Opinion of the Croatian Financial Services Supervisory Agency on the Application of Article 21 of the Factoring Act - Activities of a Factoring Company

Based on the provision of Article 15, paragraph 1, item 9 of the Act on the Croatian Financial Services Supervisory Agency ("Narodne novine", No. 140/05 and 12/12), the Croatian Financial Services Supervisory Agency, at the meeting of the Board of Directors held on September 25, 2015, issues an

OPINION

on the application of the provisions of the Factoring Act

The provisions of Article 21, paragraphs 1 and 2 of the Factoring Act ("Narodne novine" No. 94/14 and 85/15, hereinafter: ZOF), which has the heading "Factoring Company Activities," prescribe the business activities that a factoring company is permitted to carry out as its business activities. Accordingly, the following is regulated by these provisions:

(1) "A factoring company may carry out only the activities from Articles 4, 8, and 12 of this Act as a business activity on a continuous basis.

(2) A factoring company may also carry out activities that are directly or indirectly related to factoring activities, and these activities are especially:

• collection, preparation, analysis, and provision of information on the creditworthiness of legal entities and natural persons carrying out independent activities,
• management of client claims arising from sold goods and provided services and advice in connection therewith,
• export financing based on the purchase with discount and without recourse of long-term non-matured claims secured by financial instruments (forfaiting),
• purchase of matured claims,
• issuance of credit cover when performing international factoring."

By the provision of Article 20, paragraph 1 of the ZOF, a factoring company is defined as a legal entity with its registered office in the Republic of Croatia, which is entered in the court register based on approval for carrying out factoring activities, which, pursuant to the provision of Article 39, paragraph 1 of the ZOF, is issued by the Croatian Financial Services Supervisory Agency (hereinafter: HANFA).

Based on the provision of Article 39, paragraph 1 of the ZOF, which is lex specialis for factoring companies, HANFA as the competent institution issues approval for carrying out factoring activities, on the basis of which, in accordance with the provision of Article 20, paragraph 1 of the ZOF, a specific legal entity is entered as a factoring company in the court register.

It clearly follows from the above that HANFA is exclusively competent for issuing approval for carrying out factoring activities.

Furthermore, regarding the determination of other activities that fall within the subject matter of the factoring company's business, it follows that the legislator has determined that a factoring company may, in addition to factoring activities for which HANFA approval is required, pursuant to the provisions of Article 21, paragraph 2 of the ZOF, also carry out other activities that are directly or indirectly related to factoring activities, which are exhaustively listed in the same provision, and for which the ZOF does not prescribe the issuance of approval.

Considering the aforementioned provisions of the ZOF, HANFA is of the opinion that a company may carry out and register as its activity factoring activities only on the basis of HANFA approval, and the activities prescribed by the provision of Article 21, paragraph 2 of the ZOF may be carried out and registered without special HANFA approval, if they are determined by the founding act of a particular company.

CLASS: 011-02/15-09/48 FILE NO.: 326-01-550-552-15-1 Zagreb, September 25, 2015

CHAIRMAN OF THE BOARD OF DIRECTORS Petar-Pierre Matek