Executive Order on Investment Firm Companies and Investment Services and Activities

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

This is hereby ordered: Act No. 1155 of 8 June 2021 on investment firm companies and investment services and activities with the changes 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.

Part I
General Provisions
Chapter 1
Scope of Application
General rules on the scope of application

Section 1. This Act applies to investment firm companies and companies covered by Sections 2-9, subject to subsections 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 mentioned in Annex 1, Section A, points 3 and 6.

Section 1a. For investment firm companies that have not met all the conditions for classification as small and non-interconnected investment firm companies, but subsequently meet the conditions, the requirements set out 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 non-interconnected investment firm companies will no longer apply after a period of 6 months from the date on which the conditions are met. The requirements cease to apply only after the period mentioned in the first sentence if an investment firm company has continuously met all the conditions for classification as a small and non-interconnected investment firm company without interruption during this period and has notified the Danish Financial Supervisory Authority (Finanstilsynet) thereof.

Subsection 2. Investment firm companies that determine that they no longer meet all the conditions for classification as small and non-interconnected investment firm companies must notify the Danish Financial Supervisory Authority thereof and comply with the requirements set out in this Act and in rules issued pursuant to this Act for investment firm companies that do not meet all the conditions for classification as small and non-interconnected 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 out 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 non-interconnected 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 out in this Act and in rules issued pursuant to this Act for investment firm companies that do not meet all the conditions for classification as small and non-interconnected investment firm companies do not apply to subsidiaries included in a consolidated situation and established in a third country, 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 out 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 for the use of 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 out 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 non-interconnected 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, point 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 this country, Section 28, paragraphs 2 and 3, Section 30, paragraph 1, paragraph 2, points 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, point 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 this country through associated agents established in this country.

Section 6. For cross-border services with investment services and activities carried out in this 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 this 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 limited companies also apply.

Subsection 2. For branches in this 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 which have been granted permission by the Danish Financial Supervisory Authority in accordance with 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. This Act otherwise applies to the branches mentioned in subsections 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 this country to retail customers or customers who can be treated as professional customers upon request, Section 42 applies.

Section 8. For cross-border services with investment services and activities with or without ancillary services carried out in this 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 services with investment services and activities with or without ancillary services provided or performed in this 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 which have been granted permission by the Danish Financial Supervisory Authority in accordance with 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:

Small and non-interconnected 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.
Investment services and activities: The services and activities mentioned in Annex 1, Section A, in connection with the instruments referred to in Annex 2.
Ancillary services: The services mentioned in Annex 1, Section B.
Financial instruments: The instruments listed in Annex 2.
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.
Credit institution: A foreign legal person whose business consists of receiving deposits or other repayable funds from the public and lending for its own account.
Start capital: The capital that must be present to receive permission as an investment firm company.
Solvency requirement: The requirement set in accordance with Section 120.
Solvency requirement: The requirement set in accordance with Section 121.
Capital requirement: The requirement set out 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.
Branch: Another business place 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.
Associated agent: A physical or legal person who, 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.
Subsidiary: A company that is subject to controlling influence by a parent company.
Parent company: A company that has one or more subsidiaries.
Group: A parent company with one or more subsidiaries, cf. Section 11.
Narrow links:
a) Direct or indirect links of the type mentioned in point 15, b) capital interests, which means a company's direct or indirect holding of 20 percent or more of the voting rights or capital in a company, or c) several companies' or persons' common link, cf. letter a, with a company.
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, parent investment holding company in the European Union or 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 which, if they had been established in the European Union, would meet the definitions of these terms.
Consolidated level: Based on the consolidated situation.
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 hold 20 percent or more of the voting rights.
Investment firm holding company: A financing institution whose subsidiaries are exclusively or mainly 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, point 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.
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.
Mixed financial holding company: An unregulated parent company which, 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.
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, and of which at least one is an investment firm company, and which does not include a credit institution.
Parent investment firm in the European Union: An investment firm 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.
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.
Mixed financial parent holding company in the European Union: A parent company for an investment firm group that is a mixed financial holding company.
Financing institution: A company that is not a credit institution or an investment firm company, and which is not a purely industrial holding company, and whose main business consists of acquiring capital shares or in exercising one or more of the activities in points 2-12 and 15 in 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.
Qualified share: A direct or indirect holding 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.
Beneficial owner: 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.
Capital interests: A company's direct or indirect holding of 20 percent or more of the capital or voting rights in a company.
Capital shares: Shares in limited companies (shares), in private limited companies (partnerships) and in other companies' equity.
Systemic risk: A risk of disturbance of the financial system that can have serious negative consequences for the financial system and the real economy.
Competent authority: A public authority or a public body in a member state that is officially recognized and vested with authority by national law to supervise investment firms as part of the
The Act contains provisions that implement Directive 2019/2034/EU of the European Parliament and of the Council of 27 November 2019 (IFD), Official Journal of the European Union 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), Official Journal of the European Union 2014, No. L 173, page 349, Directive 2007/44/EC of the European Parliament and of the Council of 5 September 2007 (shareholding directive), Official Journal of the European Union 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), Official Journal of the European Union 2017, No. L 132, page 1, Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 (conglomerates directive), Official Journal of the European Union 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), Official Journal of the European Union 2013, No. L 182, page 19, Commission Directive 2010/43/EU of 1 July 2010, Official Journal of the European Union 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), Official Journal of the European Union 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), Official Journal of the European Union 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), Official Journal of the European Union 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), Official Journal of the European Union 2014, No. L 173, page 190, Directive 2019/879/EU of the European Parliament and of the Council of 20 May 2019 (BRRD II), Official Journal of the European Union 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, Official Journal of the European Union 2019, No. L 150, page 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), Official Journal of the European Union 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), Official Journal of the European Union 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 thus 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, Official Journal of the European Union 2010, No. L 176, page 16, Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010, Official Journal of the European Union 2010, No. L 331, page 12, and Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010, Official Journal of the European Union 2010, No. L 331, page 84.

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

Home state: A country within the European Union or a country with which the Union has concluded an agreement in the financial area, where the undertaking in question has its head office or registered office.
Host state: A country within the European Union or a country with which the Union has concluded an agreement in the financial area, 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.
Compliance with the group capital test: A parent undertaking in a securities firm group's compliance with 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.
Group supervisor: A competent authority responsible for supervising whether parent securities firms in the European Union and securities firms controlled by parent securities holding companies in the European Union or mixed financial holding companies in the European Union comply with the group capital test.
Outsourcing undertaking: A securities firm that outsources activities to a supplier.
Supplier: An undertaking that performs outsourced tasks for an outsourcing undertaking.
Further outsourcing: A supplier's outsourcing of tasks that it performs under an agreement with an outsourcing undertaking to a sub-supplier and the sub-supplier's possible further outsourcing of the tasks to the next link in the chain of sub-suppliers and any further outsourcing to other links in the chain of sub-suppliers.
Management body: The body or bodies in a securities firm, at a market operator or at a data reporting service provider, which are appointed in accordance with national legislation, have the power to determine the entity's strategy, objectives and general management principles, and which supervise and monitor management's decision-making and include persons who perform the entity's daily management.
Management body in its supervisory function: Management body acting in its function of controlling and monitoring management's decision-making.
Senior management: The natural persons who have management functions in an investment firm, at a market operator or at a data reporting service provider, and who are responsible to the management body for the entity's daily management, including for the implementation of the firm's policies for the distribution of services and products to customers and of its personnel policy.
Variable remuneration: Remuneration schemes where part of the remuneration is not known in advance, including bonus schemes, performance contracts, one-off payments and other similar schemes that are not part of the fixed remuneration.
Gender-neutral remuneration policy: A remuneration policy based on equal pay for equal work or work of equal value regardless of the employee's gender.
Execution of orders for investors' account: Entering into agreements to buy or sell one or more financial instruments on behalf of investors.
Trading for own account: Trading over own inventory, which results in transactions with one or more financial instruments.
Exposure: The sum of all exposures to a customer or a group of interconnected customers, which entails a credit risk for the securities firm, and capital shares issued by the customer or by a group of interconnected customers. As regards Sections 88 and 137, the following exposures are excluded:

a) In foreign exchange transactions: Exposures arising in connection with the normal settlement of a transaction, for a period of 48 hours after payment has been made.

b) In the purchase or sale of transferable securities: Exposures arising in connection with the normal settlement of a transaction, for a period of 5 working days after payment has been made or the transferable securities have been delivered, whichever date occurs first.

c) In payment intermediation, including the execution of payment orders, clearing and settlement of transferable securities in any currency and correspondent bank or offering clearing, settlement and deposit of financial instruments to customers: Exposures relating to delayed receipt of financing and other exposures arising as a result of customer activity, and which do not last longer than the following working day.

d) In payment intermediation, including the execution of payment orders, clearing and settlement of transferable securities in any currency and correspondent bank: Intraday exposures with institutions providing these services.

Derivatives: The financial instruments defined in Annex 2, items 4-10.
Structured deposits: Deposits as defined in Article 2(1)(c) of Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes, which are to be repaid in full at maturity using provisions that any interest or premium is paid or is at risk according to a formula that includes factors such as an index or a combination of indices, except for deposits with variable interest rates, if the return is directly linked to an interest index such as EURIBOR or LIBOR, a financial instrument or a combination of financial instruments, a commodity or a combination of commodities or other tangible or intangible non-transferable assets or an exchange rate or a combination of exchange rates.
Multilateral system: Any system or facility where the buying and selling interests of various third parties in financial instruments can be brought together.
Multilateral Trading Facility (MTF): A multilateral system operated in accordance with the rules in Chapter 17, 18, 20, 22 and 23 of the Capital Markets Act.
Organised Trading Facility (OTF): A multilateral system that is not a regulated market or a multilateral trading facility (MTF).
Regulated market: A multilateral system operated or managed by a market operator, which within the system and in accordance with fixed rules brings together the buying and selling interests of various third parties in financial instruments in a way that results in the conclusion of an agreement on financial instruments admitted to trading under the rules or systems of that market, and which has been granted authorization and operates in accordance with the regulations and Part III of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments.
Trading venue: A regulated market, a multilateral trading facility (MTF) or an organised trading facility (OTF).
Broker: An undertaking that is authorized to provide or perform investment services and activities as referred to in Annex 1, Section A, item 4, and which provides services relating to the custody and administration of shares with voting rights in companies whose shares are admitted to trading on a regulated market.
Asset manager: An undertaking that is authorized to provide or perform investment services and activities as referred to in Annex 1, Section A, item 4, and which provides services relating to discretionary portfolio management of shares with voting rights in companies whose shares are admitted to trading on a regulated market.
Advisory proxy: A legal person that professionally and commercially analyzes information from listed companies, and, if relevant, other information about the listed companies in order to enable investors to make informed decisions in connection with voting in the companies in question by providing research, advice or recommendations relating to the exercise of voting rights.
Accessory service undertaking: An undertaking whose main activity consists of the ownership and management of real estate or the management of data processing services or a similar activity that has an accessory character in relation to one or more securities firms' main activity.
Write-down eligible liabilities: Liabilities that are subject to bail-in and that are subject to Section 202 or Section 205.
Subordinated write-down eligible instruments: Instruments that meet the conditions in Article 72a, Article 72b(1) and (2), and Article 72c of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions.
Resolution entity: An undertaking that is subject to resolution measures in a resolution plan drawn up in accordance with Section 184, or an undertaking that is subject to resolution measures in a group resolution plan drawn up in accordance with Section 186.
Resolution group: A resolution entity and its subsidiaries. A subsidiary is not included in a resolution group if

a) the subsidiary itself is a resolution entity,

b) the subsidiary is a subsidiary of another resolution entity, or

c) the subsidiary is established in a third country, unless the subsidiary is included in the resolution group in accordance with the resolution plan.

Commodity and emission allowance trader: An undertaking whose main activity consists exclusively of providing or performing investment services and activities in relation to commodity derivatives, commodity derivative contracts, derivatives of emission allowances or emission allowances as referred to in items 4-7 and 9-11 of Annex 2.
Severance pay: Any form of payment to which the recipient is entitled in connection with their departure, and which does not

a) constitute salary or the value of personnel benefits during the notice period,

b) constitute reasonable compensation for assuming non-compete clauses or customer clauses, or

c) result from mandatory legislation.

Groups

Section 11. A parent undertaking together with one or more subsidiaries constitutes a group. An undertaking can only have one direct parent undertaking. If several undertakings meet one or more of the criteria in Section 12, it is only the undertaking that actually exercises decisive influence over the undertaking's economic and operational decisions that is considered to be the parent undertaking.

Section 12. Decisive influence is the power to direct the economic and operational decisions of a subsidiary.

Paragraph 2. Decisive influence in relation to a subsidiary exists when the parent undertaking directly or indirectly through a subsidiary owns more than half of the voting rights in an undertaking, unless it can be clearly demonstrated in special cases that such ownership does not constitute decisive influence.

Paragraph 3. If a parent undertaking does not own more than half of the voting rights in an undertaking, decisive influence exists if the parent undertaking has

the right to exercise more than half of the voting rights by virtue of an agreement with other investors,
the power to direct the financial and operational affairs of an undertaking in accordance with the articles of association or an agreement,
the power to appoint or remove the majority of the members of the senior management body and this body holds decisive influence over the undertaking, or
the right to exercise the actual majority of votes at the general meeting or in a corresponding body and thereby holds the actual decisive influence over the undertaking.

Paragraph 4. The existence and effect of potential voting rights, including subscription rights and purchase options on capital shares, which can currently be exercised or converted, shall be taken into account when assessing whether an undertaking has decisive influence.

Paragraph 5. In calculating the voting rights in a subsidiary, voting rights relating to capital shares held by the subsidiary itself or its subsidiaries shall be disregarded.

Part II
Licensing and Business etc.
Chapter 3
Licensing and Application
Securities Dealers and Licensing as a Securities Firm

Section 13. Undertakings that provide or perform investment services and activities covered by Annex 1, Section A, with financial instruments covered by Annex 2 as a regular occupation or on a professional basis are securities dealers and must have authorization as a securities dealer, unless the business already has authorization under Section 7(1), Section 8(1), or Section 10(2) of the Financial Business Act. Securities dealers may also perform one or more of the accessory services covered by Annex 1, Section B. Authorization to perform one or more of these accessory services may only be granted in connection with authorization for the investment services and activities covered by Annex 1, Section A. The authorization must specify the activities in Annex 1 that the authorization covers.

Paragraph 2. Securities dealers who do not have authorization under Section 7(1), Section 8(1), or Section 10(2) of the Financial Business Act are securities firms. Securities firms may only provide or perform investment services and activities and accessory services covered by Annex 1, cf. however Sections 15 and 16.

Paragraph 3. Securities dealers, Danmarks Nationalbank and the State Administration, as well as credit institutions, investment firms and administration companies that meet the conditions in Sections 5, 38, 39 and 41-43, have the exclusive right to provide or perform investment services and activities covered by Annex 1, Section A, with financial instruments covered by Annex 2 and with the instruments covered by regulations established pursuant to Section 4(2) of the Capital Markets Act, cf. however Section 11(2) and Section 95(2) of the Act on Alternative Investment Fund Managers etc.

Paragraph 4. Paragraph 3 does not apply to an undertaking's execution of transactions with and intermediation of securities that the undertaking itself issues.

Paragraph 5. The Financial Supervisory Authority establishes detailed rules on which natural and legal persons in addition to those covered by paragraphs 2 and 3 may provide or perform investment services and activities covered by Annex 1, Section A.

Section 14. A securities firm that has authorization to provide or perform investment services and activities covered by Annex 1, Section A, items 3 and 6, must have authorization as a credit institution under Section 7 of the Financial Business Act no later than on the date when

the average of the total monthly assets calculated over a period of 12 consecutive months amounts to or exceeds 30 billion euros, or
the average of the total monthly assets calculated over a period of 12 consecutive months is less than 30 billion euros and the securities firm is part of a group where the total value of the consolidated assets of all the group's undertakings, which individually have total assets of less than 30 billion euros, and which perform activities as referred to in Annex 1, Section A, items 3 and 6, amounts to or exceeds 30 billion euros, both calculated as an average over a period of 12 consecutive months.

Paragraph 2. A securities firm covered by paragraph 1, which has applied for authorization under Section 7 of the Financial Business Act, may provide or perform investment services and activities that the securities firm is authorized to perform under its authorization under Section 13, until the Financial Supervisory Authority has made a decision on whether authorization as a credit institution may be granted under Section 7 of the Financial Business Act.

Investment services and activities with other instruments and contracts

Section 15. The Financial Supervisory Authority may authorize that securities firms may provide or perform investment services and activities, cf. Annex 1, Section A, with instruments and contracts that are covered by the Financial Supervisory Authority's decision pursuant to Section 4(2) of the Capital Markets Act.

Section 16. The Financial Supervisory Authority may establish rules on which instruments and contracts in addition to financial instruments covered by Annex 2 securities firms may provide or perform investment services and activities with.

Obligation and exclusive right to names

Section 17. Securities firms have the exclusive right to use the designation securities firm in their name. Other undertakings may not use names or designations for their business that are suitable to create the impression that they are securities firms.

Paragraph 2. Securities firms that are members of a regulated market have the exclusive right to use the designation stockbroker and may use this designation in their name instead of securities firm. Other undertakings may not use names or designations for their business that are suitable to create the impression that they are stockbrokers.

Paragraph 3. Securities firms must use the designation securities firm or stockbroker in their name.

Start-up capital requirements

Section 18. An undertaking applying for authorization as a securities firm must have a start-up capital amounting to at least:

75,000 euros for undertakings applying for authorization to provide or perform one or more investment services and activities covered by Annex 1, Section A, items 1, 2, 4, 5 and 7, and which do not have authorization to keep customers' money or securities.
150,000 euros for undertakings applying for authorization to provide or perform investment services and activities that are not covered by items 1, 3 or 4.
750,000 euros for undertakings applying for authorization to provide or perform one or both of the investment services and activities covered by Annex 1, Section A, items 3 and 6.
750,000 euros for undertakings applying for authorization to provide or perform both of the investment services and activities covered by Annex 1, Section A, items 3 and 9.

Paragraph 2. The start-up capital must be composed in accordance with Article 9 of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms.

Declaration regarding the keeping of customers' money and securities

Section 19. Securities firms covered by Section 18(1), item 1, must submit a declaration to the Financial Supervisory Authority once a year stating that the securities firm does not keep customers' funds or securities. The declaration must be signed by the securities firm's board of directors and management.

Conditions for granting authorization

Section 20. The Financial Supervisory Authority grants authorization as a securities firm, cf. Section 13, upon application, when all of the following conditions are met:

The requirements for authorization in Section 13(1)-(3) are met.
The requirement for start-up capital in Section 18 is met.
The members of the applicant's board of directors and management meet the requirements in Sections 75, 76 and 78.
The holders of qualifying holdings meet the requirements in Section 60(1).
There are no close links between the applicant and other undertakings or persons that would hinder the performance of the Financial Supervisory Authority's tasks.
The legislation in a country outside the European Union, with which the Union has not concluded an agreement in the financial area, regarding an undertaking or a person with whom the applicant has close links, will not hinder the performance of the Financial Supervisory Authority's tasks.
The applicant's organizational and administrative arrangements are sound.
The applicant has its head office and registered office in Denmark.
The applicant is affiliated with the deposit and investor guarantee scheme.

Paragraph 2. The Financial Supervisory Authority may refuse to grant authorization if the purpose of placing the head office and registered office in Denmark is solely to avoid being subject to the legislation in the country where the majority of the applicant's customers are resident.

Requirements for application for authorization

Section 21. An application for authorization to operate a securities firm must contain the information necessary for the Financial Supervisory Authority to assess whether the conditions in Section 20 are met, including information on the size of the qualifying holdings and information on the organizational and administrative arrangements for the proposed securities firm. An application for authorization must also contain a business plan drawn up by the applicant containing information on the nature of the proposed business.

Processing time limits

Section 22. If the Financial Supervisory Authority rejects an application for authorization to operate a securities firm, this must be justified and communicated to the applicant no later than 6 months after receipt of the application, or, if the application is incomplete, no later than 6 months after the applicant has submitted the information necessary to make the decision. A decision must in any case be made no later than 12 months after receipt of the application. If the Financial Supervisory Authority has not made a decision no later than 6 months after receipt of a complete application for authorization, the applicant may bring the matter before the courts.

Suspension of processing of application

Section 23. The Financial Supervisory Authority may suspend the processing of an application for authorization to operate a securities firm from applicants that are directly or indirectly owned by companies with registered office in a country outside the European Union, with which the Union has not concluded an agreement in the financial area, when the suspension is intended to comply with a provision on suspension from the Commission in accordance with EU acts in the financial area.

Authorization for bridge institution

Section 24. The Financial Supervisory Authority may grant authorization to provide or perform investment services and activities, cf. Section 13, to a bridge institution established in accordance with Section 21(1) of the Act on Restructuring and Resolution of Certain Financial Undertakings, which does not meet all conditions for authorization, if

The Danish Financial Supervisory Authority assesses that it is necessary for the purpose of achieving resolution objectives. However, 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 must be met. The Danish Financial Supervisory Authority simultaneously sets a deadline for compliance with the requirements to obtain permission in accordance with Section 13, subsection 1, cf. Section 20.

Subsection 2. The Danish Financial Supervisory Authority may, when Financial Stability establishes a bridge institution in accordance with Section 21, subsection 1, of the Act on Restructuring and Resolution of Certain Financial Undertakings, exempt Financial Stability from complying with the rules for financial holding companies and mixed financial holding companies set out in Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, this Act or rules issued pursuant to the Act, taking into account the purpose of the relevant rules and the resolution objectives, cf. however subsection 3. The Danish Financial Supervisory Authority sets a deadline for Financial Stability's exemption from the rules for financial holding companies and mixed financial holding companies. The deadline may be extended if the conditions in Section 22, subsection 4, of the Act on Restructuring and Resolution of Certain Financial Undertakings are met.

Subsection 3. Notwithstanding subsection 2, Chapter 12 on the disclosure of confidential information and Section 136 apply to Financial Stability as a financial holding company or mixed financial holding company.

Registration with the Danish Business Authority
Section 25. When the Danish Financial Supervisory Authority has granted permission as a fund brokerage company, cf. Section 20, the Danish Business Authority may carry out the necessary registrations.

Subsection 2. Fund brokerage companies must, upon notification for registration, cf. subsection 1, and upon notification of articles of association amendments, submit a dated copy of the articles of association with the complete new wording to the Danish Business Authority, which forwards a copy to the Danish Financial Supervisory Authority.

Company form, share capital and own shares etc.
Section 26. Fund brokerage companies must be joint-stock companies with a board of directors and management. Fund brokerage holding companies must be joint-stock companies or limited liability companies.

Subsection 2. The share capital or limited liability capital must be paid in full. Intangible assets cannot be used to pay for share capital or limited liability capital.

Subsection 3. In fund brokerage companies, division of the share capital into share classes with different voting rights is not permitted.

Subsection 4. Fund brokerage companies may not acquire own shares for ownership or pledge against consideration, if the nominal value of the fund brokerage company's and its subsidiaries' total holding of shares in the fund brokerage company as a result of the acquisition will exceed 10 percent. The permitted holding of own shares includes shares acquired by a third party in its own name, but for the account of the fund brokerage company.

Subsection 5. The Danish Financial Supervisory Authority may set rules on the issuance of debt instruments with terms for conversion into share or limited liability capital by fund brokerage companies and fund brokerage holding companies, including to what extent Chapter 10 of the Companies Act applies.

Redemption of shares etc.
Section 27. Sections 110, 286, 306 and 318 k of the Companies Act do not apply to fund brokerage companies and fund brokerage holding companies.

Chapter 4
Affiliated agents and other permitted business Affiliated agents
Section 28. A fund brokerage company may appoint a natural or legal person as an affiliated agent.

Subsection 2. An affiliated agent may carry out the following activities on behalf of the fund brokerage company:

Marketing the fund brokerage company's investment services and activities and ancillary services, cf. Annex 1.
Concluding customer agreements for investment services, cf. Annex 1.
Receiving and transmitting orders for investors' account regarding one or more of the instruments listed in Annex 2, cf. Annex 1, Section A, No. 1, to the fund brokerage company that has appointed the agent.
Providing investment advice, cf. Annex 1, Section A, No. 5.
Placing financial instruments without a firm commitment under Annex 1, Section A, No. 7.
Safeguarding customers' money and financial instruments on behalf of the fund brokerage company that has appointed the agent.

Subsection 3. An affiliated agent appointed by a fund brokerage company that is a distributor of structured deposits may sell or advise on structured deposits.

Fund brokerage company's responsibility for and supervision of affiliated agents
Section 29. A fund brokerage company must ensure that an affiliated agent complies with the rules set out in this Act for carrying out activities covered by Section 28, subsections 2 and 3, rules issued pursuant to this Act and regulations issued pursuant to Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments. The fund brokerage company must further ensure that persons at the affiliated agent meet the requirements in Section 30, subsection 2, No. 2.

Subsection 2. If an affiliated agent safeguards customers' money and financial instruments, the fund brokerage company must ensure that the agent complies with the organizational requirements following from Section 95 and rules issued pursuant thereto.

Subsection 3. A fund brokerage company is economically responsible for the activities that an affiliated agent carries out in accordance with Section 28, subsections 2 and 3. The fund brokerage company must further take all necessary measures to ensure that the agent's other activities do not harm the activities that the agent carries out on behalf of the fund brokerage company.

Subsection 4. A fund brokerage company must ensure that an affiliated agent, at the latest in connection with a contact with a customer, informs that the person is an affiliated agent and the name of the fund brokerage company that the affiliated agent represents.

Registration of affiliated agents established in this country
Section 30. An affiliated agent established in this country must register in the Danish Financial Supervisory Authority's register of affiliated agents.

Subsection 2. The Danish Financial Supervisory Authority registers an affiliated agent when the following conditions are met:

The agent's board of directors and management or the management responsible, if the business is operated as a partnership or sole proprietorship, demonstrate that they or the person in question
a) possess the experience, professional competence and sufficient knowledge of the services that the business is to provide, b) are not bankrupt and c) are not subject to criminal liability for violation of financial legislation or other relevant legislation, if the violation entails a risk that the person cannot perform their duties or position in a satisfactory manner.
The agent declares that the persons who carry out activities covered by Section 28, subsections 2 and 3, possess adequate knowledge and experience to be able to provide such services and can produce a certificate of good conduct without notation of unconditional imprisonment for 4 months or more for violation of Chapter 28 of the Criminal Code.
The fund brokerage company to which the agent is affiliated declares that it bears any economic responsibility that may follow from the agent's business.

Subsection 3. An affiliated agent can only be affiliated with one company.

Subsection 4. If an agent agreement between a fund brokerage company and an affiliated agent ceases, the business must notify the Danish Financial Supervisory Authority thereof as soon as possible. The Danish Financial Supervisory Authority then deletes the affiliated agent from the Danish Financial Supervisory Authority's register of affiliated agents.

Other permitted business
Section 31. Fund brokerage companies may, regardless of Section 13, subsection 1, jointly with others carry out other business, if

the fund brokerage company does not directly or indirectly have decisive influence on the business,
the fund brokerage company does not operate the business together with other fund brokerage companies or financial undertakings under the Act on Financial Business that are part of a group with the fund brokerage company, and
the business is operated in a company other than the fund brokerage company.

Subsection 2. If the fund brokerage company or a group comes to operate other business in violation of subsection 1 through acquisition, merger etc., the Danish Financial Supervisory Authority may set a deadline for the disposal of the business, if an immediate disposal would be associated with an economic loss.

Section 32. Fund brokerage companies may only have subsidiaries that are fund brokerage companies or investment firms, cf. however subsection 2.

Subsection 2. The Danish Financial Supervisory Authority may grant permission for a fund brokerage company to establish subsidiaries that are not fund brokerage companies or investment firms and that carry out one or more ancillary services covered by Annex 1, Section B. If there is reason to doubt that the fund brokerage company's administrative structure and financial situation are sound as a basis for the intended establishment, the Danish Financial Supervisory Authority will not grant permission. The Danish Financial Supervisory Authority may withdraw the permission if the conditions for the permission are no longer met.

Subsection 3. Fund brokerage companies that have obtained permission to establish subsidiaries in accordance with subsection 2 must, when calculating the capital requirement based on the fund brokerage company's fixed overheads in accordance with Article 13 of Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, include the fixed overheads in the established subsidiaries.

Chapter 5
Cross-border business
Fund brokerage companies' establishment of branches in another EU/EEA country
Section 33. A fund brokerage company that intends to establish a branch in another country within the European Union or in a country with which the Union has concluded an agreement in the financial field must notify this to the Danish Financial Supervisory Authority together with the following information about the branch:

In which country the branch is intended to be established.
A business plan containing information about the organization and the planned investment services and activities and any ancillary services covered by Annex 1.
The branch's address.
The names of the branch's management members.
Information on whether the branch intends to use affiliated agents, and the identity of these.

Subsection 2. If the fund brokerage company intends to carry out business through an affiliated agent established in another country within the European Union or in a country with which the Union has concluded an agreement in the financial field, without establishing a branch, the fund brokerage company must notify this to the Danish Financial Supervisory Authority together with the following information:

In which country the affiliated agent is established.
A description of the affiliated agent's business, including a description of the intended use of the affiliated agent.
Information about the fund brokerage company's organization, including reporting lines indicating how the relevant affiliated agent is integrated into the business structure.
The name and address of the affiliated agent and the affiliated agent's management.

Subsection 3. Upon establishment of a branch or use of an affiliated agent established in a country within the European Union or in a country with which the Union has concluded an agreement in the financial field, the Danish Financial Supervisory Authority must, at the latest 3 months after receipt of the information, forward the information mentioned in subsections 1 and 2, together with a declaration that the planned activities are covered by the fund brokerage company's permission, and information about the investor and deposit guarantee scheme to the supervisory authorities in the host country, cf. however subsection 4. The Danish Financial Supervisory Authority simultaneously notifies the fund brokerage company that the information has been forwarded to the supervisory authorities in the host country.

Subsection 4. The Danish Financial Supervisory Authority may refrain from forwarding the information in accordance with subsection 3 if there is reason to doubt that the fund brokerage company's administrative structure and financial situation are sound as a basis for the intended establishment. The Danish Financial Supervisory Authority notifies the fund brokerage company thereof at the latest 2 months after receipt of the information in subsections 1 and 2.

Subsection 5. The fund brokerage company may commence business through a branch or an affiliated agent at the latest 2 months after the host country's supervisory authorities have received information in accordance with subsection 3, cf. however subsection 4.

Subsection 6. The fund brokerage company must notify the Danish Financial Supervisory Authority of any change in the circumstances reported in accordance with subsection 1 or 2 at the latest 1 month before the change is made. If it is not possible for the fund brokerage company to notify the Danish Financial Supervisory Authority of the change at the latest 1 month before the change is made, notification must be made as soon as possible thereafter. The Danish Financial Supervisory Authority notifies the host country's supervisory authorities of such changes.

Fund brokerage companies' cross-border provision of services in another EU/EEA country
Section 34. A fund brokerage company that intends to carry out cross-border provision of services in another country within the European Union or in a country with which the Union has concluded an agreement in the financial field must notify this to the Danish Financial Supervisory Authority together with the following information:

In which country the services are intended to be provided.
A business plan containing information about the planned investment services and activities and any ancillary services covered by Annex 1.
Information on whether the fund brokerage company intends to use affiliated agents established in this country, and the identity of these.

Subsection 2. The Danish Financial Supervisory Authority must, at the latest 1 month after receipt of the information in subsection 1, forward this together with a declaration that the planned services are covered by the fund brokerage company's permission. The Danish Financial Supervisory Authority simultaneously notifies the fund brokerage company that the information has been forwarded to the supervisory authorities in the host country. The planned services may commence when the Danish Financial Supervisory Authority has forwarded the information to the supervisory authorities in the host country.

Subsection 3. The fund brokerage company must notify the Danish Financial Supervisory Authority of any change in the circumstances reported in accordance with subsection 1 at the latest 1 month before the change is made. If it is not possible for the fund brokerage company to notify the Danish Financial Supervisory Authority of the change at the latest 1 month before the change is made, notification must be made as soon as possible thereafter. The Danish Financial Supervisory Authority notifies the host country's supervisory authorities of such changes.

Fund brokerage companies' establishment of branches in a third country
Section 35. A fund brokerage company that intends to establish a branch in a country outside the European Union, with which the Union has not concluded an agreement in the financial field, must have the Danish Financial Supervisory Authority's permission for this. If there is reason to doubt that the fund brokerage company's administrative structure and financial situation are sound as a basis for the intended establishment, the Danish Financial Supervisory Authority may refuse an application for permission.

Fund brokerage companies' cross-border provision of services in a third country
Section 36. A fund brokerage company that intends to provide services in a country outside the European Union, with which the Union has not concluded an agreement in the financial field, must, at the latest 1 month before the planned services commence, notify this to the Danish Financial Supervisory Authority together with information about the investment services and activities with or without ancillary services covered by Annex 1 that are intended to be provided or carried out, and in which country. If it is not possible to notify the Danish Financial Supervisory Authority thereof at the latest 1 month before the planned services commence, notification must be made as soon as possible thereafter.

Subsection 2. The fund brokerage company must notify the Danish Financial Supervisory Authority of any change in the circumstances reported in accordance with subsection 1 at the latest 1 month before the change is made. If it is not possible to notify the Danish Financial Supervisory Authority of the change at the latest 1 month before the change is made, notification must be made as soon as possible thereafter.

Fund brokerage companies' subsidiaries abroad
Section 37. A fund brokerage company that intends to establish a subsidiary that is an investment firm in a country outside the European Union, with which the Union has not concluded an agreement in the financial field, must have the Danish Financial Supervisory Authority's permission for this. If there is reason to doubt that the fund brokerage company's administrative structure and financial situation are sound as a basis for the intended establishment, the Danish Financial Supervisory Authority may refuse an application for permission.

EU/EEA investment firms' establishment of branches in Denmark
Section 38. An investment firm that has been granted permission in another country within the European Union or in a country with which the Union has concluded an agreement in the financial field may commence carrying out business in this country through a branch or through an affiliated agent established in this country at the latest 2 months after the Danish Financial Supervisory Authority has received notification thereof from the supervisory authorities in the home country, cf. subsections 2 and 3. The branch may provide or carry out investment services and activities with or without ancillary services covered by Annex 1, if the investment services and activities are covered by the investment firm's permission in the home country. The Companies Act provisions on branches of foreign capital companies apply to the branch.

Subsection 2. The Danish Financial Supervisory Authority must receive the following information about the branch from the home country's supervisory authorities:

A business plan containing information about the organization and the planned investment services and activities and any ancillary services covered by Annex 1.
A declaration that the planned activities are covered by the investment firm's permission in the home country.
The branch's address.
The names of the branch's management members.
Information on whether the branch intends to use affiliated agents, and the identity of these.
Information on any guarantee scheme in the home country that covers the branch's investors.

Subsection 3. If the investment firm intends to carry out business in this country through an affiliated agent established in this country, without establishing a branch, the Danish Financial Supervisory Authority must receive the following information from the home country's supervisory authorities:

A description of the affiliated agent's business, including a description of the intended use of the affiliated agent.
Information about the investment firm's organization, including reporting lines indicating how the relevant agent is integrated into the business structure.
The affiliated agent's name and address and the affiliated agent's management.

Subsection 4. The Danish Financial Supervisory Authority must receive notification of any change in the circumstances reported in accordance with subsections 2 and 3 at the latest 1 month before the change is made. If it is not possible to notify the Danish Financial Supervisory Authority of the change at the latest 1 month before the change is made, notification must be made as soon as possible thereafter.

EU/EEA investment firms' cross-border provision of services in Denmark
Section 39. An investment firm that has been granted permission in a country within the European Union or in a country with which the Union has concluded an agreement in the financial field may commence carrying out cross-border provision of services in this country when the Danish Financial Supervisory Authority has received notification thereof from the supervisory authorities in the home country. The investment firm may provide or carry out investment services and activities with or without ancillary services covered by Annex 1, if the investment services and activities are covered by the investment firm's permission in the home country.

Subsection 2. The Danish Financial Supervisory Authority must receive the following information from the home country's supervisory authorities:

A business plan containing information about the planned investment services and activities and any ancillary services covered by Annex 1.
A declaration that the services are covered by the investment firm's permission in the home country.
Information on whether the investment firm intends to use affiliated agents established in the home country, and the identity of these.

Investment firms' use of name
Section 40. An investment firm may use the same name as the investment firm uses in its home country. If there is a risk of confusion with another name used in this country, the Danish Business Authority may require an explanatory addition.

