervision of the processes and mechanisms referred to in this
Article.
Stress testing
Article 25
(1) A coordinator shall ensure the implementation of the appropriate and regular stress testing of financial conglomerates. (2) The relevant competent authorities shall cooperate fully with the coordinator when executing obligations referred to in paragraph (1) of this Article. (3) The coordinator shall submit stress testing results to the Joint Committee. Supervisory measures
Article 26
(1) The relevant competent authority from Montenegro may impose, to a mixed financial holding company or to a person in a financial conglomerate which does not comply with the requirements referred to in Articles 19 to 24 of this Law, whose solvency is jeopardised or where the intra-group transactions or the risk concentrations are a threat to the financial position, measures to rectify financial position of that financial conglomerate (hereinafter: the supervisory measures) in accordance with the sectoral rules. (2) The coordinator shall impose supervisory measures on the mixed financial holding company, and relevant competent authority shall impose supervisory measures on a regulated entity if it is a financial conglomerate which is not headed by the mixed financial holding company. (3) Upon imposing supervisory measures, the coordinator, relevant competent authorities and other competent authorities shall coordinate their supervisory measures. Coordinator
Article 27
(1) The Central Bank of Montenegro shall be the coordinator in the following cases:
where a financial conglomerate is headed by a credit institution licensed by the Central Bank
of Montenegro;
where a financial conglomerate is not headed by a regulated entity, and the parent of a regulated
entity is a mixed financial holding company, if that regulated entity is a credit institution licensed by the Central Bank of Montenegro;
where a financial conglomerate is not headed by a regulated entity, and mixed financial holding
company with head office in Montenegro is the parent undertaking of at least two regulated entities from different financial sectors, and one of those entities has been licensed by the Central Bank of Montenegro, and at least one has been authorised by the Capital Market Authority or Insurance Supervision Agency, where the banking sector is the most important financial sector in the financial conglomerate;
where a financial conglomerate is not headed by a regulated entity, and a mixed financial
holding company with head office in Montenegro is a parent undertaking of at least one credit institution which has been licensed by the Central Bank of Montenegro and at least one is a regulated entity with the head office in a Member State;
where a financial conglomerate is not headed by a regulated entity, and a financial conglomerate
is headed by at least one mixed financial holding company with head office in Montenegro and at least one mixed financial holding company with the head office in a Member State, and there is a regulated entity in each of these States provided that both entities belong to the banking sector and that the credit institution licensed by the Central Bank of Montenegro has the largest balance sheet total;
where a financial conglomerate is not headed by a regulated entity, and a financial conglomerate
is headed by at least one mixed financial holding company with head office in Montenegro and at least one mixed financial holding company with the head office in a Member State, and there is a regulated entity in each of these States provided that the regulated entity with head office in Montenegro is a credit institution licensed by the Central Bank of Montenegro and where the banking sector is the most important financial sector;
where a financial conglomerate is not headed by a regulated entity, and at least one regulated
entity with head office in Montenegro and at least one regulated entity with head office in a Member State is subordinate to the same mixed financial holding company, and one of these entities is a credit institution which has been licensed by the Central Bank of Montenegro;
where a financial conglomerate is not headed by a regulated entity, and at least one regulated
entity with head office in Montenegro and at least one regulated entity with head office in a Member State is subordinate to the same mixed financial holding company, provided that none of the regulated entities has been authorised in the State in which the mixed financial holding company has its head office, and the credit institution licensed by the Central Bank of Montenegro is a regulated entity with the largest balance sheet total in the most important financial sector of that financial conglomerate;
where a financial conglomerate is not headed by a regulated entity, and at least one regulated
entity with head office in Montenegro and at least one regulated entity with head office in a Member State is subordinate to the same mixed financial holding company, and none of the regulated entities has been authorised in the State in which the mixed financial holding company has its head office, and a regulated entity with the largest balance sheet total in the most important financial sector is a credit institution licensed by the Central Bank of Montenegro;
where a financial conglomerate is not headed by a regulated entity, and a financial
