Act on Mandatory Pension Funds - Unofficial Consolidated Text (NN, No. 19/14, 93/15, 64/18, 115/18, 58/20 and 156/23)

ACT ON MANDATORY PENSION FUNDS (NN 19/14, 93/15, 64/18, 115/18, 58/20 and 156/23) Part One COMMON PROVISIONS General Provisions Article 1. This Act regulates the establishment and operation of mandatory pension funds within the framework of mandatory pension insurance based on individual capital-funded savings; the establishment and operation of pension management companies for mandatory pension funds; the operations of depositaries of mandatory pension funds and the Central Insurance Register, as well as supervision over the operation of mandatory pension funds, pension management companies for mandatory pension funds, depositaries of mandatory pension funds and the Central Insurance Register. Meaning of Certain Terms Article 2. (1) Certain terms, for the purposes of this Act, have the following meanings:

1. Pension management company is a joint-stock company or limited liability company that manages mandatory pension funds.
2. Pension fund is a mandatory pension fund established by a pension management company with the Agency's approval, which the company manages in its own name and for the joint account of fund members in accordance with this Act. A pension fund may be category A, B or C.
3. Pension funds of categories A, B and C are managed by the same pension management company. Funds of different categories have different investment strategies. Assumed risk should be lowest in category C fund and highest in category A pension fund.
4. Voluntary pension fund is a fund established under the law governing the establishment and operation of voluntary pension funds within voluntary pension insurance based on individual capital-funded savings.
5. Member of a pension fund is an insured person registered with a pension fund.
6. Member of a pension management company is a shareholder or holder of a business share in the pension management company.
7. Pension beneficiary is a person who has acquired the right to a pension.
8. Reference day is the date of meeting age conditions for acquiring the right to a retirement pension under the Pension Insurance Act.
9. Personal account is an account opened in the name of a pension fund member at a selected pension fund, on which contributions paid and all changes in the personal assets of the fund member during individual capital-funded savings are recorded, managed by the Central Insurance Register.
10. Temporary account is an account opened for forwarding funds from unlinked payments and payments that cannot be forwarded to pension funds after linking, as well as during the period before choosing a pension fund.
11. Transit account is an account to which contribution funds for the individual capital-funded savings system and funds from personal accounts are paid for further allocation to mandatory pension funds, mandatory pension management companies, the temporary account, pension insurance companies, the Croatian Pension Insurance Institute, or legal heir.
12. Account transfer means the transfer of funds from a member's personal account from one to another pension fund.
13. Information prospectus means a statement by the pension management company containing complete, accurate and objective information about the pension fund and the managing company, on the basis of which a potential fund member can decide on membership.
14. Statute is the fundamental act of a pension fund determining its basic legal relations.
15. Guarantee deposit means funds in a special account opened at the depositary, on which the pension management company must hold EUR 132,722.81 for every 10,000 members above fifty thousand of all categories of pension funds managed by the same company.
16. Close linkage means a link between two or more natural or legal persons, or entities, in one of the following ways: a) participation relationship. b) control relationship.
17. Participation means a person's participation in another legal entity if: a) it has direct or indirect investments through which it participates with 20% share or more in the capital or voting rights of that legal entity, or b) it holds less than 20% in the capital or voting rights of that legal entity, acquired with the intention to influence its operations through a lasting link.
18. Control is the relationship between a parent company and a subsidiary, or a similar relationship between any natural or legal person and an entity. For this point:
19. A subsidiary of a subsidiary is also considered a subsidiary of the parent company at the head
20. A situation where two or more legal or natural persons are permanently linked to the same person through a control relationship is considered a close linkage between those persons.
21. Parent company is a parent company as defined by regulations governing business accounting and the application of financial reporting standards.
22. Subsidiary is a subsidiary as defined by regulations governing business accounting and the application of financial reporting standards.
23. Permanent medium is paper or other means that enables storage of information in such a way as to ensure access for future use over a time period appropriate to the purpose of that information, and enables reproduction of stored information without alteration.