Third-country investment firms' cross-border provision of services in Denmark
Section 41. An investment firm that has been granted permission in a country outside the European Union, with which the Union has not concluded an agreement in the financial field, and for which country the European Commission has not adopted a decision as referred to in Article 47, subsection 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, must have permission from the Danish Financial Supervisory Authority to provide or carry out investment services and activities with or without ancillary services as set out in Annex 1 in this country to approved counterparties or professional customers.

Subsection 2. The Danish Financial Supervisory Authority may refuse to grant permission in accordance with subsection 1 if the legislation in the country where the investment firm has been granted permission and is under supervision will make it difficult for the Danish Financial Supervisory Authority to perform its tasks.

Subsection 3. The Danish Financial Supervisory Authority may withdraw a permission granted in accordance with subsection 1 if the conditions for the permission are no longer met, or if the Danish Financial Supervisory Authority cannot normally collect the fee payment in accordance with Section 363 b, subsection 4, of the Act on Financial Business.

Subsection 4. The Danish Financial Supervisory Authority sets rules on the application procedure in accordance with subsection 1, including what documentation must be sent to the Danish Financial Supervisory Authority in connection with the application.

Establishment of branch by third-country investment firms' investment services and activities to retail customers or customers who can be treated as professional customers upon request
Section 42. An investment firm that has been granted permission in a country outside the European Union, with which the Union has not concluded an agreement in the financial field, that intends to provide or carry out investment services and activities with or without ancillary services as set out in Annex 1 in this country to retail customers or customers who can be treated as professional customers upon request, must have permission to establish a branch in accordance with Section 43, subsection 1, cf. however subsection 2.

Subsection 2. There is no requirement for branch establishment in accordance with subsection 1 for the provision or carrying out of investment services and activities that are initiated exclusively at the customer's own initiative. Such an initiative does not, however, give the investment firm the right to market other investment services and activities, including new categories of investment products, to the customer in any other way than through a branch.

Subsection 3. If the investment firm, including through an entity acting on behalf of the investment firm, or having close links to the investment firm, or any person acting on behalf of this entity, contacts

se til kunder eller potentielle kunder her i landet, betragtes det ikke som ydelse eller udførelse af investeringsservice og -aktiviteter, der udelukkende er iværksat på kundens eget initiativ, medmindre der er tale om en koncernintern forbindelse.

Tredjelandsinvesteringsselskabers filialetablering i Danmark § 43. An investment firm authorized in a country outside the European Union, with which the Union has not concluded an agreement in the financial sector, must obtain permission from the Danish Financial Supervisory Authority to provide or perform investment services and activities with or without ancillary services as specified in Annex 1 in this country through a branch.

Subsection 2. The investment firm must submit the following information to the Danish Financial Supervisory Authority for the processing of the application for branch permission:

The name of the competent authority in the home country and, if there are several competent authorities, information on their respective areas of competence.
Information on the investment firm's name, legal form, registered office and address, members of the management body, and relevant shareholders.
A description of the branch's business, including information on organization and planned activities, and a description of any outsourcing of significant operational functions to third parties.
The names of the persons responsible for the management of the branch, and documentation that they meet the requirements of § 20, subsection 1, no. 3, and § 78.
Information on the starting capital over which the branch has free disposal.

Subsection 3. The Danish Financial Supervisory Authority grants permission pursuant to subsection 1 when it is demonstrated that all the following conditions are met:

The activities for which permission is sought are covered by the investment firm's authorization, and the investment firm is subject to supervision by a competent authority in the home country.
There is an international cooperation agreement between the Danish Financial Supervisory Authority and the competent authorities in the investment firm's home country, containing provisions on the exchange of information with a view to preserving market integrity and protecting customers.
The branch has free disposal of sufficient starting capital.
The branch's management members meet the requirements of § 20, subsection 1, no. 3, and § 78.
The investment firm's home country has concluded an agreement with Denmark that fully complies with the standards in Article 26 of the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention on Income and on Wealth regarding income and wealth, and ensures effective exchange of information on tax matters, including multilateral tax agreements.
The investment firm participates in an investor compensation scheme approved or recognized in accordance with Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes.
The branch will be able to meet the requirements of §§ 44-48 and 94, § 95, subsections 1, 2, and 7, § 96, and § 108 and rules issued pursuant thereto, §§ 88-95, 98-109, 114, and 135-140, § 196, subsection 2, and §§ 214 and 218 in the Capital Markets Act and Articles 3-26 in Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and measures adopted pursuant thereto.

Subsection 4. The Danish Financial Supervisory Authority notifies within 6 months after receipt of a complete application whether permission can be granted.

Subsection 5. §§ 163 and 164 apply mutatis mutandis to the withdrawal of permission granted pursuant to subsection 1. In addition to the cases mentioned in §§ 163-164, the Danish Financial Supervisory Authority may withdraw a permission granted pursuant to subsection 1 if the Danish Financial Supervisory Authority cannot normally collect the tax payment pursuant to § 363 b, subsection 3, in the Act on Financial Business.

Reporting requirements for branches of third-country investment firms § 44. A branch of an investment firm authorized in a country outside the European Union, with which the Union has not concluded an agreement in the financial sector, and which has obtained permission pursuant to § 42, subsection 1, and § 43, subsection 1, must annually report the following to the Danish Financial Supervisory Authority:

The size and scope of the investment services and activities covered by Annex 1, Section A, provided or performed by the branch.
For investment firms performing proprietary trading as specified in Annex 1, Section A, no. 3, the investment firm's monthly minimum, average, and maximum exposure to counterparties located in the European Union.
For investment firms providing one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, the total value of financial instruments originating from counterparties located in the European Union for which sales guarantees have been given, or which have been placed on the basis of firm commitment within the preceding 12 months.
The turnover and the total value of the assets corresponding to the investment services and activities mentioned in no. 1.
A detailed description of the investor protection schemes available to the branch's customers, including the customers' rights resulting from the investor compensation scheme.
The risk management policy and risk management arrangements used by the branch in connection with the investment services and activities mentioned in no. 1.
The governance arrangements, including persons with key functions in relation to the branch's activities.

Subsection 2. The Danish Financial Supervisory Authority may set detailed rules on the information that investment firms must report to the Danish Financial Supervisory Authority for the purpose of the Danish Financial Supervisory Authority's monitoring of the activities in the branches of investment firms.

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Section III
Good Conduct etc. and Shareholder Rights
Chapter 6
Good Conduct etc.
§ 45. Securities firms and securities firm holding companies with subsidiaries that do not meet the conditions for classification as small and non-interconnected securities firms must be operated in accordance with fair business conduct and good practice within the business area.

Subsection 2. The Minister for Business Affairs sets detailed rules on fair business conduct and good practice for securities firms.

Subsection 3. The Minister for Business Affairs sets rules on cost, commission, price, and risk information for financial services.

Subsection 4. The Minister for Business Affairs sets rules on the delivery of a document with central investor information or significant investor information to retail investors by securities firms when brokering shares in UCITS or in an alternative investment fund.

Subsection 5. The Danish Financial Supervisory Authority may, after consultation with representatives of consumers and the relevant financial industry organizations, prepare and publish guidelines on fair business conduct and good practice in specified areas that can be considered significant, particularly from the consumer's perspective.

Subsection 6. Actions contrary to rules established pursuant to subsection 2 incur liability for damages in accordance with the general rules of Danish law.

§ 46. The Minister for Business Affairs sets rules on competence requirements for employees in securities firms who provide advice on financial instruments.

Processing of personal identification numbers
§ 46 a. Securities dealers and securities firms may process information on personal identification numbers for the purpose of necessary unique identification in relation to existing customer relationships when performing administrative tasks and advice.

Independent investment advice
§ 47. A securities firm providing investment advice may only inform the customer that this is done on an independent basis if advice is given on a broad range of the financial instruments available on the market, which differ in type and issuers or product providers, so as to ensure that the customer's investment objectives are met appropriately. The financial instruments on which advice is given must not be limited to financial instruments issued or offered by the securities firm itself or by other legal persons that either have narrow connections with the securities firm or have such close legal or economic connections with the securities firm that this may involve a risk of weakening the independent basis for the advice provided.

Subsection 2. Subsection 1 applies mutatis mutandis to securities firms that advise on or broker structured deposits.

Prohibition on receiving and retaining third-party payments § 48. A securities firm providing investment advice on an independent basis pursuant to § 47, or exercising discretionary portfolio management, must not receive and retain fees, commissions, or other monetary and non-monetary benefits paid by a third party or a person acting on behalf of a third party in connection with the delivery of the relevant service to the securities firm's customers. If the securities firm receives fees, commissions, or other monetary and non-monetary benefits, they must be passed on to the customer as soon as possible.

Subsection 2. Subsection 1, first sentence, does not apply to non-monetary benefits of minor value that can increase the quality of the service delivered to the customer and that cannot prevent the relevant securities firm from complying with its duty to act in the customer's best interest. If a securities firm receives and retains non-monetary benefits of minor value, this must be clearly disclosed to the customer.

Subsection 3. Subsections 1 and 2 apply mutatis mutandis to securities firms that advise on or broker structured deposits.

Subsection 4. The Minister for Business Affairs may set detailed rules on which non-monetary benefits of minor value are covered by subsection 2, second sentence, and on requirements for handling received fees, commissions, or other monetary and non-monetary benefits paid by a third party or a person acting on behalf of a third party.

Chapter 7
Shareholder Rights
Capital Managers' Policy on Active Ownership
§ 49. A securities firm must, in its capacity as a capital manager, prepare and publish a policy on active ownership in companies whose shares are admitted to trading on a regulated market, describing how the securities firm integrates active ownership into its investment strategy.

Subsection 2. The policy on active ownership must describe how the securities firm

monitors companies in which it invests in relevant areas, including strategy, financial and non-financial results, risk, capital structure, social and environmental impact, and good corporate governance,
engages in dialogue with companies in which it invests,
exercises voting rights and other rights attached to shares,
cooperates with other shareholders,
communicates with relevant stakeholders in companies in which it invests, and
1 March 2024. 14 No. 232.
handles actual and potential conflicts of interest in connection with the securities firm's active ownership.

Subsection 3. A securities firm must, in its capacity as a capital manager, publish annually how the securities firm's policy on active ownership has been implemented, including a general description of voting and a report on the most significant votes and the securities firm's use of advisory proxy services.

Subsection 4. A securities firm must, in its capacity as a capital manager, publish how the securities firm has voted on behalf of shareholders at general meetings of companies. Votes that are insignificant due to the subject matter of the vote or the size of the shareholding in the relevant company may be omitted from the publication.

Subsection 5. A securities firm may, in its capacity as a capital manager, choose not to comply with one or more of the requirements in subsections 1-4 if the securities firm publishes a clear and reasoned explanation of why it has chosen to do so.

Subsection 6. The information to be published pursuant to subsections 1-5 must be freely available on the securities firm's website.

Subsection 7. Rules on conflicts of interest in other legislation apply mutatis mutandis in connection with the securities firm's activities as a capital manager, including activities relating to active ownership.

§ 50. A securities firm must, in its capacity as a capital manager, once a year inform group 1 insurance companies operating business covered by Annex 8 in the Act on Financial Business, and insurance companies operating reinsurance of life insurance liabilities, with which a capital management agreement has been concluded, pursuant to § 160, subsection 2, in the Act on Financial Business, how the securities firm's investment strategy and its implementation in relation to investments in shares admitted to trading on a regulated market comply with the capital management agreement and contribute to the return of these companies' or funds' assets in the medium to long term, subject to subsection 4. The same applies if the securities firm has concluded a capital management agreement with Arbejdsmarkeds Tillægspension or Lønmodtagernes Dyrtidsfond.

Subsection 2. The notification must include reporting on

significant medium to long-term risks associated with the investments,
the portfolio composition,
turnover and transaction costs,
the use of advisory proxies for activities relating to active ownership, and
the securities firm's policy on securities lending, and how the policy is used if applicable for activities relating to active ownership, particularly at the time of the general meeting of the companies in which investments are made.

Subsection 3. The notification must further contain information on

whether and, if so, how the securities firm makes investment decisions based on an evaluation of medium to long-term results, including non-financial results, for the companies in which it invests, and
whether conflicts of interest have arisen in connection with active ownership, what conflicts of interest were involved, and how the securities firm has handled them.

Subsection 4. If information as mentioned in subsections 1-3 is already publicly available, the securities firm is not obliged to notify the information directly to the group 1 insurance company operating business covered by Annex 8 in the Act on Financial Business, insurance companies operating reinsurance of life insurance liabilities, with which an agreement on discretionary portfolio management has been concluded, pursuant to § 160, subsection 2, in the Act on Financial Business, Arbejdsmarkeds Tillægspension, or Lønmodtagernes Dyrtidsfond.

Intermediaries' Information on Shareholders
§ 51. A securities firm that, in its capacity as an intermediary, stores information on shareholders must, upon request from an issuer or from a third party appointed by the issuer, promptly inform the issuer of information on the identity of shareholders. An issuer may request an intermediary to collect and forward information on the identity of shareholders, including from other intermediaries in the intermediary chain, to the issuer.

Subsection 2. If there is more than one intermediary in a chain of intermediaries, the request must be forwarded between the intermediaries as soon as possible.

Subsection 3. A securities firm must, in its capacity as an intermediary, promptly inform an issuer of the contact details of the next intermediary in the chain of intermediaries upon request from the issuer or from a third party appointed by the issuer.

§ 52. Personal data on shareholders may only be used for the identification of existing shareholders for the purpose of fulfilling §§ 51 and 53-56. A securities firm must not, in its capacity as an intermediary, store personal data for more than 12 months after becoming aware that the person in question has ceased to be a shareholder, unless otherwise provided by other legislation.

Subsection 2. A securities firm's forwarding of information on a shareholder's identity, pursuant to § 51, in its capacity as an intermediary is not considered a breach of the duty of confidentiality applicable in accordance with a contract or other legislation.

Intermediaries' Forwarding of Information
§ 53. A securities firm must, in its capacity as an intermediary, promptly forward the following information from the issuer to a shareholder or to a third party appointed by the shareholder:

Information that the issuer is obliged to give a shareholder, pursuant to § 49 a, subsection 4, of the Companies Act, to enable the shareholder to exercise shareholder rights, and which is addressed to all shareholders with shares in the relevant class.
A notification of where on the issuer's website the information mentioned in no. 1 can be found, if the information is available to shareholders on the issuer's website.

Subsection 2. Subsection 1 does not apply when an issuer sends the information or a notification pursuant to subsection 1 directly to all its shareholders or to a third party appointed by the shareholders.

Subsection 3. When there is more than one securities firm in a chain of intermediaries, the information, pursuant to subsection 1 and § 54, must be forwarded between the intermediaries as soon as possible, unless the information can be sent directly by the securities firm to the shareholder or to a third party appointed by the shareholder.

§ 54. A securities firm must, in its capacity as an intermediary, promptly forward information on the shareholder's exercise of shareholder rights to the issuer when the securities firm has received the information from a shareholder.

Intermediaries' Facilitation of Exercise of Shareholder Rights § 55. A securities firm must, in its capacity as an intermediary, facilitate the exercise of shareholder rights, including the right to participate and vote in connection with general meetings, by

initiating the necessary arrangements so that a shareholder or a third party appointed by the shareholder can exercise the rights themselves, or
offering to exercise the shareholder rights upon explicit authorization and instruction from a shareholder and for the benefit of the shareholder.

Subsection 2. A securities firm must, in its capacity as an intermediary, promptly forward electronic confirmations of receipt of votes and registration of votes and that votes have been counted, which the securities firm has received from an issuer, to a shareholder or to a third party appointed by the shareholder.

Subsection 3. When there is more than one intermediary in a chain of intermediaries, the electronic confirmations must be forwarded between the intermediaries as soon as possible, unless the confirmation can be sent directly to the shareholder or a third party appointed by the shareholder.

Intermediaries' Fees
§ 56. A securities firm must, in its capacity as an intermediary, separately for each individual service delivered pursuant to §§ 51-55, publish the size of any fees.

Subsection 2. Fees that a securities firm charges a shareholder, an issuer, or another intermediary in its capacity as an intermediary must be non-discriminatory and proportionately adjusted to the actual costs associated with the delivery of the services.

Subsection 3. A securities firm may, in its capacity as an intermediary, only differentiate between any fees charged in connection with the national or cross-border exercise of rights when the fees are duly justified and reflect fluctuations in the actually incurred costs in connection with the delivery of these services.

Subsection 4. Fees are charged to the shareholder, issuer, or intermediary that requests a service.

Advisory Proxies' Code of Conduct
§ 57. A securities firm must, in its capacity as an advisory proxy, publicly provide a reference to a code of conduct that the securities firm uses and report on the use of this code of conduct.

Subsection 2. If a securities firm uses a code of conduct in its capacity as an advisory proxy but deviates from one or more of the code's recommendations, the securities firm must indicate which parts of the code are deviated from, present the reasons for this, and inform about any alternative measures taken.

Subsection 3. A securities firm that, in its capacity as an advisory proxy, does not use a code of conduct must provide a clear and reasoned explanation for why this is the case.

Subsection 4. The information mentioned in subsections 1-3 must be published and freely available on the securities firm's website and updated once a year.

§ 58. A securities firm must, in its capacity as an advisory proxy, publish the following information annually regarding the preparation of the securities firm's studies, advice, and recommendations regarding voting in listed companies:

The most significant characteristics of the methodologies and models used.
The most important information sources.
The procedures introduced to ensure the quality of studies, advice, and recommendations regarding voting and the qualifications of the personnel involved.
Whether and, if so, how consideration is given to conditions on the Danish market and to legal, regulatory, and company-specific conditions.
The most significant elements of the voting policies used for the individual markets.
Whether dialogue is conducted with the companies that are the subject of the advisory proxy's studies, advice, and recommendations regarding voting, and with the companies' stakeholders, and if so, the extent and nature thereof.
Policy for the prevention and handling of potential conflicts of interest.

Subsection 2. The information pursuant to subsection 1 must be published on the securities firm's website and must be freely available for at least 3 years after the date of publication. The information does not need to be published separately if it is presented as part of the information mentioned in § 101 in the Act on Financial Business.

Subsection 3. A securities firm must, in its capacity as an advisory proxy, identify and promptly provide 1 March 2024. 16 No. 232.

without prior notice of actual or potential conflicts of interest and business connections, which may affect the preparation of the investment firm company's investigations, advice or recommendations regarding voting, and the measures taken to eliminate, limit or handle actual or potential conflicts of interest.

Subsection 4. Subsections 1-3 apply mutatis mutandis to investment firm companies that act as advisory representatives and do not have their statutory seat or their head office in the European Union, but carry out activities through a branch located in the Union.

Section IV
Ownership and management and control etc.

Chapter 8
Ownership

Application for acquisitions

§ 59. Any natural or legal person or natural and legal persons acting in concert who intend to acquire directly or indirectly a qualified shareholding in an investment firm company or an investment firm holding company must apply to the Danish Financial Supervisory Authority for approval of the intended acquisition in advance. The same applies to an increase in the qualified shareholding which results in the shareholding reaching or exceeding a threshold of respectively 20 pct., 33 pct. and 50 pct. of the share capital or voting rights after the acquisition, or results in the investment firm company or investment firm holding company becoming a subsidiary.

Subsection 2. The Danish Financial Supervisory Authority may set a deadline for the implementation of the acquisition or increase upon approval. The Danish Financial Supervisory Authority may extend the deadline.

Subsection 3. The Danish Financial Supervisory Authority sets rules on when an acquisition should be included in the calculation according to subsection 1.

Assessment

§ 60. In connection with its assessment of an application under § 59, subsection 1, the Danish Financial Supervisory Authority must ensure consideration of the need for prudent and sound management of the investment firm company or investment firm holding company where the acquisition is intended. The assessment must also take into account the intended acquirer's likely influence on the investment firm company or investment firm holding company, the intended acquirer's suitability and the intended acquisition's financial solidity in relation to the following:

The intended acquirer's reputation.
The reputation and experience of the person or persons who, after the acquisition, will manage the investment firm company or investment firm holding company.
The intended acquirer's financial situation, particularly in relation to the nature of the business carried out or intended to be carried out in the investment firm company or investment firm holding company where the acquisition is intended.
Whether the investment firm company or investment firm holding company where a qualified shareholding is intended to be acquired can continue to comply with the supervisory requirements in legislation, particularly whether the group of which the investment firm company or investment firm holding company may become part has a structure that makes it possible to carry out effective supervision and effective exchange of information between the competent authorities and to determine how responsibility should be distributed between the competent authorities.
Whether there is reason to suspect money laundering or terrorist financing in connection with the intended acquisition, cf. §§ 3 and 4 of the Money Laundering Act.

Subsection 2. The Danish Financial Supervisory Authority may reject an application for approval of an intended acquisition if, based on the criteria in subsection 1, there is reasonable ground to assume that the intended acquirer will hinder prudent and sound management of the investment firm company or investment firm holding company, or if the information provided by the intended acquirer is, in the opinion of the Danish Financial Supervisory Authority, not sufficient.

Subsection 3. In the Danish Financial Supervisory Authority's assessment under subsection 1, consideration of the economic needs of the market must not be included.

Assessment Period

§ 61. The Danish Financial Supervisory Authority confirms in writing and no later than after 2 working days the receipt of the application, cf. § 59, subsection 1. The same applies to the receipt of information under subsection 3.

Subsection 2. The Danish Financial Supervisory Authority has an assessment period of 60 working days from the time of the written confirmation of receipt of the application and receipt of all documents required to be attached to the application to carry out the assessment under § 60. At the same time as confirming receipt of the application, the Danish Financial Supervisory Authority notifies the intended acquirer of the date when the assessment period expires.

Subsection 3. The Danish Financial Supervisory Authority may, until the 50th working day of the assessment period, request further information necessary for the assessment. The request must be made in writing. The first time such a request is made, the assessment period is interrupted for the period between the time of the request and the receipt of the answer thereto. The interruption may, however, not exceed 20 working days, cf. however subsection 4.

Subsection 4. The Danish Financial Supervisory Authority may extend the interruption of the assessment period under subsection 3, 3rd sentence, by up to 10 working days if

the intended acquirer is resident or subject to legislation in a country outside the European Union with which the Union has not concluded an agreement in the financial sector, or
the intended acquirer is a natural or legal person who has not been granted permission to carry out business covered by this Act's § 13, §§ 7-11 of the Act on Financial Business or § 3, no. 2, of the Act on Capital Markets in Denmark, in another country within the European Union or in a country with which the Union has concluded an agreement in the financial sector.

March 1, 2024. 17 No. 232.

§ 62. If the Danish Financial Supervisory Authority rejects an application for approval of an intended acquisition pursuant to § 59, subsection 1, this must be justified in writing and communicated to the intended acquirer immediately after the decision. The notification must be made within the assessment period established under § 61, subsection 2. The intended acquirer may request the Danish Financial Supervisory Authority to publish the justification for the rejection.

Subsection 2. If the Danish Financial Supervisory Authority does not issue a written rejection of the application for the intended acquisition during the assessment period established under § 61, subsection 2, the acquisition is deemed to be approved.

Disposal or reduction of a qualified shareholding

§ 63. Any natural or legal person or natural and legal persons acting in concert who intend to dispose of a qualified shareholding or reduce a qualified shareholding in an investment firm company or an investment firm holding company, such that the disposal or reduction results in the threshold of respectively 20 pct., 33 pct. or 50 pct. of the share capital or voting rights no longer being reached, or results in the investment firm company or investment firm holding company ceasing to be a subsidiary of the relevant legal person, must notify the Danish Financial Supervisory Authority of this in writing in advance, stating the size of the intended future share capital.

Notification of acquisitions or disposals

§ 64. When an investment firm company or an investment firm holding company becomes aware of acquisitions or disposals of shares covered by § 59, subsection 1, or § 63, the investment firm company or investment firm holding company must without undue delay notify the Danish Financial Supervisory Authority thereof.

Subsection 2. Investment firm companies and investment firm holding companies must notify the Danish Financial Supervisory Authority by February each year of the names of the shareholders who, at the end of the previous year, owned a qualified shareholding in the investment firm company or investment firm holding company, and of the size of these shareholdings.

Revocation of voting rights and order to follow guidelines

§ 65. If shareholders who hold qualified shareholdings in an investment firm company or an investment firm holding company do not meet the criteria in § 60, subsection 1, the Danish Financial Supervisory Authority may revoke the voting rights attached to the relevant owners' shareholdings, or order the company to follow certain guidelines.

Subsection 2. The Danish Financial Supervisory Authority may revoke the voting rights attached to shareholdings owned by natural or legal persons who do not comply with the obligation in § 59, subsection 1, to apply in advance for approval. The shareholdings are assigned full voting rights again if the Danish Financial Supervisory Authority can approve the acquisition.

Subsection 3. If a natural or legal person has acquired shareholdings as referred to in § 59, subsection 1, despite the Danish Financial Supervisory Authority having rejected approval of this acquisition of shareholdings, the Danish Financial Supervisory Authority must revoke the voting rights attached to these shareholdings.

Subsection 4. The Danish Financial Supervisory Authority must inform the relevant investment firm company or the relevant investment firm holding company when the Danish Financial Supervisory Authority has revoked the voting rights attached to shareholdings in the investment firm company or investment firm holding company pursuant to subsections 1-3. The Danish Financial Supervisory Authority must also inform the investment firm company or investment firm holding company if shareholdings are again assigned full voting rights pursuant to subsection 2, 2nd sentence.

Subsection 5. If the Danish Financial Supervisory Authority has revoked the voting rights pursuant to subsections 1-3, the shareholding cannot be included in the calculation of the voting capital represented at a general meeting.

Acquisitions in foreign companies

§ 66. The Danish Financial Supervisory Authority must be notified in advance of investment firm companies' and investment firm holding companies' direct or indirect acquisition of a qualified shareholding in an investment company or in a foreign financial company, cf. § 5, subsection 1, no. 1, of the Act on Financial Business, and such increases in the qualified shareholding which result in it reaching or exceeding a threshold of respectively 20 pct., 33 pct. or 50 pct. of respectively voting rights or share capital, or that the foreign company becomes a subsidiary. The notification must contain information on in which country the company is established.

Subsection 2. Investment firm companies and investment firm holding companies that have a share of at least 10 pct. of a foreign financial company and intend to reduce this share so that it falls below one of the thresholds set out in subsection 1 must notify the Danish Financial Supervisory Authority of this and state the size of the intended future share.

Subsection 3. If the foreign company becomes a subsidiary of the Danish investment firm company or the Danish investment firm holding company, the notification to the Danish Financial Supervisory Authority must contain the following information about the subsidiary:

In which country the subsidiary is intended to be established.
A description of the subsidiary's business, including information on organization and planned activities.
The subsidiary's address.
The names of the subsidiary's management.

Subsection 4. In the event of a change in a circumstance for which notification has been given under subsection 3, the investment firm company or investment firm holding company must notify the Danish Financial Supervisory Authority thereof before the change is made. If an investment firm company or investment firm holding company becomes aware of a change of which the investment firm company or investment firm company was not previously aware, notification thereof must be given to the Danish Financial Supervisory Authority without undue delay.

March 1, 2024. 18 No. 232.

Chapter 9
Management

§ 67. The board of directors of an investment firm company or an investment firm holding company must, with a view to ensuring that the company is operated in a secure manner,

determine which main types of business activities the company is to carry out,
identify and quantify the company's significant risks and determine the company's risk profile, including determining which and how large risks the company may take on,
establish policies for how the company is to manage each of the company's significant activities and the risks associated with them, taking into account the interaction between these, and
establish a policy for diversity in the board of directors, which promotes sufficient diversity in qualifications and competences among the board members.

Subsection 2. The board of directors of the company must, based on the established risk profile and the established policies, give the management written guidelines, which must at a minimum contain

controllable frameworks for which and how large risks the management may impose on the company,
the principles for the calculation of the individual risk types,
rules on which dispositions require the board's decision and which dispositions the management can make as part of its position, and
rules on how and to what extent the management must report to the board on the company's risks, including on the use of the frameworks in the guidelines for the management and on compliance with the limits set in legislation regarding the risks the company may take on.

Subsection 3. The board of directors of the company must continuously take a position on whether the company's risk profile and policies and the guidelines for the management are sound in relation to the company's business activities, organization and resources, including capital and liquidity, and the market conditions under which the company's activities are carried out.

Subsection 4. The board of directors of the company must continuously evaluate whether the management performs its tasks in accordance with the established risk profile, the established policies and the guidelines for the management, including whether the management has deviated from these, and whether the deviation, if any, has been sound. The board must take appropriate measures if this is not the case.

Subsection 5. If the board decides specifically to deviate from or accept a deviation from the established risk profile, the established policies or the guidelines for the management, this must be entered into the board's minutes together with a statement of the reasons for the decision.

Subsection 6. The Danish Financial Supervisory Authority may set detailed rules on the obligations that apply to the board of directors of an investment firm company or an investment firm holding company pursuant to subsections 1-4.

Rules of procedure for the board

§ 68. The board must, by means of rules of procedure, make further provisions on the execution of its duties.

Subsection 2. The Danish Financial Supervisory Authority may set detailed rules on the content of the rules of procedure.

Board meetings

§ 69. The chairman of the board must ensure that the board holds meetings when necessary, and must ensure that all members are summoned. Any member of the board, a director, an external auditor or the internal audit head in an investment firm company may demand that the board be summoned. A director, an external auditor or the internal audit head has the right to attend and speak at board meetings, unless the board decides otherwise in the individual case. External auditors and the internal audit head always have the right to attend board meetings when matters are being processed that are significant for the audit or for the preparation of the annual report.

Subsection 2. External auditors or the internal audit head are obliged to participate in the board's processing of a matter if requested by even one board member.

Subsection 3. Minutes must be kept of the board's proceedings, which must be signed by all members present. A board member, a director, an external auditor or the internal audit head who does not agree with the board's decision has the right to have their opinion entered in the minutes.

Signing authority of the board or management

§ 70. The signing authority that belongs to members of the board or management according to the Companies Act can only be exercised by at least two in concert.

Underrepresented genders in management

§ 71. In investment firm companies and investment firm holding companies that have financial instruments admitted to trading on a regulated market in a country within the European Union or in a country with which the Union has concluded an agreement in the financial sector, or that have a balance sheet total of 500 mio. DKK or more in 2 consecutive financial years, the board must

set targets for the proportion of members elected by the general meeting or a corresponding meeting, which is the company's highest authority, of the underrepresented gender in the board, unless there is an equal distribution of women and men among these members in the board,
set targets for the proportion of the underrepresented gender on the company's other management levels, unless there is an equal distribution of women and men on the other management levels, and
draw up a policy to increase the proportion of the underrepresented gender on the company's other management levels, unless there is an equal distribution of women and men on the other management levels, cf. however subsection 5.

March 1, 2024. 19 No. 232.

Subsection 2. For parent companies that prepare group accounts, the calculation in subsection 1 must be based on the group accounts.

Subsection 3. Other management levels are understood as two management levels below the board. The first management level below the board comprises the management and the persons who are organizationally at the same management level as the management. The second management level comprises persons with personnel responsibility who report directly to the first management level below the board.

Subsection 4. The board must set a new and higher target for the proportion of the underrepresented gender under subsection 1, no. 1 and 2, when the company has reached its previously set target, or a new target when the time horizon for the expected fulfillment has expired.

Subsection 5. Companies that have employed fewer than 50 employees in the most recent financial year may refrain from drawing up a policy to increase the proportion of the underrepresented gender on their other management levels.

Subsection 6. If a company is covered by both this provision and the provisions on gender composition in the highest governing body in the Companies Act, the Act on Commercial Foundations or the Act on Certain Commercial Activities, subsections 1-5 take precedence.

Summoning to general meeting

§ 72. Summoning to a general meeting in investment firm companies that do not meet the conditions for classification as small and non-interconnected investment firm companies must be publicly available and in accordance with the provisions of the articles of association. The press must have access to general meetings in investment firm companies that do not meet the conditions for classification as small and non-interconnected investment firm companies.

Subsection 2. Subsection 1 does not apply to investment firm companies that are 100 pct. owned by one financial company according to the Act on Financial Business or several financial companies in the same group.

Subsection 3. The deadline for summoning to a general meeting with a view to carrying out a capital increase may be shortened to 10 days if the Danish Financial Supervisory Authority has assessed that an investment firm company, which has permission to provide or carry out one or both of the investment services and activities mentioned in Annex 1, Section A, no. 3 and 6, is subject to the rules in Chapter 20, and the investment firm company assesses that the capital increase is necessary to prevent the investment firm company from becoming distressed. The shortening of the summoning deadline can, however, only be carried out if the general meeting with two-thirds of the votes cast amends the articles of association to include this possibility.

Subsection 4. The Companies Act's §§ 84 and 90 and time limits in the Companies Act's §§ 94, 98 and 99 do not apply to general meetings and representative meetings summoned in accordance with subsection 3.

§ 73. The Danish Financial Supervisory Authority exercises for investment firm companies the powers granted to the Danish Business Authority pursuant to § 93, subsections 2 and 3, in the Companies Act.

Establishment of a representative body

§ 74. A representative body may be established to perform certain tasks specified in the articles of association, including the election of the board of directors. The members of the representative body are subject to the same responsibility as the board of directors with regard to the performance of their duties.

Suitability and integrity requirements

§ 75. A member of the board of directors or management in an investment firm company

must have sufficient knowledge, professional competence and experience to be able to perform the duty or position,
must have a sufficiently good reputation and be able to demonstrate integrity, honesty and sufficient independence in the performance of the duty or position,
must not be subject to criminal liability for violation of the Penal Code or the financial legislation or other relevant legislation, if the violation entails a risk that the person cannot perform their duty or position in a secure manner,
must not have submitted a request for or be under restructuring proceedings, bankruptcy or debt settlement,
must not, due to their financial situation or via a company in which the member owns, participates in the operation of or has significant influence, have caused or cause the investment firm company losses or risk of losses, and
must not have exhibited such behavior that there is reason to assume that the member will not perform the duty or position in a sound manner.

Subsection 2. Members of the board of directors or management in an investment firm company must notify the Danish Financial Supervisory Authority of information on circumstances as mentioned in subsection 1 in connection with their entry into the investment firm company's management and of circumstances as mentioned in subsection 1, no. 2-6, if the circumstances change subsequently.

Subsection 3. The investment firm company is obliged to ensure compliance with subsection 1.

Subsection 4. Subsection 1, no. 1-4 and 6, and subsections 2 and 3 apply mutatis mutandis to members of the board of directors and management in an investment firm holding company or a mixed financial holding company.

Time allocated for performance of management duties

§ 76. A member of the board of directors or management in an investment firm company must allocate sufficient time to perform their duty as a board member or their position as a director in the investment firm company. The management member must continuously evaluate whether the person has allocated sufficient time to perform their duty or position. The evaluation must include the investment firm company's size, organization and complexity.

Introductory and further training courses for management members

§ 77. An investment firm company and an investment firm holding company must have personnel and financial

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resources necessary to ensure adequate opportunities for introductory and further training courses for members of the board of directors and the executive management.

Collective suitability of the board of directors

§ 78. The board of directors of an investment firm or an investment holding company must ensure that its members have sufficient collective knowledge, professional competence, and experience to be able to understand the investment firm's activities and the risks associated with them.

Incompatible offices

§ 79. The office of board member or member of the representative body in an investment firm cannot be combined with the position of director in the same investment firm. However, the board may temporarily appoint one of its members or a member of the representative body as director in the event of a director's absence. The person so appointed may not exercise voting rights in the aforementioned bodies.

Subsection 2. The office of internal audit chief and deputy internal audit chief cannot be combined with the office of board member.

Risk committee

§ 80. An investment firm must establish a risk committee if the investment firm's value of on-balance-sheet and off-balance-sheet assets averages 100 million euros or more over the four-year period immediately preceding the relevant financial year, subject to subsection 2.

Subsection 2. An investment firm is not obliged to establish a risk committee if the investment firm meets the conditions for classification as a small and non-interconnected investment firm.

Subsection 3. The Danish Financial Supervisory Authority may exempt an investment firm from subsection 1 if the Danish Financial Supervisory Authority considers it appropriate having regard to the nature and scope of the investment firm's activities, its internal organization, and the characteristics of the group to which the investment firm belongs. The following conditions must be met:

The investment firm must not be one of the three largest investment firms in Denmark in terms of total asset value.
The investment firm must not be subject to obligations or simplified obligations regarding recovery and resolution planning in accordance with §§ 98 and 99 and Chapter 20.
The investment firm's value of on-balance-sheet and off-balance-sheet assets averages a maximum of 300 million euros over the four-year period immediately preceding the relevant financial year.
The size of the investment firm's on-balance-sheet and off-balance-sheet trading book activities amounts to a maximum of 150 million euros.
The size of the investment firm's on-balance-sheet and off-balance-sheet derivative activities amounts to a maximum of 100 million euros.

