Executive Order on Investment Firm Companies and Investment Services and Activities

Executive Order on the Law on Investment Firm Companies and Investment Services and Activities 1)

This Executive Order promulgates Act No. 1155 of 8 June 2021 on investment firm companies and investment services and activities, with the amendments resulting from Section 13 of Act No. 2382 of 14 December 2021, Section 10 of Act No. 568 of 10 May 2022, Section 6 of Act No. 570 of 10 May 2022, Section 3 of Act No. 409 of 25 April 2023, Section 7 of Act No. 480 of 12 May 2023, and Section 4 of Act No. 1546 of 12 December 2023.

Section I General Provisions

Chapter 1 Scope of Application

General Rules on Scope of Application

Section 1. This Act applies to investment firm companies and companies covered by Sections 2-9, subject to Sections 2 and 3.

Subsection 2. Sections 67, 75-78, 80, 81, 94, 97, 101-103, 105-107, 109-113, 120-124, 128, and 129, and rules issued pursuant thereto, do not apply to investment firm companies covered by Section 236 or meeting the conditions in Article 1, paragraphs 2 and 5, of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms.

Subsection 3. Chapters 18-21 apply only to investment firm companies that have permission to provide or perform one or both of the investment services and activities listed in Annex 1, Section A, items 3 and 6.

Section 1a. For investment firm companies that have not met all conditions for classification as small and unconnected investment firm companies, but subsequently meet the conditions, the requirements set forth in this Act and in rules issued pursuant to this Act for investment firm companies that do not meet the conditions for classification as small and unconnected investment firm companies will cease to apply after a period of 6 months from the date the conditions are met. The requirements cease to apply only after the period mentioned in the first sentence if the investment firm company has continuously met all conditions for classification as a small and unconnected investment firm company without interruption during this period and has notified the Danish Financial Supervisory Authority thereof.

Subsection 2. Investment firm companies that determine that they no longer meet all conditions for classification as small and unconnected investment firm companies must notify the Danish Financial Supervisory Authority thereof and comply with the requirements set forth in this Act and in rules issued pursuant to this Act for investment firm companies that do not meet all conditions for classification as small and unconnected investment firm companies. The requirements must be met no later than 12 months after the date on which the classification assessment took place.

Subsection 3. The requirements set forth in Sections 67, 80, 81, 94, 105, 107, and 109-112 of this Act for investment firm companies that do not meet the conditions for small and unconnected investment firm companies apply to investment firm companies on an individual and consolidated basis, subject to Subsection 4. Notwithstanding the first sentence, the requirements set forth in this Act and in rules issued pursuant to this Act for investment firm companies that do not meet all conditions for classification as small and unconnected investment firm companies do not apply to subsidiaries included in a consolidated situation that are established in third countries, if the parent company in the European Union can demonstrate to the Danish Financial Supervisory Authority and other competent authorities in the Union for investment firm companies in the investment firm group that the application of the requirements set forth in this Act is contrary to the legislation of the third country in which these subsidiaries are established.

Subsection 4. If the Danish Financial Supervisory Authority has granted permission to use the group capital test in Article 8 of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, the requirements set forth in this Act and in rules issued pursuant to this Act for investment firm companies that do not meet the conditions for small and unconnected investment firm companies apply to investment firm companies on an individual basis.

Other Securities Dealers

Section 2. For credit institutions and mortgage credit institutions providing or performing investment services and activities covered by Annex 1, Sections 28 and 29, Section 30, paragraph 2, item 3, and paragraph 4, Sections 45-48, Section 95, paragraphs 1-5 and 7, and Sections 96 and 108, and rules issued pursuant thereto, as well as Chapters 22-27, apply.

Subsection 2. For investment management companies and managers of alternative investment funds providing investment services covered by Annex 1, Sections 45-48, Section 95, paragraphs 1-5 and 7, and Sections 96 and 108, and rules issued pursuant thereto, as well as Chapters 22-27, apply.

Associated Agents Established in the Country

Section 3. For associated agents established in the country, Section 28, paragraphs 2 and 3, Section 30, paragraph 1, paragraph 2, items 1 and 2, and paragraphs 3 and 4, Section 232, Section 233, paragraph 4, and Sections 259 and 262-264, and rules issued pursuant to Section 46, apply.