conglomerate is a group without parent undertaking, and a credit institution licensed by the Central Bank of Montenegro is a regulated entity with the largest balance sheet total in the most important financial sector; or
in all other cases, where a financial conglomerate is not headed by a regulated entity, and a
credit institution licensed by the Central Bank of Montenegro is a regulated entity with the largest balance sheet total in the most important financial sector. (2) The Capital Market Authority shall be the coordinator in the following cases:
where a financial conglomerate is headed by a legal person authorised by the Capital Market
Authority;
where a financial conglomerate is not headed by a regulated entity, and the parent of a regulated
entity is a mixed financial holding company, if that regulated entity is a legal person authorised by the Capital Market Authority;
where a financial conglomerate is not headed by a regulated entity, and mixed financial holding
company with head office in Montenegro is the parent undertaking of at least two regulated entities from different financial sectors, and at least one of those entities has been authorised by the Capital Market Authority, and at least one has been licensed by the Central Bank of Montenegro or Insurance Supervision Agency, where the investment services sector is the most important financial sector in the financial conglomerate;
where a financial conglomerate is not headed by a regulated entity, and a mixed financial
holding company with head office in Montenegro is a parent undertaking of at least one regulated entity with the head office in Montenegro which has been authorised by the Capital Market Authority and at least one is a regulated entity with the head office in a Member State;
where a financial conglomerate is not headed by a regulated entity, and a financial conglomerate
is headed by at least one mixed financial holding company with head office in Montenegro and at least one mixed financial holding company with the head office in a Member State, and there is a regulated entity in each of these States provided that they belong to the same financial sector and legal person authorised by the Capital Market Authority has the largest balance sheet total;
where a financial conglomerate is not headed by a regulated entity, and a financial conglomerate
is headed by at least one mixed financial holding company with head office in Montenegro and at least one mixed financial holding company with the head office in a Member State, and there is a regulated entity in each of these States provided that a legal person authorised by the Capital Market Authority belongs to the most important financial sector;
where a financial conglomerate is not headed by a regulated entity, and at least one regulated
entity with head office in Montenegro and at least one regulated entity with head office in a Member State is subordinate to the same mixed financial holding company provided that none of the regulated entities has been authorised in the State in which the mixed financial holding company has its head office, and a legal person authorised by the Capital Market Authority is a regulated entity with the largest balance sheet total in the most important financial sector of that financial conglomerate;
where a financial conglomerate is not headed by a regulated entity, and at least one regulated
entity with head office in Montenegro and at least one regulated entity with head office in a Member State is subordinate to the same mixed financial holding company, and one of these entities has been authorised by the Capital Market Authority;
where a financial conglomerate is not headed by a regulated entity, and at least one regulated
entity with head office in Montenegro and at least one regulated entity with head office in a Member State is subordinate to the same mixed financial holding company, and none of the regulated entities has been authorised in the State in which the mixed financial holding company has its head office, and a regulated entity with the largest balance sheet total in the most important financial sector is a legal person authorised by the Capital Market Authority;
where a financial conglomerate is not headed by a regulated entity, and a financial
conglomerate is a group without parent undertaking, and a legal person authorised by the Capital Market Authority is a regulated entity with the largest balance sheet total in the most important financial sector; or
in other cases, where a financial conglomerate is not headed by a regulated entity, and a legal
person authorised by the Capital Market Authority is a regulated entity with the largest balance sheet total in the most important financial sector; (3) The Insurance Supervision Agency shall be a coordinator in the following cases:
where a financial conglomerate is headed by a legal person authorised by the Insurance
Supervision Agency;
where a financial conglomerate is not headed by a regulated entity, and the parent of a regulated
entity is a mixed financial holding company, if that regulated entity is a legal person authorised by the Insurance Supervision Agency;
where a financial conglomerate is not headed by a regulated entity, and mixed financial holding
company with head office in Montenegro is the parent undertaking of at least two regulated entities