Subsection 4. Regardless of subsection 1, the Danish Financial Supervisory Authority may require an investment firm to establish a risk committee if the Danish Financial Supervisory Authority considers it appropriate having regard to the nature and scope of the investment firm's activities, its internal organization, and the characteristics of the group to which the investment firm belongs.

§ 81. The chairman and the other members of the risk committee must be members of the board of directors of the relevant investment firm and must have the necessary knowledge, qualifications, and competencies to understand and monitor the investment firm's risks.

Subsection 2. The risk committee must:

Advise the board of directors on the investment firm's overall current and future risk profile and risk strategy.
Assist the board of directors in ensuring that the board's risk strategy is correctly implemented in the organization.
Assess whether the financial products and services traded by the investment firm are consistent with the investment firm's business model and risk profile, including whether the earnings from the products and services reflect the associated risks, and propose remedial measures if the products or services and the earnings therefrom are not consistent with the investment firm's business model and risk profile.
Assess whether the incentives in the investment firm's remuneration structure take into account the investment firm's risks, capital, and liquidity, as well as the likelihood of profit and the timing thereof.

Subsection 3. The risk committee must have access to information on the investment firm's risks, including the risks identified by the risk management function, and the opportunity to use external advice to the extent necessary and relevant.

Subsection 4. The risk committee must continuously assess and decide on the type, quantity, and frequency of information from the relevant investment firm that must be provided to the risk committee.

Conflicts of interest

§ 82. (Repealed)

§ 83. Persons who, according to law or statutory provisions, are employed by the board of directors of an investment firm, and employees for whom there is a significant risk of conflicts between their own interests and the investment firm's interests, must not, for their own account or through companies they control:

take out loans or draw on already approved credits to purchase financial instruments when the purchased financial instruments are pledged as security for the loan or credit,
acquire, issue, or trade in derivative financial instruments, unless the purpose is risk hedging,
acquire capital shares other than shares in Danish UCITS, investment funds, and foreign investment institutions covered by § 143, subsection 1, nos. 2 and 3, of the Act on Investment Funds etc., with a view to selling them earlier than 6 months after acquisition, or
acquire positions in foreign currencies other than the euro, when the position-taking is done for purposes other than payment for the purchase of financial instruments, goods, or services, or the purchase or operation of real estate, or for use in travel.

Subsection 2. Persons and employees covered by subsection 1 must not acquire capital shares in companies carrying out business under subsection 1. This does not apply to the purchase of shares in credit institutions, insurance companies, mortgage credit institutions, or investment firms, and shares in Danish UCITS, investment funds, and foreign investment institutions covered by § 143, subsection 1, nos. 2 and 3, of the Act on Investment Funds etc.

Subsection 3. The prohibition in subsection 1, no. 1, does not cover loans for the purchase of employee shares, nor the instruments mentioned in the second sentence. The prohibition in subsection 1, no. 2, does not cover financial instruments derived from shares in the investment firm or a company affiliated with it, which the person receives as part of their remuneration. The prohibition in subsection 1, no. 3, does not cover shares acquired through the exercise of the instruments mentioned in the second sentence.

§ 84. The board of directors must determine for which employees there is a significant risk of conflicts between their own interests and the investment firm's interests, and who are therefore subject to the prohibition in § 83. The board of directors must ensure that the relevant persons are aware of this. The criminal provision in § 266, subsection 1, applies from the time when the person has received information about this.

§ 85. The board of directors must draw up guidelines for controlling compliance with the prohibition in § 83, subsection 1 and subsection 2, first sentence, including the reporting of asset dispositions.

Subsection 2. The external auditor must review the guidelines once a year and in the audit report annex regarding the annual report state whether the guidelines are considered secure and have functioned appropriately, and whether the investment firm's control procedures have given rise to remarks. If no audit report is kept, the external auditor's information must appear in other corresponding documentation.

§ 86. The board of directors of an investment firm may request a depositary institution to give the investment firm's external auditor access to information about accounts and deposits and to issue extracts therefrom for persons covered by § 83, subsection 1.

§ 87. Internal audit chiefs and deputy internal audit chiefs must not, regardless of §§ 83-86, have economic interests in the investment firm or the group to which they are employed.

General management rules

§ 88. An investment firm must not, without the board of directors' approval and entry thereof in the board's minutes:

grant exposure to or receive security from companies where board members and directors of the investment firm directly or indirectly hold a qualifying holding or are board members or directors, or
enter into an agreement with a director when the agreement involves larger dispositions relative to the director's economic situation, or with a third party in which the director has a significant interest that may conflict with the investment firm's.

Subsection 2. Members of the board of directors must compensate for losses suffered by the investment firm as a result of approvals, securities, or agreements covered by subsection 1, which were approved by the board of directors, unless the board of directors proves that the loss could not have been prevented through the care and diligence required by the management of the investment firm.

Subsection 3. A director who, without the board of directors' approval, grants exposures, receives securities, or enters into agreements covered by subsection 1, is liable for the loss that the investment firm may thereby suffer.

Subsection 4. If an approval or security covered by subsection 1, no. 1, is entered into without the board of directors' approval with a company in which a board member directly or indirectly holds a qualifying holding or is a board member or director, the board member is liable for the loss that the investment firm may thereby suffer.

Subsection 5. Exposures and agreements under subsection 1 must be granted or entered into in accordance with the investment firm's usual business terms and on market-based terms, unless the exposure is entered into with an employee-elected board member on employment terms. The investment firm's external auditor must, in the audit report annex regarding the annual report, provide a statement on whether the requirements in the first sentence are met. If no audit report is kept, the statement must appear in other corresponding documentation.

Subsection 6. The executive management and the board of directors must each monitor the prudence and progress of exposures and agreements under subsection 1.

Subsection 7. The rules in subsections 1-6 also apply to exposures to and agreements with persons connected to directors by marriage, cohabitation for at least 2 years, or kinship in the ascending or descending line, or as siblings, and to companies for which such persons are directors or owners of a qualifying holding.

Subsection 8. An investment firm or companies within the same group must not grant exposure to or receive security from an external auditor or the internal audit chief or deputy internal audit chief.

§ 89. Persons who, according to law or statutory provisions, are employed by the board of directors of an investment firm, may not, without the board of directors' permission, own or run independent business activity or participate as a board member or official or in any other way in the management or operation of other business activity than the investment firm, subject to § 160, subsections 9 and 10.

Subsection 2. All permissions granted by the board of directors must appear in the board's minutes.

§ 90. Employees of an investment firm who are not covered by § 89, subsection 1, and for whom there is a significant risk of conflicts between their own interests and the investment firm's interests, may not, without the executive management's permission, own or run independent business activity or participate as a board member or official or in any other way in the management or operation of other business activity than the investment firm. The board of directors must be informed about permissions granted by the executive management.

Subsection 2. The board of directors must determine for which employees there is a significant risk of conflicts between their own interests and the investment firm's interests, and who therefore require the executive management's permission. The board of directors must ensure that the relevant persons are aware of this. The criminal provision in § 266, subsection 1, applies only from the time when the person has become aware of this.

§ 91. Permission under § 89, subsection 1, and § 90, subsection 1, may only be granted if the investment firm or companies forming part of the group with the investment firm do not have or assume exposures to the business activities mentioned in § 89, subsection 1, and § 90, subsection 1, or companies forming part of the group with these companies. This does not apply to exposures in the form of capital shares, exposures to the companies mentioned in subsection 2, and exposures to business activities forming part of the group with the investment firm.

Subsection 2. The prohibition on exposures does not apply in connection with participation in the boards of directors for the following businesses and funds etc.:

Danmarks Skibskredit A/S.
Banker og Sparekassers Ungdomskontakt.
LR Realkredit A/S.
Bornholms Erhvervsfond.
Grønlandsbanken A/S.
NASDAQ OMX Stockholm AB.
NASDAQ OMX Helsinki Oy.
IFU – Investeringsfonden for Udviklingslande.
IØ – Investeringsfonden for Østlandene.
Landbrugets FinansieringsBank A/S.
Bankernes Kontantservice A/S.
Fundcollect A/S.
Fundconnect A/S.
DLR Kredit A/S.
Regulated markets.
Clearing houses.
Securities depositories.

Subsection 3. The Danish Financial Supervisory Authority may, in special cases, grant dispensation from subsection 1.

§ 92. Investment firms must at least once a year publish information about the offices that the board of directors has approved in accordance with § 89, subsection 1.

§ 93. The external auditor must, in the audit report annex regarding the annual report, provide a statement on whether the investment firm has exposure to business activities covered by § 89, subsection 1, and § 90, subsection 1. If no audit report is kept, the external auditor's statement must appear in other corresponding documentation.

Chapter 10
Management and Structure
Corporate Governance

§ 94. An investment firm and an investment holding company must have effective forms of corporate governance, including:

a clear organizational structure with a well-defined, transparent, and consistent division of responsibilities,
sound administrative and accounting practices,
written business processes for all significant activity areas,
effective procedures to identify, measure, manage, monitor, and report on the risks that the company is or may be exposed to, or risks that the company poses or may pose to others,
the resources necessary for the proper implementation of its business, and appropriate use thereof,
procedures for the separation of functions in connection with handling and preventing conflicts of interest,
comprehensive internal control procedures, and
secure control and security measures in the IT area.

Subsection 2. The procedures mentioned in subsection 1, no. 4, must cover significant sources and effects of risks and any impact on the capital base.

Subsection 3. An investment firm and an investment holding company must register all its transactions and document the measures taken for effective forms of corporate governance, cf. subsections 1 and 2.

Subsection 4. The Danish Financial Supervisory Authority may set detailed rules on the measures that an investment firm and an investment holding company must take to have effective forms of corporate governance in accordance with subsection 1.

Organizational requirements

§ 95. An investment firm must take the necessary precautions to ensure coherence and regularity in its business as a securities dealer and use resources, systems, and procedures that are appropriate for this.

Subsection 2. An investment firm must:

have appropriate rules and procedures for transactions with instruments covered by Annex 2, which cover the investment firm's management, employees, and associated agents,
have effective procedures to take reasonable measures to prevent conflicts of interest that may harm customers' interests,
ensure customers' property rights to their funds and the instruments covered by Annex 2,
protect customers' rights and must not dispose of their funds and instruments without explicit consent, and
keep and store comprehensive lists of all services performed and transactions, for at least 5 years after the service has been performed or the transaction has been completed.

Subsection 3. An investment firm may store customers' instruments in the same depot (commingled depot) if the investment firm has informed the individual customer of the legal consequences thereof and the customer has given consent thereto. The investment firm must keep a register from which the individual customers' ownership of the registered instruments clearly appears. The Danish Financial Supervisory Authority may, in special cases, grant permission for customers' and an investment firm's own instruments to be stored in the same depot. The Danish Financial Supervisory Authority may deprive an investment firm of the right to maintain a commingled depot.

Subsection 4. In the event of an investment firm's bankruptcy, restructuring proceedings, etc., the individual customer may, based on the register mentioned in subsection 3, second sentence, withdraw their instruments from a commingled depot, provided there is no dispute regarding the customer's property rights beforehand.

Subsection 5. Subsection 2, nos. 1, 2, and 5, apply mutatis mutandis to investment firms that sell, advise on, or broker structured deposits.

Subsection 6. Subsection 2, nos. 2-4, apply mutatis mutandis to the National Bank of Denmark and the State Administration with the necessary adjustments.

Subsection 7. The Danish Financial Supervisory Authority may set detailed rules on the matters mentioned in subsections 1-3.

Procedures for approval of new products and services

§ 96. An investment firm must have effective procedures for the approval of new products and services, significant changes to existing products and services, and the distribution thereof.

Subsection 2. The Danish Financial Supervisory Authority may set detailed rules on the requirements for effective product approval procedures.

Outsourcing

§ 97. An investment firm may outsource a process, a service, or an activity that the investment firm would otherwise perform itself to a supplier.

Subsection 2. The Danish Financial Supervisory Authority may decide that an investment firm's outsourcing must be terminated within a deadline set by the Danish Financial Supervisory Authority if the investment firm or its parties do not comply with the rules set pursuant to subsection 3.

Subsection 3. The Minister for Business may set detailed rules on outsourcing regarding:

investment firms' management arrangements, responsibility, risk management, monitoring, control, and reporting in connection with outsourcing to a supplier, including the supplier's further outsourcing,
investment firms' internal guidelines for outsourcing,
investment firms' handling of conflicts of interest in connection with outsourcing,
requirements that investment firms must at minimum ensure that suppliers or sub-suppliers always fulfill, including also access, information, and audit rights at suppliers and sub-suppliers,
requirements regarding the content of the contract,
outsourcing at group and sub-group level, and
investment firms' duty to notify the Danish Financial Supervisory Authority about outsourcing.

Recovery plans

§ 98. An investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, subject to § 99, must draw up and maintain a recovery plan. The recovery plan must be approved by the investment firm's board of directors and contain:

appropriate criteria and procedures that ensure the timely implementation of the measures that the investment firm assesses should be taken to restore the financial situation of the investment firm in the event of a rapid or significant deterioration of the investment firm,
a wide range of recovery options, and
a number of scenarios with severe macroeconomic and financial stress that are relevant to the investment firm, and appropriate responses thereto.

Subsection 2. The recovery plan must be submitted to the Danish Financial Supervisory Authority. The Danish Financial Supervisory Authority has 6 months from receipt of the recovery plan to assess the recovery plan. The Danish Financial Supervisory Authority may, when relevant, submit the recovery plan to any competent authorities in other countries within the European Union and in countries with which the Union has concluded agreements in the financial sector, where significant branches are located.

Subsection 3. The Danish Financial Supervisory Authority must submit the recovery plan to Financial Stability, which may provide recommendations to the Danish Financial Supervisory Authority regarding the content of the recovery plan.

Subsection 4. The Danish Financial Supervisory Authority may set detailed rules on requirements for the content of recovery plans, including rules on critical functions, scenarios with severe macroeconomic and financial stress, and maintenance and deadlines for submission of recovery plans.

Group recovery plans

§ 99. In groups where the ultimate parent company is located in Denmark, and where the parent company is an investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, or an investment holding company with at least one subsidiary that is an investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, the parent company must draw up and maintain a group recovery plan, subject to subsection 2. It must appear from the group recovery plan which measures the parent company assesses should be taken to restore the financial situation of the parent company and each individual subsidiary in the event of a rapid or significant deterioration of the financial situation in one or more of the companies in the group. § 98, subsection 1 and

2, with the necessary adaptations correspondingly applicable to the parent undertaking and the group recovery plan.

Subsection 2. The Danish Financial Supervisory Authority may order that a recovery plan be prepared for each individual subsidiary that is an investment firm and has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, items 3 and 6, in accordance with Section 98.

Subsection 3. The Danish Financial Supervisory Authority shall send group recovery plans prepared in accordance with subsection 1 to:

the competent authorities that are part of the supervisory college,
Financial Stability or the authority in countries within the European Union or in countries with which the Union has concluded an agreement in the financial field, which is responsible for the resolution of the group, and
Financial Stability or an authority in the country within the European Union or in countries with which the Union has concluded an agreement in the financial field, which is responsible for the resolution of a subsidiary.

Subsection 4. With a view to making a joint decision, the Danish Financial Supervisory Authority, in cooperation with the authorities mentioned in subsection 3, items 1 and 2, assesses the group recovery plan, including whether the plan meets the requirements set out in subsection 1, cf. Section 98, subsections 1 and 2. The authorities mentioned in subsection 3, items 2 and 3, may give recommendations to the Danish Financial Supervisory Authority regarding the content of the group recovery plan.

Subsection 5. If no joint decision has been made within 4 months after the Danish Financial Supervisory Authority has sent the group recovery plan or reactions pursuant to Section 100, subsection 2, the Danish Financial Supervisory Authority shall make the decision itself. The Danish Financial Supervisory Authority shall notify the parent undertaking of the group, Financial Stability, and the authorities mentioned in subsection 3 of this decision. If one of the authorities has referred the matter to the European Banking Authority, the Danish Financial Supervisory Authority shall make a decision in accordance with the decision of the European Banking Authority.

Subsection 6. The Danish Financial Supervisory Authority may lay down detailed rules on requirements for the content of group recovery plans, including rules on critical functions, scenarios of severe macroeconomic and financial stress, and maintenance and deadlines for submission of group recovery plans.

Assessment of recovery and group recovery plans by the Danish Financial Supervisory Authority

Section 100. The Danish Financial Supervisory Authority shall notify the investment firm or the parent undertaking of the group if the Danish Financial Supervisory Authority assesses that the recovery plan or group recovery plan has significant deficiencies, or that there are significant obstacles to its implementation. The investment firm or the parent undertaking of the group shall submit a revised plan to the Danish Financial Supervisory Authority no later than 2 months after the notification. The Danish Financial Supervisory Authority may extend the deadline by up to 1 month.

Subsection 2. The Danish Financial Supervisory Authority may, if the investment firm or the parent undertaking of the group does not submit a revised plan within the set deadline, or if the revised plan does not sufficiently remedy the deficiencies and obstacles pointed out by the Danish Financial Supervisory Authority, order the investment firm or the parent undertaking of the group to:

reduce the risk profile of the investment firm or the parent undertaking, including liquidity risk,
enable timely recapitalization measures,
revise the company's strategy and structure,
make changes to the financing strategy to improve the resilience of the core business lines and critical functions, and
make changes to the management structure of the investment firm or the parent undertaking.

Anonymous reports to and about investment firms

Section 101. An investment firm shall have a system whereby its employees can report breaches or potential breaches of financial regulation committed by the investment firm, including by employees or members of the board of directors of the investment firm, via a special, independent, and autonomous channel. Reports to the system must be able to be made anonymously. The investment firm shall follow up on reports to the system and be able to document in writing how the investment firm has followed up on the reports. The Act on Protection of Whistleblowers applies to the system in the first sentence, cf. however Section 2 of the Act on Protection of Whistleblowers.

Subsection 2. The system in subsection 1 may be established via a collective agreement.

Subsection 3. The Danish Financial Supervisory Authority may in special cases exempt from the requirement in subsection 1, if the Danish Financial Supervisory Authority assesses that it would be pointless to establish a system.

Section 102. An investment firm must not subject employees or former employees to unfavorable treatment or unfavorable consequences as a result of the employee or former employee having reported the investment firm's breach or potential breach of financial regulation to the Danish Financial Supervisory Authority or to a system in the investment firm. The same applies to the determination, allocation, and payment of variable pay to employees or former employees.

Subsection 2. Employees or former employees whose rights have been violated by a breach of subsection 1 may be awarded compensation in accordance with the principles in the Act on Equal Treatment of Men and Women with regard to Employment etc. The compensation is determined with regard to the employee's or former employee's period of employment and the circumstances of the case otherwise.

Subsection 3. Subsections 1 and 2 may not be derogated from by agreement to the detriment of the employee or former employee.

Section 103. If an employee or former employee and an investment firm enter into an agreement containing a confidentiality clause, it must appear from the agreement that the employee or former employee is not barred from reporting information about breaches or potential breaches of financial regulation to public authorities.

Subsection 2. Notwithstanding subsection 1, the employee or former employee is not barred from reporting information about breaches or potential breaches of financial regulation to public authorities, even if such a prohibition is included in an agreement between the employee or former employee and the investment firm. The same applies to reports to systems pursuant to Section 101.

Duty to inform the Danish Financial Supervisory Authority

Section 104. An investment firm shall immediately notify the Danish Financial Supervisory Authority of information about circumstances that are of crucial importance for the continued operation of the investment firm. The investment firm shall as soon as possible notify the Danish Financial Supervisory Authority of information that is of significant importance to the Danish Financial Supervisory Authority's supervision.

Subsection 2. The same applies to each individual member of the board of directors and a director in an investment firm.

Subsection 3. A member of the board of directors or management of an investment firm and the external auditor shall immediately notify the Danish Financial Supervisory Authority if the person concerned suspects that the investment firm does not meet one of the following requirements:

The individual solvency requirement pursuant to Section 120.
The own funds requirement pursuant to Article 11 of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms.

Subsection 4. Subsections 1-3 apply correspondingly to investment firms and investment holding companies regarding circumstances in subsidiaries that are investment firms.

Publication

Section 105. Investment firms that do not meet the conditions for classification as small and non-interconnected investment firms and that have branches or subsidiaries that are financial institutions as defined in Article 4, subsection 1, item 26, of Regulation (EU) 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions in another country, shall publish the following information annually per country regarding the branches and subsidiaries:

Location, name, and nature of activities.
Turnover.
Number of employees in full-time equivalents.
Profit before tax.
Tax on profit.
Public deposits received.

Subsection 2. The information must be audited by the investment firm's external auditors and must be published as an appendix to the annual report, cf. Section 155.

Section 106. The Danish Financial Supervisory Authority may determine that investment firms' publication of information pursuant to Article 46 of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms shall be done with a frequency other than once a year, and that certain media and places are used for these publications.

Subsection 2. The Danish Financial Supervisory Authority may determine that parent undertakings shall once a year publish a description of their legal structure and the management structure and organizational structure of the investment firm group.

Chapter 11
Remuneration

Written remuneration policy

Section 107. Investment firms and investment holding companies shall have a written remuneration policy that is consistent with and promotes sound and effective risk management. The remuneration policy must be gender-neutral.

Subsection 2. The company's highest body shall approve the company's remuneration policy upon any significant change and at least every fourth year. The company's remuneration policy shall be published on the company's website as soon as possible after approval. The remuneration policy must remain publicly accessible on the website as long as it is in force.

Subsection 3. In investment firms or investment holding companies, the chairman of the board of directors shall in the report to the company's highest body account for the remuneration of the company's board of directors and management. The account must contain information about the remuneration in the previous financial year and about the expected remuneration in the current and the coming financial year. The chairman of the board of directors must explain and justify the content of the remuneration policy and its compliance in the report to the company's highest body.

Subsection 4. The company's highest body shall approve the remuneration of the company's board of directors for the current financial year.

Subsection 5. The board of directors of an investment firm and an investment holding company shall annually prepare and publish a remuneration report.

Subsection 6. The remuneration report must contain:

Information about the total remuneration that each member of the board of directors and management has earned from the company and other companies within the same group as part of this role in the last 3 years, including information about the most important content of retention and exit schemes.
An account of the link between management's remuneration and the company's strategy and relevant goals for this.

Subsection 7. The remuneration report is published on the company's website as soon as possible after the general meeting. The remuneration report must remain publicly accessible on the company's website for a period of 10 years. The remuneration report may be available for a longer period than 10 years, provided that it no longer contains personal data.

Remuneration of employees

Section 108. Investment firms must ensure that the remuneration of the company's employees is not in conflict with the company's obligation to act in the best interests of customers, including the company's obligations pursuant to Section 45, subsection 1, and rules issued pursuant to Section 45, subsection 2, cf. however subsection 3.

Subsection 2. Investment firms must not introduce remuneration schemes, sales targets, or other schemes that may give an incentive for its employees to recommend a specific financial instrument to a retail customer, when the investment firm could offer another financial instrument that would better cover the customer's needs.

Subsection 3. Subsections 1 and 2 do not apply to matters covered by collective agreement.

Remuneration of management and significant risk-takers

Section 109. In the remuneration of the board of directors, management, and other employees of investment firms and investment holding companies, whose activities have a significant influence on the company's risk profile or on the assets managed by the company, the company must ensure that the following are met:

The variable pay components to a member of the board of directors or management may at the time of calculation of the variable pay amount to at most 50 pct. either of the fee or of the fixed basic salary including pension, cf. however Section 110, subsection 1.
The variable pay components to other employees, whose activities have a significant influence on the company's risk profile or on the assets managed by the company, may at the time of calculation of the variable pay amount to at most 100 pct. of the fixed basic salary including pension.
The company's highest body may, however, decide that the variable pay components to other employees, whose activities have a significant influence on the company's risk profile or on the assets managed by the company, may amount to up to 200 pct. of the fixed basic salary including pension, provided that the following requirements are met:
a) The company must at the latest upon convocation to the meeting of the highest body inform the highest body that a decision is sought on the use of a higher maximum cap. b) The highest body must make the decision on the use of a higher maximum cap based on a detailed recommendation from the company, which justifies the proposal and which in minimum contains information about the number of affected employees, their areas of work, the new proposed maximum cap, and the expected impact on the company's ability to maintain a sound own funds position. The shareholders must receive the recommendation at the latest simultaneously with the convocation to the meeting of the highest body. c) The company must at the latest simultaneously with forwarding the recommendation to the shareholders, cf. letter b, inform the Danish Financial Supervisory Authority about the recommendation to the shareholders, including the proposed higher maximum cap and the justification for the proposal. The company must, upon request from the Danish Financial Supervisory Authority, prove that the proposed higher maximum cap is not in conflict with the company's obligations under Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, this Act, and rules issued pursuant to Section 113, subsection 3. d) The decision on the use of a higher maximum cap must be approved by the company's highest body with at least 66 pct. of the votes cast, provided that at least 50 pct. of the voting share capital is represented at the meeting. If less than 50 pct. of the voting share capital is represented at the meeting, the decision must be approved by at least 75 pct. of the votes cast. An employee who is a shareholder in the company must not participate in the vote on this at the meeting of the highest body, if the employee has a significant interest in the decision that may be contrary to the company's interest. e) The company must inform the Danish Financial Supervisory Authority at the latest 8 days after the meeting of the highest body about the decision of the highest body, including about the size of any decided higher maximum cap.
At least 50 pct. of a variable pay component to the board of directors, management, and other employees, whose activities have a significant influence on the company's risk profile, must at the time of calculation of the variable pay consist of a balance of shares or corresponding ownership interests, share-like instruments, or corresponding illiquid instruments, which reflect the instruments in the managed portfolios. The company may use hybrid core capital instruments or supplementary capital instruments or other instruments that can be converted into actual core capital instruments or written down, and which in an appropriate degree reflect the company's creditworthiness as a company whose activity is assumed to continue. If the company does not issue such instruments, the Danish Financial Supervisory Authority may approve alternative schemes that fulfill the same purpose. Investment firms that have permission to perform orders and discretionary portfolio management, cf. Annex 1, Section A, items 2 and 4, must, where it is possible and appropriate, use instruments that are regulated in Article 52 and 63 of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions or other instruments that can be converted into actual core capital instruments or written down, and which in an appropriate degree reflect the company's creditworthiness as a company whose activity is assumed to continue. The instruments may be issued in the company or its parent undertaking, which owns the company fully.
The company's payment of at least 40 pct. or, for larger amounts, at least 60 pct. of a variable pay component must take place over a period of at least 4 years with commencement 1 year after the calculation time point, however for the board of directors and management at least 5 years. The payment must take place with an equal distribution over the years or with an increasing share at the end of the period.
The company may refrain from paying a variable pay component entirely or partially, if the company at the time of payment of the variable pay component does not meet the solvency requirement or solvency requirement in Sections 120 and 121 and Article 7 and 11 of Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, or if

marts 2024. 27 Nr. 232.

Finanstilsynet assesses that there is a likely risk in this regard.

The company shall not pay variable remuneration to the board of directors and management if the company, during the period to which the agreement on variable remuneration relates and until the time of its calculation, receives a deadline from Finanstilsynet pursuant to Section 166, subsection 1 or 3, regarding compliance with the solvency requirement.

Subsection 2. For the board of directors and management in investment firms and investment holding companies, stock options or similar instruments may not exceed 12.5 percent of the respective honorarium and the fixed basic salary including pension at the time of their calculation.

Subsection 3. The investment firm or investment holding company must ensure that shares and instruments etc., which are transferred to the board of directors, management, or other employees whose activities have a significant influence on the company's risk profile or on the assets managed by the company, as part of the variable remuneration covered by subsection 1, item 4, may not be disposed of by these persons for a suitable period, and that these persons may not hedge the risk associated with these shares and instruments etc.

Subsection 4. The investment firm or investment holding company must ensure that the payment of deferred variable remuneration parts pursuant to subsection 1, item 5, to the board of directors, management, and other employees whose activities have a significant influence on the company's risk profile or on the assets managed by the company, is conditional on the following:

The criteria that formed the basis for the calculation of the variable remuneration part are still met at the time of payment.
The recipient of the payment has complied with the requirements of fitness and propriety and has not participated in or been responsible for behavior that has resulted in significant losses for the company.
The company's financial situation has not deteriorated significantly compared to the time of calculation of the variable remuneration part.

Subsection 5. The investment firm or investment holding company must ensure that the board of directors, management, and other employees whose activities have a significant influence on the company's risk profile or on the assets managed by the company, and who receive variable remuneration, must repay the variable remuneration in whole or in part if the variable remuneration was paid based on information about results that can be documented to be incorrect, and if the recipient is in bad faith.

Subsection 6. The investment firm or investment holding company must ensure that if the board of directors, management, and other employees whose activities have a significant influence on the company's risk profile or on the assets managed by the company, are granted a pension benefit that can be equated wholly or partly with variable remuneration parts, the company must retain this part of the pension benefit for 5 years in the form of instruments covered by subsection 1, item 4, if the recipient leaves the company before the pension date. Subsections 4 and 5 apply correspondingly to the cases mentioned in the first sentence. If the recipient is a member of the board of directors or employed by the company at the age of retirement, the company must pay the variable part of the pension benefit to the recipient in the form of instruments covered by subsection 1, item 4, without the possibility of disposal or utilization for a period of 5 years. Subsection 5 applies correspondingly to the cases mentioned in the third sentence.

Subsection 7. For persons in employment relationships covered by a collective agreement, subsections 1-6 apply only to agreements on variable remuneration parts if the agreements on variable remuneration are not stipulated in the agreement.

Section 109 a. If an investment firm or an investment holding company enters into an agreement on a severance scheme with a member of the management, and the value of the scheme exceeds an amount corresponding to the person's total remuneration in the last 2 financial years including pension, the company must publish the size of the total remuneration, including the size of the individual remuneration parts, and a justification for the size of the remuneration parts.

Subsection 2. The publication pursuant to subsection 1 must take place on the company's website in the same place where the company's remuneration policy is published, and must take place as soon as possible and no later than 3 business days after the agreement is entered into. The information about a member of the management's severance scheme must be available as long as the agreement is valid.

Section 109 b. Remuneration in an agreed notice period to a member of the management in an investment firm or an investment holding company, which is not matched by a normal work obligation, must be paid monthly during the notice period.

Section 109 c. A severance payment to a member of the management in an investment firm or an investment holding company must reflect the results achieved in performing the position, and must not reward misconduct or lack of results.

Subsection 2. The severance payment must be paid in monthly installments corresponding to the size of the recipient's average monthly salary including pension in the last financial year.

Subsection 3. The payment of the severance payment may begin earliest after any remuneration in the notice period has been fully paid.

Subsection 4. The board of directors must recommend the payment of the severance payment if the board of directors assesses that the director during their employment has exhibited behavior that must be considered to constitute serious managerial negligence. The board of directors must withhold the payment of the severance payment if the company is charged with criminal offenses that can be attributed to the director, or if the board of directors becomes aware that the director is charged with criminal offenses committed in connection with their employment in the company.

Subsection 5. The board of directors must demand repayment of a severance payment that has been paid wholly or partly before the board of directors has become aware of behavior or circumstances covered by subsection 4.

Section 109 d. Sections 109 a-109 c may not be derogated from by agreement, including by agreement on a severance scheme for a member of the management in an investment firm or an investment holding company, which is entered into with another company in the group that is not covered by the rules.

Remuneration under state aid

Section 110. Investment firms and investment holding companies that receive state aid or have received a commitment of state aid may not grant or pay variable remuneration to members of the board of directors and management.

Subsection 2. No new stock option programs or similar schemes may be initiated for the board of directors or management in investment firms and investment holding companies that receive or have received a commitment of state aid.

Subsection 3. Investment firms and investment holding companies that receive state aid or have received a commitment of state aid must limit the variable remuneration to other employees than members of the board of directors and management to a part of the net income, if the payment of variable remuneration otherwise would be incompatible with maintaining a robust capital base and timely termination of state aid.

Subsection 4. Investment firms and investment holding companies that receive or have received a commitment of state aid must in their remuneration policy set a specified limit in relation to the company's net income for the total grant of variable remuneration to other employees than members of the board of directors and management, if the payment of variable remuneration is incompatible with maintaining a robust capital base and timely termination of state aid.

Remuneration Committee

Section 111. Investment firms and investment holding companies, whose value of balance sheet and off-balance sheet assets on average amounts to 100 million euros or more in the 4-year period immediately preceding the relevant financial year, must establish a remuneration committee, subject to subsections 2-5.

Subsection 2. An investment firm is not obliged to establish a remuneration committee if the investment firm meets the conditions for classification as a small and non-interconnected investment firm.

Subsection 3. Finanstilsynet may exempt an investment firm from subsection 1, if Finanstilsynet assesses that it is appropriate considering the nature and scope of the investment firm's activities, its internal organization, and the characteristics of the group to which the investment firm belongs. The following conditions must however be met:

The investment firm must not be one of the three largest investment firms in Denmark in relation to the total value of assets.
The investment firm must not be subject to obligations or simplified obligations regarding recovery and resolution planning in accordance with Sections 98 and 99 and Chapter 20.
The value of the investment firm's balance sheet and off-balance sheet assets amounts to a maximum of 300 million euros on average in the 4-year period immediately preceding the relevant financial year.
The size of the investment firm's balance sheet and off-balance sheet trading book activities amounts to a maximum of 150 million euros.
The size of the investment firm's balance sheet and off-balance sheet derivative activities amounts to a maximum of 100 million euros.

Subsection 4. An investment holding company is not obliged to establish a remuneration committee if the investment holding company's subsidiary is exempted from the requirement thereof pursuant to subsections 2 and 3.

Subsection 5. Finanstilsynet may regardless of subsection 1 require that an investment firm must establish a remuneration committee, if Finanstilsynet assesses that it is appropriate considering the nature and scope of the investment firm's activities, its internal organization, and the characteristics of the group to which the investment firm belongs.

Subsection 6. In groups with several companies that are obliged to establish a remuneration committee pursuant to subsection 1, a common remuneration committee may be established for these companies in the group or a part thereof. The remuneration committee must be organizationally placed in a company under the supervision of Finanstilsynet and must be established in a company that is the parent company for the other companies for which the remuneration committee is established. The remuneration committee may however not be placed in an investment holding company.

Section 112. The chairman and members of the remuneration committee must be members of the board of directors in the company that establishes the remuneration committee, or of the boards of directors in companies that have a common remuneration committee pursuant to Section 111, subsection 6. The remuneration committee must be composed so that the members have the necessary knowledge and the necessary qualifications and competencies to understand and monitor the company's remuneration policy and practice, risk management and control activities, particularly insofar as it concerns adapting the company's remuneration structure to the company's risk profile and management of capital and liquidity, and are able to make a qualified and independent assessment of whether the company's remuneration, including remuneration policy and associated business practices, is in accordance with Section 107, subsection 1, Sections 108-110, and rules issued pursuant to Section 113. The remuneration committee must have an equal gender distribution.

Subsection 2. The remuneration committee must conduct the preparatory work for the board of directors' decisions on remuneration, including remuneration policy and other decisions thereon, which can have an influence on the company's risk management, and in connection therewith conduct the following:

The remuneration committee must advise the board of directors on the formulation of the company's remuneration policy, assist the board of directors in ensuring compliance with the company's remuneration policy in practice, and assess whether the company's remuneration policy is updated, including if necessary coming forward with proposals for updates of the remuneration policy.
The remuneration committee must ensure that the information presented to the general meeting regarding the company's remuneration policy and practice and the information pursuant to Section 109, subsection 1, item 3, letters a and b, are sufficient.
The remuneration committee must assess whether the company's processes and systems are sufficient and take into account the company's risks, including risks associated with the management of capital and liquidity, in relation to the company's remuneration structure, and ensure that the company's remuneration policy and practice are in accordance with and promote sound and effective risk management and are in accordance with the company's business strategy, objectives, values, and long-term interests.
The remuneration committee must assess the company's and business units' total results and ensure that the management has evaluated whether the result criteria that formed the basis for the calculation of variable remuneration to the company's members of the board of directors and management and other employees whose activities have a significant influence on the company's risk profile, are still met at the time of payment, cf. Section 109, subsection 4.
The remuneration committee must control selected evaluations made by the management, cf. item 4, to test whether the conditions in Section 109, subsection 4, are met.
The remuneration committee must ensure that the independent control functions and other relevant functions are involved, to the extent necessary for the implementation of the tasks in items 1-5, and, to the extent necessary, seek external advice.

Subsection 3. The remuneration committee may perform other tasks regarding remuneration. The remuneration committee must in the preparatory work perform the company's long-term interests, including also in relation to investors, and the public interest.