Investment Firm Holding Companies, Mixed Holding Companies, and Mixed Financial Holding Companies

Section 4. For investment firm holding companies, Section 45, paragraph 1, Chapter 8, Sections 67 and 71, Section 75, paragraph 4, Sections 77, 78, 94, 99, 104, 107, 109-114, 128-131, 133, 136, and 138-142, Chapter 16, Sections 182, 183, and 186, Section 198, paragraph 1, Sections 213, 216, 218, 219, 221-226, 228-230, and 232-235, Section 238, paragraph 3, Section 242, paragraphs 1, 2, and 4-7, and Sections 244, 247, 248, 253, 259-273, 275, and 287, and rules issued pursuant thereto, apply.

Subsection 2. For mixed holding companies, Sections 131, 138-142, 182, 183, and 186, Section 192, paragraph 5, item 13, Section 198, paragraph 1, and Sections 213, 216, 218, 219, 221-224, 232, 253, 259-264, 266-273, and 275 apply.

Subsection 3. For mixed financial holding companies, Section 75, paragraph 4, and Sections 219, 221, 223, 224, 232, 233, 253, 259-264, 266-273, and 275 apply.

EU/EEA Companies

Section 5. For branches of investment firms, credit institutions, and administration companies that have been granted permission to provide or perform investment services and activities in a country within the European Union or in a country with which the Union has concluded an agreement in the financial sector, Sections 219, 219a, 221, 223, 229, 232-235, 247, 249-252, 259-274, 277, and 287 apply. For branches of investment firms, Sections 38 and 40 also apply.

Subsection 2. Subsection 1 also applies to investment firms and credit institutions that carry out activities in the country through associated agents established in the country.

Section 6. For cross-border provision of investment services and activities carried out in the country by investment firms, credit institutions, and administration companies that have been granted permission to provide or perform investment services and activities in a country within the European Union or in a country with which the Union has concluded an agreement in the financial sector, Sections 219a, 251, 252, 259, and 262-264 apply. For investment firms, Section 39 also applies.

Third-Country Companies

Section 7. For branches in the country of investment firms that have been granted permission to provide or perform investment services and activities with or without ancillary services in a country outside the European Union, with which the Union has not concluded an agreement in the financial sector, Sections 43-48 and 94, Section 95, paragraphs 1, 2, and 7, and Sections 96 and 108, and rules issued pursuant thereto apply. The provisions of the Companies Act on branches of foreign joint-stock companies also apply.

Subsection 2. For branches in the country of credit institutions that have been granted permission to provide or perform investment services and activities with or without ancillary services in a country outside the European Union, with which the Union has not concluded an agreement in the financial sector, and that have been granted permission by the Danish Financial Supervisory Authority pursuant to the Act on Financial Business, Sections 44-48 and 94, Section 95, paragraphs 1, 2, and 7, and Sections 96 and 108, and rules issued pursuant thereto apply.

Subsection 3. The Act otherwise applies to the branches mentioned in paragraphs 1 and 2 with the deviations that the branch relationship necessitates.

Subsection 4. For investment firms and credit institutions that have been granted permission to provide or perform investment services and activities with or without ancillary services in a country outside the European Union, with which the Union has not concluded an agreement in the financial sector, and that carry out such activity in the country to retail customers or customers who can be treated as professional customers upon request, Section 42 applies.

Section 8. For cross-border provision of investment services and activities with or without ancillary services carried out in the country by investment firms that have been granted permission in a country outside the European Union, with which the Union has not concluded an agreement in the financial sector, and for which country the European Commission has not adopted a decision as referred to in Article 47, paragraph 1, of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments, or where such a decision is no longer valid, Sections 41, 45-48, 232, 247, 259, and 262-264, Section 265, paragraphs 2 and 3, Section 267, paragraphs 1 and 2, and Section 272, paragraph 1, and rules issued pursuant thereto and pursuant to Section 96, paragraph 2, apply.

Subsection 2. For cross-border provision of investment services and activities with or without ancillary services provided or performed in the country by credit institutions that have been granted permission in a country outside the European Union, with which the Union has not concluded an agreement in the financial sector, and for which country the European Commission has not adopted a decision as referred to in Article 47, paragraph 1, of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments, or where such a decision is no longer valid, and that have been granted permission by the Danish Financial Supervisory Authority pursuant to the Act on Financial Business, Sections 45-48, 232, 247, 259, and 262-264, Section 265, paragraphs 2 and 3, Section 267, paragraphs 1 and 2, and Section 272, paragraph 1, and rules issued pursuant thereto and pursuant to Section 96, paragraph 2, apply.

Suppliers and Sub-suppliers

Section 9. For suppliers and sub-suppliers to outsourcing companies, Section 232, Section 233, paragraph 4, and Sections 259 and 262-264 apply.