24. Transferable securities are types of securities transferable on the capital market, such as: a) shares or other securities of equivalent nature representing equity or membership rights in an entity, and certificates of deposited shares b) bonds and other types of securitized debt, including certificates of deposited securities c) all other securities entitling to acquire or sell such transferable securities, or on the basis of which monetary payments determined by transferable securities, currencies, interest rates or yields, goods, indices or other measurable quantities can be made. Payment instruments are not considered transferable securities for this point.
25. Transferable equity securities are securities defined in point 22(a).
26. Transferable debt securities are securities defined in point 22(b).
27. Money market instruments are financial instruments commonly traded on the money market, such as treasury, bank and commercial notes and deposit certificates, excluding payment instruments, which are liquid and whose value can be precisely determined at any time.
28. Relevant person in relation to a pension management company is a natural person who: a) holds a managerial position or is a member of the pension management company b) is a member of the supervisory board or an authorized signatory of the pension management company c) is an employee of the pension management company.
29. A person related to a relevant person is: a) the spouse of the relevant person or any person considered equivalent to a spouse under national law b) a dependent child or nephew/niece of the relevant person c) any other relative who has lived in the same household as the relevant person for at least one year on the date of the relevant personal transaction.
30. Related person in relation to a specific legal or natural person under this Act is:

• any natural person(s) who can, directly or indirectly, influence the decisions of another entity
• each member of the management board, supervisory board or other decision-making/supervisory body
• in relation to each aforementioned person, spouse, de facto partner, life partner or relative up to the second degree in direct line. The concept of linkage means the link between the first and second entity, then between the second and third, and between the third and fourth. The link of a fourth entity to any further entity is not considered a related person with the first entity. For this Act, closely linked persons, relevant persons and persons related to relevant persons are also considered related persons.

29. Auditor is an audit firm defined by regulations governing audits.
30. Depositary is a credit institution or branch thereof entrusted with duties prescribed by Article 172 of this Act.
31. UCITS fund (Undertakings for Collective Investment in Transferable Securities) is an investment fund defined by the law governing the establishment and operation of open-ended public investment funds.
32. Alternative investment fund is an investment fund defined by the law governing the establishment and management of alternative investment funds.
33. Management company is a UCITS fund and/or alternative investment fund management company.
34. Investment company is a legal entity whose regular business is providing one or more investment services to third parties and/or performing one or more investment activities on a professional basis.
35. Member State is an EU member state and a contracting party to the Agreement on the European Economic Area.
36. Third country is a state that is not a Member State as defined in point 35.
37. Agency is the Croatian Financial Services Supervisory Agency, whose competences and scope of work are prescribed by the Act on the Croatian Financial Services Supervisory Agency and this Act.
38. Central Insurance Register is an institution whose powers and operations are prescribed by the Act on the Central Insurance Register.
39. Approval is an Agency decision accepting a submitted application, which is always required and issued before taking a certain action or concluding a transaction, as prescribed by this Act.
40. Without delay or immediately means taking a certain action or transaction no later than the next working day.
41. Clearing is clearing as defined in Article 2(3) of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparty and trade repository (OJ L 201/1, 27.7.2012) (hereinafter: Regulation (EU) 648/2012).
42. Central counterparty is a central counterparty as defined in Article 2(1) of Regulation (EU) No 648/2012.
43. Clearing system member is a clearing system member as defined in Article 2(14) of Regulation (EU) No 648/2012.
44. Indirect clearing service is an indirect clearing arrangement as defined in Article 1(b) of Commission Delegated Regulation (EU) No 149/2013 of 19 December 2012 supplementing Regulation (EU) No 648/2012 with regard to regulatory technical standards on indirect clearing arrangements, clearing obligation, public register, access to trading venues, non-financial counterparties and risk reduction techniques for OTC derivative contracts not cleared by a central counterparty (OJ L 052/11, 23.2.2013) (hereinafter: Commission Delegated Regulation (EU) 149/2013).
45. Qualified holding is any direct or indirect share in a pension management company representing 10% or more of the share capital or voting rights, or a smaller share enabling significant influence over management. Voting rights percentage calculation applies capital market law provisions accordingly.
