Circular No. 2007-03 - Obligations of Trust Companies under Article 17 of the Companies Law

THE GENERAL DIRECTOR
OF THE CENTRAL BANK OF THE REPUBLIC OF SAN MARINO

HAVING REGARD TO Article 17 of Law No. 47 of 23 February 2006, which, in its third paragraph, refers to the regulation by the Central Bank of the Republic of San Marino of the compliance obligations provided therein with regard to the certifications of settlors;

HAVING REGARD TO Article 39 of Law No. 165 of 17 November 2005, which attributes, among other things, to the Supervisory Authority the power to issue binding circulars in pursuit of the objectives set out in Article 37 of the aforementioned Law;

HAVING REGARD TO the Statute of the Central Bank of the Republic of San Marino approved by Law No. 96 of 29 June 2005 and in particular Article 30, paragraph 3 of the said Statute, according to which the acts of the Central Bank in matters of supervision, deliberated by the Supervisory Coordination, are issued by the General Director;

HAVING REGARD TO the resolution of the Supervisory Coordination by which the text of the Circular of the Central Bank of the Republic of San Marino on the compliance obligations of trust companies pursuant to Article 17 of the Companies Law was approved,

ISSUES

the attached Circular No. 2007-03 which will enter into force on 13 August 2007.

San Marino, 9 August 2007

SIGNED: THE GENERAL DIRECTOR
Luca Papi

Circular No. 2007-03

COMPLIANCE OBLIGATIONS OF TRUST COMPANIES
PURSUANT TO ARTICLE 17 OF THE COMPANIES LAW

Definitions
For the purposes of this Circular, the following terms are understood as:

• "Central Bank": the Central Bank of the Republic of San Marino;
• "certification": certificates provided for and described in Article 1 of the COMPANIES LAW;
• "settlors": subjects who confer a mandate without representation to TRUST COMPANIES for the acquisition of participations in San Marino companies;
• "Companies Law": Law No. 47 of 23 February 2006 and subsequent amendments;
• "LISF": Law No. 165 of 17 November 2005;
• "trust companies": companies authorized to exercise the reserved activity marked with the letter C in Annex 1 to the LISF;

Preamble
The COMPANIES LAW, in Article 17, already establishes:
a) the obligation for TRUST COMPANIES that, in execution of a mandate without representation, establish companies with headquarters in San Marino, acquire or hold participations in them, to obtain in advance the CERTIFICATION relating to the SETTLORS; b) the prohibition for TRUST COMPANIES to establish companies with headquarters in San Marino, acquire or hold participations in them on behalf of SETTLORS who fall within the definition of unsuitable subject contained in Article 1 of the aforementioned law.

The third paragraph of the aforementioned article refers to the regulatory and supervisory powers of the CENTRAL BANK, as it concerns the exercise of reserved activity pursuant to the LISF.

Consequently, subject to compliance with the legal provisions set out in the preceding letters a) and b), the CENTRAL BANK, in the exercise of its regulatory and supervisory powers, establishes the methods and timelines for compliance by TRUST COMPANIES.

Purpose
The main purpose of this Circular is to introduce immediately, pending a complete and organic regulation of trust activities, certain modifications to the supervisory legislation, with specific reference to the CERTIFICATION of SETTLORS, to align it with the new provisions contained in the COMPANIES LAW.

Provisions
TRUST COMPANIES, in the cases referred to in Article 17 of the COMPANIES LAW, must obtain the CERTIFICATION relating to the SETTLORS, both prior to the acceptance of the mandate and periodically for the entire duration of the trust relationship, and must retain it for at least five years from the date of termination of the mandate.

The CERTIFICATION produced by the SETTLORS in advance must be issued on a date not more than 6 months prior to the date of the conferral of the mandate and must prudentially be renewed with a maximum periodicity of 3 years from the date indicated on each of the certificates.

In cases where the CERTIFICATION shows that the SETTLORS are unsuitable subjects pursuant to the COMPANIES LAW, the TRUST COMPANY must refuse to accept the mandate or immediately renounce it, if already in effect.

Final and Transitional Provisions.
This Circular modifies the following circulars, issued by the Inspectorate for Credit and Currencies on 11 August 1999:

• No. 27 for banks;
• No. 17/F for financial companies.

This Circular enters into force on 13/08/2007 and will apply to all trust mandates concerning participations in San Marino companies, including those in effect on the date of entry into force of this Circular.

San Marino, 9 August 2007.