from different financial sectors, and at least one of those entities has been authorised by the Insurance Supervision Agency and at least one has been licensed by the Central Bank of Montenegro or the Capital Market Authority, where the insurance sector is the most important financial sector in the financial conglomerate;
4) where a financial conglomerate is not headed by a regulated entity, and a mixed financial
holding company with head office in Montenegro is a parent undertaking of at least one regulated entity with the head office in Montenegro which has been authorised by the Insurance Supervision Agency and at least one is a regulated entity with the head office in a Member State;
5) where a financial conglomerate is not headed by a regulated entity, and a financial conglomerate
is headed by at least one mixed financial holding company with head office in Montenegro and at least one mixed financial holding company with the head office in a Member State, and there is a regulated entity in each of these States provided that they belong to the same financial sector and legal person authorised by the Insurance Supervision Agency has the largest balance sheet total;
6) where a financial conglomerate is not headed by a regulated entity, and a financial conglomerate
is headed by at least one mixed financial holding company with head office in Montenegro and at least one mixed financial holding company with the head office in a Member State, and there is a regulated entity in each of these States provided that a legal person authorised by the Insurance Supervision Agency belongs to the most important financial sector;
7) where a financial conglomerate is not headed by a regulated entity, and at least one regulated
entity with head office in Montenegro and at least one regulated entity with head office in a Member State is subordinate to the same mixed financial holding company provided that none of the regulated entities has been authorised in the State in which the mixed financial holding company has its head office, and a legal person authorised by the Insurance Supervision Agency is a regulated entity with the largest balance sheet total in the most important financial sector of that financial conglomerate;
8) where a financial conglomerate is not headed by a regulated entity, and at least one regulated
entity with head office in Montenegro and at least one regulated entity with head office in a Member State is subordinate to the same mixed financial holding company, and one of these entities has been authorised by the Insurance Supervision Agency;
9) where a financial conglomerate is not headed by a regulated entity, and at least one regulated
entity with head office in Montenegro and at least one regulated entity with head office in a Member State is subordinate to the same mixed financial holding company, and none of the regulated entities has been authorised in the State in which the mixed financial holding company has its head office, and a regulated entity with the largest balance sheet total in the most important financial sector is a legal person authorised by the Insurance Supervision Agency;
10) where a financial conglomerate is not headed by a regulated entity, and a financial
conglomerate is a group without parent undertaking, and a legal person authorised by the Insurance Supervision Agency is a regulated entity with the largest balance sheet total in the most important financial sector; or
11) in other cases, where a financial conglomerate is not headed by a regulated entity, and a legal
person authorised by the Insurance Supervision Agency is a regulated entity with the largest balance sheet total in the most important financial sector; (4) Notwithstanding paragraphs (1), (2) and (3) of this Article, relevant competent authorities may by common agreement, in particular cases, appoint a different coordinator taking into account the structure of the conglomerate and the relative importance of its activities in different countries, if they gave, before taking their decision, the conglomerate an opportunity to state its opinion on that decision. (5) In order to ensure adequate supplementary supervision of the regulated entities in a financial conglomerate, a single coordinator, responsible for coordination and exercise of supplementary supervision, shall be appointed from among the competent authorities of the Member States concerned, including those of the Member State in which the mixed financial holding company has its head office and the data and information on the appointed coordinator shall be published on the website of the Joint Committee referred to in Article 35 of this Law.