Subsection 4. In investment firms and in investment holding companies, which are obliged to establish a remuneration committee, and where there is employee representation in the board of directors, at least 1 of these representatives must be a member of the remuneration committee.

Section 113. The Minister for Business Affairs may for investment firms and investment holding companies set detailed rules regarding the definition of other employees whose activities have a significant influence on the company's risk profile.

Subsection 2. The Minister for Business Affairs may for investment firms and investment holding companies set detailed rules regarding the obligation to publish information on remuneration of the board of directors, management, and other employees whose activities have a significant influence on the company's risk profile.

Subsection 3. The Minister for Business Affairs may for investment firms and investment holding companies set detailed rules regarding the matters mentioned in Section 107, subsection 1, and Section 109, subsections 1-6.

Subsection 4. The Minister for Business Affairs may for investment firms and investment holding companies set detailed rules regarding compliance with rules on remuneration at group level.

Chapter 12
Disclosure of Confidential Information
General Provisions

Section 114. Members of the board of directors, members of the representative body, directors, and other employees in an investment firm or in an investment holding company may not unauthorizedly pass on or utilize confidential information, which they have become acquainted with in the exercise of their duties. The same applies to auditors and examiners and their substitutes, founders, valuers, and liquidators.

Subsection 2. The person who receives confidential information is covered by the duty of confidentiality in subsection 1, first sentence.

Section 115. An investment firm may pass on usual information about customer relations for use in performing administrative tasks.

Subsection 2. For use in performing administrative tasks, information may be passed on to a joint-stock company, which is wholly owned by Labour Market Supplementary Pension, and to Labour Market Supplementary Pension, cf. Section 23, subsection 4, and Section 26 b, subsection 3, in the Act on Labour Market Supplementary Pension.

Subsection 3. The person who receives information pursuant to subsection 1 or 2, is covered by the duty of confidentiality in Section 114, subsection 1, first sentence.

Subsection 4. Finanstilsynet sets detailed rules regarding which information is usual customer information according to subsection 1.

Section 116. An investment firm may not pass on information about purely private matters without the customer's consent, unless the passing on is justified pursuant to Section 114, subsection 1, first sentence, or Section 115, subsection 2.

Disclosure of Information to Parent Company

Section 117. An investment firm may pass on confidential information to the investment firm's parent company for use in risk management, if the parent company is an investment firm or an investment holding company. This does not however apply to information about purely private matters.

Subsection 2. Information about customers, who are natural persons, may not be passed on for use in risk management except in the special cases where the information about the customer concerns obligations that have or will be able to have a significant size.

Disclosure of Information for Marketing Purposes

Section 118. An investment firm may not pass on information about a customer, who is a natural person, for use in marketing or advice, unless the customer has given consent thereto.

Subsection 2. Passing on to group companies, which are subject to the duty of confidentiality pursuant to Section 114, subsection 1, first sentence, and companies, which the investment firm operates jointly with others, cf. Section 31, and which are subject to the duty of confidentiality pursuant to Section 114, subsection 1, first sentence, may take place without consent, if it concerns general customer information that forms the basis for division into customer categories. The passing on must be necessary for the company, to which the information is passed on, to pursue a legitimate interest, when the interest of the natural person does not outweigh this interest.

Subsection 3. Usual information about customers, who are legal persons, may be passed on for use in marketing and advice to an investment firm, which is covered by the duty of confidentiality in Section 114, subsection 1, or to a financial company, which is subject to a corresponding duty of confidentiality.

Section 119. An investment firm must prepare guidelines regarding the extent to which information is passed on from the investment firm. The guidelines must be freely available.

Section V
Capital and Liquidity Conditions
Chapter 13
Solvency and Liquidity

The Individual Solvency Need

Section 120. The board of directors and management of an investment firm, which does not meet the conditions for classification as a small and non-interconnected investment firm, must ensure that the investment firm has a sufficient capital base and liquid assets as well as internal procedures for risk measurement and risk management for continuous assessment and maintenance of a capital base and liquid assets of a size, type, and distribution, which are suitable to cover the risks that the investment firm may pose to others, and which the investment firm is or may be exposed to. These procedures must be subject to internal control to ensure that they continue to be sufficient and stand in reasonable proportion to the nature, scope, and complexity of the investment firm's business.

Subsection 2. The investment firm's board of directors and management must on the basis of the assessment pursuant to subsection 1 calculate the investment firm's individual solvency need, which may not be less than the capital base requirement pursuant to Article 11, subsection 1, 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. Finanstilsynet may determine that an investment firm, which meets the conditions for classification as a small and non-interconnected investment firm, must assess and calculate the investment firm's individual solvency need.

Subsection 4. Finanstilsynet may set detailed rules for calculation and reporting of the individual solvency need for investment firms and for groups, where the top parent company in Denmark is an investment firm or an investment holding company, cf. Section 129.

The Individual Solvency Requirement

Section 121. Finanstilsynet may individually set a higher requirement for the capital base for an investment firm in the form of an add-on to the capital base requirement pursuant to Article 11 of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms. This individually set solvency requirement is Finanstilsynet's assessment of the investment firm's sufficient capital base and may be set if Finanstilsynet assesses the following:

The investment firm is exposed to risks or elements of risks or poses risks to others, which are significant, and which are not covered or not sufficiently covered by the capital base requirements, particularly the K-factor requirements, in the third or fourth part of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms.
The investment firm does not meet the requirements for arrangements etc. for risk measurement and risk management for continuous assessment and maintenance of the sufficient capital base and liquid assets pursuant to Section 120 and the requirements for management arrangements etc. in Chapter 9, and other supervisory measures will likely not improve the arrangements etc. within a suitable period.
The adjustments in relation to the prudent valuation of the trading book are not sufficient to enable the investment firm to sell or hedge its positions within a short time without suffering significant losses under normal market conditions.
Finanstilsynet's control of the investment firm's use of internal models for calculation of capital base requirements shows that the non-compliance with the requirements for use of the permitted internal models will likely result in an insufficient capital base.
The investment firm repeatedly fails to establish or maintain a sufficient level for additional capital base, cf. Section 122.

Subsection 2. The add-on must be met on the following conditions:

At least three quarters of the add-on must be met with core capital.
At least three quarters of the core capital must consist of own core capital.
The capital base may not be used to meet the capital base requirements, which are covered by Article 11, subsection 1, letter a-c, of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms.

Guidance on Additional Capital Base

Section 122. Finanstilsynet may for an investment firm, which does not meet the conditions for classification as a small and non-interconnected investment firm, establish a guiding level of additional capital base, which ensures that the investment firm's maintained capital base is sufficiently much larger than the capital base requirement pursuant to Article 11, subsection 1, of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, the individual solvency need, and the individual solvency requirement to ensure that economic fluctuations do not lead to non-compliance with the mentioned capital base requirements or bring the investment firm into non-compliance.

The possibility of orderly resolution or winding up of its business is at risk. The indicative level of additional capital buffer shall be set taking into account the principle of proportionality and the size, systemic importance, nature, scope and complexity of the activities carried out by the investment firm.

Subsection 2. The Danish Financial Supervisory Authority informs the investment firm of any expectations regarding the adjustment of the maintained capital buffer set in accordance with subsection 1 and a deadline by which the investment firm must have made the adjustment.

Write-down of assets in connection with the calculation of the capital buffer

Section 123. The Danish Financial Supervisory Authority may require an investment firm that does not meet the conditions for classification as a small and non-interconnected investment firm to write down assets etc. for use in the calculation of the capital buffer.

Special liquidity requirements

Section 124. The Danish Financial Supervisory Authority may set a special liquidity requirement for an investment firm, taking into account specific liquidity risks in the investment firm. The first sentence applies to investment firms that do not meet the conditions for classification as small and non-interconnected investment firms, and also to investment firms that meet the conditions for classification as small and non-interconnected investment firms and which have not been exempted from the liquidity requirement in accordance with Article 43, subsection 1, of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements for investment firms.

Subsection 2. The special liquidity requirement may be set if the Danish Financial Supervisory Authority assesses the following:

The investment firm is exposed to liquidity risk that is significant and is not covered or not sufficiently covered by the liquidity requirement in Part Five of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements for investment firms.
The investment firm does not meet the requirements for arrangements etc. for risk measurement and risk management for the ongoing assessment and maintenance of adequate capital buffer and liquid assets pursuant to Section 120 and the requirements for management arrangements etc. in Chapter 9, and other supervisory measures are unlikely to improve the arrangements etc. within a reasonable time.

Subsection 3. The special liquidity requirement is calculated as the difference between the Danish Financial Supervisory Authority's assessed adequate liquidity and the liquidity requirement in Part Five of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements for investment firms and shall be met with liquid assets as defined in Article 43 of the Regulation.

Chapter 14
Placement of Funds

Section 125. An investment firm's capital shares in other undertakings must not exceed 100% of the capital buffer.

Subsection 2. Share purchase and share sale transactions shall be included in the calculation of the limit pursuant to subsection 1.

Subsection 3. Capital shares that must be deducted from the capital buffer and capital shares in undertakings that are fully consolidated are not included in the limit pursuant to subsection 1.

Subsection 4. The Danish Financial Supervisory Authority may grant an exemption from the limit pursuant to subsection 1.

Section 126. An investment firm must not own real estate or have capital shares in real estate companies for more than 20% of the capital buffer, subject to subsection 2.

Subsection 2. Properties acquired by the investment firm for the purpose of operating business therefrom are not included pursuant to subsection 1.

Subsection 3. The Danish Financial Supervisory Authority may grant an exemption from the limit pursuant to subsection 1.

Section 127. An investment firm that does not have permission to carry out trading for own account, pursuant to Annex 1, Section A, No. 3, may place its capital buffer in the financial instruments covered by Annex 2.

Chapter 15
Group Rules and Consolidation etc.
Calculation of capital buffer requirements by parent undertakings at company level

Section 128. The rules on capital buffer requirements in Article 11, subsection 1, points (a) and (c), of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements for investment firms apply at company level for investment firm holding companies that are the ultimate parent undertaking in Denmark. The capital buffer requirement pursuant to Article 11, subsection 1, point (c), of the aforementioned Regulation applies only to parent investment firm holding companies that have a subsidiary that is subject to this capital buffer requirement.

Subsection 2. The Danish Financial Supervisory Authority sets detailed rules for the calculation and reporting of capital buffer requirements and capital buffer, including common equity tier 1 capital, additional tier 1 capital and tier 2 capital, for investment firm holding companies that are the ultimate parent undertaking in Denmark.

Solvency and liquidity, placement of funds and intra-group transactions at group level

Section 129. In groups where the ultimate parent undertaking in Denmark is an investment firm or an investment firm holding company, Sections 125, 126 and 137 apply to the group. Sections 120, 121 and 124 further apply to the group in the following cases:

The ultimate parent undertaking itself or at least one of the parent undertaking's subsidiaries is an investment firm that is subject to Sections 120, 121 and 124.
The ultimate parent undertaking is an investment firm holding company that has at least one subsidiary that is an investment firm that is subject to the provision.

Pro rata consolidation

Section 130. If an investment firm or an investment firm holding company holds, alone or together with other undertakings in the group, capital interests in a credit institution or financial institution that is not a subsidiary, and the credit institution or financial institution is operated jointly with other undertakings that are part of the group, pro rata consolidation of the undertaking shall be carried out in accordance with Article 7 of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements for investment firms in relation to the investment firm's share of the own funds and result of the undertaking in which the capital interest is held.

Subsection 2. If the liability of the investment firm or investment firm holding company for the undertaking is not limited to the shareholding or voting rights, full consolidation shall be carried out in accordance with Article 7 of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements for investment firms.

Subsection 3. Subsections 1 and 2 do not apply to the ultimate parent undertaking in Denmark that is part of a group where consolidation is carried out in accordance with Article 7 of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements for investment firms.

Early intervention at group level

Section 131. Sections 177 and 179 apply to groups where the ultimate parent undertaking in Denmark is

an investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, or
an investment firm holding company or a mixed financial holding company with at least one subsidiary that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6.

Subsection 2. If a parent undertaking covered by subsection 1 meets the conditions for the Danish Financial Supervisory Authority to apply one or more of the measures mentioned in Sections 177 or 179, the Danish Financial Supervisory Authority shall consult the other competent authorities in the supervisory college and notify the European Banking Authority before the parent undertaking is issued a measure pursuant to Sections 177 or 179.

Subsection 3. If the Danish Financial Supervisory Authority, as the consolidating supervisor pursuant to subsection 1, receives a consultation corresponding to Section 132, the Danish Financial Supervisory Authority shall provide its assessment of the intended measure's impact on the group within 3 working days after receipt.

Subsection 4. If more than one competent authority in the supervisory college wishes to issue one or more measures pursuant to Sections 177 or 179 to a group covered by subsection 1, the Danish Financial Supervisory Authority, in cooperation with the other competent authorities in the supervisory college, shall assess whether it is most appropriate to appoint the same temporary administrator, pursuant to Section 179, for all affected undertakings or to coordinate the application of one or more measures pursuant to Section 177 on more than one undertaking. The Danish Financial Supervisory Authority and the other competent authorities in the supervisory college shall strive to reach a joint decision no later than 5 working days after the consultation pursuant to subsection 2. If a joint decision is reached, the Danish Financial Supervisory Authority forwards it to the parent undertaking.

Subsection 5. If no joint decision, pursuant to subsection 4, is reached no later than 5 working days after the consultation pursuant to subsection 2, the Danish Financial Supervisory Authority makes a decision on the application of one or more measures, pursuant to Sections 177 or 179, against the parent undertaking. The Danish Financial Supervisory Authority notifies the parent undertaking and the other relevant competent authorities in the supervisory college of this decision. The Danish Financial Supervisory Authority must postpone the decision if one of the competent authorities in the supervisory college has referred the matter to the European Banking Authority, and shall thereafter make a decision in accordance with the decision of the European Banking Authority.

Section 132. In cases where one or more subsidiaries are investment firms that have permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6 and are subject to supervision by the Danish Financial Supervisory Authority, but where another authority within the European Union or in a country with which the Union has concluded an agreement in the financial field is the consolidating supervisor for the relevant group, the Danish Financial Supervisory Authority, when the conditions for applying Sections 177 or 179 are met in relation to one or more subsidiaries, shall consult the consolidating supervisor before the Danish Financial Supervisory Authority issues one or more measures pursuant to Sections 177 or 179 to the subsidiary. The Danish Financial Supervisory Authority notifies the consolidating supervisor and the other competent authorities in the supervisory college of the decision.

Subsection 2. In a group where consolidated supervision is not with the Danish Financial Supervisory Authority, the Danish Financial Supervisory Authority may make a decision on the application of one or more measures, pursuant to Sections 177 or 179, against an investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6 and is subject to supervision by the Danish Financial Supervisory Authority, if a joint decision as mentioned in Section 131, subsection 4, second sentence, is not available within the deadline in Section 131, subsection 4, second sentence. The Danish Financial Supervisory Authority notifies the investment firm of this decision. The Danish Financial Supervisory Authority must postpone the decision if the matter has been referred to the European Banking Authority, and shall thereafter make a decision in accordance with the decision of the European Banking Authority.

Separation of capital shares in investment firms in a sub-group

Section 133. The Danish Financial Supervisory Authority may order a parent undertaking that owns capital shares in one or more investment firms to separate the investment firms and financial institutions in a sub-group under an investment firm holding company if

the group is structured in such a way that the parent undertaking is not required to meet the capital buffer requirement in Section 128 and the consolidated capital buffer requirement in Article 7 of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements for investment firms,
a member of the parent undertaking's board of directors or management is subject to one of the circumstances in Section 75, subsection 1, Nos. 3, 4 and 6, or
the structure otherwise hinders the performance of the Danish Financial Supervisory Authority's tasks.

Divestment of capital shares in an investment firm

Section 134. The Danish Financial Supervisory Authority may order an investment firm holding company to divest capital shares in an investment firm if

the parent undertaking does not meet the capital buffer requirement in Section 128 or the group does not meet the consolidated capital buffer requirement in Article 7 of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements for investment firms,
a member of the investment firm holding company's board of directors or management does not have sufficient experience to exercise the office or hold the position or is subject to one of the circumstances in Section 75, subsection 1, Nos. 3, 4 and 6, or
the investment firm holding company hinders sound and prudent management of the investment firm.

Common intermediate parent undertaking within the European Union

Section 135. An investment firm must appoint a common intermediate parent undertaking within the European Union if

the investment firm is part of a group whose parent undertaking is located in a country outside the European Union with which the Union has not concluded an agreement in the financial field,
the group has two or more credit institutions, mortgage credit institutions or investment firms located in a country within the European Union or in a country with which the Union has concluded an agreement in the financial field, and
the group has assets with a total value of 40 billion euros or more in the European Union or in a country with which the Union has concluded an agreement in the financial field.

Subsection 2. The Danish Financial Supervisory Authority may grant permission for the investment firm to appoint two intermediate parent undertakings within the European Union if

the parent undertaking of the group mentioned in subsection 1, No. 1, is ordered to separate activities in the country outside the European Union with which the Union has not concluded an agreement in the financial field where the parent undertaking is located, or
if the competent resolution authority for the intermediate parent undertaking has assessed that resolution would be more effective with two intermediate parent undertakings in the European Union.

Subsection 3. An intermediate parent undertaking must have permission as a credit institution or mortgage credit institution or be an approved financial holding company or mixed financial holding company, subject to subsection 4.

Subsection 4. An investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, may be appointed as an intermediate parent undertaking if

none of the undertakings covered have permission as a credit institution or mortgage credit institution or
the intermediate parent undertaking is appointed pursuant to subsection 2, No. 1.

Intra-group transactions

Section 136. The Danish Financial Supervisory Authority sets detailed rules for intra-group transactions entered into between an investment firm and

undertakings that are directly or indirectly connected with the investment firm as subsidiaries, associated undertakings or parent undertakings or as the parent undertaking's associated undertakings and other subsidiaries,
undertakings or persons that are connected with the investment firm through close links, or
undertakings that are not covered by Nos. 1 and 2, where the persons in the management of the undertakings are the same for the majority or where the undertakings are subject to joint management pursuant to an agreement or articles of association.

Subsection 2. Intra-group transactions carried out in breach of rules established pursuant to subsection 1 shall be revoked, so that services are returned if possible, including that any security provided ceases. Payments from the investment firm that have been made in connection with intra-group transactions in breach of rules established pursuant to subsection 1 shall be refunded with an annual interest rate on the amount corresponding to the interest rate set pursuant to Section 5, subsections 1 and 2, of the Interest Act.

Intra-group exposures

Section 137. An investment firm must not, without permission from the Danish Financial Supervisory Authority, have exposures to other undertakings within the same group, except exposures to subsidiaries, subject to Sections 138-142.

Subsection 2. An investment firm must not have an exposure to undertakings or persons that directly or indirectly have decisive influence on the investment firm, or that are dominated by undertakings or persons with such influence.

Subsection 3. The Danish Financial Supervisory Authority may grant an exemption from subsection 2.

Early intervention and intra-group financial support

Section 138. Investment firms that have permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, and investment firm holding companies and mixed holding companies with at least one such subsidiary investment firm, that are part of a group with other such investment firms, investment firm holding companies and mixed holding companies, as well as credit institutions, mortgage credit institutions, financial institutions and financial holding companies and mixed holding companies pursuant to the Act on Financial Business with at least one subsidiary that is a credit institution, mortgage credit institution or financial institution, may, with the permission of the Danish Financial Supervisory Authority, enter into an agreement on intra-group financial support with one or more of these group undertakings for the case that one of these group undertakings subsequently comes into a situation where the conditions for early intervention in Chapter 18 are met. An agreement on intra-group financial support must be compatible with the conditions in Section 140.

Subsection 2. When entering into an agreement on intra-group financial support, the undertakings that are parties to the agreement must act in their own interest. The agreement on intra-group financial support must establish principles for the calculation of the remuneration to be paid for transactions in accordance with the agreement.

Subsection 3. An application for permission to enter into an agreement on intra-group financial support shall be submitted to the Danish Financial Supervisory Authority by the parent undertaking in the group when the ultimate parent undertaking within the European Union is under consolidated supervision by the Danish Financial Supervisory Authority. The application must contain a draft of the intended agreement, information on which undertakings intend to participate in the agreement, and other information necessary for the Danish Financial Supervisory Authority's assessment of whether the agreement is compatible with the conditions in Section 140.

Subsection 4. The Danish Financial Supervisory Authority immediately forwards the submitted application for permission to enter into an agreement on intra-group financial support to the competent authorities for each of the subsidiaries that wish to participate in the agreement to reach a joint decision.

Subsection 5. The Danish Financial Supervisory Authority grants permission for the intended agreement in accordance with the procedures in subsections 7 and 8 if the agreement is assessed to be compatible with the conditions for providing intra-group financial support in Section 140.

Subsection 6. The Danish Financial Supervisory Authority may, in accordance with the procedures in subsections 7 and 8, prohibit the entry into the intended agreement on intra-group financial support if the agreement is considered incompatible with the conditions for providing intra-group financial support in Section 140.

Subsection 7. The Danish Financial Supervisory Authority must, after receipt of an application pursuant to subsection 3, together with the competent authorities for each of the subsidiaries that wish to participate in the agreement, reach a joint decision on the application within 4 months. If a joint decision is reached, the Danish Financial Supervisory Authority forwards it to the applying undertaking.

Subsection 8. If no joint decision is available within the deadline of 4 months, the Danish Financial Supervisory Authority makes a decision on the application. The Danish Financial Supervisory Authority notifies the undertaking and the relevant competent authorities of the decision.

Subsection 9. The Danish Financial Supervisory Authority must postpone the decision if one of the competent authorities for each of the subsidiaries that wish to participate in the agreement has referred the matter to the European Banking Authority. The Danish Financial Supervisory Authority must thereafter make a decision in accordance with the decision of the European Banking Authority.

Section 139. If the Danish Financial Supervisory Authority has granted permission for an agreement on intra-group financial support pursuant to Section 138, subsection 1, the agreement must be approved by the shareholders in each of the undertakings that wish to participate in the agreement.

Subsection 2. The board of directors for each of the undertakings participating in the agreement on intra-group financial support must annually report to the shareholders on the implementation of the decisions made pursuant to the agreement.

Section 140. An undertaking may only provide intra-group financial support in accordance with the agreement entered into pursuant to Section 138, subsection 1, to another undertaking that meets the conditions in Chapter 18, when all of the following conditions are met:

It can reasonably be expected that the intra-group financial support will remedy the significant financial problems in the recipient undertaking.
The intra-group financial support aims to preserve or restore the financial stability in the group as a whole or in one of the undertakings and is in the interest of the providing undertaking.
The intra-group financial support is provided on market-based terms, including for remuneration.
There is a reasonable prospect that the remuneration for the intra-group financial support will be paid, including that the loan will be repaid by the recipient undertaking if the support is provided in the form of a loan.
The provision of the intra-group financial support will not threaten the liquidity or solvency of the providing undertaking.
The provision of the intra-group financial support will not pose a threat to financial stability, in particular in countries within the European Union or in countries with which the Union has concluded an agreement in the financial field, where the providing undertaking is established.
The providing undertaking meets the capital buffer and liquidity requirements at the time of providing the intra-group financial support, and the provision of support does not result in the requirements no longer being met, unless the Danish Financial Supervisory Authority or the competent authority in countries within the European Union or in countries with which the Union has concluded an agreement in the financial field, responsible for supervising the providing undertaking, has given specific permission for this.
The providing undertaking meets at the time of providing the intra-group financial support the requirements for large exposures set out in Part Four of Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements for investment firms or Part Four of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions, depending on which of the two regulations the providing undertaking is subject to, minim

the competent authority in countries within the European Union or in countries with which the Union has concluded an agreement in the financial field, which is responsible for the supervision of the supporting company, has given specific permission for the failure to comply.

The provision of intra-group financial support does not change the options for the resolution of the supporting company.

§ 141. The board of a supporting company shall make a decision to provide intra-group financial support in accordance with the agreement thereto, if the conditions in § 140 are met. The board of the supported company shall make a decision to accept intra-group financial support in accordance with the agreement.

Subsection 2. Prior to the provision of intra-group financial support in accordance with an approved agreement thereto, cf. § 138, subsection 5, the board of a supporting company shall notify

The Danish Financial Supervisory Authority,
the consolidating supervisory authority, if it is not the Danish Financial Supervisory Authority,
the competent authority for the supported company, if this is not covered by no. 1 or 2, and
The European Banking Authority.

Subsection 3. The notification shall contain the board's reasoned decision and detailed information about the intended intra-group financial support, including a copy of the agreement on intra-group financial support.

Subsection 4. The Danish Financial Supervisory Authority has from the time of receipt of the notification and receipt of the required information 5 working days to prohibit or limit the intra-group financial support, if the Danish Financial Supervisory Authority assesses that the conditions in § 140 are not met.

Subsection 5. The Danish Financial Supervisory Authority's decision to accept, prohibit or limit the intra-group financial support shall be communicated immediately to

the consolidating supervisory authority, if it is not the Danish Financial Supervisory Authority,
the competent authority for the supported company and
The European Banking Authority.

Subsection 6. If the Danish Financial Supervisory Authority does not prohibit or limit the intra-group financial support within the time limit in subsection 4, intra-group financial support may be provided in accordance with the notification.

Subsection 7. The board's decision to provide intra-group financial support shall be sent to the authorities covered by subsection 2. The Danish Financial Supervisory Authority shall immediately notify the other members of the supervisory college and the members of the resolution college, if the Danish Financial Supervisory Authority has the consolidated supervision of the group.

§ 142. A company that is a party to an agreement on intra-group financial support covered by § 138 shall publish on its website a description of the general terms of the agreement as well as names and identification numbers in the form of CVR numbers for Danish companies that are parties to the agreement.

Subsection 2. Publication pursuant to subsection 1 shall take place at least once a year simultaneously with the publication of the annual report. Publication shall also take place if there are significant changes in the agreement on intra-group financial support or in the company during the year.

Section VI
Annual Report and Audit
Chapter 16
Annual Report and Audit
General rules on annual report and audit

§ 143. For each financial year, investment firm companies and investment firm holding companies shall prepare an annual financial statement, which consists of a balance sheet, an income statement, other comprehensive income, notes, including a statement of applied accounting policies, and a summary of movements in equity. The annual financial statement shall be supplemented with

annual financial statement for a group led by the company (consolidated financial statement),
management report for the company and for a group led by the company,
management statement and
audit statement.

Subsection 2. The annual financial statement may be supplemented with any supplementary reports, cf. § 153.

Subsection 3. The collective term for the accounts, reports and statements referred to in subsections 1 and 2 is "annual report".

§ 144. Investment firm companies and investment firm holding companies shall prepare the annual report in accordance with the rules in this chapter and rules issued pursuant to § 157.

§ 145. Investment firm companies and investment firm holding companies that are not obliged to apply the international accounting standards referred to in Article 4 of Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards to their consolidated financial statements may choose to apply the standards to their consolidated financial statements.

Subsection 2. Investment firm companies and investment firm holding companies that are obliged to apply or optionally apply the standards mentioned in subsection 1 shall follow all approved standards. If provisions in this chapter or in rules issued pursuant to § 157 regulate the same matters as the standards, the investment firm companies or investment firm holding companies shall apply the standards instead of the provisions.

Subsection 3. The Danish Financial Supervisory Authority may set rules necessary to apply the regulation referred to in subsection 1 in this country.

Management's responsibility for the preparation of the annual report

§ 146. The board and the executive management shall prepare the annual report for the investment firm company or investment firm holding company.

Subsection 2. Each individual member of the management is responsible for ensuring that the annual report

is prepared in accordance with legislation and any additional requirements for accounts in articles of association or agreement,
can be audited and approved in good time and
is submitted to the Danish Financial Supervisory Authority and the Danish Business Authority within the time limits set in legislation.

§ 147. When the annual report has been prepared, all members of the board and executive management shall sign it and date the signature. The members of the board and executive management shall give their signature in connection with a management statement, where each individual member's name and function in relation to the investment firm company or investment firm holding company are clearly indicated, and in which they declare whether

the annual report has been prepared in accordance with the requirements of legislation and any requirements in articles of association or agreement,
the annual financial statement and any consolidated financial statement give a true and fair view of the investment firm company or investment firm holding company or the group, the group's assets and liabilities, financial position as well as the result and
the management report contains a true and fair description of the development in the activities and economic conditions of the investment firm company or investment firm holding company and, if a consolidated financial statement has been prepared, the group's activities and economic conditions as well as a description of the most significant risks and uncertainties that the investment firm company, investment firm holding company and group may be affected by.

Subsection 2. If the annual report is signed digitally, the requirement in subsection 1 that the signature and the dating of the signature shall be given in connection with the management statement shall not apply. The signer's name must, however, appear clearly in connection with the management statement.

Subsection 3. If the management has inserted supplementary reports in the annual report, the members of the board and executive management shall declare in the management statement whether the report gives a true and fair description within the framework of generally accepted guidelines for such reports.

Subsection 4. A member of the management cannot refrain from signing the annual report, even if the member of the management is completely or partially in disagreement with the annual report or has objections to it being approved with the content that has been decided. The member of the management may, however, express their objections with a concrete and comprehensive justification in connection with their signature and the management statement.

Basic requirements for the annual report

§ 148. The annual financial statement and any consolidated financial statement shall give a true and fair view of the investment firm company's or investment firm holding company's and the group's assets and liabilities, financial position as well as the result. The management report shall contain a true and fair description of the matters covered by the report.

Subsection 2. If the application of the provisions of this law or rules issued pursuant to § 157 is not sufficient to give a true and fair view as mentioned in subsection 1, further information shall be given in the annual financial statement and the consolidated financial statement respectively.

Subsection 3. If the application of the provisions of this chapter or rules issued pursuant to § 157 in special cases conflicts with the requirement in subsection 1, first sentence, they shall be deviated from, so that this requirement is met. Such a deviation shall be disclosed in the notes every year and always be justified concretely and comprehensively with information about the impact, including as far as possible the monetary impact, the deviation has on the investment firm company's, investment firm holding company's and the group's assets and liabilities, financial position as well as the result.

§ 149. In order for the annual financial statement and the consolidated financial statement to give a true and fair view, and for the management report to contain a true and fair description, the requirements in subsections 2 and 3 must be met.

Subsection 2. The annual report shall be prepared so that it supports the users of the accounts in their economic decisions, and shall at least concern

the allocation of the user's own resources,
the management of the investment firm company's or investment firm holding company's resources and
the distribution of the investment firm company's or investment firm holding company's resources.

Subsection 3. The annual report shall be prepared so that it provides information on matters that are normally relevant to the users of the accounts. The information shall also be reliable in relation to what the users of the accounts normally expect.

Subsection 4. The users of the accounts are persons, companies, organisations and public authorities etc., whose economic decisions are normally expected to be affected by an annual report, including current or future company participants, creditors, employees, customers and alliance partners, the local community and grant-giving and fiscal authorities.

§ 150. The annual report shall be prepared according to the following basic assumptions:

It shall be prepared in a clear and understandable manner (clarity).
Account shall be taken of the actual circumstances and not of formalities without real content (substance).
All relevant matters shall be included in the annual report, unless they are insignificant (materiality). If several insignificant matters together are considered to be significant, they shall, however, be included.
The operation of an activity is assumed to continue (going concern), unless it is not to be or is not assumed to be able to continue. If an activity is being wound up, classification and presentation as well as recognition and measurement shall be adapted to this winding up.
Recognition and measurement shall be based on a prudent basis, including that accounting estimates shall be supported and neutral. Any value adjustment shall be recognised, regardless of whether the annual financial statement shows a surplus or deficit.
Transactions, events and changes in value shall be recognised when they occur, regardless of the time of payment (accrual basis).
Recognition methods and measurement bases shall be applied uniformly to the same category of matters (consistency).
Each transaction, event and change in value shall be recognised and measured separately, and the individual matters shall not be offset against each other (gross value).
The opening balance for the financial year shall correspond to the closing balance for the preceding financial year (formal continuity).

Subsection 2. Presentation and classification, consolidation method, recognition method and measurement basis as well as the monetary unit used shall not be changed from year to year (real continuity). Change, however, may be made if this better achieves a true and fair view, or if the change is necessary as a result of a change in legislation or rules issued pursuant to § 157. § 148, subsection 3, second sentence, shall apply correspondingly.

Subsection 3. The Danish Financial Supervisory Authority may, regardless of subsection 1, no. 8, set rules on the obligation to offset.

§ 151. The financial year shall follow the calendar year.

Subsection 2. The first accounting period may cover a shorter or longer period than 12 months, but at most 18 months.

Subsection 3. Parent companies and subsidiary companies shall ensure that the subsidiary company has the same financial year as the parent company, unless this is not possible due to circumstances beyond the control of the parent company and the subsidiary company.

Subsection 4. The Danish Financial Supervisory Authority may in special cases exempt from the requirement in subsection 1.

§ 152. Recognition, measurement and information in monetary units shall be carried out in Danish kroner or euros.

Subsection 2. The Danish Financial Supervisory Authority may in rules issued pursuant to § 157 stipulate that the amounts are stated in other foreign currencies that are relevant to the company and the company's group respectively.

Supplementary reports

§ 153. Supplementary reports, including reports on knowledge and employees' conditions (knowledge accounts), on environmental conditions (green accounts), on the investment firm company's or investment firm holding company's social responsibility (social accounts) and on the investment firm company's or investment firm holding company's ethical objectives and follow-up thereon (ethical accounts), shall give a true and fair description within the framework of generally accepted guidelines for such reports. The reports shall meet the quality requirements in § 149, subsection 3, and with the relaxations that follow from the nature of the matter, the basic assumptions in § 150, subsections 1 and 2.

Subsection 2. The methods and measurement bases according to which the reports have been prepared shall appear in the supplementary reports.

Audit of the annual report

§ 154. The annual report shall be audited by the external auditors of the investment firm company or investment firm holding company. The audit does not cover the management report and the supplementary reports that are part of the annual report. The auditor shall, however, give an opinion on whether the information in the management report is in accordance with the annual financial statement and any consolidated financial statement.

Submission of annual reports and audit protocols

§ 155. The annual report shall, in the form in which it has been presented and approved by the board, be submitted to the Danish Financial Supervisory Authority by digital communication without undue delay after the board meeting where the annual report has been finally approved.

Subsection 2. The external auditor's audit protocol regarding the annual report and, for investment firm companies and investment firm holding companies with an internal auditor, the internal audit chief's audit protocol regarding the annual report shall be submitted to the Danish Financial Supervisory Authority by digital communication simultaneously with the submission of the annual report pursuant to subsection 1. If the external auditor does not keep an audit protocol regarding the annual report, other corresponding documentation shall be submitted.

§ 156. The approved annual report shall be submitted to the Danish Business Authority without undue delay after final approval and no later than 4 months after the end of the financial year. Investment firm companies and investment firm holding companies that are obliged to prepare interim reports shall submit the prepared interim report to the Danish Business Authority no later than 3 months after the end of the interim period.

Subsection 2. The submitted annual report shall contain at least the mandatory components and the full audit statement. If the investment firm company or investment firm holding company wishes to publish supplementary reports as mentioned in § 153, these shall be submitted together with the mandatory components of the annual report, so that the mandatory components and the supplementary reports together appear as one document designated "annual report".

Subsection 3. The Danish Financial Supervisory Authority may, after consultation with the Danish Business Authority, set detailed rules on the submission of annual reports and interim reports to the Danish Business Authority and rules on the publication of annual reports and interim reports. Detailed rules may be set hereunder that annual reports and interim reports shall be submitted digitally to the Danish Business Authority, and that communication in connection with this shall take place digitally.

The Danish Financial Supervisory Authority's powers to set detailed rules on the annual report

§ 157. The Danish Financial Supervisory Authority sets detailed rules for the annual report, including rules on the recognition and measurement of assets, liabilities, income and expenses, the presentation of the income statement and balance sheet as well as requirements for notes and the management report.

Subsection 2. The Danish Financial Supervisory Authority also sets rules for consolidated financial statements, including rules on when an annual report shall include a consolidated financial statement, and which companies this shall cover.

Subsection 3. The Danish Financial Supervisory Authority may set rules for the preparation and publication of accounting reports covering periods shorter than the annual report.

Reactions to violations of the law

§ 158. In order to ensure that the annual reports of investment firm companies and investment firm holding companies are in accordance with the rules in this chapter and the rules issued pursuant to § 157, and that the consolidated financial statements of investment firm companies and investment firm holding companies covered by Article 4 of Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards are in accordance with the international accounting standards, the Danish Financial Supervisory Authority may

provide guidance,
point out violations and
order that errors be corrected and violations be brought to an end.