46. Persons acting in concert are: a) natural or legal persons cooperating based on an explicit or implicit, oral or written agreement aimed at acquiring shares or business shares with voting rights or jointly exercising voting rights; b) legal persons mutually linked under the law governing the establishment and organization of commercial companies.
47. Sustainable investment is an investment in economic activity contributing to environmental objectives, measured by key resource efficiency indicators regarding energy use, renewable energy, raw materials, water and land, waste creation, greenhouse gas emissions or biodiversity and circular economy, or an investment in economic activity contributing to social objectives, particularly investments combating inequality, promoting social cohesion, integration and labor relations, or investing in human capital or economically/socially vulnerable communities, provided such investments do not significantly harm any of these objectives and investee companies follow good governance practices, particularly regarding management structures, employee relations, staff remuneration and tax obligations.
48. Sustainability risk is an environmental, social or governance event or condition that, if occurring, may cause actual or potential significant negative impact on the value of an investment.
49. Sustainability factors are environmental and social issues, employee relations, human rights respect, corruption and bribery prevention.
50. Infrastructure projects are projects relating to public systems at the state or local/regional self-government level, including roads, bridges, airports, pipelines, energy transmission networks, communications, educational or health institutions, municipal infrastructure, public buildings and other investments designated by the Government of the Republic of Croatia as such, particularly those enabling sustainability goal implementation and classifiable as sustainable investments.
51. ETF (Exchange-Traded Fund) is an open-ended public investment fund with at least one share class traded during the day on a regulated market, with at least one market maker taking appropriate actions to ensure its market value does not significantly deviate from its net asset value or indicative net asset value.
52. OECD Member State is a member state of the Organisation for Economic Co-operation and Development and an acceding state to the OECD Codes on Liberalisation of Capital Movements and Invisible Transactions. (2) When this Act prescribes the Agency's authority to adopt regulations, such regulation is adopted by the Agency's Administrative Board. Application of Other Regulations Article 3. The provisions of the law governing the establishment and operation of commercial companies apply to the operations of pension management companies accordingly, unless otherwise determined by this Act or other regulations. Register of Pension Funds and Pension Management Companies Article 4. (1) Pension funds and pension management companies with Agency approval for establishment and operation are entered in the register of mandatory pension funds and the register of pension management companies for managing mandatory pension funds in the Republic of Croatia. The registers are kept by the Agency. (2) Pension funds and pension management companies, along with all data prescribed by this Act and regulations in paragraph 4 of this article, as well as changes to those data, are entered into the register of mandatory pension funds and pension management companies. (3) The Agency will publish data from the register of mandatory pension funds and pension management companies on its website. (4) The Agency will adopt regulations prescribing the content and method of keeping the register of mandatory pension funds and the register of pension management companies for managing mandatory pension funds, as well as the data published on the Agency's website in accordance with paragraph 3 of this article. Part Two PENSION MANAGEMENT COMPANY Chapter 1. Section 1. Form of Pension Management Company Article 5. (1) A pension management company is a commercial company under the law governing the establishment and operation of commercial companies, established in the legal form of a joint-stock company or limited liability company. (2) A pension management company cannot issue preferred shares. (3) A pension management company must ensure equal treatment of all shareholders, or holders of business shares, and shall not grant them any additional rights or privileges, restrict their rights, or impose additional liabilities on them. Company Name of Pension Management Company Article 6. (1) The company name of a pension management company must contain the words: "management company for mandatory pension funds", or the words: "management company for mandatory and voluntary pension funds" if the pension management company also performs the activity under Article 7, paragraph 1, point b of this Act. (2) Only pension management companies established through the procedure prescribed by this Act have the right to use the words mentioned in paragraph 1 of this article in their company name. (3) In the event that the operating approval ceases to be valid, a pension management company must immediately change its company name by removing the words: "management company for mandatory pension funds", or the words: "and voluntary", depending on which activities the operating approval ceases to cover. Activities of Pension Management Company Article 7. (1) The activities of a pension management company are: a. establishment and management of pension funds (hereinafter: management of pension funds) b. establishment and management of voluntary pension funds under the law governing the establishment and management of voluntary pension funds (hereinafter: management of voluntary pension funds). (2) Establishment and management of pension funds includes:
53. establishing pension funds
54. managing the assets of pension funds, and