Tasks of the coordinator
Article 28
(1) The tasks to be carried out by the coordinator with regard to supplementary supervision shall in particular include:

coordination of the gathering and dissemination of relevant and essential information between
competent authorities in going concern and emergency situations, including the dissemination of information which is of importance for a competent authority's supervisory task;
assessment of the financial situation of a financial conglomerate;
assessment of compliance of a financial conglomerate with the regulations on capital adequacy
and of risk concentration and intra-group transactions as set out in Articles 19 to 23 of this Law;
assessment of compliance of the financial conglomerate's structure, organisation and internal
controls system with Article 24 of this Law;
planning and coordination of supervisory activities of the relevant competent authorities
involved;
other tasks in accordance with this Law and regulations referred to in Article 39 of this Law.
(2) The coordinator shall, when it needs information for performing tasks in accordance with this Law, request another competent authority to submit information which has already been given to that competent authority in accordance with the sectoral rules. (3) In order to facilitate and establish supplementary supervision on a broad legal basis, the coordinator and the other relevant competent authorities, and, where necessary, the other competent authorities concerned, shall have coordination arrangements in place, which shall entrust additional tasks to the coordinator and may specify the procedures for the decision-making process among the relevant competent authorities as referred to in Articles 8 to 15, Articles 20, 21, 26 and 32 and
Article 33 paragraph (2) of this Law, and for cooperation with other competent authorities.
(4) The activities of a coordinator entrusted with specific tasks concerning the supplementary supervision of regulated entities in a financial conglomerate shall not affect the tasks and responsibilities of the competent authorities as provided for by the sectoral rules. (5) The required cooperation under this Article and the exercise of the tasks listed in paragraphs (1) to (4) of this Article and in Articles 33 and 34 of this Law and, subject to confidentiality requirements, the appropriate coordination and cooperation with relevant third-country relevant competent authorities where appropriate, shall be fulfilled through colleges, established pursuant to the provisions of sectoral rules.