Accounting reports

§ 159. The Danish Financial Supervisory Authority may require investment firm companies and investment firm holding companies to make regular reports of accounting data on forms designed by the Danish Financial Supervisory Authority.

Subsection 2. Investment firm companies and investment firm holding companies covered by § 71, subsection 1, shall annually report to the Danish Financial Supervisory Authority information related to the obligations to set targets and prepare policies for the underrepresented gender in management, which follow from § 71. The reports shall be made in accordance with forms and guidelines prepared by the Danish Financial Supervisory Authority and shall be submitted to the Danish Financial Supervisory Authority in electronic form.

Audit

§ 160. Investment firm companies and investment firm holding companies shall have at least one state-authorised auditor. If more than one auditor is chosen, or if an auditor is appointed pursuant to subsection 2, the additional chosen or appointed auditors shall be state-authorised.

Subsection 2. The Danish Financial Supervisory Authority may in special cases appoint an additional auditor. This auditor shall function on the same terms and according to the same rules as the auditors chosen by the general meeting.

Subsection 3. The auditors in an investment firm company or in an investment firm holding company shall also be auditors in the subsidiary companies of the investment firm company and investment firm holding company.

Subsection 4. Subsection 3 shall not apply to parent companies and subsidiary companies that are not domiciled in Denmark.

Subsection 5. In the event of a change of auditor, the investment firm company or investment firm holding company and the outgoing auditor shall, no later than 1 month after resignation, each give the Danish Financial Supervisory Authority a statement, if the change is due to special circumstances.

Subsection 6. The Danish Financial Supervisory Authority may impose on the auditor and, for investment firm companies and investment firm holding companies with an internal auditor, the internal audit chief to give information on the circumstances in an investment firm company, in an investment firm holding company or in such investment firm companies' and investment firm holding companies' subsidiary companies.

Subsection 7. The Danish Financial Supervisory Authority may arrange an extraordinary audit in an investment firm company, in an investment firm holding company or in such investment firm companies' and investment firm holding companies' subsidiary companies. The investment firm company or investment firm holding company may be ordered to pay for the execution of the audit. The Danish Financial Supervisory Authority approves the size of the fee.

Subsection 8. The board may not, cf. § 89, subsection 1, allow internal audit and deputy audit chiefs to perform audit tasks in companies outside the group. The board may not also allow internal audit and deputy audit chiefs to perform other work than audit tasks in investment firm companies and investment firm holding companies within the group or in companies within the same administrative community. The Danish Financial Supervisory Authority may in special cases exempt from the first sentence.

Subsection 9. The board may not, cf. § 89, subsection 1, allow internal audit and deputy audit chiefs to take on duties that cause them to conflict with the impartiality provisions corresponding to those that apply pursuant to the Auditor Act and Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of undertakings of public interest and repealing Commission Decision 2005/909/EC for external auditors of undertakings of public interest.

Subsection 10. The Danish Financial Supervisory Authority sets rules on the implementation of the audit in investment firm companies, in investment firm holding companies and in such companies' subsidiary companies, including rules on internal audit and on the implementation of the system audit in joint data centres.

§ 161. An external auditor and an internal audit chief in an investment firm company or in an investment firm holding company shall immediately notify the Danish Financial Supervisory Authority of any matter and any decision concerning the investment firm company or investment firm holding company, of which the auditor becomes aware in the course of performing the duties as auditor, and which can

constitute a significant violation of legal provisions or regulations that set the conditions for the grant of permission, or that specifically concern the activities of the investment firm company or investment firm holding company,
affect the continued operation of the investment firm company or investment firm holding company or
lead to a refusal to sign the accounts or to the conclusion being modified.

Subsection 2. The obligation to notify also covers any matter and any decision covered by subsection 1, of which the external auditor and an internal audit chief become aware as auditor for a company that has close connections with the investment firm company or investment firm holding company.

Chapter VII
Interventions or Termination etc.
Chapter 17
Merger and Termination
Merger
Section 162. An investment firm company may not, without the consent of the Minister for Industry, Business and Financial Affairs, merge with another investment firm company or a financial undertaking, cf. the Act on Financial Undertakings, or with a specific business unit of another investment firm company or financial undertaking. The same applies when the continuing undertaking is an investment company or a foreign financial undertaking, cf. the Act on Financial Undertakings.
Subsection 2. A decision on merger shall be communicated to the applicant no later than 2 months after receipt of the application. If the application is incomplete, the decision shall be communicated no later than 2 months after the applicant has submitted the information necessary to make the decision. A decision must in any case be made no later than 6 months after receipt of the application. Subsection 3. Permission under subsection 1 may, inter alia, be refused if the merger is contrary to significant public interest considerations. Subsection 4. Section 238, subsection 2, Section 239, subsection 2, Section 242, second sentence, Section 256, subsection 2, Section 257, subsection 2, Section 260, second sentence, Section 277, second sentence, Section 294, subsection 2, and Section 297, second sentence, of the Companies Act shall not apply to mergers covered by subsections 1 and 2. Withdrawal of Permission
Section 163. The Financial Supervisory Authority may withdraw an investment firm company's permission as an investment firm company if the investment firm company requests this.
Section 164. The Financial Supervisory Authority may furthermore withdraw an investment firm company's permission as an investment firm company in the following cases:

The investment firm company commits serious or repeated breaches of
a) this Act, the Money Laundering Act, the Capital Markets Act or regulations issued pursuant to these Acts, b) Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms and regulations and rules issued pursuant thereto, c) regulations issued pursuant to Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the supervision of investment firms, d) Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments or e) regulations issued pursuant to Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.
The investment firm company does not meet the requirements for obtaining permission in accordance with Chapter 3.
Business as an investment firm company is not commenced no later than 12 months after the Financial Supervisory Authority has communicated permission to the undertaking.
Investment firm business is not conducted for a period of more than 6 months.
Subsection 2. If an investment firm company does not meet the liquidity requirement in Article 43, subsection 1, of Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, the Financial Supervisory Authority may withdraw the permission. The first sentence shall not apply to investment firm companies that meet the conditions for classification as small and non-interconnected investment firm companies and which, in accordance with Article 43, subsection 1, second subparagraph, of said Regulation, have been exempted from the liquidity requirement in Article 43, subsection 1, first subparagraph, of said Regulation. Subsection 3. If an investment firm company does not meet a specific liquidity requirement set for the investment firm company in accordance with Section 124, and the investment firm company has not provided the prescribed liquidity within a deadline set by the Financial Supervisory Authority, the Financial Supervisory Authority may withdraw the permission. The Financial Supervisory Authority may extend the deadline if the Financial Supervisory Authority deems this necessary.
Section 165. An investment firm company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, is considered distressed or likely to become distressed in the following cases:
The investment firm company breaches or there are objective indicators to support that the investment firm company in the near future will breach the requirements to maintain its permission in a manner that allows the Financial Supervisory Authority to withdraw the permission in accordance with Section 164, subsection 1, Nos. 1 or 2, Section 166, subsection 1, or Section 238, subsection 2.
There are objective indicators to support a finding that the investment firm company in the near future will be unable to pay its debts or other liabilities as they fall due, and the Financial Supervisory Authority can therefore withdraw the permission in accordance with Section 164, subsection 2 or 3.
The investment firm company receives extraordinary financial support from the public, unless the support is given to avoid or remedy a serious disturbance in the Danish economy and maintain financial stability and the financial support is
a) a state guarantee to cover liquidity facilities provided by Danmarks Nationalbank, b) a state guarantee for recently issued liabilities or c) an injection of own funds or purchase of own instruments to handle a capital shortage that has been identified in national stress tests or stress tests carried out at EU level.
Subsection 2. An investment firm company group is considered distressed or likely to become distressed when the group at consolidated level is in one of the situations mentioned in subsection 1.
Subsection 3. The Financial Supervisory Authority shall decide that an investment firm company, which has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, or an investment firm company group is considered distressed or likely to become distressed after consultation with the Financial Stability Council.
Section 166. If an investment firm company does not meet the own funds requirements in Article 11 of Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms and the individual solvency requirement in Section 120, subsection 2, and the investment firm company has not provided the prescribed capital within a deadline set by the Financial Supervisory Authority, cf. subsection 4, the Financial Supervisory Authority shall withdraw the permission, subject however to subsection 5.
Subsection 2. If the provision of capital requires the investment firm company's highest authority to be convened, the Financial Supervisory Authority may determine that the convening may take place with a shorter deadline than that set in the articles of association.
Subsection 3. If an investment firm company group covered by Chapter 15 does not meet the solvency requirement in the relevant provision, and the group has not provided the prescribed capital within a deadline set by the Financial Supervisory Authority, cf. subsection 4, the Financial Supervisory Authority may withdraw the investment firm company's permission, subject however to subsection 5. Subsection 4. The Financial Supervisory Authority sets the deadline according to subsections 1 and 3 taking into account the nature of the case and specific circumstances. The deadline may be extended if the Financial Supervisory Authority deems it necessary. Subsection 5. The Financial Supervisory Authority may refrain from withdrawing the permission according to subsection 1 or 3 when the interest in appropriate crisis management or resolution speaks in favor of this. Resolution after Withdrawal
Section 167. When the Financial Supervisory Authority withdraws an investment firm company's permission in accordance with Sections 163, 164 or 166, the investment firm company shall be resolved, and other business may not be commenced before the resolution is completed.
Subsection 2. The Financial Supervisory Authority shall approve the form, content and implementation of the resolution, unless the resolution takes place through liquidation, bankruptcy or merger in accordance with Section 162.
Section 168. When an investment firm company makes a decision on resolution, the investment firm company shall immediately inform the Financial Supervisory Authority of the decision.
Subsection 2. The Financial Supervisory Authority may set a deadline for adoption of a decision on liquidation according to Section 217 of the Companies Act. If the deadline is exceeded, the Financial Supervisory Authority may decide that the investment firm company shall enter liquidation.
Special Rules on Liquidation and Bankruptcy
Section 169. An investment firm company shall be liquidated by one or more liquidators appointed by the Minister for Industry, Business and Financial Affairs. One of the liquidators must be a lawyer.
Section 170. The Financial Supervisory Authority may suspend the articles of association of an investment firm company during the liquidation.
Subsection 2. Accounts prepared in connection with liquidation shall be submitted to the Financial Supervisory Authority and the Business Authority.
Section 171. If an investment firm company is under liquidation, only the liquidators or the Financial Supervisory Authority may file a petition for bankruptcy.
Section 172. When an investment firm company becomes insolvent, the Financial Supervisory Authority may file a petition for bankruptcy. The Financial Supervisory Authority's decision to file a petition for bankruptcy cannot be appealed according to Section 275.
Subsection 2. Regardless of Section 17, subsection 2, of the Bankruptcy Act, an investment firm company that does not fulfill its obligations regarding subordinated capital raised as liable loan capital is not considered insolvent. The same applies to other investment firm companies that do not fulfill their obligations regarding supplementary capital raised as liable loan capital. Subsection 3. After the pronouncement of the bankruptcy decree, the bankruptcy court, after consultation with the Financial Supervisory Authority, appoints one or more trustees, of whom one must be a lawyer.
Section 173. The Financial Supervisory Authority has the right to participate in meetings of the creditors' committee and in bankruptcy assemblies. Drafts of the final account and final distribution in the bankruptcy estate shall be submitted by the trustee to the Financial Supervisory Authority for comment before the trustee submits it to the bankruptcy court.
Reconstruction Proceedings
Section 174. The Financial Supervisory Authority may file a petition for reconstruction proceedings of an investment firm company when the interest of the customers so requires.
Subsection 2. A petition for reconstruction proceedings according to subsection 1 shall be accompanied by the Financial Supervisory Authority's proposal for who shall be appointed as reconstruction administrator and trustee during the reconstruction proceedings, and a declaration from the persons concerned that they are willing to do so and meet the conditions in Section 238 of the Bankruptcy Act.
Section 175. The provisions of this Act or regulations issued pursuant thereto regarding the powers of the Minister for Industry, Business and Financial Affairs and the Financial Supervisory Authority and the obligations of investment firm companies towards the Minister for Industry, Business and Financial Affairs and the Financial Supervisory Authority shall apply with the necessary adaptations to investment firm companies that are under reconstruction proceedings or dissolution.
Section 176. The Minister for Industry, Business and Financial Affairs sets rules with a view to fulfilling EU legal rules on the rehabilitation and liquidation of investment firm companies.
Chapter 18
Early Intervention
Section 177. If an investment firm company, which has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, breaches or it is highly probable that the investment firm company in the near future will breach the requirements set out in this Act, regulations issued pursuant to the Act, Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, Section II of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments or Article 3, 7, 14, 17 and 24-26 of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments as a result of a significant or rapid deterioration of the investment firm company's financial situation, the Financial Supervisory Authority may order the investment firm company to take one or more of the measures in subsections 2 and 3 within a deadline set by the Financial Supervisory Authority. The Financial Supervisory Authority may extend the deadline if deemed necessary.
Subsection 2. The Financial Supervisory Authority may order the investment firm company to
initiate or update its recovery plan, which is prepared in accordance with Sections 98 and 99,
prepare and submit an action plan to the Financial Supervisory Authority,
convene the investment firm company's board of directors,
one or more members of the investment firm company's board of directors or management shall resign from their office, cf. Section 79,
prepare and submit a plan for negotiations on restructuring the investment firm company's debt,
change its business strategy,
change its legal or operational structure and
contact potential buyers with a view to preparing a resolution of the investment firm company.
Subsection 3. When convening the investment firm company's board of directors, the Financial Supervisory Authority sets the agenda. Sections 90 and 91 of the Companies Act shall not apply to convenings according to the first sentence. If the investment firm company does not comply with an order to convene the investment firm company's board of directors, the Financial Supervisory Authority may, on behalf of the investment firm company, convene the investment firm company's board of directors and set the agenda for this. Sections 89-91 and 93 of the Companies Act shall not apply to convenings according to the third sentence.
Section 178. The Financial Supervisory Authority may order one or more members of the board of directors or management in an investment firm company, which has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, to resign from their office, if the investment firm company's financial situation deteriorates significantly or if there are one or more serious breaches of the financial legislation.
Subsection 2. The Financial Supervisory Authority may issue an order according to subsection 1 if the order is not considered sufficient according to Section 177 to restore the investment firm company's financial situation.
Subsection 3. Appointment of a new management or board of directors or new members thereof shall take place in accordance with this Act, regulations issued pursuant to the Act, the Companies Act, regulations issued pursuant to the Companies Act and the investment firm company's articles of association.
Temporary Administrator
Section 179. The Financial Supervisory Authority may order an investment firm company, which has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, to appoint one or more temporary administrators, cf. subsection 2 or 3, if the investment firm company's financial situation deteriorates significantly or if there are one or more serious breaches of the financial legislation and it is assessed that an order according to Section 178 is not sufficient to restore the investment firm company's financial situation.
Subsection 2. The Financial Supervisory Authority may order the investment firm company that the temporary administrator
shall take the place of the entire board of directors or
shall assist the board of directors in their work.
Subsection 3. The provisions of this Act and the Companies Act regarding an investment firm company's board of directors shall apply with the necessary adaptations to a temporary administrator who takes the place of the board of directors.
Subsection 4. At the time of the appointment of a temporary administrator who takes the place of the entire board of directors, the board of directors shall resign, and the temporary administrator shall be granted signing and representation rights in accordance with Section 135 of the Companies Act and the investment firm company's articles of association. Subsection 5. Section 114 shall apply mutatis mutandis to a temporary administrator. Subsection 6. No later than at the time of the order according to subsection 1, the Financial Supervisory Authority shall have defined the specific framework for the temporary administrator's work, including which decisions the temporary administrator shall submit to the Financial Supervisory Authority for approval. Convening the investment firm company's board of directors always requires the Financial Supervisory Authority's prior approval. The Financial Supervisory Authority may continuously change the framework for the temporary administrator's work if the Financial Supervisory Authority deems it necessary to restore the investment firm company's financial situation. The Financial Supervisory Authority may decide that the temporary administrator shall report to the Financial Supervisory Authority. Subsection 7. The Financial Supervisory Authority may set specific rules regarding the temporary administrator.
Section 180. A temporary administrator according to Section 179 is appointed for a period of up to 1 year. This period may in special cases be extended by the Financial Supervisory Authority. The Financial Supervisory Authority shall justify an extension to the investment firm company's shareholders. A temporary administrator may at any time be dismissed by the Financial Supervisory Authority. Section 120 of the Companies Act shall not apply to a temporary administrator who takes the place of the entire board of directors, and the board of directors cannot dismiss a temporary administrator. Section 121, subsection 1, of the Companies Act shall not apply to the temporary administrator, who shall give the Financial Supervisory Authority a warning of at least 2 months before a planned withdrawal.
Subsection 2. The Financial Supervisory Authority ensures that the temporary administrator is impartial and possesses the necessary competencies to perform the task.
Subsection 3. A temporary administrator who intentionally or grossly negligently causes loss to the investment firm company in the performance of their office shall compensate for this loss. The same applies when the damage is caused to shareholders or third parties. The Financial Supervisory Authority cannot be held liable for the temporary administrator's actions and omissions according to the general rules of tort law in Danish law.
Section 181. An order from the Financial Supervisory Authority pursuant to Sections 177-179 does not in itself constitute a ground for fulfillment or insolvency proceedings as defined in Section 5, subsection 1, No. 6, of the Capital Markets Act, if the investment firm company continues to fulfill the contract's significant material obligations, including payment and delivery obligations and requirements for security provision.
Subsection 2. If the investment firm company continues to fulfill the contract's significant obligations, including payment and delivery obligations and requirements for security provision, an order pursuant to Sections 177-179 or measures directly connected thereto will not in itself entitle the investment firm company's contractual partner to
terminate, suspend, amend, net or set off against the contract,
take possession of, exercise control over or seek fulfillment in any asset belonging to the investment firm company or
exercise influence on the investment firm company's contractual rights in other respects.
Subsection 3. Subsections 1 and 2 shall apply mutatis mutandis to contracts entered into by a subsidiary, provided that the parent company or another company in the group guarantees or supports the subsidiary's obligations, and to contracts entered into by a group-affiliated company, which contain provisions on cross-default.
Subsection 4. Subsections 1-3 shall apply mutatis mutandis where an order corresponding to an order according to Sections 177-179 is issued in a country outside the European Union, with which the Union has not concluded an agreement in the financial area.
Chapter 19
Crisis Management
Section 182. An investment firm company, which has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, and an investment firm holding company with at least one subsidiary, which has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, shall have effective procedures and systems that ensure that the investment firm company or investment firm holding company can within 24 hours provide the necessary summaries and information immediately prior to or in connection with an assessment of whether the investment firm company or investment firm holding company is distressed or likely to become distressed, cf. Section 165, or when the conditions in Section 214 are met.
Subsection 2. The Financial Supervisory Authority may order the investment firm company to prepare a register of financial contracts that the investment firm company has entered into.
Subsection 3. Subsection 1 shall apply with the necessary adaptations to financing institutions that are subsidiaries of investment firm companies.
Subsection 4. The Financial Supervisory Authority may, after consultation with the Financial Stability Council, set specific rules regarding which summaries and information the investment firm company shall provide, including requirements for the register of financial contracts, and which measures and systems are necessary to ensure this.
Section 183. An investment firm company, which has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, and an investment firm holding company with at least one subsidiary, which has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, shall notify the Financial Supervisory Authority of the names and identification numbers in the form of CVR numbers of Danish companies in the form of CVR numbers of the financing instruments that are subsidiaries of the companies in question and that are included in the Financial Supervisory Authority's consolidated supervision of the group.
Chapter 20
Resolution Planning
Resolution Plans
Section 184. The Financial Supervisory Authority shall prepare, adopt and maintain a resolution plan for an investment firm company, which has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, subject however to Section 186. The Financial Supervisory Authority adopts the resolution plan after a proposal from the Financial Stability Council. The resolution plan shall
contain the resolution measures that are assessed to be applicable in the resolution of the investment firm company, cf. Section 12 of the Act on Restructuring and Resolution of Certain Financial Undertakings,
take into account relevant scenarios, including that the collapse of an investment firm company may be due to specific conditions in the investment firm company or be a consequence of a period of general financial instability, including events that affect the entire financial system,
contain an analysis of how and when an investment firm company can, under the conditions set out in the plan, request the use of central bank facilities and identify the assets that are expected to be regarded as collateral, and
contain models for how the resolution tools and powers mentioned in the Act on Restructuring and Resolution of Certain Financial Undertakings can be applied to the investment firm company.
Subsection 2. The Financial Supervisory Authority may prepare, adopt and maintain a simplified resolution plan. The Financial Supervisory Authority adopts the simplified resolution plan after a proposal from the Financial Stability Council.
Subsection 3. The Financial Supervisory Authority shall maintain the resolution plan, cf. subsections 1 and 2, at least once a year. The Financial Supervisory Authority adopts the resolution plan, cf. subsections 1 and 2, after a proposal from the Financial Stability Council. The Financial Supervisory Authority may decide to deviate from the requirement to maintain the resolution plan at least once a year, subject however to subsection 4. Subsection 4. The Financial Supervisory Authority shall maintain the resolution plan when changes have occurred in the investment firm company, including changes in the investment firm company's legal or organizational structure, business activities or economic conditions, which necessitate a change in the investment firm company's resolution plan. The Financial Supervisory Authority adopts the resolution plan after a proposal from the Financial Stability Council. Subsection 5. The Financial Supervisory Authority sends the final resolution plan to the Financial Stability Council.

Section 6. The Minister for Business Affairs may lay down further rules on the preparation, content, and maintenance of resolution plans, as well as the division of work between the Danish Financial Supervisory Authority and Financial Stability.

§ 185. An investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, for which a resolution plan has been prepared in accordance with Section 184, subsection 1, shall immediately inform the Danish Financial Supervisory Authority of significant changes in the investment firm, including changes in the investment firm's legal or organizational structure, business activities, or financial conditions.

§ 186. The Danish Financial Supervisory Authority shall prepare, adopt, and maintain a group resolution plan for groups where the ultimate parent undertaking is in Denmark, and where the parent undertaking is an investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, an investment firm holding company, or a mixed financial holding company, where at least one subsidiary is an investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, or is a mixed financial holding company. The Danish Financial Supervisory Authority adopts the group resolution plans following a proposal from Financial Stability and in cooperation with the resolution authorities for the subsidiaries.

Subsection 2. A group resolution plan shall contain concrete measures for the resolution of the group as a whole and the resolution of the undertakings and branches that are part of the group. The group resolution plan shall specify the resolution units and resolution groups in the relevant group.

Subsection 3. The group resolution plan shall be prepared in such a way that its implementation does not result in a negative and disproportionately large impact on a country within the European Union or on a country with which the Union has concluded an agreement in the financial field.

Subsection 4. Section 184 applies mutatis mutandis to group resolution plans.

Subsection 5. The Danish Financial Supervisory Authority forwards information received for the purpose of preparing the group resolution plan to:

The European Banking Authority,
Financial Stability,
the resolution authorities for the subsidiaries,
the relevant competent authorities, and
the resolution authorities in other countries within the European Union or in countries with which the Union has concluded an agreement in the financial field, where an investment firm holding company or a mixed financial holding company is established.

Subsection 6. The Danish Financial Supervisory Authority and Financial Stability, together with the resolution authorities for the subsidiaries, assess whether the group resolution plan meets the requirements set out in subsections 2-4 with a view to reaching a joint decision on the group resolution plan within 4 months after the Danish Financial Supervisory Authority has forwarded the information as mentioned in subsection 5.

Subsection 7. The Danish Financial Supervisory Authority makes a decision on the group resolution plan, no later than 4 months after the Danish Financial Supervisory Authority has forwarded information in accordance with subsection 5, if the Danish Financial Supervisory Authority and the resolution authorities for the subsidiaries have not reached a joint decision, cf. subsection 6. The Danish Financial Supervisory Authority notifies the parent undertaking and the resolution authorities for the subsidiaries of the decision. If a subsidiary's resolution authority has referred the matter to the European Banking Authority before the expiry of the 4-month period, the Danish Financial Supervisory Authority shall postpone its decision until the decision from the European Banking Authority is available. The Danish Financial Supervisory Authority shall thereafter make a decision in accordance with the decision from the European Banking Authority. If the European Banking Authority has not made a decision, no later than 1 month after the matter was referred, the Danish Financial Supervisory Authority makes a decision on the group resolution plan.

Subsection 8. The Minister for Business Affairs may lay down further rules on the preparation, content, and maintenance of group resolution plans, as well as the division of work between the Danish Financial Supervisory Authority and Financial Stability.

§ 187. The Danish Financial Supervisory Authority prepares, adopts, and maintains a resolution plan, cf. Section 184, subsection 1, if the Danish Financial Supervisory Authority and Financial Stability disagree on the proposal for a group resolution plan from the group resolution authority, and if the group resolution authority and the resolution authorities for the subsidiaries have not reached a joint decision on the group resolution plan, no later than 4 months after the group resolution authority has forwarded information received for the purpose of preparing the group resolution plan, cf. however the second sentence. The first sentence applies when the Danish Financial Supervisory Authority and Financial Stability are the resolution authority for a subsidiary in a group where the ultimate parent undertaking is established in another country within the European Union or in a country with which the Union has concluded an agreement in the financial field.

Subsection 2. The Danish Financial Supervisory Authority notifies the other members of the resolution college that the Danish Financial Supervisory Authority has adopted a resolution plan in accordance with subsection 1.

Subsection 3. If a resolution authority has referred the matter to the European Banking Authority before the expiry of the 4-month period, the Danish Financial Supervisory Authority shall postpone its decision in accordance with subsection 1 until the decision from the European Banking Authority is available. The Danish Financial Supervisory Authority shall thereafter make a decision in accordance with the decision from the European Banking Authority. If the European Banking Authority has not made a decision, no later than 1 month after the matter was referred, the Danish Financial Supervisory Authority makes a decision on the resolution plan.

§ 188. The Danish Financial Supervisory Authority may order an investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, or a parent undertaking, to assist in the preparation and maintenance of the investment firm's or the group's resolution plan, cf. Sections 184 and 186, including ordering the investment firm or the parent undertaking to submit all relevant information.

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§ 189. The Danish Financial Supervisory Authority may lay down further rules on an investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, preparing a register of financial contracts that the investment firm has entered into.

Assessment of Resolution Options

§ 190. The Danish Financial Supervisory Authority and Financial Stability assess, in connection with the preparation of the resolution plan, cf. Section 184, whether there are significant obstacles to the resolution of an investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6.

§ 191. The Danish Financial Supervisory Authority and Financial Stability assess, in connection with the preparation of the group resolution plan, cf. Section 186, whether there are significant obstacles to the resolution of a group.

Subsection 2. The assessment shall be carried out in cooperation with the resolution authorities for the subsidiaries and after consultation with the competent authorities for the subsidiaries.

Power to Remedy and Remove Resolution Obstacles

§ 192. If the Danish Financial Supervisory Authority and Financial Stability, in the assessment of the resolution options for an investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, cf. Section 190, find that there are significant obstacles to the resolution of the investment firm, the Danish Financial Supervisory Authority shall notify the investment firm in writing and any resolution authorities in other countries within the European Union or countries with which the Union has concluded an agreement in the financial field.

Subsection 2. The investment firm shall, no later than 4 months after it has received a notification in accordance with subsection 1, cf. however subsection 3, submit to the Danish Financial Supervisory Authority proposals for possible measures with a view to remedying or removing the significant resolution obstacles that follow from the notification.

Subsection 3. The investment firm shall submit to the Danish Financial Supervisory Authority proposals for possible measures and a timetable for the implementation of these measures, no later than 2 weeks after the investment firm has received a notification in accordance with subsection 1, with a view to removing the significant resolution obstacle in cases where the resolution obstacle is due to the investment firm not meeting the requirement for write-downable liabilities, cf. Section 198.

Subsection 4. The Danish Financial Supervisory Authority and Financial Stability assess whether the investment firm's proposals for possible measures in accordance with subsections 2 and 3 effectively remedy or remove the significant resolution obstacles. If the Danish Financial Supervisory Authority and Financial Stability assess that the investment firm's proposals effectively remedy or remove the significant resolution obstacles, the proposals are binding on the investment firm.

Subsection 5. If the Danish Financial Supervisory Authority and Financial Stability assess that the measures proposed by the investment firm in accordance with subsection 2 or 3 do not effectively remedy or remove the significant resolution obstacles, the Danish Financial Supervisory Authority may:

order the investment firm to review agreements on intra-group financial support or to reconsider the absence of such and to prepare intra-group service agreements or service agreements with third parties to cover critical functions,
order the investment firm to limit its maximum single and aggregate exposures,
in specific cases or on a regular basis by order require additional information that is relevant in connection with resolution,
order the investment firm to divest certain assets,
order the investment firm to limit or cease existing or planned activities,
limit or prevent the development of new or existing business areas or the sale of new or existing products,
order that the investment firm or a subsidiary controlled by the investment firm either directly or indirectly be simplified through changes to their legal or operational structure to ensure that critical functions can be separated legally and operationally from other functions by the use of resolution tools,
order the investment firm to establish a holding company,
order the investment firm to submit a plan for meeting the requirement for write-downable liabilities,
order the investment firm to issue write-downable liabilities to meet the requirements in Section 198,
order the investment firm to take other measures to comply with the requirement for write-downable liabilities in accordance with Section 198,
order the investment firm to change the maturity profile of
a) capital instruments and b) write-downable liabilities, or
order the mixed financial holding company to establish a separate investment firm holding company to take over the management of the investment firm, if this is necessary to facilitate resolution and to avoid that the use of the resolution tools and powers that follow from Chapter 4 of the Act on Restructuring and Resolution of Certain Financial Undertakings has negative consequences for the group's non-financial part.

Subsection 6. The investment firm shall, within 1 month after the notification of the order in accordance with subsection 5, submit to the Danish Financial Supervisory Authority a plan for compliance therewith.

Subsection 7. The requirement for the Danish Financial Supervisory Authority and Financial Stability to prepare resolution plans is suspended as a result of the notification referred to in subsection 1, until the measures, cf. subsections 2 and 3, or the orders, cf. subsection 5, have been implemented.

Subsection 8. The Minister for Business Affairs may lay down further rules on the orders listed in subsection 5 and the application thereof.

§ 193. If the Danish Financial Supervisory Authority, after consultation with Financial Stability, finds that there are obstacles to the resolution of a credit institution, mortgage credit institution, or investment firm that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, as a result of other investment firms that have permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, Nos. 3 and 6, holding write-downable liabilities in the undertaking under resolution, the Danish Financial Supervisory Authority shall order the investment firm that holds write-downable liabilities to limit its maximum single and aggregate exposures in the undertaking under resolution.

Subsection 2. Subsection 1 does not apply in cases where the investment firm is part of the same resolution group as the investment firm under resolution.

§ 194. If the Danish Financial Supervisory Authority and Financial Stability, in an assessment of the resolution options for a group, cf. Section 191, find that there are significant obstacles to the resolution of the relevant group, the Danish Financial Supervisory Authority shall, following a proposal from Financial Stability, in cooperation with the European Banking Authority and after consultation with the competent authorities, prepare and submit a report to:

the parent undertaking,
Financial Stability, and
the resolution authorities for the subsidiaries.

Subsection 2. Section 192 applies mutatis mutandis to groups.

Subsection 3. The report shall:

analyze significant obstacles to the effective use of resolution tools and the exercise of resolution powers towards the group and its resolution groups, cf. Chapter 4 of the Act on Restructuring and Resolution of Certain Financial Undertakings,
contain considerations on consequences for the company's business model, and
recommend proportionate and targeted orders that, in the opinion of the Danish Financial Supervisory Authority, are necessary or suitable to remedy or remove the relevant obstacles.

Subsection 4. The parent undertaking may, no later than 4 months after receiving the report prepared in accordance with subsection 1, submit comments and proposals for alternative changes or orders to remedy or remove the obstacles pointed out in the report from the Danish Financial Supervisory Authority to the Danish Financial Supervisory Authority. The Danish Financial Supervisory Authority communicates the parent undertaking's comments and proposals to Financial Stability, the European Banking Authority, and the authorities mentioned in subsection 1, No. 3.

Subsection 5. The Danish Financial Supervisory Authority, together with Financial Stability, reviews the parent undertaking's comments and proposals given in accordance with subsection 4, first sentence, with the resolution authorities for the subsidiaries to reach a joint decision on the application of orders under Section 192, subsection 5. The joint decision shall be available, no later than 4 months after the Danish Financial Supervisory Authority has received comments from the parent undertaking. If the Danish Financial Supervisory Authority has not received comments from the parent undertaking, the joint decision shall be available no later than 1 month after the expiry of the deadline in subsection 4, first sentence.

Subsection 6. The Danish Financial Supervisory Authority makes a decision on the application of orders if the Danish Financial Supervisory Authority and the resolution authorities for the subsidiaries have not reached a joint decision within the deadlines after subsection 5. The Danish Financial Supervisory Authority notifies the parent undertaking and the resolution authorities for the subsidiaries of this decision. If a subsidiary's resolution authority has referred the matter to the European Banking Authority before the expiry of the deadlines, the Danish Financial Supervisory Authority shall postpone its decision until the decision from the European Banking Authority is available. The Danish Financial Supervisory Authority shall thereafter make a decision in accordance with the decision from the European Banking Authority. If the European Banking Authority has not made a decision, no later than 1 month after the matter was referred, the Danish Financial Supervisory Authority makes a decision on which orders shall be applied.

Subsection 7. The parent undertaking shall, within 1 month after receiving a decision, cf. subsection 5 or 6, submit a plan for compliance with the orders.

Subsection 8. The Minister for Business Affairs may lay down further rules on the application of the orders listed in Section 192, subsection 5, for groups.

§ 195. If the Danish Financial Supervisory Authority and Financial Stability find that there is a significant resolution obstacle for a group, cf. Section 194, as a result of a group entity being in the situation covered by Section 192, subsection 3, the Danish Financial Supervisory Authority shall notify the parent undertaking of its assessment after consultation with the resolution authority for the resolution unit and the resolution authorities for the subsidiaries.

Subsection 2. The parent undertaking shall submit to the Danish Financial Supervisory Authority proposals for possible measures and a timetable for the implementation of these measures no later than 2 weeks after receiving a notification in accordance with subsection 1 with a view to ensuring that the group entity complies with the requirement for write-downable liabilities. The Danish Financial Supervisory Authority communicates the parent undertaking's proposals to the European Banking Authority and the authorities mentioned in Section 194, subsection 1, No. 3.

Subsection 3. The Danish Financial Supervisory Authority and Financial Stability assess whether the parent undertaking's proposals in accordance with subsection 2 effectively remedy or remove the relevant resolution obstacle.

Subsection 4. The Danish Financial Supervisory Authority, together with Financial Stability, reviews the parent undertaking's proposals in accordance with subsection 2 with the resolution authorities for the subsidiaries to reach a joint decision on the application of orders, cf. Section 192, subsection 5. This shall be done, no later than 2 weeks after the Danish Financial Supervisory Authority has received the parent undertaking's proposals and timetable.

Subsection 5. The Danish Financial Supervisory Authority makes a decision on the application of orders, cf. Section 192, subsection 5, if the Danish Financial Supervisory Authority and the resolution authorities for the subsidiaries have not reached a joint decision within the deadline, cf. subsection 4. The Danish Financial Supervisory Authority notifies the group's parent undertaking and the resolution authorities for the subsidiaries of this decision. If one of the resolution authorities for the subsidiaries has referred the matter to the European Banking Authority before the expiry of the deadline in subsection 4, the Danish Financial Supervisory Authority shall postpone its decision until the decision from the European Banking Authority is available, and thereafter make a decision in accordance with the decision from the European Banking Authority.

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consistency with the decision of the European Banking Authority. If the European Banking Authority has not made a decision, at the latest 1 month after the case was brought before it, the Financial Supervisory Authority makes a decision on which orders shall apply.

§ 196. The Financial Supervisory Authority makes a decision on which measures shall be ordered, cf. § 192, subsection 5, when the Financial Supervisory Authority and Financial Stability are the resolution authority for a resolution entity in a group, where the ultimate parent undertaking is established in another country within the European Union or in a country with which the Union has concluded an agreement in the financial sector, and if the group resolution authority and the resolution authorities of the subsidiaries have not made a joint decision within the deadline mentioned in § 194, subsection 5, or the deadline mentioned in § 195, subsection 4, if the obstacle to resolution is due to the situation covered by § 192, subsection 3. The Financial Supervisory Authority notifies the resolution entity and the group resolution authority of the decision.

Subsection 2. If a resolution authority has brought a case covered by subsection 1 before the European Banking Authority, the Financial Supervisory Authority postpones its decision until the decision from the European Banking Authority is available. The Financial Supervisory Authority then makes a decision in accordance with the decision from the European Banking Authority. If the European Banking Authority has not made a decision, at the latest 1 month after the case was brought before it, the Financial Supervisory Authority makes a decision on which orders shall apply.