55. administrative tasks. (3) Establishment and management of voluntary pension funds is determined by the law governing the establishment and operation of voluntary pension funds. (4) The administrative tasks from paragraph 2, point 3 of this article include:
56. legal and accounting tasks related to the management of pension funds
57. receiving and processing inquiries from pension fund members
58. valuing assets and determining the value of a pension fund's accounting unit
59. monitoring regulatory compliance
60. settling contracted obligations
61. keeping business records
62. maintaining records of pension fund members, providing data to the Central Insurance Register as required
63. transferring members' personal assets under conditions determined by this Act
64. publications and informing pension fund members
65. promotion of the pension management company and pension funds. (5) A pension management company must establish and manage one pension fund of each category A, B and C. (6) A pension management company cannot perform other activities besides those listed in paragraph 1 of this article. (7) A pension management company cannot delegate tasks from paragraph 2 of this article to third parties. Section 2. Share Capital of Pension Management Company Article 8. (1) The minimum amount of share capital of a pension management company is EUR 5,308,910.00. (2) If a pension management company has approval for managing voluntary pension funds, the minimum amount of share capital equals the amount in paragraph 1 of this article increased by the amount of minimum share capital prescribed by the law governing the establishment and operation of voluntary pension funds. (3) The share capital of a pension management company must be fully paid in cash. (4) The share capital of a pension management company cannot originate from loans or credits nor can it be encumbered in any way. (5) The share capital of a pension management company must be paid in full before the registration of that company at the commercial court. (6) If a pension management company is established and operates as a joint-stock company, all shares of the pension management company must be named, issued in dematerialized form, and preferred shares cannot be issued. (7) Shares of a pension management company are not permitted to be listed on a regulated market, MTP, or other organized market. (8) The share capital of a pension management company cannot be increased by public call. Regulatory Capital of Pension Management Company Article 9. (1) A pension management company is obliged to always maintain the regulatory capital of a pension management company at an amount equal to or greater than the minimum share capital from Article 8 of this Act. (2) Any change in the share capital of a pension management company, before entry into the court register, must have prior approval from the Agency. (3) A pension management company shall promptly notify the Agency of any decrease in the regulatory capital of a pension management company below the level established by paragraph 1 of this article. (4) A pension management company, in the event of a decrease in regulatory capital below the amount prescribed by paragraph 1 of this article, must increase the company's regulatory capital to the required level by increasing its share capital within a period determined by the Agency. (5) The Agency will adopt regulations prescribing the components of a pension management company's regulatory capital. Section 3. Approval for Establishment and Operation of Pension Management Company Article 10. (1) Before entering a pension management company into the court register, approval for its establishment and operation (hereinafter: operating approval) must be obtained from the Agency, which is attached to the application for court registration of the company's establishment. After entry into the court register, the pension management company submits an application to the Agency for approval to establish and manage pension funds. (2) Applications for operating approval are submitted to the Agency by all members of the management and supervisory boards of a pension management company. (3) The application for operating approval must cover the establishment and management of mandatory pension funds, and may additionally cover the establishment and management of voluntary pension funds in accordance with the law governing the establishment and operation of voluntary pension funds. (4) Operating approval is granted indefinitely, cannot be transferred to another person, and does not apply to the legal successor. (5) An already established joint-stock company or limited liability company may also request operating approval from the Agency, in which case the application is submitted by the company's management. (6) A company from paragraph 5 of this article must obtain operating approval from the Agency before registering a change in the company's activity in the court register. (7) After obtaining operating approval, a pension management company may request an extension of its operating approval to perform activities under Article 7 of this Act that were not previously covered by the issued approval. (8) The application for extension of operating approval from paragraph 1 of this article is submitted by the management of a pension management company. (9) The provisions of this Act regarding the issuance of operating approval apply accordingly to extensions of operating approval. Article 11. (1) The following documentation must be attached to the application for operating approval:
66. statute of a pension management company with an amendment based on which the statute was adopted (declaration of founders) if a pension management company is established as a joint-stock company, or partnership agreement or declaration of establishment if a pension management company is established as a limited liability company
67. list of founders with information on whether they are related