Obligations of a mixed financial holding company
Article 29
A mixed financial holding company shall, without undue delay, notify a coordinator on the persons appointed in the management bodies of that company. Access to information
Article 30
(1) For the purposes of exercising supplementary supervision of a financial conglomerate, a legal person in a financial conglomerate shall enable the competent authority to exercise the supplementary supervision of the operations of that person in its head office and in other locations where that person performs its activity and other operations in respect of which the competent authority exercises supplementary supervision. (2) A legal person in a financial conglomerate shall enable the competent authority to control business books, business documents and administrative or business records, as well as the control of information technology and other associated technologies to the extent necessary for the execution of the supplementary supervision referred to in paragraph (1) of this Article. (3) A legal person in a financial conglomerate shall hand over the electronic records, copies of business books, business documentation and administrative or business records to the authorised person of the competent authority at its request in the required format (hard copy or electronic copy).

(4) Without prejudice to the provisions of other laws, all persons involved in the supplementary supervision in accordance with this Law shall enable exchange of all information with each other that may be material for the supplementary supervision and exchange of information in accordance with this Law. (5) The information referred to in paragraph (4) of this Article shall be also exchanged with the European competent authorities i.e. with the European Insurance and Occupational Pension Authority, European Securities and Markets Authority and European Banking Authority, in accordance with Article 35 of the Regulation (EU) 1093/2010, Regulation (EU) 1094/2010, or Regulation (EU) 1095/2010, directly or as needed through Joint Committee. IV SUPPLEMENTARY SUPERVISION OF THIRD-COUNTRY ENTITIES Supplementary supervision of third-country entities
Article 31
Regulated entity with its head office in Montenegro the parent undertaking of which is a legal person with its registered office in a third country and which is included in a financial conglomerate or mixed financial holding company with its head office in third country and which has subsidiary undertakings in Montenegro shall be subject to supplementary supervision at the level of a financial conglomerate in accordance with the provisions of this Law. Parent undertaking in a third country
Article 32
(1) The competent authorities shall verify whether the regulated entities, the parent undertaking of which has its head office in a third country are subject to supplementary supervision by that third country's competent authority, which is equivalent to the supplementary supervision in accordance with the provisions of this Law. (2) The verification referred to in paragraph (1) of this Article shall be carried out by the competent authority which, in accordance with Article 27 of this Law, would be the coordinator, at the request of the parent undertaking with its head office in a third country or of any of the regulated entities with their head offices in Montenegro or a Member State or on that competent authority’s own initiative. (3) When carrying out verification in accordance with this Article, the competent authority referred to in paragraph (2) of this Article shall consult the other relevant competent authorities, and when reaching a decision on the equivalence of the supervision, it shall apply guidelines referred to in
Article 39 item 3) of this Law.
(4) Where the supplementary supervision exercised by the competent authorities of the third country is not equivalent to the supplementary supervision in accordance with the provisions of this Law, the provisions concerning the supplementary supervision of regulated entities referred to in Article 18 paragraph (1) of this Law shall apply. (5) In the case referred to in paragraph (3) of this Article, the method of exercising supplementary supervision shall be established by the coordinator after consulting the other relevant competent authorities. (6) The competent authorities may in exceptional cases require the establishment of a mixed financial holding company which has its head office in any of the Member States and apply the provisions of this Law to the regulated entities in the financial conglomerate headed by that holding company. (7) The actions referred to in paragraphs (5) and (6) of this Article should achieve the objectives of the supplementary supervision referred to in this Law, and the following entities shall be notified thereof:

other competent authorities included in the supplementary supervision; and
the European Commission.
(8) Where a competent authority disagrees with the decision taken by the relevant competent authority under paragraph (2) of this Article, Article 19 of Regulation (EU) No 1093/2010, of Regulation (EU) No 1094/2010 and of Regulation (EU) No 1095/2010 respectively shall apply.