§ 197. The Financial Supervisory Authority makes a decision on which measures shall be ordered, cf. § 192, subsection 5, when the Financial Supervisory Authority and Financial Stability are the resolution authority for a subsidiary that is not a resolution entity, in a group, where the ultimate parent undertaking is established in another country within the European Union or in a country with which the Union has concluded an agreement in the financial sector, and if the group resolution authority and the resolution authorities of the subsidiaries have not made a joint decision within the deadline mentioned in § 194, subsection 5, or the deadline mentioned in § 195, subsection 4, if the obstacle to resolution is due to the situation covered by § 192, subsection 3. The Financial Supervisory Authority notifies the subsidiary, the resolution entity, the resolution authority for the relevant resolution entity, and the group resolution authority.

Requirements for eligible liabilities

§ 198. An investment firm company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, must at all times meet a minimum requirement for eligible liabilities, which the Financial Supervisory Authority sets after consulting Financial Stability. Investment firm holding companies and mixed holding companies must meet a minimum requirement for eligible liabilities if the Financial Supervisory Authority, after consulting Financial Stability, sets a minimum requirement for eligible liabilities for these. The same applies to financing institutions, when the financing institution is a subsidiary of an investment firm company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, an investment firm holding company or a mixed holding company, and the financing institution is included in supervision of the parent undertaking on a consolidated basis.

Subsection 2. The Financial Supervisory Authority may, after consulting Financial Stability, refrain from setting a requirement for eligible liabilities for a subsidiary of a resolution entity in the following cases:

The subsidiary is part of a resolution group, where both the resolution entity and the subsidiary are established in Denmark and the following conditions are met:
a) The resolution entity meets the requirements for eligible liabilities, which are set for the resolution entity. b) There are no current or expected significant practical or legal obstacles to the resolution entity's rapid transfer of capital base or repayment of obligations to the subsidiary in the event that a decision has been made regarding the subsidiary on the exercise of powers of write-down or conversion pursuant to §§ 214 or 215 or pursuant to §§ 17 or 18 a in the Act on Restructuring and Resolution of Certain Financial Undertakings. c) The resolution entity demonstrates to the Financial Supervisory Authority that the subsidiary is managed prudently, and provides a declaration that the resolution entity, with the permission of the Financial Supervisory Authority, has provided a guarantee for the subsidiary's obligations, or that the risks in the subsidiary are insignificant. d) The resolution entity's procedures for risk assessment, measurement, and control include the subsidiary. e) The resolution entity holds more than 50 pct. of the voting rights attached to the shares in the subsidiary, or has the right to appoint or dismiss a majority of the members of the subsidiary's management.
The subsidiary is part of a resolution group, where both the parent undertaking and the subsidiary are established in Denmark and the following conditions are met:
a) The parent undertaking meets the requirement for eligible liabilities on a consolidated basis in Denmark. b) There are no current or expected significant practical or legal obstacles to the parent undertaking's rapid transfer of capital base or repayment of obligations to the subsidiary in the event that a decision has been made regarding the subsidiary on the exercise of powers of write-down or conversion pursuant to §§ 214 or 215 or pursuant to §§ 17 or 18 a in the Act on Restructuring and Resolution of Certain Financial Undertakings. c) The parent undertaking demonstrates to the Financial Supervisory Authority that the subsidiary is managed prudently, and provides a declaration that the parent undertaking, with the permission of the Financial Supervisory Authority, has provided a guarantee for the subsidiary's obligations, or that the risks in the subsidiary are insignificant. d) The parent undertaking's procedures for risk assessment, measurement, and control include the subsidiary. e) The parent undertaking holds more than 50 pct. of the voting rights attached to the shares in the subsidiary, or has the right to appoint or dismiss a majority of the members of the subsidiary's management.

Subsection 3. The Financial Supervisory Authority may, after consulting Financial Stability, refrain from setting a minimum requirement for eligible liabilities for a bridge institution and for an undertaking in resolution.

Subsection 4. In setting the requirement for eligible liabilities, cf. subsections 1 and 2, the Financial Supervisory Authority must indicate whether the requirement must be met on a consolidated basis, cf. § 201, or at an individual level, cf. § 204.

Subsection 5. The Financial Supervisory Authority must set the minimum requirement for eligible liabilities, cf. subsections 1 and 2, as a percentage of the total risk exposure calculated as the applicable capital base requirement, cf. Article 11, subsection 1, of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, multiplied by 12.5.

§ 199. The Financial Supervisory Authority sets the requirement for eligible liabilities, cf. § 198, based on the following factors:

The resolution group must be able to be resolved by using the resolution tools on the resolution entity in a way that fulfills the resolution objectives.
The resolution entity and its subsidiaries, which are not resolution entities, must have sufficient eligible liabilities to ensure that losses can be absorbed and the capital requirement in the relevant investment firm companies can be restored to a level where the resolution entity and its subsidiaries, which are not resolution entities, can continue to meet the requirements for permission and perform the activities for which permission has been granted, and where sufficient market confidence is maintained.
The resolution entity must have sufficient eligible liabilities to absorb losses and restore the resolution entity's capital requirements to a level where the resolution entity can continue to meet the requirements for permission and perform the activities for which permission has been granted, and where sufficient market confidence is maintained, when the resolution plan anticipates the possibility that certain categories of eligible liabilities are excluded from bail-in or transferred in their entirety to a recipient in a partial transfer.
The size, business model, financing model, and risk profile of the investment firm company.
To what extent the fact that the investment firm company becomes distressed will have a negative impact on financial stability, including through contagion to other undertakings.

Subsection 2. The Financial Supervisory Authority must set the requirement for eligible liabilities for a resolution entity based on whether the resolution plan stipulates that the resolution entity's subsidiaries, which are established in a country outside the European Union, with which the Union has not concluded an agreement in the financial sector, are part of the same resolution group as the resolution entity.

§ 200. Requirements for eligible liabilities can be met with capital base and eligible liabilities, cf. §§ 202, 203 and 205.

Requirements for eligible liabilities for resolution entities

§ 201. A resolution entity must meet the requirement for eligible liabilities, cf. § 198, on a consolidated basis at the resolution group level, cf. however subsection 3.

Subsection 2. The consolidation includes only investment firm companies that have permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, which are subject to a requirement for eligible liabilities.

Subsection 3. The Financial Supervisory Authority sets, after consulting Financial Stability, a deadline to meet the requirement for eligible liabilities anew for resolution entities that have been subject to write-down or conversion pursuant to §§ 214 or 215 or §§ 17 or 18 a in the Act on Restructuring and Resolution of Certain Financial Undertakings, and resolution entities for which Financial Stability has used resolution tools. The Financial Supervisory Authority provides, after consulting Financial Stability, sub-targets for the resolution entity's fulfillment of the requirement for eligible liabilities for each 12-month period leading up to the set deadline, cf. 1st sentence.

§ 202. A resolution entity must meet the requirement for eligible liabilities with capital base and liabilities in nos. 1-5 or both in combination, cf. however § 203:

Additional capital instruments that meet the conditions in Article 72a, subsection 1, letter b, of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions.
Liabilities that meet the conditions in Article 72a, Article 72b, subsection 1, subsection 2, letters a-c and e-n, and subsections 3-5, and Article 72c in Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions.
The principal of liabilities from debt instruments that have derivative components, and that meet the following conditions:
a) The conditions in Article 72a, subsection 1, and subsection 2, letters a-k, Article 72b, subsection 1, subsection 2, letters a-c and e-n, and subsections 3-5, and Article 72c in Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions. b) The principal of the debt instrument is known at the time of issuance, is fixed or increasing, and is not affected by an embedded derivative feature, and the total liabilities arising from the debt instrument can be valued daily based on an active and liquid market for purchase and sale of an equivalent instrument without credit risk in accordance with Articles 104 and 105 in Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions. c) The debt instrument is not covered by a netting agreement and the valuation of the debt instrument is not covered by § 27, subsection 3, in the Act on Restructuring and Resolution of Certain Financial Undertakings.
Liabilities from debt instruments that have derivative components, and that meet the following conditions:
a) The conditions in Article 72a, subsection 1, and subsection 2, letters a-k, Article 72b, subsection 1, subsection 2, letters a-c and e-n, and subsections 3-5, and Article 72c in Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions. b) The debt instrument contains a contractual provision that stipulates that the value of the claim is fixed or increasing in the event of the issuer's resolution or bankruptcy, and that the value does not exceed the originally paid liability amount. c) The debt instrument is not covered by a netting agreement, and the valuation of the debt instrument is not covered by § 27, subsection 3, in the Act on Restructuring and Resolution of Certain Financial Undertakings.
Liabilities issued by a subsidiary that is established in the European Union or in a country with which the Union has concluded an agreement in the financial sector, which is part of the same resolution group as the resolution entity, to a capital owner who is not part of the same resolution group, when the following conditions are met:
a) The liabilities are issued in accordance with § 205, no. 4. b) The resolution entity's control of the subsidiary will not be affected by the Financial Supervisory Authority's exercise of write-down or conversion powers, cf. §§ 214 or 215, or Financial Stability's exercise of write-down or conversion powers, cf. §§ 17 or 18 a in the Act on Restructuring and Resolution of Certain Financial Undertakings. c) The liabilities do not exceed the amount calculated from the formula in Annex 3, no. 1.

Requirements for subordination for resolution entities

§ 203. The Financial Supervisory Authority may, after consulting Financial Stability, decide that resolution entities must meet a share of the requirement for eligible liabilities, cf. § 198, subsection 1, corresponding to the highest of either 8 pct. of total liabilities and capital base or the amount calculated from the formula in Annex 3, no. 3, with capital base, subordinated eligible instruments, or with liabilities covered by § 202, no. 5, when the following conditions are met:

The non-subordinated liabilities referred to in § 202, nos. 2-4, are in bankruptcy order equated with liabilities that are exempt from bail-in, cf. § 25, subsection 3, in the Act on Restructuring and Resolution of Certain Financial Undertakings, or liabilities that Financial Stability can decide to exempt wholly or partially from bail-in, cf. § 25, subsection 4, in the Act on Restructuring and Resolution of Certain Financial Undertakings.
There is a risk that creditors with claims linked to these liabilities suffer greater losses as a result of a bail-in on non-subordinated liabilities planned in the resolution plan, than they would in a bankruptcy treatment of the resolution entity.
The size of the capital base and the other subordinated liabilities do not exceed the amount necessary to ensure that creditors referred to in no. 2 do not suffer losses that are greater than the losses they would have suffered in a bankruptcy treatment of the resolution entity.

Subsection 2. The Financial Supervisory Authority sets, after consulting Financial Stability, a deadline to meet the requirement in subsection 1 anew for the resolution entities that have been subject to write-down or conversion pursuant to §§ 214 or 215 or §§ 17 or 18 a in the Act on Restructuring and Resolution of Certain Financial Undertakings, and resolution entities for which Financial Stability has used resolution tools. The Financial Supervisory Authority provides, after consulting Financial Stability, sub-targets for the resolution entity's fulfillment of the requirement for each 12-month period leading up to the set deadline, cf. 1st sentence.

Requirements for eligible liabilities for investment firm companies that are not resolution entities (internal requirement for eligible liabilities)

§ 204. An investment firm company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, which is a subsidiary of a resolution entity or an undertaking in a third country, but which is not itself a resolution entity, must meet the requirement for eligible liabilities, cf. § 198, at an individual level, cf. however § 198, subsection 2.

Subsection 2. The Financial Supervisory Authority sets, after consulting Financial Stability, a deadline to meet the requirement for eligible liabilities anew for investment firm companies that are not resolution entities, which have been subject to write-down or conversion pursuant to §§ 214 or 215 or pursuant to §§ 17 or 18 a in the Act on Restructuring and Resolution of Certain Financial Undertakings, and investment firm companies that are not resolution entities, for which Financial Stability has used resolution tools. The Financial Supervisory Authority provides sub-targets for the resolution entity's fulfillment of the requirement for eligible liabilities for each 12-month period leading up to the set deadline, cf. 1st sentence.

§ 205. An investment firm company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, which is a subsidiary of a resolution entity or a company in a third country, but which is not itself a resolution entity, can meet the requirement for bail-in eligible liabilities with the following capital and liabilities or both in combination:

Core tier 1 capital.
Other tier 1 capital instruments issued to entities that
a) are part of the same resolution group, or b) are not part of the same resolution group, if the resolution entity's control of the company will not be affected by the exercise of write-down or conversion powers, cf. Sections 214 or 215 or Sections 17 or 18 a of the Act on Restructuring and Resolution of Certain Financial Undertakings.
Supplementary capital instruments that meet the conditions in Article 72a, paragraph 1, letter b, of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions.
Liabilities that meet the following conditions:
a) The liability is issued to
i. the resolution entity either directly or indirectly through other companies in the same resolution group that purchased the liabilities from the company covered by the provision, or
ii. an existing capital owner that is not part of the same resolution group as the company covered by the provision, to the extent that the resolution entity's control of the company covered by the provision will not be affected by the exercise of write-down or conversion powers by the Danish Financial Supervisory Authority, cf. Sections 214 or 215, or by the Danish Financial Stability Board, cf. Sections 17 or 18 a of the Act on Restructuring and Resolution of Certain Financial Undertakings.
b) The liability meets the conditions in Article 72a, Article 72b, paragraph 1 and paragraph 2, letters a, d-j and n, and Article 72c of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions. c) The liability is subordinated to liabilities in bankruptcy proceedings that do not meet the conditions in letter a and do not qualify for meeting the tier 1 capital requirements in no. 1 or 2. d) The liability is subject to write-down or conversion powers, cf. Sections 214 or 215 or Sections 17 or 18 a of the Act on Restructuring and Resolution of Certain Financial Undertakings, and the application of the powers will not affect the resolution entity's control of the subsidiary. e) The liability is not financed directly or indirectly by the company. f) The company cannot collect, redeem, repay or repurchase the liability before maturity except in the event of the company's bankruptcy. g) The holder of the liability does not have the right to accelerate the planned payments of interest and principal for the liability except in the event of insolvency or liquidation of the company. h) Due interest and dividend payments cannot be changed for the liability based on the credit situation of the company or its parent company.

Procedure for setting the requirement for bail-in eligible liabilities when a resolution college has been established

§ 206. When a resolution college has been established, cf. Section 213, the requirement for bail-in eligible liabilities for resolution entities established in Denmark, cf. Section 198, is set in accordance with a joint decision made by

the Danish Financial Supervisory Authority,
the group resolution authority, when this is different from the Danish Financial Supervisory Authority and the Danish Financial Stability Board, and
the resolution authorities responsible for subsidiaries of a resolution group established in another country in the European Union or in a country with which the Union has concluded an agreement in the financial field.

Paragraph 2. The joint decision must specify the requirements that apply to

the consolidated resolution group level for each resolution entity and
the individual basis for each individual company in the resolution group, when the company is not a resolution entity.

Paragraph 3. It can be stipulated in the joint decision that part of the requirement for bail-in eligible liabilities for companies that are not resolution entities must be met with instruments issued to companies that do not belong to the resolution group, when

it is assessed to be in accordance with the resolution strategy and
the resolution entity does not at the time of the joint decision meet the requirement for bail-in eligible liabilities on an individual level.

Paragraph 4. If there is no joint decision on the requirement for bail-in eligible liabilities for the resolution entity, no later than 4 months after the Danish Financial Supervisory Authority has submitted proposals for requirements for bail-in eligible liabilities to the resolution authorities covered by paragraph 1, the Danish Financial Supervisory Authority sets the requirement for bail-in eligible liabilities after consulting the Danish Financial Stability Board.

Paragraph 5. If one of the authorities covered by paragraph 1, nos. 2 and 3, has referred the matter to the European Banking Authority before the expiry of the 4-month deadline mentioned in paragraph 4, the Danish Financial Supervisory Authority postpones its decision, cf. paragraph 4, and awaits a decision by the European Banking Authority on the matter. Thereafter, the Danish Financial Supervisory Authority sets the requirement for bail-in eligible liabilities for the resolution entity in accordance with the European Banking Authority's decision after consulting the Danish Financial Stability Board.

Paragraph 6. If the European Banking Authority has not made a decision no later than 1 month after the matter was referred, cf. paragraph 5, the Danish Financial Supervisory Authority sets the requirement for bail-in eligible liabilities for the resolution entity after consulting the Danish Financial Stability Board.

Paragraph 7. The Danish Financial Supervisory Authority must send the decision setting the requirement for bail-in eligible liabilities for the resolution entity to the following:

The resolution entity.
Companies that are part of the resolution group and are not resolution entities.
The group's parent company in the European Union or in countries with which the Union has concluded an agreement in the financial field, when the parent company is not itself a resolution entity in the same resolution group.

§ 207. When a resolution college has been established, cf. Section 213, the requirement for bail-in eligible liabilities for investment firm companies that have permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, established in Denmark, which are not resolution entities, cf. Section 198, and where the resolution entity is established in another country in the European Union or in a country with which the Union has concluded an agreement in the financial field, is set in accordance with a joint decision made by the following:

The Danish Financial Supervisory Authority.
The resolution authority for the resolution entity.
The group resolution authority, when this is different from the resolution authority for the resolution entity.
The resolution authorities responsible for subsidiaries of a resolution group established in another country in the European Union or in a country with which the Union has concluded an agreement in the financial field.

Paragraph 2. The joint decision must specify the requirements that apply to

the consolidated resolution group level for each resolution entity and
the individual basis for each individual company in the resolution group, when the company is not a resolution entity.

Paragraph 3. It can be stipulated in the joint decision that part of the requirement for bail-in eligible liabilities for investment firm companies that are not resolution entities must be met with instruments issued to companies that do not belong to the resolution group, when

it is assessed to be in accordance with the resolution strategy and
the resolution entity does not at the time of the joint decision meet the requirement for bail-in eligible liabilities, cf. Section 198, on an individual level, cf. Section 204, paragraph 1.

Paragraph 4. If there is no joint decision on the requirement for bail-in eligible liabilities for companies in a resolution group on an individual basis, no later than 4 months after the resolution authorities covered by paragraph 1 have submitted proposals for requirements for bail-in eligible liabilities, the Danish Financial Supervisory Authority sets the requirement for bail-in eligible liabilities after consulting the Danish Financial Stability Board.

Paragraph 5. If one of the authorities covered by paragraph 1, nos. 2-4, has referred the matter to the European Banking Authority before the expiry of the 4-month deadline, the Danish Financial Supervisory Authority postpones its decision and awaits a decision by the European Banking Authority on the matter. Thereafter, the Danish Financial Supervisory Authority sets the requirement for bail-in eligible liabilities in accordance with the European Banking Authority's decision after consulting the Danish Financial Stability Board.

Paragraph 6. If the European Banking Authority has not made a decision within 1 month after the matter was referred, cf. paragraph 5, the Danish Financial Supervisory Authority sets the requirement for bail-in eligible liabilities for the company established in Denmark that is not a resolution entity after consulting the Danish Financial Stability Board.

Paragraph 7. The Danish Financial Supervisory Authority must send the decision setting the requirement for bail-in eligible liabilities to the companies established in Denmark in a resolution group that are not resolution entities.

§ 208. The Minister for Industry, Business and Financial Affairs sets detailed rules on the requirement for bail-in eligible liabilities. The Minister for Industry, Business and Financial Affairs may also set rules that deviate from Sections 204 and 205.

Supervision of compliance with the requirement for bail-in eligible liabilities

§ 209. The Danish Financial Supervisory Authority supervises compliance with the requirement for bail-in eligible liabilities for investment firm companies that have permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, cf. Section 198.

Paragraph 2. If an investment firm company does not meet the requirement for bail-in eligible liabilities, the Danish Financial Supervisory Authority must react in at least one of the following ways:

Use of powers to remedy or remove obstacles to resolution in accordance with Sections 192 and 194.
Initiation of measures under Section 177.
Initiation of measures under Section 219.
Restriction of the investment firm company's distributions with regard to the following distributions:
a) Distribution relating to core tier 1 capital. b) Allocation of variable salary or estimated pension benefits or payment of variable salary, if the obligation to pay was introduced at a time when the investment firm company did not meet the requirement for bail-in eligible liabilities. c) Payments relating to hybrid core tier 1 capital instruments.

Paragraph 3. The Danish Financial Supervisory Authority may also assess whether an investment firm company is failing or likely to fail, cf. Section 165.

Reporting to the Danish Financial Supervisory Authority

§ 210. A company that is subject to a requirement for bail-in eligible liabilities, cf. Section 198, must report the following information to the Danish Financial Supervisory Authority:

The size of the tier 1 capital or tier 1 capital that meets the conditions in Section 205, nos. 1 and 2, at least once every half year.
The size of bail-in eligible liabilities at least once every half year.
The size of liabilities subject to bail-in at least once a year.
The composition of items covered by nos. 1-3 and their maturity profile at least once a year.
The hierarchical classification of items covered by nos. 1-3 in ordinary bankruptcy proceedings at least once a year.
Information on whether items covered by nos. 1 and 2 are subject to legislation in a third country, and if so, which third country, and whether they contain the contractual terms in Section 216, paragraph 1, and Article 52, paragraph 1, letters p and q, and Article 63, letters n and o, of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions at least once a year.

Paragraph 2. Companies that on the date of reporting this information have bail-in eligible liabilities of at least 150% of the requirement for bail-in eligible liabilities are exempt from reporting the size of liabilities subject to bail-in, cf. paragraph 1, no. 3.

Paragraph 3. The Danish Financial Supervisory Authority may request that companies report the information in paragraph 1, nos. 1-6, more frequently than indicated.

Paragraph 4. A company that according to its resolution plan is to be taken into bankruptcy proceedings is not covered by paragraph 1.

§ 211. An investment firm company that is subject to a requirement for bail-in eligible liabilities must immediately notify the Danish Financial Supervisory Authority if the investment firm company does not meet the requirement for bail-in eligible liabilities under Section 198.

Publication

§ 212. An investment firm company that is subject to a requirement for bail-in eligible liabilities must publish the following information at least once a year:

The size of the investment firm company's bail-in eligible liabilities.
The composition of items covered by no. 1, their maturity profile and priority in bankruptcy proceedings of the investment firm company.
The requirement for bail-in eligible liabilities specified as stated in Section 198, paragraph 5.

Paragraph 2. If write-down or conversion powers have been exercised in accordance with Sections 214 or 215 or Sections 17 or 18 a of the Act on Restructuring and Resolution of Certain Financial Undertakings, or if the Danish Financial Stability Board has used resolution tools against the investment firm company, the publication requirements in paragraph 1 apply from the date of the deadline to meet the requirement for bail-in eligible liabilities anew.

Paragraph 3. An investment firm company that according to its resolution plan is to be taken into bankruptcy proceedings is not covered by paragraph 1.

Resolution colleges

§ 213. The Danish Financial Supervisory Authority establishes resolution colleges to carry out the tasks mentioned in Sections 186, 188, 191, 194, 195, 198 and 206 for a group where the top parent company is in Denmark, and where the parent company is an investment firm company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, a mixed holding company or an investment firm holding company, which has at least one subsidiary that is an investment firm company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6.

Paragraph 2. Resolution colleges consist of the following:

The consolidating group resolution authority.
The resolution authorities in each member state where a subsidiary subject to consolidated supervision is established.
The resolution authorities in the member states where a parent company to one or more of the group's companies, which is an investment firm holding company or a mixed holding company, is established.
The consolidating supervisory authority and the competent authorities in the member states where the resolution authority is a member of the resolution college. If the competent authority in a member state is not the member state's central bank, the competent authority may decide to be accompanied by a representative of the member state's central bank.
The responsible ministries, provided that the resolution authorities that are members of the resolution college are not the responsible ministries.
The authority responsible for the deposit guarantee scheme in a member state, provided that the resolution authority of the relevant member state is a member of the resolution college.
The European Banking Authority.

Paragraph 3. The Danish Financial Supervisory Authority may decide that a third country's resolution authority may participate as an observer in resolution colleges established in accordance with paragraph 1, if the third country's resolution authority requests this, and if the following conditions are met:

There is a company within the group that is established in the European Union or in a country with which the Union has concluded an agreement in the financial field, which has a subsidiary.
The third country's resolution authority is subject to confidentiality obligations corresponding to the confidentiality obligations to which the Danish Financial Supervisory Authority is subject.

Paragraph 4. The Danish Financial Supervisory Authority may participate in resolution colleges established by a group resolution authority established in countries within the European Union or in countries with which the Union has concluded an agreement in the financial field.

Paragraph 5. The Danish Financial Supervisory Authority establishes and participates in European resolution colleges if a company established outside the European Union or countries with which the Union has concluded an agreement in the financial field

has more than one subsidiary that is an investment firm company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, an investment firm holding company or a mixed holding company, which is established in a country within the European Union or in a country with which the Union has concluded an agreement in the financial field, and at least one of the subsidiaries is established or located in Denmark, or
has more than one parent company that is an investment firm company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, an investment firm holding company or a mixed holding company, which is established in more than one country within the European Union or in countries with which the Union has concluded an agreement in the financial field, and at least one parent company is established in Denmark.

Paragraph 6. European resolution colleges established in accordance with paragraph 5 carry out the tasks mentioned in paragraph 1. The European resolution colleges otherwise function as resolution colleges established in accordance with paragraph 1.

Chapter 21
Write-down and conversion of capital instruments and bail-in eligible liabilities

§ 214. The Danish Financial Supervisory Authority must without undue delay write down or convert hybrid capital instruments and supplementary capital instruments that meet the requirements in Article 9, paragraph 1, of Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, in an investment firm company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, into core tier 1 capital instruments. The same applies to bail-in eligible liabilities that meet the conditions in Section 205, no. 4, regardless of whether the liabilities meet the condition in Section 205, no. 4, letter b, about a remaining maturity of at least 1 year.

Paragraph 2. An investment firm company is considered not to be viable in relation to paragraph 1 if the conditions in Section 165, paragraph 1, are met and the Danish Financial Supervisory Authority assesses that there is no prospect that other measures, including measures initiated by the private sector or the Danish Financial Supervisory Authority, within a suitable time horizon will be able to prevent the company from being resolved. The Danish Financial Supervisory Authority must consult the Danish Financial Stability Board on the assessment in the first sentence.

Paragraph 3. If the investment firm company is a resolution entity that has acquired relevant capital instruments and bail-in eligible liabilities indirectly through other companies in the same resolution group, the power to write down or convert these capital instruments and bail-in eligible liabilities must be exercised in a way that ensures that losses are passed on to the resolution entity.

Paragraph 4. The Danish Financial Supervisory Authority's finding in accordance with paragraph 1 must be based on a valuation in accordance with Chapter 3 of the Act on Restructuring and Resolution of Certain Financial Undertakings. This valuation is carried out by the Danish Financial Stability Board upon request from the Danish Financial Supervisory Authority. The decision on the size of the write-down or conversion is also made on the basis of this valuation.

Paragraph 5. Write-down and conversion of capital instruments and bail-in eligible liabilities must be carried out in accordance with Section 17, paragraph 4, and Section 18 of the Act on Restructuring and Resolution of Certain Financial Undertakings. As far as the condition in Section 18, paragraph 2, no. 1, of the Act on Restructuring and Resolution of Certain Financial Undertakings is concerned, it is the Danish Financial Supervisory Authority that must approve the issuance. Sections 44-46 of the Act on Restructuring and Resolution of Certain Financial Undertakings apply with the necessary adaptations to the Danish Financial Supervisory Authority's write-down or conversion in accordance with paragraph 1.

Paragraph 6. Section 74, paragraphs 2 and 3, and Sections 76, 104-107, 154-157, 162-164, 167-169, 185 and 186 of the Companies Act do not apply in relation to the Danish Financial Supervisory Authority's write-down or conversion in accordance with this provision. The Danish Financial Supervisory Authority may, in connection with the conversion of relevant core tier 1 capital instruments and bail-in eligible liabilities, on behalf of the company, cause the issuance of the relevant number of core tier 1 capital instruments to the owners of the relevant capital instruments and bail-in eligible liabilities. For the purpose of issuing core tier 1 capital instruments in accordance with the second sentence, the Danish Financial Supervisory Authority may order the company to possess the necessary permission to issue the relevant number of core tier 1 capital instruments.

Paragraph 7. It is the company's board of directors' responsibility to ensure the necessary changes to the company's articles of association and the necessary registrations in accordance with the Companies Act's rules.

§ 215. Section 214 applies correspondingly to groups when

the relevant capital instruments are issued by a subsidiary and the relevant capital instrument is part of the tier 1 capital on an individual and consolidated level, and when the authority responsible for the consolidated supervision of the concerned group and the Danish Financial Supervisory Authority together have established that unless the capital instrument is written down or converted, the group will not continue to be viable, or
the relevant capital instrument is issued by a parent company that the Danish Financial Supervisory Authority supervises, and the relevant capital instrument is part of the tier 1 capital at the parent company level or on a consolidated level and the Danish Financial Supervisory Authority has established that unless the capital instrument is written down or converted, the group will not continue to be viable.

Paragraph 2. A group is considered not to be viable in relation to paragraph 1 if the Danish Financial Supervisory Authority, after consulting the Danish Financial Stability Board, has established that the group is failing or likely to fail.

for expected distressed, cf. Section 165, para. 3, and the Financial Supervisory Authority assesses that there is no prospect that other measures, including measures initiated by the private sector or the Financial Supervisory Authority, within a suitable time horizon, will be able to prevent the group from being resolved.

Para. 3. A subsidiary's relevant capital instruments shall not be written down or converted, cf. para. 1, no. 1, to a greater extent or on worse terms than capital instruments of the same rank in the parent company that have been written down or converted.

Contractual Acknowledgement of the Financial Supervisory Authority's and Financial Stability's Write-down and Conversion Powers

Section 216. A fund brokerage company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, no. 3 and 6, a fund brokerage holding company, a mixed holding company, and a financing institute shall ensure that contracts entered into after June 26, 2021, and governed by the legislation of a third country, contain provisions according to which the counterparty acknowledges that

the obligation covered by the contract may be subject to the Financial Supervisory Authority's and Financial Stability's write-down and conversion powers, cf. Sections 214 and 215 and Sections 17, 18 a and 24 of the Act on Restructuring and Resolution of Certain Financial Undertakings, cf. however Section 24, para. 4, of the Act on Restructuring and Resolution of Certain Financial Undertakings, and
the counterparty is bound by any reduction of the share capital or the outstanding amount, conversion, or termination affected by the Financial Supervisory Authority's and Financial Stability's exercise of the powers mentioned in no. 1.

Para. 2. The Financial Supervisory Authority may order the undertaking to obtain a legal opinion that the contractual provisions according to para. 1 are binding on the counterparty and can be enforced in accordance with the terms.

Para. 3. Para. 1 shall not apply if the obligation is exempt from bail-in, cf. Section 25, para. 3, of the Act on Restructuring and Resolution of Certain Financial Undertakings, or if the obligation is a covered deposit, cf. Section 2, no. 5, of the Act on Restructuring and Resolution of Certain Financial Undertakings.

Para. 4. Para. 1 shall not apply if the Financial Supervisory Authority assesses that the obligations or instruments in question can be subject to write-down or conversion under the legislation of a third country or under the authority of a binding agreement entered into with the relevant third country.

Para. 5. The Financial Supervisory Authority may decide that undertakings, whose requirements for write-down eligible liabilities according to Section 198 correspond to the undertaking's loss absorption amount, are not covered by the requirement in para. 1, provided that the liabilities are not used to meet the requirement for write-down eligible liabilities.

Para. 6. If an undertaking fails to introduce a contractual provision in accordance with para. 1, the obligation cannot be used to meet the requirement for write-down eligible liabilities. This does not prevent the Financial Supervisory Authority and Financial Stability from exercising write-down and conversion powers, cf. Sections 214 or 215 and Sections 17, 18 a and 24 of the Act on Restructuring and Resolution of Certain Financial Undertakings, cf. however Section 24, para. 4, of the Act on Restructuring and Resolution of Certain Financial Undertakings.

Section 217. A fund brokerage company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, no. 3 and 6, a fund brokerage holding company, a mixed holding company, a mixed financial holding company, or a financing institute shall notify the Financial Supervisory Authority if it is not possible to comply with Section 216, para. 1, in relation to a contract concerning an obligation covered by Section 97 of the Bankruptcy Act. The notification shall indicate the category of the obligation and the reason why it is not possible to introduce the contractual provision.

Para. 2. The fund brokerage company, fund brokerage holding company, mixed holding company, mixed financial holding company, or financing institute shall submit all information to the Financial Supervisory Authority that the Financial Supervisory Authority requests within a reasonable time after receipt of the notification according to para. 1.

Para. 3. The duty to introduce a contractual provision, cf. Section 216, para. 1, shall automatically cease from the time when the Financial Supervisory Authority receives a notification in accordance with para. 1.

Para. 4. If the Financial Supervisory Authority assesses that it is possible to comply with Section 216, para. 1, in relation to the contract in question, the Financial Supervisory Authority may, notwithstanding para. 3, order the fund brokerage company, fund brokerage holding company, mixed holding company, mixed financial holding company, or financing institute to introduce such a contractual provision. The Financial Supervisory Authority shall give the order within a reasonable time after the Financial Supervisory Authority has received a message according to para. 1.

Para. 5. The Financial Supervisory Authority may order the fund brokerage company, fund brokerage holding company, mixed holding company, mixed financial holding company, or financing institute to change its practice regarding the fund brokerage company's, fund brokerage holding company's, mixed holding company's, mixed financial holding company's, or financing institute's assessment of whether it is possible to introduce a contractual provision acknowledging Financial Stability's powers in Section 24 of the Act on Restructuring and Resolution of Certain Financial Undertakings.

Para. 6. If the Financial Supervisory Authority and Financial Stability assess that contracts that do not contain a provision in accordance with Section 216, para. 1, constitute a significant impediment to resolution, the Financial Supervisory Authority shall, to the extent necessary, use the powers in Section 192 to remove the relevant impediment.

Para. 7. The Minister for Business may set detailed rules on the categories of obligations covered by Section 97 of the Bankruptcy Act, where it is not possible to introduce a contractual provision as mentioned in Section 216, para. 1.

March 1, 2024. 54 No. 232.

Contractual Acknowledgement of Financial Stability's Powers to Suspend During Resolution

Section 218. A fund brokerage company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, no. 3 and 6, a fund brokerage holding company, or a mixed holding company, which has at least one subsidiary that is a fund brokerage company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, no. 3 and 6, shall ensure that the fund brokerage company's contracts, cf. para. 2, which are governed by the legislation of a third country, contain a provision according to which the parties acknowledge that

the contract may be subject to Financial Stability's power to suspend or limit rights and obligations in Sections 4 a and 32-34 of the Act on Restructuring and Resolution of Certain Financial Undertakings, and
the parties in relation to the contract are bound by Section 31 of the Act on Restructuring and Resolution of Certain Financial Undertakings.

Para. 2. Para. 1 shall apply to contracts that

create a new obligation or significantly change an existing obligation after June 26, 2021, and
contain provisions on payment or delivery obligations, termination rights, or the right to enforce security rights.

Para. 3. If a fund brokerage company fails to introduce a provision in accordance with para. 1, this does not prevent Financial Stability from using the powers in Sections 4 a and 32-34 of the Act on Restructuring and Resolution of Certain Financial Undertakings, and Section 31 of the Act on Restructuring and Resolution of Certain Financial Undertakings shall continue to apply.

Section VIII
Supervision etc.
Chapter 22
Supervision
General Rules on Supervision

Section 219. The Financial Supervisory Authority ensures compliance with this Act and rules issued pursuant to the Act except Section 25, Section 32, para. 3, no. 1, cf. Section 32, para. 6, of the Auditors Act, and the following EU regulations and rules issued pursuant thereto:

Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms and regulations issued pursuant thereto.
Regulations and rules issued pursuant to Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the supervision of investment firms.
Regulations issued pursuant to Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms.
Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments.
Commission Delegated Regulation 2017/565/EU of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive.
Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs).
Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation.
Regulation (EU) 2019/1238 of the European Parliament and of the Council of 20 June 2019 on a pan-European personal pension product (PEPP).
Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector.
Council Regulation 2017/1509/EU of 30 August 2017 concerning restrictive measures against the Democratic People's Republic of Korea.
Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment.

Para. 3. The Danish Business Authority ensures compliance with Section 25.

Section 219 a. The Financial Supervisory Authority may exercise the powers following Article 24, para. 2, points (a), (b), and (d), and para. 4, of Regulation (EU) 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products for retail investors (PRIIPs).