Chapter 2 Definitions

Section 10. In this Act, the following terms are understood as:

1. Small and unconnected investment firm companies: The investment firm companies that meet the conditions in Article 12, paragraph 1, of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms.

2. Investment services and activities: The services and activities listed in Annex 1, Section A, in connection with the instruments referred to in Annex 2.

3. Ancillary services: The services listed in Annex 1, Section B.

4. Financial instruments: The instruments listed in Annex 2.

5. Investment firm: A foreign legal or natural person whose regular occupation or business consists of providing or performing investment services and activities for third parties on a professional basis.

6. Credit institution: A foreign legal person whose business consists of receiving deposits or other repayable funds from the public and granting loans for its own account.

7. Start-up capital: The capital that must be present to receive permission as an investment firm company.

8. Solvency requirement: The requirement set in accordance with Section 120.

9. Solvency requirement: The requirement set in accordance with Section 121.

10. Capital base requirement: The requirement set in Part Three, Section I, of Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms.

11. Branch: Another place of business than the head office, which constitutes a non-independent part of an investment firm company or an investment firm, and which provides or performs investment services and activities with or without ancillary services in accordance with the permission of the respective investment firm company or investment firm.

12. Associated agent: A physical or legal person that, under the unconditional responsibility of only one investment firm company, one credit institution, one mortgage credit institution, one investment firm, or one credit institution, on whose behalf transactions are conducted with customers or potential customers, markets investment services and activities and ancillary services, receives and transmits customers' instructions or orders regarding investment services and activities or financial instruments, places financial instruments, or advises customers or potential customers on such financial instruments or services.

13. Subsidiary: A company that is subject to controlling influence by a parent company.

14. Parent company: A company that has one or more subsidiaries.

15. Group: A parent company with one or more subsidiaries, cf. Section 11.

16. Narrow links: a) Direct or indirect links of the type indicated in item 15, b) Capital interests, understood as a company's direct or indirect possession of 20 percent or more of the voting rights or capital in a company, or c) Multiple companies' or persons' common link, cf. letter a, with a company.

17. Consolidated situation: The situation resulting from the application of the requirements in Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms in accordance with Article 7 on a parent investment firm in the European Union, a parent investment holding company in the European Union, or a mixed financial parent holding company in the European Union, as if this company together with all investment firms, financing institutions, ancillary service companies, and associated agents in the investment firm group constituted a single investment firm. For the purpose of this definition, the terms investment firm, financing institution, ancillary service company, and associated agent also apply to companies established in third countries that, if they had been established in the European Union, would meet the definitions of these terms.

18. Consolidated level: Based on the consolidated situation.

19. Associated company: A company in which an investment firm company and its subsidiaries hold capital shares and exercise significant influence on the company's operational and financial management, but which is not a subsidiary of the investment firm company. An investment firm company and its subsidiaries are presumed to exercise significant influence if they together possess 20 percent or more of the voting rights.

20. Investment firm holding company: A financing institution whose subsidiaries are exclusively or primarily investment firm companies or financing institutions, of which at least one such subsidiary is an investment firm company, and which is not a financial holding company as defined in Article 4, paragraph 1, item 20, of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions.

21. Mixed holding company: A parent company other than a financial holding company, an investment firm holding company, a credit institution, an investment firm company, or a mixed financial holding company, whose subsidiaries include at least one investment firm company.

22. Mixed financial holding company: An unregulated parent company that, together with its subsidiaries, of which at least one is a regulated entity with its head office in the European Union, and other entities, constitutes a financial conglomerate.

23. Investment firm group: A group of companies consisting of a parent company and its subsidiaries or of companies that meet the conditions in Article 22 of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on annual accounts, consolidated accounts, and related reports for certain types of companies, of which at least one is an investment firm company, and which does not include a credit institution.

24. Parent investment firm company in the European Union: An investment firm company in a member state that is part of an investment firm group and has as a subsidiary an investment firm company or a financing institution, or has capital interests in such an investment firm company or financing institution, and which is not itself a subsidiary of another investment firm company permitted in a member state, or an investment firm holding company or mixed financial holding company established in a member state.

25. Parent investment firm holding company in the European Union: An investment firm holding company in a member state that is part of an investment firm group and is not itself a subsidiary of an investment firm company permitted in a member state or of another investment firm holding company in a member state.

26. Mixed financial parent holding company in the European Union: A parent company for an investment firm group that is a mixed financial holding company.