V COOPERATION OF COMPETENT AUTHORITIES
Scope of cooperation of competent authorities
Article 33
(1) The competent authorities responsible for the supplementary supervision of regulated entities in a financial conglomerate and the coordinator appointed for that financial conglomerate shall cooperate closely with each other. (2) The competent authorities shall, prior to their decision, consult each other with regard to the following items, where these decisions are of importance for other competent authorities' supervisory tasks:

changes in the shareholder, organisational or management structure of regulated entities in a
financial conglomerate, which require the approval or authorisation of competent authorities;
procedures in respect of misdemeanours referred to in Article 40 of this Law committed by the
persons within the financial conglomerate; or
measures imposed on a person within a financial conglomerate by a competent authority.
(3) Notwithstanding paragraph (1) of this Article, a competent authority may decide not to consult other authority in cases of urgency and in this case, the competent authority shall, without delay, notify the other competent authorities. (4) The coordinator may invite the competent authorities which do not themselves exercise the supplementary supervision to ask the member at the head of the group for any information which would be relevant for the exercise of its coordination tasks as laid down in Article 28 of this Law, and to transmit that information to the coordinator. (5) A competent authority which has received from other competent authority data on entity, either regulated or non-regulated in accordance with the Law, that is included in the financial conglomerate, may forward the request to that other competent authority to verify data and information, and on the basis of such request, it may:
verify independently data and information;
enable that other competent authority to verify independently data and information; or
delegate certified auditor or other expert to verify data and information, in accordance with the
sectoral rules.
(6) In the cases referred to in paragraph (5) items 2) and 3) of this Article, competent authority that has submitted the request may participate in the verification. (7) All information and data being exchanged within the supplementary supervision shall be subject to the provisions on professional secrecy and communication of confidential information laid down in the sectoral rules. Exchange of information
Article 34
(1) Competent authorities for the supplementary supervision of the regulated entities in a financial conglomerate and a coordinator appointed for that financial conglomerate shall exchange all information which is essential or relevant for carrying out operations from within their competence in accordance with the sectoral rules and this Law, and in this regard, the competent authority shall provide, on their own initiative or on the initiative of that other competent authority, that other competent authority with all information relevant for carrying out operations from within their competence. (2) Exchange of information referred to in paragraph (1) of this Article shall also be carried out in accordance with Article 35 of the Regulation (EU) No 1093/2010, Regulation (EU) No 1094/2010 and Regulation (EU) No 1095/2010. (3) Where a competent authority, based on the exchange of information referred to in paragraph (1) of this Article, does not provide sufficient information necessary for carrying out operations from within its competence pursuant to this Law, it may ask for such information directly from the regulated entity. (4) Within the exchange of information referred to in paragraph (1) of this Article, the following information shall be gathered and exchanged, in particular with regard to:
governance structure and organisational structure of the group, and all regulated entities, nonregulated subsidiary undertakings and significant branches belonging to a financial conglomerate,
holders of the qualifying holding at the level of ultimate parent undertaking as well as of competent authorities of the regulated entities in the group;
financial conglomerate operating policies and strategies;
financial position of the financial conglomerate, in particular with regard to capital
requirements, intra-group transactions, risk concentration and profitability;
information on shareholders or holders of interest and management bodies within the individual
persons in the financial conglomerate;
the organisation, risk management and internal control systems at financial conglomerate level;
procedures for the collection of information from the entities in a financial conglomerate, and
the verification of that information;
adverse developments in regulated entities or in other entities of the financial conglomerate
which could seriously affect other regulated entities; and
misdemeanours referred to in Article 40 of this Law and measures imposed by competent
authorities on individual entities within a financial conglomerate in accordance with sectoral rules or this Law. (5) The competent authorities shall also exchange information regarding regulated entities in a financial conglomerate with central banks of the Member States, the European System of Central Banks, the European Central Bank and the European Systemic Risk Board in accordance with
Article 15 of Regulation (EU) No 1092/2010.
(6) For the purpose of calculating own funds adequacy, relevant competent authorities shall request necessary information from the member at the head of the group. (7) Information referred to in paragraph (1) of this Article shall be deemed in particular the following:
data from the financial statements for the last three years;
excerpts from the registry of shareholders or book of shares in original or counterpart;
report on the calculation of capital requirements; and
schematics of the group.
Joint Committee
Article 35
(1) Competent authorities shall cooperate with the Joint Committee in accordance with the Regulation (EU) No 1093/2010, Regulation (EU) No 1094/2010 and Regulation (EU) No 1095/2010. (2) The competent authorities shall, without delay, provide the Joint Committee with all information necessary to carry out its tasks in accordance with Article 35 of Regulation (EU) No 1093/2010, of Regulation (EU) No 1094/2010, and of Regulation (EU) No 1095/2010 respectively. (3) The coordinator shall provide the Joint Committee with all information referred to in Article 24 paragraphs (4), (5) and (6) and Article 34 paragraph (4) item 1) of this Law. (4) When carrying out tasks and exercising powers referred to in this Law, the competent authorities shall adhere to the guidelines, standards and other recommendations issued by the Joint Committee and the European Commission. Common agreement
Article 36
A coordinator and other competent authorities from Montenegro and Member States may enter into the agreement of cooperation which shall regulate all important areas and operations with regard to the supplementary supervision under this Law. Cooperation of competent authorities with regard to on-site supplementary supervision
Article 37
(1) A competent authority from Montenegro may exercise on-site supplementary supervision for the purpose of verifying information pertaining to the regulated or non-regulated entities within the financial conglomerate with the head office in other Member State.