Section 220. The Financial Supervisory Authority may determine that the Financial Supervisory Authority's supervision of the provision or performance of investment services and activities covered by Annex 1, Section A, by credit institutions, mortgage credit institutions, and investment management companies shall be carried out in accordance with the rules therefor in the Act on Financial Business.

Section 221. The Financial Supervisory Authority shall organize the routine supervisory activities with a view to promoting financial stability and confidence in fund brokerage companies and the financial markets. The Financial Supervisory Authority shall, in its supervisory activities, place emphasis on the sustainability of the individual fund brokerage company's business model. The organization of supervisory activities shall be based on a materiality consideration, where the supervisory effort is proportional to the potential risks or harmful effects. The Board of Directors of the Financial Supervisory Authority is responsible for the organization of supervisory activities.

March 1, 2024. 55 No. 232.

Para. 2. The Financial Supervisory Authority shall, in the organization of supervisory activities, consider the potential consequences for financial stability in other countries within the European Union or in a country with which the Union has entered into an agreement in the financial sector. This applies in particular in connection with crisis situations. For branches in this country of investment companies that have been granted permission to provide or perform investment services and activities covered by Annex 1 in another country within the European Union or in a country with which the Union has entered into an agreement in the financial sector, the Financial Supervisory Authority shall monitor the branches and assist in the supervision of the branches.

Para. 3. The Financial Supervisory Authority may, in special cases, use foreign assistance in connection with the Financial Supervisory Authority's supervisory activities.

Section 222. The Financial Supervisory Authority performs the tasks mentioned in Chapters 20 and 21, including resolution planning, with appropriate operational independence from the Financial Supervisory Authority's supervision of fund brokerage companies that have permission to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, no. 3 and 6.

Para. 2. The Director of the Financial Supervisory Authority organizes the tasks mentioned in para. 1. The Board of Directors of the Financial Supervisory Authority approves the organization of the tasks.

Section 223. The Board of Directors of the Financial Supervisory Authority participates in the supervision of fund brokerage companies, fund brokerage holding companies, mixed financial holding companies, and mixed holding companies according to Sections 219 and 230 with the competence that the Board of Directors is granted pursuant to Section 345 of the Act on Financial Business.

Para. 2. Chapter 23 applies to members of the Board of Directors, the observer, and members of the expert panel.

Section 224. The Financial Supervisory Authority may, in certain cases where a parent company in a group is a fund brokerage company, a fund brokerage holding company, a mixed financial holding company, or a mixed holding company, deviate from provisions for groups set out in this Act or in rules issued pursuant to the Act, taking into account the purpose of the relevant provisions and the activities in the group.

Para. 2. If it concerns a fund brokerage company group with presence in Denmark and other Member States, the Financial Supervisory Authority and the other relevant competent authorities may, by mutual agreement, deviate from principles on the establishment of group supervisors and decide to appoint another group supervisor if the purpose is to ensure effective supervision at the consolidated level or supervision of compliance with the group capital test.

Para. 3. Before the relevant competent authorities make a joint decision according to para. 2, the parent investment holding company in the European Union or the mixed financial parent holding company in the European Union or the investment company with the largest total balance sheet, whichever is relevant, shall have the opportunity to comment on the intended joint decision.

Section 224 a. The Financial Supervisory Authority may, in cases where the Financial Supervisory Authority would have been the group supervisor if the parent company had been established in the European Union, require the establishment of a fund brokerage holding company or mixed financial holding company in the Union and apply the rules in Article 7 or 8 of Regulation (EU) 2019/2033 of 27 November 2019 on prudential requirements to this fund brokerage holding company or mixed financial holding company.

Inspections etc.

Section 225. The Financial Supervisory Authority shall investigate the affairs of fund brokerage companies and fund brokerage holding companies, including by reviewing ongoing reports and by inspections at the individual undertaking.

Section 226. The Financial Supervisory Authority shall, after an inspection at a fund brokerage company or a fund brokerage holding company, hold a meeting with the participation of the undertaking's Board of Directors, management, external auditor, and any internal audit head, unless the inspection only concerns limited areas of activity in the undertaking. At the meeting, the Financial Supervisory Authority shall communicate its conclusions regarding the inspection.

Para. 2. The Financial Supervisory Authority shall, after an inspection visit, send significant conclusions in the form of a written report to the undertaking's Board of Directors, management, external auditor, and any internal audit head.

Section 227. The Financial Supervisory Authority may, independently or in cooperation with other authorities, conduct investigations suitable to promote transparency in the financial market, and publish the results of these.

Section 228. The Financial Supervisory Authority may order a fund brokerage company or a fund brokerage holding company to have an independent investigation of one or more matters in the fund brokerage company or fund brokerage holding company carried out and to bear the costs thereof, if the Financial Supervisory Authority assesses that this is of significant importance for the supervision of the fund brokerage company or fund brokerage holding company, and it does not concern an investigation that is a usual occurrence for the Financial Supervisory Authority. The result of the independent investigation shall be given in a written report, which shall be available within a time limit set by the Financial Supervisory Authority. The Financial Supervisory Authority may determine that the expert persons, cf. paras. 2-6, shall continuously report to the Financial Supervisory Authority on matters in connection with the investigation.

Para. 2. The independent investigation shall be carried out by one or more expert persons. The fund brokerage company or fund brokerage holding company appoints the expert persons within a time limit set by the Financial Supervisory Authority. The Financial Supervisory Authority shall approve the proposed expert persons.

Para. 3. The fund brokerage company or fund brokerage holding company shall provide the expert persons with the information necessary for the implementation of the independent investigation.

Para. 4. The expert persons shall deliver a copy of the written report on the investigation to the Financial Supervisory Authority,

March 1, 2024. 56 No. 232.

latest simultaneously with the report being delivered to the investment firm company or the investment firm holding company.

Subsection 5. The independent experts must immediately provide the Financial Supervisory Authority with information about matters they become aware of in connection with the independent investigation, if the information is of significant importance to the investment firm company's or investment firm holding company's risk profile or business model, and, in the case of investment firm companies, can involve a non-negligible risk that these matters may develop in such a way that the investment firm company will lose its license.

Subsection 6. If the independent expert, due to their special circumstances, cannot forward the information in accordance with subsections 4 and 5 to the Financial Supervisory Authority, notification to the Financial Supervisory Authority may be made by others than the independent expert, including by the investment firm company or the investment firm holding company.

Section 229. The Financial Supervisory Authority may order an investment firm company or an investment firm holding company to have one or more independent experts follow the investment firm company or the investment firm holding company for a period of up to 12 months with a view to carrying out the Financial Supervisory Authority's activities, when the Financial Supervisory Authority assesses that there are significant circumstances giving rise to this. The Financial Supervisory Authority may set the appointment period, cf. sentence 1, to up to 3 years, when the purpose hereof is to follow the company's fulfillment of obligations that the company has been imposed by an authority in another country. The Financial Supervisory Authority may renew the appointment period, cf. sentences 1 and 2, by up to 12 months at a time, if the Financial Supervisory Authority assesses that there is a need for this. The same applies to branches covered by Sections 5 and 7.

Subsection 2. An investment firm company or an investment firm holding company that has received an order in accordance with subsection 1 must provide the independent experts with the information and access to meetings that are necessary for the independent experts to follow the daily operations in the investment firm company or in the investment firm holding company, including board meetings, executive meetings, and general meetings, as well as the company's branches with a view to obtaining information.

Subsection 3. The independent experts must, in connection with the observation of the daily operations in the investment firm company or in the investment firm holding company, inform the Financial Supervisory Authority of matters of significant importance to the Financial Supervisory Authority's activities. The Financial Supervisory Authority may set conditions for the information.

Subsection 4. The independent experts are appointed by the Financial Supervisory Authority. The expenses for the independent experts may be paid temporarily by the Financial Supervisory Authority, but are ultimately borne by the relevant investment firm company or the relevant investment firm holding company. The Financial Supervisory Authority may require advance or ongoing payment or security from the investment firm company or the investment firm holding company.

Subsection 5. The Minister for Business may set detailed rules regarding the independent experts, including regarding appointment and remuneration.

Section 230. The Financial Supervisory Authority controls that the rules for financial information in annual reports and interim reports in Sections 143 and 146-154 and in rules issued pursuant to Section 157 are complied with for investment firm companies and investment firm holding companies that have issued transferable securities that are admitted to trading on a regulated market, cf. Section 213, subsections 1-5 and 8, in the Capital Markets Act.

Section 231. The Financial Supervisory Authority regularly and at least every third year ensures that investment firm companies that do not meet the conditions for classification as small and non-interconnected investment firm companies, and that have permission to use the alternative method with internal models for calculating the capital requirement for positions in the trading book, cf. Article 22 of Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, meet the requirements for using the internal models.

Subsection 2. The Financial Supervisory Authority withdraws an investment firm company's permission to use an internal model or orders the investment firm company to take appropriate measures to ensure that the model is immediately improved within a set deadline, if there are many breaches, cf. Article 366 in Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions, which indicate that the model is not or no longer accurate.

Subsection 3. If an investment firm company that has permission to use an internal model no longer meets the requirements for the use of internal models, the investment firm company must to the Financial Supervisory Authority either prove that the effect of the non-compliance is negligible, or present a plan and a timetable for compliance. The Financial Supervisory Authority sets requirements that the plan be improved when the Financial Supervisory Authority assesses that it is unlikely that the plan will lead to full compliance with the requirements, or that the deadline is not appropriate.

Subsection 4. The Financial Supervisory Authority withdraws an investment firm company's permission to use an internal model if the Financial Supervisory Authority assesses that it is unlikely that the investment firm company will meet the requirements within the set deadline, or if the investment firm company has not satisfactorily proven that the effect of the non-compliance is negligible.

Subsection 5. The Financial Supervisory Authority may limit an investment firm company's permission to areas where the requirements are met, or to areas where the requirements can be met within a reasonable deadline.

Subsection 6. The Financial Supervisory Authority may order an investment firm company to pay a supplementary capital requirement or other measures to limit the consequences of the non-compliance with the requirements for the use of internal models.

Obtaining Information

Section 232. Investment firm companies, investment firm holding companies, mixed financial holding companies, mixed holding companies and persons belonging to these companies, as well as suppliers and sub-suppliers must provide the Financial Supervisory Authority with the information necessary for the Financial Supervisory Authority's activities. The same applies to branches and associated agents covered by Sections 3, 5 and 7.

1 March 2024. 57 No. 232.

Subsection 2. Information provided in accordance with subsection 1 must be corrected to the Financial Supervisory Authority as soon as possible if the company subsequently establishes the following:

The information was not correct at the time of submission.
The information has subsequently become misleading.

Section 233. The Financial Supervisory Authority may at any time, upon proper identification and without a court order, gain access to business premises belonging to investment firm companies, investment firm holding companies, mixed financial holding companies and mixed holding companies and their subsidiaries, including by inspection. Sentence 1 also applies to any other company that is part of the supervision of compliance with the group capital test, cf. Article 8 in Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, provided prior notification to other relevant supervisory authorities.

Subsection 2. The Financial Supervisory Authority may at any time, upon proper identification and without a court order, gain access to the companies with which an investment firm company or an investment firm holding company has special direct or indirect connections, to the extent that it is necessary to assess the investment firm company's or the investment firm holding company's financial position.

Subsection 3. The Financial Supervisory Authority may require all information, including accounts and accounting material, extracts from books, other business documents and electronically stored data, which are deemed necessary for the Financial Supervisory Authority's activities or for deciding whether a natural or legal person is covered by the provisions of this law.

Subsection 4. The Financial Supervisory Authority may at any time, upon proper identification and without a court order, gain access to business premises belonging to a branch or an associated agent established in this country or a supplier or sub-supplier with a view to obtaining information about the outsourced activity.

Periodic Penalty Payments

Section 234. The Financial Supervisory Authority and the Business Authority may impose daily or weekly periodic penalty payments on the board of directors, executive management, external auditor, internal audit head, liquidator, branch manager or representative body of an investment firm company as a coercive measure, if they do not comply in due time with the duties that, pursuant to the law, Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms or rules issued pursuant to the law, lie with them towards the Financial Supervisory Authority and the Business Authority respectively.

Subsection 2. The Financial Supervisory Authority may impose daily or weekly periodic penalty payments on a natural or legal person or the person responsible for the legal person as a coercive measure, when the person fails to fulfill the duties that follow from Section 233, subsections 2 and 3.

Subsection 3. The Financial Supervisory Authority may impose daily or weekly periodic penalty payments on an investment firm company as a coercive measure, if the investment firm company does not comply with an order communicated in accordance with Section 242, subsection 1 and subsection 3, sentence 1.

Section 235. The Financial Supervisory Authority may obtain information in accordance with Section 232 and Section 233, subsections 1-3, for use by the authorities and bodies mentioned in Section 257, subsection 1, items 3 and 4.

Powers

Section 236. The Financial Supervisory Authority may decide to apply the requirements in Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions to an investment firm company that has permission to provide or perform one or both of the investment services and activities mentioned in Annex I, Section A, items 3 and 6, if the total value of the investment firm company's consolidated assets amounts to or exceeds 5 billion euros calculated as an average for the preceding 12 months, and where one or more of the following criteria are met:

The investment firm company's business covered by Annex I, Section A, items 3 and 6, is of such a scale that its failure or payment difficulties can lead to systemic risk.
The investment firm company is a clearing member as defined in Article 4, subsection 1, item 3, in Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms.
The Financial Supervisory Authority considers it justified in light of the size, nature, scope and complexity of the investment firm company's business taking into account the general principle of proportionality and one or more of the following factors:
a) The investment firm company's significance for the economy of the European Union or a relevant member state. b) The significance of the investment firm company's cross-border business. c) The investment firm company's interconnectedness with the financial system.

Subsection 2. Subsection 1 does not apply to commodity or emission allowance traders, collective investment undertakings or insurance companies.

Subsection 3. If the Financial Supervisory Authority decides to apply the requirements in Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions to an investment firm company in accordance with subsection 1, the investment firm company is subject to supervision with regard to compliance with the supervisory requirements in Section 14, subsection 7, Sections 64, 64 a-64 c, 70, 70 a, 71 and 72 a, Section 75, subsection 3, and Sections 75 a-75 c, 77 a-77 i, 79 a, 80 a-80 c, 124, 125 a-125 h, 142, 143, 143 a, 144, 170, 171, 175 and 200 in the Financial Business Act and rules issued pursuant thereto as well as chapters 21-25 in the Financial Business Act.

Subsection 4. If the Financial Supervisory Authority decides to revoke a decision made in accordance with subsection 1, the Financial Supervisory Authority immediately notifies the investment firm company.

Subsection 5. The Financial Supervisory Authority's decision in accordance with subsection 1 ceases to apply if the investment firm company does not exceed the threshold calculated for a period of 12 consecutive months.

1 March 2024. 58 No. 232.

Section 237. The Financial Supervisory Authority may order the management of an investment firm company to prepare a statement and plan for the investment firm company's financial position and future prospects. The board of directors, executive management, external auditor and internal audit head of the investment firm company must confirm to the Financial Supervisory Authority by signature on the order that they have been made aware of the content of the Financial Supervisory Authority's order.

Subsection 2. The statement must

be accompanied by an opinion from the investment firm company's external auditor, unless the statement as a whole is prepared by this,
be submitted to the company's board of directors for approval and
be sent in copy to the Financial Supervisory Authority.

Section 238. The Financial Supervisory Authority may order an investment firm company within a deadline set by the Financial Supervisory Authority to take the necessary measures if

the investment firm company's financial position is so deteriorated that customers' interests are exposed to danger, or
there is a non-negligible risk that the investment firm company's financial position due to internal or external circumstances develops in such a way that the investment firm company will lose its license.

Subsection 2. The Financial Supervisory Authority may withdraw the investment firm company's license if the ordered measures in accordance with subsection 1 are not taken within the set deadline.

Subsection 3. Subsections 1 and 2 apply correspondingly to a group where the parent company is an investment firm company or an investment firm holding company, if there is significant risk that the group's financial position develops in such a way that the group will not comply with the capital requirement for the group.

Section 239. If it is probable that an investment firm company within the following 12 months will violate Sections 18, 67, 80, 94, 101, 105, 107-113 or 120 or rules issued pursuant thereto or Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, the Financial Supervisory Authority may order the investment firm company to take the necessary measures within a deadline set by the Financial Supervisory Authority.

Section 240. The Financial Supervisory Authority may set supplementary or more frequent reporting requirements for an investment firm company than those that follow from this law and Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, including reporting of capital and liquidity positions, if the information to be reported is not overlapping and one of the following conditions is met:

The Financial Supervisory Authority has set an individual solvency requirement, cf. Section 121, a indicative level of additional capital, cf. Section 122, a requirement to strengthen the procedures for risk measurement and risk management in relation to the sufficient capital, cf. Section 120, or a requirement for governance of management arrangements, cf. Sections 67 and 94, in accordance with Section 239.
The reports are necessary for the Financial Supervisory Authority to have sufficient basis for the assessment of the basis for issuing orders in accordance with Section 239.
The reports are necessary for the Financial Supervisory Authority's supervisory activities in general.

Section 241. The Financial Supervisory Authority may set additional disclosure requirements for an investment firm company.

Section 242. The Financial Supervisory Authority may order an investment firm company or an investment firm holding company to dismiss a member of the executive management within a deadline set by the Financial Supervisory Authority, if the member of the executive management, pursuant to Section 75, subsection 1, or Section 76, cannot hold the position.

Subsection 2. The Financial Supervisory Authority may order a member of the board of directors in an investment firm company or an investment firm holding company to resign from their office within a deadline set by the Financial Supervisory Authority, if the board member, pursuant to Section 75, subsection 1, or Section 76, cannot hold the office.

Subsection 3. The Financial Supervisory Authority may order an investment firm company to dismiss a director when charges have been brought against the person in a criminal case regarding violation of the Penal Code, the financial legislation or other relevant legislation, until the criminal case is decided, if a conviction would imply that the director does not meet the requirements in Section 75, subsection 1, item 3. The Financial Supervisory Authority sets a deadline for compliance with the order. The Financial Supervisory Authority may, under the same conditions as in sentence 1, order a member of the board of directors in an investment firm company to resign from their office. The Financial Supervisory Authority sets a deadline for compliance with the order.

Subsection 4. The duration of orders communicated in accordance with subsection 2 based on Section 75, subsection 1, items 2 and 4-6, must appear in the order.

Subsection 5. Orders communicated in accordance with subsections 1-3 may be demanded by the investment firm company or the investment firm holding company and by the person to whom the order relates, to be brought before the courts. Request for this must be submitted to the Financial Supervisory Authority within 4 weeks after the order has been communicated to the person concerned. The request does not have suspensive effect on the order, but the court may by ruling determine that the director concerned or the board member concerned may maintain their position or office during the proceedings. The Financial Supervisory Authority brings the case before the courts within 4 weeks after receipt of request for this. The case is brought in the forms of civil procedure.

Subsection 6. The Financial Supervisory Authority may revoke an order communicated in accordance with subsection 2 and subsection 3, sentence 3, on its own initiative or upon application. If the Financial Supervisory Authority rejects an application to revoke the order, the applicant may demand the rejection to be brought before the courts. Request for this must be submitted to the Financial Supervisory Authority within 4 weeks after the rejection has been communicated to the person concerned. Request for judicial review may however only be made if the order is not time-limited and at least 5 years have passed from the date of issuance of the order or at least 2 years after the Financial Supervisory Authority's rejection of revocation has been upheld by judgment.

Subsection 7. If the investment firm company or the investment firm holding company has not dismissed the director within the set deadline, the Financial Supervisory Authority may withdraw the investment firm company's or the investment firm holding company's license. Fi

1 March 2024. 59 No. 232.

The Financial Supervisory Authority may further withdraw the authorization of an investment firm company or an investment holding company if a board member fails to comply with an order issued pursuant to subsections 2 and 3, third sentence.

§ 243. The Financial Supervisory Authority may decide on a temporary ban on an investment firm company's membership in or participation on a marketplace if the investment firm company has been imposed an administrative penalty pursuant to § 234, or if the investment firm company violates § 28, § 29, subsection 2 or 3, §§ 33, 34, 47, 48, 64, 67, 75, 76, 79, 94, 95 or 107 or § 108, subsection 1 or 2.

Subsection 2. The Financial Supervisory Authority may set rules stating that the Financial Supervisory Authority may decide on a temporary ban on an investment firm company's membership in or participation on a marketplace if the investment firm company violates the rules pursuant to this Act or rules issued pursuant thereto.

§ 244. If an investment firm company or an investment holding company issues transferable securities that are admitted to trading on a regulated market, and the investment firm company or investment holding company does not fulfill its obligations under §§ 143 or 146-154 or provisions established pursuant to § 157, the Financial Supervisory Authority may order the investment firm company or investment holding company to change the situation, including an order to publish amended or supplementary information.

Subsection 2. The Financial Supervisory Authority may, when deemed appropriate, itself publish the relevant information or publish the order or suspend or delete the affected transferable securities from trading on a regulated market.

§ 245. If the Financial Supervisory Authority assesses that an investment firm company, which has authorization to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, does not meet or is expected not to meet the requirements of this Act or Regulation (EU) No 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms to maintain their authorization, the Financial Supervisory Authority may hold discussions with interested parties and stakeholders with a view to finding a solution to the investment firm company's situation.

Subsection 2. The Financial Supervisory Authority must inform Finansiel Stabilitet if the Financial Supervisory Authority assesses that there is a risk that an investment firm company will become or is expected to become distressed, and the Financial Supervisory Authority intends on this basis to make a decision pursuant to § 165, subsection 3, or § 166, subsection 1, and there is no prospect of a solution to the investment firm company's situation in accordance with subsection 1.

Subsection 3. The Financial Supervisory Authority must inform the Minister for Business Affairs when the Financial Supervisory Authority makes a decision pursuant to § 165, subsection 3, regarding an investment firm company or a group that the investment firm company or group is distressed or expected to be distressed, if the decision may have implications for the real economy or for financial stability.

§ 246. In cases where an investment firm company has been declared bankrupt or the majority of the investment firm company's operations have ceased or been transferred, the Financial Supervisory Authority prepares a report on the reasons for this if one of the following circumstances has occurred in connection with or in a short period prior to the investment firm company's bankruptcy or the cessation or transfer of operations:

The State has suffered direct losses as a result of financial assistance in the winding up of the investment firm company.
The State has otherwise provided a guarantee or made funds available for the investment firm company, its creditors, or a purchaser of the whole or part of the investment firm company.

Subsection 2. The Financial Supervisory Authority must publish the report. In connection with the publication, §§ 255-258 do not apply, unless the information concerns customer relationships or third parties who are or have been involved in attempts to save the relevant investment firm company.

Subsection 3. The report must describe the Financial Supervisory Authority's role in the process leading up to the bankruptcy or the cessation of operations or the transfer.

The Consumer Ombudsman

§ 247. The Consumer Ombudsman may bring a case against investment firm companies and investment holding companies regarding actions that contravene fair business practices and good practice, cf. § 45, subsection 1 and 2, including cases regarding injunctions, orders, compensation, and recovery of unlawfully collected amounts.

Subsection 2. The Consumer Ombudsman may handle cases regarding violations of penal provisions in rules issued pursuant to § 45, subsection 3.

Subsection 3. Section 24, § 25, subsection 2, § 28, subsection 1, § 32, subsection 1, and §§ 33 and 34 of the Marketing Practices Act apply mutatis mutandis to cases that the Consumer Ombudsman wishes to bring pursuant to subsections 1 and 2.

Subsection 4. The Consumer Ombudsman may be appointed as a class representative in a class action, cf. Chapter 23 a of the Administration of Justice Act.

§ 248. The Financial Supervisory Authority notifies the Consumer Ombudsman if the Financial Supervisory Authority becomes aware that customers of an investment firm company may have suffered losses as a result of the investment firm company violating § 45, subsection 1, or provisions issued pursuant to § 45, subsection 2.

Subsection 2. The Consumer Ombudsman has access to all information in the Financial Supervisory Authority's cases covered by subsection 1, regardless of §§ 255-258.

Subsection 3. The Consumer Ombudsman is subject to confidentiality pursuant to § 254, subsection 4.

Supervision of Foreign Investment Firms

§ 249. The supervisory authorities of an investment firm that has been granted authorization in another country within the European Union or in a country with which the Union has concluded an agreement in the financial area may, after prior notification to the Financial Supervisory Authority, conduct inspections in a branch that the investment firm has established in this country.

Subsection 2. The Financial Supervisory Authority may, upon request from the supervisory authorities in the investment firm's home country, conduct inspections in the investment firm's branch established in this country.

Subsection 3. The Financial Supervisory Authority may independently, after consulting the competent authorities in the investment firm's home country, conduct inspections in the investment firm's branch established in this country.

Subsection 4. Subsections 1-3 apply mutatis mutandis to associated agents established in this country that have been appointed by the investment firm.

§ 250. The Financial Supervisory Authority ensures that an investment firm that has been granted authorization in another country within the European Union or in a country with which the Union has concluded an agreement in the financial area, and which conducts business in this country through a branch or an associated agent established in this country, complies with §§ 45-48, § 95, subsection 2, no. 5, and subsection 7, and § 108 and rules issued pursuant thereto and pursuant to § 96, subsection 2, as well as Articles 14-26 of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments.

Subsection 2. If the Financial Supervisory Authority establishes that the investment firm violates the rules mentioned in subsection 1, the Financial Supervisory Authority may issue an order to bring the unlawful situation to an end. If the investment firm does not take the necessary steps, the Financial Supervisory Authority may, after notifying the supervisory authorities in the investment firm's home country, take all necessary measures to protect the interests of Danish investors and the proper functioning of the markets.

§ 251. If the Financial Supervisory Authority establishes that an investment firm that has been granted authorization in another country within the European Union or in a country with which the Union has concluded an agreement in the financial area, and which conducts business in this country through a branch or an associated agent established in this country, or which provides cross-border services in this country, acts in a manner that harms the interests of Danish investors or the proper functioning of the markets, the Financial Supervisory Authority may take all necessary measures to protect the interests of investors or the proper functioning of the markets, including by prohibiting the investment firm from carrying out further transactions in Denmark, when the investment firm's supervisory authorities in the home country have not been able to take the necessary measures to stop actions that harm the interests of investors or the proper functioning of the markets. The Financial Supervisory Authority notifies the supervisory authorities in the investment firm's home country beforehand.

Subsection 2. If the Financial Supervisory Authority establishes that an investment firm with authorization to operate a multilateral trading facility (MTF) or an organized trading facility (OTF) in another country within the European Union or in a country with which the Union has concluded an agreement in the financial area, and which conducts business in this country through a branch or an associated agent established in this country, or which provides cross-border services in this country, acts in a manner that harms the interests of Danish investors or the proper functioning of the markets, the Financial Supervisory Authority may take all necessary measures to protect the interests of Danish investors or the proper functioning of the markets, including by ordering the investment firm not to grant access for remote members and users in this country to the multilateral trading facility (MTF) or the organized trading facility (OTF), when the supervisory authorities in the investment firm's home country have not been able to take the necessary measures to stop actions that harm the interests of investors or the proper functioning of the markets. The Financial Supervisory Authority notifies the supervisory authorities in the investment firm's home country beforehand.

§ 252. If the Financial Supervisory Authority establishes that an investment firm that has been granted authorization in another country within the European Union or in a country with which the Union has concluded an agreement in the financial area, and which conducts business in this country through a branch or an associated agent established in this country, or which provides cross-border services in this country, poses a risk to Danish customers or financial stability in Denmark, the Financial Supervisory Authority may take the necessary measures to protect the customers or financial stability, when the investment firm's supervisory authorities in the home country have not been able to take the necessary measures to stop actions that pose a risk to the customers or financial stability. The Financial Supervisory Authority notifies the supervisory authorities in the investment firm's home country as well as the European Banking Authority and the European Securities and Markets Authority beforehand.

Verification of Margin Models

§ 252 a. The Financial Supervisory Authority may, with a view to assessing whether the condition in Article 23, subsection 1, first subparagraph, point (c), of Regulation (EU) 2019/2033 of 27 November 2019 on prudential requirements for investment firms is fulfilled, request information from the competent authority in the home country of a clearing member regarding the margin model and parameters used in calculating an investment firm company's margin requirements.

Verification of Information

§ 253. The supervisory authorities in another country within the European Union or in a country with which the Union has concluded an agreement in the financial area may, with the permission of the Financial Supervisory Authority, verify information provided by investment firm companies, investment holding companies, mixed financial holding companies, financing institutions, ancillary service companies, mixed holding companies or subsidiary companies, including subsidiary companies that are insurance companies, which are subject to supplementary supervision by the relevant supervisory authority.

Subsection 2. The Financial Supervisory Authority may, within the framework of its powers, conduct the verification itself.

Subsection 3. The Financial Supervisory Authority may request an auditor or other expert to conduct the verification and report the results immediately.

Chapter 23
Confidentiality

§ 254. Employees of the Financial Supervisory Authority must not disclose information about a person when that person has reported a business or a person to the Financial Supervisory Authority for a violation or potential violation of the financial regulation supervised by the Financial Supervisory Authority, cf. however subsections 2 and 3.

Subsection 2. Subsection 1 does not prevent personal data from being disclosed pursuant to § 256, subsection 1.

Subsection 3. Subsection 1 does not prevent personal data concerning a customer from being disclosed to an investment firm company in connection with cases covered by § 255, subsection 3, or in cases of violation of Chapter 12, when the customer has given explicit consent to the disclosure.

Subsection 4. All persons who receive personal data in accordance with subsection 2 are subject to the confidentiality obligation in subsection 1 with respect to that data.

§ 255. Employees of the Financial Supervisory Authority are liable under the Penal Code §§ 152-152 e to keep confidential information that they become aware of through supervisory activities. The same applies to persons performing service tasks as part of the Financial Supervisory Authority's operations and experts acting on behalf of the Financial Supervisory Authority. This also applies after the employment or contract relationship has ended. The first to third sentences also apply to employees of the Danish Business Authority, insofar as it concerns information that they become aware of through the solution of tasks pursuant to § 217, subsections 1-5 and 8, of the Capital Markets Act.

Subsection 2. Consent from the person whom the confidentiality obligation is intended to protect does not entitle the persons covered by subsection 1 to disclose confidential information.

Subsection 3. Subsection 1 does not apply to information in cases regarding good conduct, price information, and contractual relationships, cf. §§ 45-48 and regulations issued pursuant thereto.

Subsection 4. Subsection 1 does not prevent the Financial Supervisory Authority from voluntarily disclosing confidential information in summarized or aggregated form, when neither the individual investment firm company nor its customers can be identified.

Subsection 5. Confidential information may be disclosed during a civil court case when an investment firm company has been declared bankrupt or entered into liquidation, and provided that the information does not concern customer relationships or third parties who are or have been involved in attempts to save the investment firm company.

§ 256. § 255, subsection 1, does not prevent confidential information from being disclosed to the following:

The Systemic Risk Council.
Other public authorities, including the prosecution authority and the police, in connection with the investigation and prosecution of possible criminal offenses covered by the Penal Code or supervisory legislation.
The relevant minister as part of their general supervision, cf. however § 257, subsection 6.
Administrative authorities and courts handling decisions made by the Financial Supervisory Authority.
The Parliamentary Ombudsman.
The Minister for Employment in the event of notification pursuant to the Act on the Labour Market Supplementary Pension, the Act on the Wage Earners' Savings Fund, and the Act on Work Injury Insurance.
A parliamentary commission established by the Folketing, cf. however § 257, subsections 4 and 6.
Inquiry commissions established by law or pursuant to the Act on Inquiry Commissions, cf. however § 257, subsections 4 and 6.
The standing committees of the Folketing regarding the general economic conditions of a financial business, insofar as it concerns crisis management of investment firm companies, when a decision is made on whether the state should provide a guarantee or make funds available. The same applies in connection with parliamentary control in cases covered by the first sentence.
The State Audit Office and the National Audit Office.
Stakeholders, including authorities, involved in attempts to save a distressed investment firm company, provided that the recipients of the information have a need for this, cf. however § 257, subsection 6.
Auditors appointed by FSR – Danish Auditors pursuant to § 144, subsection 5, second sentence, of the Act on Financial Business.
The Bankruptcy Court, cf. however § 257, subsection 4, other authorities participating in the liquidation, bankruptcy proceedings or similar procedures of an investment firm company, and the liquidator and persons responsible for the statutory audit of the investment firm company's accounts, provided that the recipients of the information have a need for this to perform their tasks.
Institutions managing deposit or investor guarantee schemes, provided that the information is necessary for them to perform their work.
Finansiel Stabilitet, provided that Finansiel Stabilitet has a need for this to perform its tasks.
Committees, groups, etc. established by the Minister for Business Affairs, which have the purpose of discussing and coordinating efforts to ensure financial stability.
The Danish Business Authority in its capacity as supervisory authority for compliance with company legislation, when disclosure is made with a view to strengthening the stability and integrity of the financial system, cf. however § 257, subsection 4, and the Danish Business Authority and the Audit Board in their capacity as supervisory authority for the statutory audit of investment firm companies' accounts, cf. however § 257, subsection 4. Disclosure pursuant to the first sentence can only take place, provided that the recipient has a need for this to perform its tasks.
Experts assisting the Financial Supervisory Authority, the Danish Business Authority, the Audit Board, and institutions managing deposit or investor guarantee schemes in carrying out their supervisory tasks, provided that the recipient has a need for the information to perform its tasks, cf. however § 257, subsections 4 and 6.
The Faroese Minister for Finance as part of the responsibility for economic stability in the Faroe Islands and for use in crisis management of investment firm companies in the Faroe Islands.
The competent member of Naalakkersuisut as part of the responsibility for economic stability in Greenland and for use in crisis management of investment firm companies in Greenland.
The Standing Committee of the Faroese Parliament regarding the general economic conditions of a Faroese investment firm company, insofar as it concerns crisis management of Faroese investment firm companies, when a decision is taken on whether the Government of the Faroe Islands should provide a guarantee or make funds available. The same applies in connection with parliamentary control in matters covered by the first sentence.
The Standing Committee of the Greenland Parliament regarding the general economic conditions of a Greenlandic investment firm company, insofar as it concerns crisis management of Greenlandic investment firm companies, when a decision is taken on whether Naalakkersuisut should provide a guarantee or make funds available. The same applies in connection with parliamentary control in matters covered by the first sentence.
Faroese supervisory authorities in the financial sector, provided that the recipients are subject to a statutory duty of confidentiality that corresponds at least to the duty of confidentiality under subsection 1, and that the recipients need the information to perform their duties, subject to Section 257, subsection 4.
Authorities or similar bodies in other countries within the European Union or in countries with which the Union has concluded an agreement in the financial field, which are responsible for the resolution of an investment firm company, in connection with the authorities' preparation of group resolution plans.
Resolution authorities in countries outside the European Union, with which the Union has not concluded an agreement in the financial field.
The Centre for Cyber Security, provided that the information is necessary for the Centre to fulfill its statutory tasks as the national central contact point or as a CSIRT.
The Danish Data Protection Agency as an independent supervisory authority for compliance with data protection rules, provided that the Danish Data Protection Agency needs the information to perform its duties, subject to Section 257, subsection 4.

Subsection 2. Confidential information received by the Financial Supervisory Authority may only be used in connection with the supervisory task, for the imposition of sanctions, or if the decision of the Financial Supervisory Authority is appealed to a higher administrative authority or brought before the courts.

Subsection 3. The right to receive confidential information from the Folketing's Standing Committee in accordance with subsection 1, no. 9, is limited to documents in cases established at the Financial Supervisory Authority after 16 September 1995. The right to receive confidential information from the Standing Committee of the Faroese Parliament in accordance with subsection 1, no. 21, and from the Standing Committee of the Greenland Parliament in accordance with subsection 1, no. 22, is limited to documents in cases established at the Financial Supervisory Authority after 1 January 2006.

Subsection 4. If a debtor, guarantor, or investor has significant obligations to several investment firm companies, the Financial Supervisory Authority may notify the relevant investment firm companies thereof.