27. Financing institution: A company that is not a credit institution or an investment firm company, and that is not a pure industrial holding company, and whose main business consists of acquiring capital shares or in performing one or more of the activities in points 2-12 and 15 of Annex I to 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 on the prudential supervision of credit institutions, including a financial holding company, a mixed financial holding company, an investment holding company, a payment institution as defined in Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, and a portfolio management company, but not insurance holding companies or mixed insurance holding companies as defined in Article 212, paragraph 1, letter g, of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance.

28. Qualified shareholding: A direct or indirect possession of at least 10 percent of the capital or voting rights or a share that makes it possible to exercise significant influence on the management of an investment firm company or an investment firm holding company.

29. Beneficial owner: A natural person who ultimately directly or indirectly owns or controls a sufficient part of the qualified shares or voting rights, or who exercises control by other means.

30. Capital interests: A company's direct or indirect possession of 20 percent or more of the capital or voting rights in a company.

31. Capital shares: Shares in joint-stock companies (shares), in limited liability companies (partnerships), and in other companies' equity.

32. Systemic risk: A risk of disturbance to the financial system that can have serious negative consequences for the financial system and the real economy.

33. Competent authority: A public authority or a public body in a member state that is officially recognized and granted powers by national law to supervise investment firms as part of the applicable supervisory scheme in the relevant member state.

34. Home country: A country within the European Union or a country with which the Union has concluded an agreement in the financial sector, where the company in question has its head office or statutory seat.

35. Host country: A country within the European Union or a country with which the Union has concluded an agreement in the financial sector, where an investment firm has a branch and provides or performs investment services and activities, or a member state where a regulated market makes the necessary facilities available to facilitate access for remote members or participants established in that member state to trade in the investment firm's system.

36. Compliance with group capital test: A parent company in an investment firm group's fulfillment of the requirements in Article 8 of Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms.

37. Group supervisor: A competent authority responsible for supervising whether parent investment firm companies in the European Union and investment firm companies in the European Union comply with the requirements set forth in this Act and in rules issued pursuant to this Act on an individual and consolidated basis.

38. The Act contains provisions implementing Directive 2019/2034/EU of the European Parliament and of the Council of 27 November 2019 (IFD), OJ EU 2019, No. L 314, page 64, parts of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 (MiFID II), OJ EU 2014, No. L 173, page 349, Directive 2007/44/EC of the European Parliament and of the Council of 5 September 2007 (Capital Acquisition Directive), OJ EU 2007, No. L 247, page 1, parts of Directive 2017/828/EU of the European Parliament and of the Council of 17 May 2017 (Shareholder Rights Directive), OJ EU 2017, No. L 132, page 1, Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 (Conglomerates Directive), OJ EU 2003, No. L 35, page 1, parts of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 (Accounting Directive), OJ EU 2013, No. L 182, page 19, Commission Directive 2010/43/EU of 1 July 2010, OJ EU 2010, No. L 176, page 42, parts of Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 (DGSD), OJ EU 2014, No. L 173, page 149, parts of Directive 2015/849/EU of the European Parliament and of the Council of 20 May 2015 (4th Anti-Money Laundering Directive), OJ EU 2015, No. L 141, page 73, parts of Directive 2016/1148/EU of the European Parliament and of the Council of 6 July 2016 (NIS Directive), OJ EU 2016, No. L 194, page 1, parts of Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 (BRRD), OJ EU 2014, No. L 173, page 190, Directive 2019/879/EU of the European Parliament and of the Council of 20 May 2019 (BRRD II), OJ EU 2019, No. L 150, page 296, and parts of Directive 2019/878/EU of the European Parliament and of the Council of 20 May 2019, OJ EU 2019, No. L 150, pages 253-293.

The Act also includes certain provisions from Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 (IFR), OJ EU 2019, No. L 314, page 1, and Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 (MiFIR), OJ EU 2014, No. L 173, page 84. According to Article 288 of the TFEU, a regulation applies directly in each member state. The reproduction of these provisions in the Act is therefore solely justified by practical considerations and does not affect the direct validity of the regulations in Denmark. The Act also includes certain provisions from Commission Regulation (EU) No 584/2010 of 1 July 2010, OJ EU 2010, No. L 176, page 16, Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010, OJ EU 2010, No. L 331, page 12, and Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010, OJ EU 2010, No. L 331, page 84.

Official Gazette A 2024 Published on 9 March 2024 1 March 2024. No. 232. Ministry of Industry and Business, Danish Financial Supervisory Authority, file no. 22-011150 CQ002783