(2) Where a competent authority from Montenegro receives a request from the competent authority of other Member State to exercise on-site supplementary supervision, that authority shall, if that is within its competences prescribed by this Law:

exercise on-site supplementary supervision on a stand-alone basis or in cooperation with other
competent authority from Montenegro;
enable competent authority from other Member State which has submitted the request to
exercise on-site supplementary supervision; or
delegate an auditor or other expert to exercise on-site supplementary supervision in
accordance with the powers it has as a competent authority from Montenegro.
(3) Where a competent authority from other Member State does not exercise on-site supplementary supervision within the meaning of paragraph (2) item 2) of this Article, that authority may participate in the on-site supplementary supervision exercised by the competent authority from Montenegro or an auditor or an expert pursuant to the authorisations of the competent authority from Montenegro. Cooperation with third-country competent authorities
Article 38
(1) Competent authorities from Montenegro may enter into agreement with one or several thirdcountry competent authorities which ensures the basis for exchanging information necessary for exercising the supplementary supervision of the regulated entities in a financial conglomerate. (2) Competent authorities from Montenegro may propose to the European Commission to enter into agreement with one or several third countries for the purposes of exercising supplementary supervision of the regulated entities in a financial conglomerate. Regulations on supplementary supervision of a financial conglomerate
Article 39
(1) The Central Bank of Montenegro shall prescribe the method of calculating capital adequacy at the level of the financial conglomerate, supplementary supervision of intra-group transactions and risk concentration within the financial conglomerate, and guidelines for harmonizing supervisory practices pertaining to the cooperation agreements for financial conglomerates for a credit institution that is a member at the head of the group in accordance with Article 18 paragraph (1) of this Law. (2) The Capital Market Authority shall prescribe the method of calculating capital adequacy at the level of the financial conglomerate, supplementary supervision of intra-group transactions and risk concentration within the financial conglomerate, and guidelines for harmonizing supervisory practices pertaining to the cooperation agreements for financial conglomerates for the management company for open-ended investment funds with a public offering, alternative investment fund management company, or pension fund management company that is a member at the head of the group in accordance with Article 18 paragraph (1) of this Law. (3) The Insurance Supervision Agency shall prescribe the method of calculating capital adequacy at the level of the financial conglomerate, supplementary supervision of intra-group transactions and risk concentration within the financial conglomerate, and guidelines for harmonizing supervisory practices pertaining to the cooperation agreements for financial conglomerates for an investment firm, an insurance undertaking or a reinsurance undertaking that is a member at the head of the group in accordance with Article 18 paragraph (1) of this Law. Accessibility of information on the European single access point
Article 39a
(1) The coordinator shall, as a designated authority, submit the information to the European single access point (hereinafter: the ESAP), established in accordance with Regulation (EU) 2023/2859. (2) When publicly disclosing any information referred to in Article 24 paragraph (6) of this Law, a regulated entity shall submit that information at the same time to the coordinator for the purpose of making it accessible on the ESAP.

(3) The regulated entity shall ensure that the information referred to in paragraph (2) of this Article complies with the following requirements:

be submitted in a data extractable format as defined in Article 2(3) of Regulation (EU)
2023/2859 or, where required by Union law, in a machine-readable format, as defined in
Article 2(4), of Regulation (EU) 2023/2859;
be accompanied by the following metadata:
− the name of the regulated entity to which the information relates; − the legal person identifier of the regulated entity, as specified pursuant to Article 7(4)(b) of Regulation (EU) 2023/2859; − the size of the regulated entity by category, as specified pursuant to Article 7(4)(d) of Regulation (EU) 2023/2859; − the type of information, as classified pursuant to Article 7(4)(c) of Regulation (EU) 2023/2859; − an indication of whether the information referred to in indent 1 to 4 of this item contains personal data. (4) The regulated entity shall obtain a legal entity identifier prior to submitting the information in accordance with paragraph (3) item 2) indent 2 of this Article. (5) The coordinator shall ensure that the information referred to in paragraph (2) of this Article is made accessible on ESAP and that it meets the requirements referred to in paragraph (3) of this Article. VI PENALTY PROVISIONS
Article 40
(1) A pecuniary penalty in the amount ranging from EUR 5,000 to EUR 40,000 shall be imposed on a legal person, if:
1)it fails to notify the coordinator on the termination of the fulfilment of the requirements for the existence of the financial conglomerate within 30 days following that of the termination of the requirements for identifying financial conglomerate (Article 16 paragraph (4)); 2)it fails to maintain appropriate level of capital adequacy as specified in accordance with the regulation referred to in Article 39 paragraph (1) item 1) of this Law at the financial conglomerate level (Article 19 paragraph (1) item 1)); 3)it fails to monitor significant risk concentration at the financial conglomerate level (Article 19 paragraph (1) item 2)); 4)it fails to monitor significant intra-group transactions of regulated entities in a financial conglomerate at the financial conglomerate level (Article 19 paragraph (1) item 3)); 5)in addition to the requirements referred to in Article 19 paragraph (1) of this Law, it fails to adopt and carry out own funds adequacy policies (Article 19 paragraph (2) item 1)); 6)in addition to the requirements referred to in Article 19 paragraph (1) of this Law, it fails to establish and carry out an efficient and reliable risk management system (Article 19 paragraph (2) item 2)); 7)in addition to the requirements referred to in Article 19 paragraph (1) of this Law, it fails to establish and carry out an efficient internal controls system in all business areas, in particular in administrative and accounting procedures (Article 19 paragraph (2) item 3)); 8)it fails to exercise the supervision of a regulated entity with regard to the fulfilment of the obligations referred to in Article 19 paragraphs (1) and (2) of this Law (Article 19 paragraph (3)); 9)it fails to maintain own funds adequacy in accordance with Article 20 paragraph (1) of this Law;
it fails to calculate regularly, and at least once a year, own funds and supplementary capital
requirements and notify the coordinator thereof (Article 20 paragraph (4));
if fails to report on a regular basis and at least annually to the coordinator any significant risk
concentration at the level of the financial conglomerate (Article 22 paragraph (1));
it fails to report on a regular basis and at least annually to the coordinator any significant intragroup transactions between the regulated entities within the financial conglomerate (Article 23
paragraph (1));
it fails to establish and carry out efficient risk management and adequate internal controls
system, which include appropriate administrative and accounting procedures (Article 24 paragraph (1));
it fails to provide, at the level of the financial conglomerate, on an annual basis, details to their
competent authorities in Montenegro on their structure, governance and organisational structure including such data on all regulated entities, non-regulated subsidiary undertakings and significant branches (Article 24 paragraph (5));
it fails to disclose publicly, at the level of the financial conglomerate, either in full or by way
of references to equivalent information, a description of their structure, governance and organisational structure (Article 24 paragraph (6));
it fails to notify, without undue delay, a coordinator on the persons appointed in the
management bodies of that holding company (Article 29);
for the purposes of exercising additional supervision, it fails to enable the competent authority
to exercise the supplementary supervision of the operations of that person in its head office and in other locations where that person performs its activity and other operations in respect of which the competent authority exercises supplementary supervision (Article 30 paragraph (1));
it fails to enable the competent authority to control business books, business documents and
administrative or business records, as well as the control of information technology and other associated technologies to the extent necessary for the execution of the supplementary supervision referred to in Article 30 paragraph (1) of this Law (Article 30 paragraph (2));
it fails to hand over the electronic records, copies of business books, business documentation
and administrative or business records to the authorised person of the competent authority at its request in the required format (hard copy or electronic copy) (Article 30 paragraph (3));
it fails to comply with the provisions of this Law within 18 months from the date of entry into
force of this Law (Article 42).
(2) A pecuniary penalty in the amount ranging from EUR 2,000 to EUR 4,000 shall also be imposed on a responsible person in the legal person for the misdemeanour referred to in paragraph (1) of this Article. VII TRANSITIONAL AND FINAL PROVISIONS Deadline for adoption of regulations
Article 41
The competent authorities shall adopt the regulations for the adoption of which they are authorised in accordance with Article 39 of this Law, within 12 months from the date of entry into force of this Law. Compliance with the provisions of this Law
Article 42
Regulated entity shall comply with the provisions of this Law within 18 months from the date of entry into force of this Law. Deferred application
Article 43
The provisions of Article 9 paragraphs (3) and (4), Article 14 paragraph (3) items 2) and 3), Article 15 paragraph (3) items 2) and 4), Article 18 paragraph (1) item 2), Article 19 paragraph (4), Article 27 paragraph (1) items 4) to 9), paragraph (2) items 4) to 9), paragraph (3) items 4) to 9) and paragraph (5), Article 30 paragraph (5), Article 32 paragraph (6), paragraph (7) item 2) and paragraph (8), Article 34 paragraphs (2) and (5), Articles 35, 36 and 37, Article 38 paragraph (2), and Article 39a of this Law, shall apply as of Montenegro’s European Union accession date.

Entry into force
Article 44
This Law shall enter into force on the eighth day following that of its publication in the “Official Gazette of Montenegro”. ___________________________ *This Law transposes the Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council, Directive 2005/1/EC of the European Parliament and of the Council of 9 March 2005 amending Council Directives 73/239/EEC, 85/611/EEC, 91/675/EEC, 92/49/EEC and 93/6/EEC and Directives 94/19/EC, 98/78/EC, 2000/12/EC, 2001/34/EC, 2002/83/EC and 2002/87/EC in order to establish a new organisational structure for financial services committees, Directive 2008/25/EC of the European Parliament and of the Council of 11 March 2008 amending Directive 2002/87/EC on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate, as regards the implementing powers conferred on the Commission, Directive 2011/89/EU of the European Parliament and of the Council of 16 November 2011 amending Directives 98/78/EC, 2002/87/EC, 2006/48/EC and 2009/138/EC as regards the supplementary supervision of financial entities in a financial conglomerate, Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU. ____________________ *This Law transposes the provisions of the Directive (EU) 2023/2864 of the European Parliament and of the Council of 13 December 2023 amending certain Directives as regards the establishment and functioning of the European single access point.

Law on Financial Conglomerates

Lineage: In force

Similar documents from other regulators