Section 257. Section 255, subsection 1, does not prevent confidential information from being passed on to the following:

Danmarks Nationalbank, central banks in countries within the European Union or countries with which the Union has concluded an agreement in the financial field, the European System of Central Banks and the European Central Bank in their capacity as monetary authorities, as well as public authorities responsible for supervising payment and settlement systems, and other countries within the European Union or countries with which the Union has concluded an agreement in the financial field, provided that the information is necessary for them to fulfill their statutory tasks, including the implementation of monetary policy, supervision of payment and securities settlement systems, and the maintenance of the stability of the financial system.
An institution responsible for the clearing of financial instruments or money, if it is necessary to ensure that the institution responds appropriately to defaults or potential defaults on the market where the institution is responsible for clearing, subject to subsection 6.
Financial supervisory authorities in other countries within the European Union or in countries with which the Union has concluded an agreement in the financial field, which are responsible for supervising investment firm companies or financial markets, authorities and bodies responsible for maintaining financial stability through macroprudential regulation, authorities or bodies with the aim of ensuring financial stability, or bodies involved in the liquidation, bankruptcy proceedings or similar procedures of investment firm companies, as well as persons responsible for the statutory audit of the accounts of investment firm companies, provided that the recipients of the information need it to perform their duties.
Bodies in other countries within the European Union or in countries with which the Union has concluded an agreement in the financial field, which supervise bodies involved in the liquidation, bankruptcy proceedings or similar procedures of investment firm companies, and authorities in these countries responsible for supervising contractual safeguard schemes, provided that the recipient of the information needs it to perform its duties, subject to subsection 4.
Bodies in other countries within the European Union or in countries with which the Union has concluded an agreement in the financial field, which are responsible for detecting breaches of company law, provided that the recipient of the information needs it to perform its duties and the disclosure is made with a view to strengthening the stability and integrity of the financial system, subject to subsection 4.
Experts assisting authorities in other countries within the European Union or in countries with which the Union has concluded an agreement in the financial field, which supervise bodies involved in the liquidation, bankruptcy proceedings or similar procedures of investment firm companies, and authorities in these countries responsible for supervising contractual safeguard schemes, subject to subsection 4.
Ministers responsible for financial legislation in other countries within the European Union or in countries with which the Union has concluded an agreement in the financial field, in connection with the crisis management of an investment firm company.
Committees of Inquiry established by the European Parliament in accordance with Article 226 of the Treaty on the Functioning of the European Union.
The European Banking Authority, the European Securities and Markets Authority and the European Systemic Risk Board, provided that the information is necessary for them to perform their tasks.
Financial supervisory authorities in countries outside the European Union, with which the Union has not concluded an agreement in the financial field, which are responsible for supervising investment companies or financial markets, authorities and bodies responsible for maintaining financial stability through macroprudential regulation, authorities or bodies with the aim of ensuring financial stability and contractual safeguard schemes, or bodies involved in the liquidation, bankruptcy proceedings or similar procedures of investment firm companies, as well as persons responsible for the statutory audit of the accounts of investment companies, subject to subsections 3 and 4.
Bodies in countries outside the European Union, with which the Union has not concluded an agreement in the financial field, which supervise bodies involved in the liquidation, bankruptcy proceedings or similar procedures of investment companies or investment firm companies, authorities responsible for supervising contractual safeguard schemes or institutional safeguard schemes, and authorities supervising persons responsible for the statutory audit of the accounts of investment companies, subject to subsections 3 and 4.
Bodies in countries outside the European Union or in countries with which the Union has not concluded an agreement in the financial field, which are responsible for detecting breaches of company law, provided that the disclosure is made with a view to strengthening the stability and integrity of the financial system, subject to subsections 3 and 4.
Experts assisting authorities in countries outside the European Union or in countries with which the Union has not concluded an agreement in the financial field, which supervise bodies involved in the liquidation, bankruptcy proceedings or similar procedures of investment companies, and authorities supervising persons responsible for the statutory audit of the accounts of investment companies, subject to subsections 3 and 4.
The Commission, when the information is necessary for the Commission to exercise its powers.

Subsection 2. Confidential information received in accordance with subsection 1, no. 9, may, notwithstanding the duty of confidentiality referred to in Section 258, be exchanged directly between on the one hand the European Banking Authority, the European Securities and Markets Authority and bodies established by these and on the other hand the European Systemic Risk Board.

Subsection 3. Disclosure in accordance with subsection 1, nos. 10-13, may only take place:

on the basis of an international cooperation agreement, and
provided that the recipients are at least subject to a statutory duty of confidentiality corresponding to the duty of confidentiality under Section 255, subsection 1, and need the information to perform their duties.

Subsection 4. Disclosure in accordance with subsection 1, nos. 4-6, 10-13 and 23, and Section 256, subsection 1, nos. 7, 8, 13, 17 and 18, of confidential information originating from countries within the European Union or countries with which the Union has concluded an agreement in the financial field, may further only take place if the authorities that provided the information have given their explicit consent, and may only be used for the purpose for which the consent was given. In disclosing information in accordance with subsection 1, nos. 4-6, 10-13 and 23, and Section 256, subsection 1, nos. 7, 8, 13, 17 and 18, the Financial Supervisory Authority shall inform the authorities or bodies that provided the information of the experts to whom the information will be forwarded, specifying the powers of the experts.

Subsection 5. Disclosure of confidential information to resolution authorities in accordance with Section 256, subsection 1, no. 24, may only take place if the conditions in subsection 3, no. 2, and subsection 4 are met and the resolution functions of the resolution authorities correspond to the functions laid down in Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 on a framework for the recovery and resolution of credit institutions and investment firms.

Subsection 6. Disclosure of confidential information in accordance with subsection 1, no. 2, and Section 256, subsection 1, nos. 3, 7, 8, 11 and 18, may only take place if the authorities or bodies that provided the information, or the authorities in the Member State where the on-site inspection or investigation was carried out, have given their explicit consent, and where the information was received from one of the following authorities etc.:

The European Banking Authority, the European Systemic Risk Board, the European Securities and Markets Authority and bodies established under these and under this Act, regulations issued under this Act, other directives concerning credit institutions, regulations issued under Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the supervision of investment firms, Article 15 of Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board, Articles 31, 35 and 36 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority) and Articles 31 and 36 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority).
Authorities responsible for the supervision of financial undertakings, financial institutions, investment firms, credit rating agencies and financial markets.
Authorities or bodies responsible for maintaining the stability of the financial system through the application of macroprudential rules.
Authorities or bodies with the aim of ensuring financial stability, contractual safeguard schemes or institutional safeguard schemes as referred to in regulations.
Institutions managing deposit-guarantee or investor-compensation schemes.
Bodies involved in the liquidation, bankruptcy proceedings or similar procedures of investment firm companies.
Persons responsible for the statutory audit of the accounts of investment firm companies, or where information has been obtained through on-site inspections or investigations in accordance with Section 249, subsection 1.

Section 258. All persons who, in accordance with Section 256, subsection 5, and Section 257, subsection 1, receive confidential information from the Financial Supervisory Authority are subject to the duty of confidentiality referred to in Section 255, subsection 1, with regard to this information.

Chapter 24
Parties, Time Limits, Communication and Fees
Parties

Section 259. As a party in relation to the Financial Supervisory Authority, the investment firm company, the investment firm holding company, the associated agent established in this country, the mixed financial holding company, the mixed holding company, the investment company or the investment holding company shall be considered, which the Financial Supervisory Authority has made or will make a decision against in accordance with this Act, regulations issued in accordance with this Act, Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, regulations issued under Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the supervision of investment firms and regulations and rules issued under Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms, Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector and Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment and rules issued thereunder, subject to subsections 2 and 3.

Subsection 2. In the following cases, another than the investment firm company, the investment firm holding company, the associated agent established in this country, the mixed financial holding company, the mixed holding company, the investment company or the investment holding company shall also be considered a party to the decision of the Financial Supervisory Authority, insofar as the part of the case concerns the person in question:

The parent company, where this is an investment firm holding company or an investment firm company.
Undertakings with which an investment firm company, an investment firm holding company, a mixed financial holding company, a mixed holding company, an investment company or an investment holding company has a specific direct or indirect connection, and where the Financial Supervisory Authority may obtain information and carry out inspection visits, cf. Section 233, subsection 2.
A natural or legal person of whom the Financial Supervisory Authority requires information to decide whether this person is covered by the provisions of this Act, cf. Section 233, subsection 3.
The intended acquirer or holder of a qualifying holding, when the Financial Supervisory Authority is processing matters regarding approval of acquisition, cf. Sections 59, 60 and 63, and when the Financial Supervisory Authority reacts as a result of failure to notify of a holding or revokes the voting rights attached to the relevant owner's holding, cf. Section 65, subsections 1-3.
Auditor in an investment firm company or an investment firm holding company, when the Financial Supervisory Authority orders this to provide information about the affairs of the investment firm company or the investment firm holding company, and in matters regarding prohibition of an auditor having loans etc. in the investment firm company which the auditor audits, cf. Section 160, subsections 5 and 6.
Undertakings to which an investment firm company or an investment firm holding company has such a connection that, in the opinion of the Financial Supervisory Authority, this must be included in the consolidation, cf. Section 177, subsection 1, in the Act on Financial Business.
A company applying for permission to carry on investment firm business, cf. Section 13, subsection 1, and Section 20, or whose application is suspended, cf. Section 23.
A member of the board of directors or management of an investment firm company or a capital owner, when the Financial Supervisory Authority refuses permission to an investment firm company or withdraws this wholly or partly, cf. Section 20, subsection 1, nos. 1, 3 and 4, Sections 21 and 164 and Section 166, subsection 1.
Undertakings which the Financial Supervisory Authority finds have close links to an investment firm company, when permission is refused or withdrawn in accordance with Section 20, subsection 1, nos. 5 and 6, and Section 164.
The person who violates the Act's prohibition on using words in a company's name or designation of the company that are covered by the exclusive right of investment firm companies to names, cf. Section 17, cf. Section 13, subsection 1.
The person who violates the law's prohibition on conducting business covered by Section 13, subsections 1 and 3, without a license.
The person against whom the Financial Supervisory Authority makes a decision on whether the person in question may offer investment services without a license, cf. Section 13, subsection 5.
The temporary administrator appointed to the board of a securities firm that has a license to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, pursuant to Section 179 in matters concerning the appointment or removal of the temporary administrator.
A member of the board or management or a capital owner in a securities firm that has a license to provide or perform one or both of the investment services and activities mentioned in Annex 1, Section A, nos. 3 and 6, or companies that the Financial Supervisory Authority finds to have close connections to a securities firm, when the Financial Supervisory Authority makes a decision that the securities firm is considered to be in difficulty or likely to become so, cf. Section 165.

Subsection 3. As a party, a board member, an auditor, a director, or other senior employees in a securities firm, a securities holding company, a mixed financial holding company, a mixed holding company, an investment company, or an investment holding company is also considered a party if the Financial Supervisory Authority's decision is addressed directly to the person in question. The same applies to the administrator of an administration estate for covered bonds.

Subsection 4. Party status and party rights according to subsections 2 and 3 are limited to matters where the Financial Supervisory Authority's decisions were made after October 8, 1998. As far as the disclosure of confidential information is concerned, cf. Chapter 12, party status and party rights are limited to matters where the Financial Supervisory Authority's decisions are made after January 1, 2004. Party status and party rights according to subsections 2 and 3 are limited to matters where the Financial Supervisory Authority's decision was made after July 1, 2009.

Subsection 5. The Financial Supervisory Authority may, when the Financial Supervisory Authority takes up a matter regarding the disclosure of confidential information, cf. Chapter 12, grant certain party rights to other natural or legal persons than those mentioned in subsections 2 and 3. Party rights may only be granted insofar as it concerns the part of the matter that has direct and significant importance for the person in question. Party rights must be granted with regard to the protection of confidential information about the securities firms that are under supervision. The party rights are limited to matters where the authority's decisions are made after January 1, 2004.

Section 260. As a party in relation to the Financial Supervisory Authority's decisions on suitability and integrity, both the affected securities firm, the affected securities holding company, the affected mixed financial holding company, or the affected mixed holding company and the board member or director whom the decision concerns are considered parties. The same applies to the Financial Supervisory Authority's decisions pursuant to Sections 76 and 242.

Subsection 2. As a party in relation to the Financial Supervisory Authority's decisions made as part of the Financial Supervisory Authority's control of accounts submitted according to the rules in this law's Chapter 16 and the rules issued pursuant to Section 157, and of group accounts covered by Article 4 of Regulation (EC) No 1606/2002 of the European Parliament and of the Council of July 19, 2002 on the application of international accounting standards, any person whom the Financial Supervisory Authority considers a party to the matter is also considered a party.

Deadlines

Section 261. The deadlines set in or pursuant to this law begin to run from and including the day after the day on which the event triggering the deadline occurs. This applies to the calculation of both day, week, month, and year deadlines.

Subsection 2. If the deadline is specified in weeks, the deadline, cf. subsection 1, expires on the day of the week on which the event triggering the deadline occurred.

Subsection 3. If the deadline is specified in months, the deadline, cf. subsection 1, expires on the day of the month on which the event triggering the deadline occurred. If the deadline expires on a day of the month that does not exist, the deadline always expires on the last day of the month regardless of its length.

Subsection 4. If the deadline is specified in years, the deadline, cf. subsection 1, expires on the anniversary of the day on which the event triggering the deadline occurred.

Subsection 5. If a deadline expires on a weekend or on a public holiday, Constitution Day, Christmas Eve, or New Year's Eve, the deadline is extended to the next working day.

Communication

Section 262. The Minister for Business Affairs may set rules stating that written communication to and from the Minister for Business Affairs, the Financial Supervisory Authority, and the Danish Business Authority regarding matters covered by this law or rules issued pursuant to this law, must be conducted digitally, and set further rules on digital communication, including the use of specific IT systems, special digital formats, and digital signatures, etc.

Section 263. A digital message is considered to have been received when it is available to the person to whom the message is addressed.

Section 264. Where it is required by this law or by rules issued pursuant to this law that a document issued by others than the Minister for Business Affairs, the Financial Supervisory Authority, or the Danish Business Authority must be signed, this requirement may be fulfilled by using a technique that ensures unique identification of the person who issued the document, cf. however subsection 2. Such documents are equated with documents with a personal signature.

Subsection 2. The Minister for Business Affairs may set further rules on deviation from the signature requirement. It may be specified that the requirement for a personal signature cannot be deviated from for certain types of documents.

Fee

Section 265. Securities firms and securities holding companies, as well as foreign investment companies that provide or perform investment services and activities here in the country through a branch or associated agents established here in the country, must pay a fee to the Financial Supervisory Authority.

Subsection 2. Foreign investment companies that have been granted a license to provide or perform investment services and activities in a country outside the European Union, for 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, subsection 1, of Regulation (EU) No 600/2014 of the European Parliament and of the Council of May 15, 2014 on markets in financial instruments, or where such a decision is no longer valid, and which provide cross-border services with investment services and activities here in the country, must pay a fee to the Financial Supervisory Authority.

Subsection 3. The fee is determined according to Chapter 22 in the Act on Financial Business.

Section IX
Penal, Entry into Force, and Transitional Provisions etc.
Chapter 25
Penal Provisions

Provisions subject to penalties in this law

Section 266. A violation of the following provisions is punishable by a fine, unless a higher penalty is incurred according to the rest of the legislation:

Section 67, Section 71, subsection 1, nos. 1 and 2, Section 79, subsection 1, 1st sentence, and subsection 2, Section 80, subsections 1, 3, 4, and 6, Section 83, subsections 1 and 2, Section 84, 1st and 2nd sentences, Section 85, subsections 1 and 2, Section 87, Section 89, subsections 1 and 2, Section 90, subsection 1, 1st sentence, and subsection 2, Sections 92 and 94, Section 95, subsections 1 and 2 and subsection 3, 2nd sentence, Section 96, subsection 1, Section 98, subsections 1 and 2, Section 99, subsection 1, Section 100, subsection 1, 2nd sentence, Section 101, subsection 1, Section 102, subsection 1, Section 103, subsection 1, Section 104, subsection 1, 2nd sentence, Sections 106 and 107, Section 108, subsection 1, Section 109, subsections 1-6, Section 109a, Section 110, subsections 1, 2, and 4, Section 111, Section 118, subsection 1, Sections 119 and 140, Section 141, subsections 2 and 7, 1st sentence, Section 142, Section 143, subsection 1, nos. 1-4, Section 145, subsection 2, Section 146, Section 147, subsections 1 and 3 and subsection 4, 1st sentence, Section 148, Section 150, subsections 1 and 2, 1st sentence, Section 153, Section 154, 1st sentence, Section 159, Section 160, subsections 3 and 5, Section 182, subsections 1 and 3, Sections 183 and 185, Section 192, subsections 2 and 3, Section 198, subsection 1, Section 211, Section 228, subsections 3 and 6, Section 229, subsection 2, and Section 285, subsections 1, 2, 4, and 5.
Article 9, Article 35, Article 38, and Articles 43-54 in Regulation (EU) No 2019/2033 of the European Parliament and of the Council of November 27, 2019 on prudential requirements for investment firms.
Article 4 in Regulation (EC) No 1606/2002 of the European Parliament and of the Council of July 19, 2002 on the application of international accounting standards.
Article 5, subsection 1, Articles 6 and 7, Article 8, subsections 1-3, Article 9, Article 10, subsection 1, Article 13, subsections 1, 3, and 4, and Articles 14 and 19 in Regulation (EU) No 1286/2014 of the European Parliament and of the Council of November 26, 2014 on packaged and retail insurance-based investment products (PRIIPs).

Subsection 2. A violation of the following provisions is punishable by a fine or imprisonment for up to 4 months, unless a higher penalty is incurred according to the rest of the legislation:

Section 13, subsections 1-3, Sections 17 and 32, Section 33, subsections 1, 2, and 6, Section 34, subsections 1 and 3, Section 35, 1st sentence, Section 37, 1st sentence, Section 41, subsection 1, Section 42, subsection 1, Section 43, subsection 1, Section 47, Section 48, subsections 1 and 2, Section 59, subsection 1, Sections 63 and 64, Section 66, subsections 1, 2, and 4, Section 68, subsection 1, Section 69, subsections 1 and 3, Section 70, Section 72, subsection 1, Section 75, subsection 2, cf. subsection 1, nos. 3 and 4, Section 76, Section 88, subsections 1 and 5-8, Section 104, subsection 1, 1st sentence, and subsections 2-4, Section 114, Section 115, subsection 3, Section 116, Section 117, subsection 1, 2nd sentence, and subsection 2, Section 120, subsections 1 and 2, Section 124, Section 125, subsection 1, Section 126, subsection 1, Sections 128 and 129, Section 137, subsections 1 and 2, Sections 155, 156, and 161, Section 162, subsection 1, Section 167, Section 192, subsection 5, and Sections 193 and 232.
Article 7, subsections 1-3, Article 8, subsections 1-3, Article 11, subsections 1-3, Articles 37, 38, and 40, and Article 54, subsection 1, letter e, and subsection 2, in Regulation (EU) No 2019/2033 of the European Parliament and of the Council of November 27, 2019 on prudential requirements for investment firms.
Articles 6, 7, 9, and 18-26, Article 27, subsections 1 and 4, and Article 28, subsection 2, in Regulation (EU) No 2017/2402 of the European Parliament and of the Council of December 12, 2017 on a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation.

Section 267. A securities firm or a securities holding company that does not comply with an order given pursuant to Section 177, subsection 2, Section 182, subsection 2, Section 188, Section 192, subsection 5, Section 193, Section 228, subsection 1, 1st sentence, Section 229, subsection 1, Section 238, subsection 1, or Section 242, subsections 1-3, or that violates Section 112, subsection 1, in the Companies Act, is punishable by a fine.

Subsection 2. Furthermore, the person who violates a prohibition or limitation or a restriction issued pursuant to Article 16, Article 17, or Article 24, subsection 2, letters a, b, or d, or subsection 4, in Regulation (EU) No 1286/2014 of the European Parliament and of the Council of November 26, 2014 on packaged and retail insurance-based investment products (PRIIPs), or Article 40-42 in Regulation (EU) No 600/2014 of the European Parliament and of the Council of May 15, 2014 on markets in financial instruments, is punishable by a fine.

Subsection 3. A securities firm or a securities holding company that has issued transferable securities that are admitted to trading on a regulated market and that does not comply with an order from the Financial Supervisory Authority pursuant to Section 244 is punishable by a fine.

Special criminal offenses for natural persons

Section 268. If a member of a securities firm's or a securities holding company's board or management, or an employee who is part of the actual management on a day-to-day basis, is guilty of gross or repeated management failures that result in loss or risk of loss for the company or its shareholders or other investors or customers, the person in question is punishable by a fine or imprisonment for up to 2 years, provided that a higher penalty is not incurred according to other legislation. The same applies if the management failure results in significantly increased risk that the company is exposed to or used as part of crime.

Subsection 2. Persons who are connected to a securities firm or a securities holding company without being members of the board or management or part of the actual management on a day-to-day basis, and who are guilty of gross or repeated negligence or carelessness that results in loss or risk of loss for the company or its shareholders or other investors or customers, are punishable by a fine or imprisonment for up to 2 years, provided that a higher penalty is not incurred according to other legislation. The same applies to employees responsible for a key function if the negligence or carelessness results in significantly increased risk that the company is exposed to or used as part of crime.

Penalty for providing false information

Section 269. Companies and persons who are connected to a securities firm and who provide false or misleading information regarding matters concerning the securities firm to public authorities, to the public, to a company body, or to depositors, bondholders, or other investors in the securities firm, are punishable by a fine or imprisonment for up to 2 years, unless a higher penalty is incurred according to the rest of the legislation.

General provisions on penalties

Section 270. A penalty in the form of a fine or imprisonment for up to 4 months may be imposed for violations of provisions in rules issued pursuant to this law and in rules issued pursuant to Regulation (EU) 2019/2033 of the European Parliament and of the Council of November 27, 2019 on prudential requirements for investment firms.

Subsection 2. The Financial Supervisory Authority may set rules on penalties in the form of a fine for violations of provisions contained in European Union regulations, which are adopted by the European Commission pursuant to Directive (EU) 2019/2034 of the European Parliament and of the Council of November 27, 2019 on the supervision of investment firms, Regulation (EU) 2019/2033 of the European Parliament and of the Council of November 27, 2019 on prudential requirements for investment firms, and Directive 2014/51/EU of the European Parliament and of the Council of April 16, 2014 amending Directives 2003/71/EC and 2009/138/EC and Regulations (EC) No 1060/2009, (EU) No 1094/2010, and (EU) No 1095/2010 as regards the powers conferred on the European Supervisory Authority (European Securities and Markets Authority).

Section 271. In the assessment of fines, emphasis is placed on the seriousness of the violation and the economic circumstances of the perpetrator. For violations committed by legal persons, emphasis is placed on the securities firm's or securities holding company's net annual turnover at the time of the violation. For violations committed by natural persons, emphasis is placed on the person's income circumstances at the time of the violation.

Subsection 2. A heightened fine is imposed for violations that involve

a risk to the continued operation of a securities firm,
the operation of a securities firm without a statutory license, or
gross or repeated disregard of companies' disclosure obligations to the Financial Supervisory Authority under aggravating circumstances.

Subsection 3. If an economic advantage has been obtained through a violation, this is confiscated according to the rules in Chapter 9 of the Penal Code. If confiscation cannot be carried out, special consideration must be given to this when imposing a fine.

Section 272. Companies etc. (legal persons) may be subject to criminal liability according to the rules in Chapter 5 of the Penal Code.

Subsection 2. The statute of limitations for violations of the law's provisions, provisions in regulations where criminal liability is set out in this law, or rules issued pursuant to the law is 5 years, cf. however subsection 3.

Subsection 3. The statute of limitations is 10 years for violations of Section 13, subsections 1 and 2, Section 42, subsection 1, Section 43, subsection 1, Section 67, subsections 1-4, Sections 78, 88, and 94, Section 95, subsection 2, nos. 3 and 4, Sections 104, 120-124, 128, and 129, Section 137, subsections 1 and 2, Section 145, subsection 2, Section 148, Section 150, subsections 1 and 2, 1st sentence, Section 154, 1st sentence, Section 160, subsections 3 and 5, Section 161, Section 228, subsection 3, and Section 232, subsections 2 and 6.

Fine Proposal

Section 273. The Minister for Business Affairs may, after consultation with the Minister of Justice, set rules stating that the Financial Supervisory Authority in specified cases of violations of this law and rules issued pursuant to this law, which are not considered to result in a higher penalty than a fine, may indicate in a fine proposal that the matter can be resolved without a court case if the person who committed the violation declares themselves guilty of the violation and declares themselves ready to pay a fine as specified in the fine proposal within a specified deadline.

Subsection 2. The rules of the Administration of Justice Act regarding requirements for the content of an indictment and that a suspect is not obliged to make a statement apply correspondingly to fine proposals.

Subsection 3. If the fine is accepted, further prosecution ceases.

Chapter 26
Delegation and Appeal Provisions

General authorization provisions

Section 274. If the Minister for Business Affairs delegates his powers under the law to the Financial Supervisory Authority, the Minister for Business Affairs may set rules on the right of appeal, including that appeals cannot be brought before another administrative authority.

Section 275. Decisions made by the Financial Supervisory Authority or the Danish Business Authority may be brought before the Business Appeals Board by the person to whom the decision is addressed, no later than 4 weeks after the decision has been communicated to the person in question, according to the following:

This law and rules issued pursuant thereto.
Regulation (EU) No 2019/2033 of the European Parliament and of the Council of November 27, 2019 on prudential requirements for investment firms.
Rules issued pursuant to regulations issued pursuant to Directive (EU) 2019/2034 of the European Parliament and of the Council of November 27, 2019 on the supervision of investment firms.
Regulations issued pursuant to Directive 2014/59/EU of the European Parliament and of the Council of May 15, 2014 on a framework for the recovery and resolution of credit institutions and investment firms.
Regulations and rules issued pursuant to Regulation (EU) No 575/2013 of the European Parliament and of the Council of June 26, 2013 on prudential requirements for credit institutions.
Regulation (EU) 2019/2088 of the European Parliament and of the Council of November 27, 2019 on sustainability-related disclosures in the financial services sector and rules issued pursuant thereto.
Regulation (EU) 2020/852 of the European Parliament and of the Council of June 18, 2020 on the establishment of a framework to facilitate sustainable investment.
Regulation (EU) No 1286/2014 of the European Parliament and of the Council on packaged and retail insurance-based investment products (PRIIPs).

Subsection 2. Joint decisions made by the Financial Supervisory Authority, Financial Stability, the competent authorities that are part of the supervisory college, or other authorities pursuant to this law cannot, regardless of subsection 1, be brought before the Business Appeals Board.

Section 276. The Minister for Business Affairs may set rules that are necessary to apply or implement the decisions or legal acts adopted by the European Commission pursuant to the following:

Regulation (EU) No 2019/2033 of the European Parliament and of the Council of November 27, 2019 on prudential requirements for investment firms.
Directive (EU) 2019/2034 of the European Parliament and of the Council of November 27, 2019 on the supervision of investment firms.
Regulation (EU) No 600/2014 of the European Parliament and of the Council of May 15, 2014 on markets in financial instruments.
Directive 2014/65/EU of the European Parliament and of the Council of May 15, 2014 on markets in financial instruments.
Directive 2014/59/EU of the European Parliament and of the Council of May 15, 2014 on a framework for the recovery and resolution of credit institutions and investment firms.
Regulation (EU) 2019/1238 of the European Parliament and of the Council of June 20, 2019 on a pan-European personal pension product.
Regulation (EU) 2019/2088 of the European Parliament and of the Council of November 27, 2019 on sustainability-related disclosures in the financial services sector.
Regulation (EU) 2020/852 of the European Parliament and of the Council of June 18, 2020 on the establishment of a framework to facilitate sustainable investment.

Chapter 27
Publication

Financial Supervisory Authority's publication

Section 277. The Financial Supervisory Authority must publish the following on the Financial Supervisory Authority's website, indicating the company's name, cf. however Sections 282 and 283:

Reactions given pursuant to Section 223 or by the Financial Supervisory Authority after delegation from the Financial Supervisory Authority's board to a company under supervision.
Reactions given pursuant to Section 223 or by the Financial Supervisory Authority after delegation from the Financial Supervisory Authority's board to a company that is not under supervision.
Decisions to hand over matters to police investigation.
The name of companies that violate the prohibition on conducting activities as a securities firm without a license, cf. Section 13.

Section 278. The Financial Supervisory Authority must inform the public about matters that have been processed by the Financial Supervisory Authority, the prosecution authority, or the courts, and that are of general interest or of significance for the understanding of Section 45 and regulations issued pursuant thereto.

Section 279. The Financial Supervisory Authority publishes on its website the name of the company or person in matters concerning violations of Section 59, subsection 1, Sections 63 and 64, Section 75, subsection 1, Section 76, Section 94, subsection 1, Section 98, subsection 1, Section 107, subsection 1, Sections 185 and 188, Section 192, subsections 2, 3, and 5, Section 193, Section 194, subsections 2, 4, and 7, Section 195, subsection 2, Section 198, Section 201, subsection 1, Section 203, Section 204, subsection 1, Sections 207 and 210, Section 214, subsection 2, Section 216, subsections 1 and 2, Section 217, subsections 1, 2, 4, and 5, and Section 218, subsection 1, relevant articles in Regulation (EU) No 2019/2033 of the European Parliament and of the Council of November 27, 2019 on prudential requirements for investment firms, cf. however Section 283, and in matters concerning warnings, orders, or fines issued pursuant to Section 219. The same applies to warnings, orders, and fines made by the Financial Supervisory Authority's board in the mentioned matters.

Section 280. If a reaction etc. that is published pursuant to Section 277, no. 1 or 2, or Section 279, is brought before the Business Appeals Board or the courts, this must appear in the publication. The status and the subsequent result of the Business Appeals Board's or the court's decision must also be published on the Financial Supervisory Authority's website as soon as possible.

Section 281. If a matter has been handed over to police investigation, and a final or partial guilty verdict has been passed or a fine accepted, or if a matter has been resolved with the acceptance of an administrative fine proposal, the verdict, fine acceptance, or a summary thereof must be published, cf. however Section 282, subsections 1 and 2. If the verdict is not final, or if it has been appealed or protested, this must appear in the publication.

Subsection 2. In matters where the Financial Supervisory Authority has published a decision to hand over a matter to police investigation pursuant to Section 277, nos. 1 and 3, and a decision is made to drop prosecution or to dismiss charges, or an acquittal is passed, the Financial Supervisory Authority must, upon request from the company,

the matter concerns, publish information about this. The company must submit a copy of the decision on discontinuance of prosecution or withdrawal of charges or a copy of the judgment to Finanstilsynet simultaneously with the request for publication. If the discontinuance of prosecution, withdrawal of charges, or judgment is not final, this must be stated in the publication. If Finanstilsynet receives documentation that the case has been concluded by a final discontinuance of prosecution, final withdrawal of charges, or a final acquittal, Finanstilsynet must remove all information about the decision to refer the case to police investigation and any subsequent judgments in the case from Finanstilsynet's website.

Restrictions on Finanstilsynet's publication
§ 282. Publication pursuant to § 277, items 1-3, § 280 or § 281, para. 1, may not, however, take place if

it would cause disproportionate damage to the company,
it would endanger the stability of the financial markets, or
investigative considerations speak against publication.
Para. 2. The publication pursuant to § 277, items 1-3, § 280 or § 281, para. 1, must not contain
confidential information about customer relations or information covered by § 30 of the Act on Public Access to Information in the Administration, or
confidential information originating from financial supervisory authorities in other countries within or outside the European Union, unless the authorities that provided the information have given their explicit consent.
Para. 3. If publication is omitted pursuant to para. 1, publication pursuant to § 277, items 1-3, § 280 or § 281, para. 1, must take place when the considerations that necessitated the omission no longer apply. This applies only for up to 2 years after the date of the reaction.

§ 283. Publication pursuant to § 279 must be made in anonymized form in the following cases:

Publication in non-anonymized form would cause disproportionate damage to the company or the person.
Investigative considerations speak against publication in non-anonymized form.
Publication in non-anonymized form would threaten financial stability.
Societal considerations regarding the publication of a person's name must be assessed as not proportional to the considerations regarding the person.

Time and duration of Finanstilsynet's publication § 284. Publication pursuant to this chapter must take place as soon as possible after the person or company has been notified of the reaction or decision and of Finanstilsynet's intention to publish it. If Finanstilsynet cannot notify the person concerned, publication may still take place.
Para. 2. The published information must appear on Finanstilsynet's website for at least 5 years from the publication. Publication concerning persons, however, must only appear on Finanstilsynet's website as long as the information is considered necessary in relation to the societal considerations behind the publication.

Publication by companies
§ 285. If a reaction etc. directed at a company under supervision has been published pursuant to § 277, item 1 or 2, or if a judgment or fine acceptance directed at or accepted by a company under supervision has been published pursuant to § 281, para. 1, the company must publish the relevant reaction etc., judgment, or fine acceptance on its website in a place where it naturally belongs. Publication concerning companies not under supervision must, however, only take place on Finanstilsynet's website. Para. 2. The company must publish a reaction etc. as mentioned in para. 1 as soon as possible and no later than 3 business days after the company has received the reaction etc., or no later than at the time of publication required pursuant to the Capital Markets Act. Para. 3. The company must publish a judgment or fine acceptance as mentioned in para. 1 as soon as possible and no later than 10 business days after the judgment has been passed or the fine accepted, or no later than at the time of publication required pursuant to the Capital Markets Act. Para. 4. Simultaneously with the company's publication pursuant to para. 1-3, the company must insert a link providing direct access to the reaction etc., judgment, fine acceptance, or summary, on the front page of the company's website in a visible manner. It must be clearly evident from the link and any associated text that it concerns a reaction from Finanstilsynet, a judgment, or a fine acceptance. Removal of the information from the company's website must take place according to the same principles as the company uses for other communications, but no earlier than when the link and information have been on the website for 3 months, and no earlier than after the next general meeting or representative meeting. Para. 5. If the company comments on the reaction etc., judgment, fine acceptance, or summary pursuant to para. 1-3, this must be done in continuation thereof, and the comments must be clearly separated from the reaction etc., judgment, fine acceptance, or summary. Para. 6. The company must notify Finanstilsynet of the publication pursuant to para. 1, including sending a copy of the judgment or fine acceptance. Finanstilsynet must thereafter publish the judgment, fine acceptance, or a summary thereof on its website.

§ 286. If a company has passed on information about the company, and this information has come to the public's knowledge, Finanstilsynet may order the company to publish correcting information within a deadline set by Finanstilsynet, if

the information is misleading according to Finanstilsynet's assessment, and
Finanstilsynet assesses that the information may cause damage to the company's customers, other creditors, the financial markets on which the company's shares or financial instruments issued by the securities brokerage company are traded, or financial stability in general.
Para. 2. Finanstilsynet may publish the order issued pursuant to para. 1 if the company does not correct the information in accordance with Finanstilsynet's order and within the set deadline.

Authorization
§ 287. The Minister of Business Affairs may set rules regarding the obligation of securities brokerage companies and securities brokerage holding companies to publish information about Finanstilsynet's assessment of the company and about Finanstilsynet's possibility to publish the information before the company.

Section X
Entry into force provisions, transitional provisions etc.
Chapter 28
Entry into force etc.
§ 288. The Act enters into force on June 26, 2021.
Para. 2. The requirement in § 212 has effect from January 1, 2024. If Finanstilsynet has set a deadline pursuant to para. 3, 3rd sentence, after January 1, 2024, the requirement in § 212 applies from the set deadline.
Para. 3. Finanstilsynet sets, after consultation with Financial Stability, a deadline for companies to fulfill the requirements in § 198 and § 203, para. 2. The companies must fulfill the requirements in § 198 and § 203, para. 2, on January 1, 2024. Finanstilsynet may, after consultation with Financial Stability, and if it is properly justified and appropriate, set a deadline after January 1, 2024. Finanstilsynet sets interim targets for the fulfillment of the requirements, which the companies must fulfill on January 1, 2022. Finanstilsynet sets interim targets for each 12-month period in the company's transition period. Para. 4. Decisions on requirements for write-down-able liabilities, which were made before the entry into force of this Act, cf. para. 1, also apply after the entry into force of this Act, until Finanstilsynet sets a new requirement for write-down-able liabilities pursuant to § 198.

Chapter 29
Transitional provisions etc.
§ 289. Rules set pursuant to § 6, § 9, para. 9, § 17, § 33, para. 5, § 43, para. 2 and 5, § 46 b, para. 2, § 61, para. 9, § 71, para. 4, § 71 a, para. 4, § 71 b, para. 6, § 72, para. 6, § 124, para. 7, § 128, para. 3, § 142, § 143, para. 1, item 2, § 181, para. 1, § 183, para. 6, § 188, para. 3, § 192, § 195, para. 3, § 196, § 199, para. 12, § 242, § 245 a, para. 4, § 259, para. 6, § 260, para. 8, § 264, para. 6, § 265, para. 9, §§ 270, 347 a, 371 and 373 a in the Act on Financial Business remain in force until they are repealed or replaced by new rules issued pursuant to § 13, para. 5, § 16, § 41, para. 4, § 45, para. 2 and 3, § 48, para. 4, § 59, para. 3, § 95, para. 7, § 96, para. 2, § 98, para. 4, § 99, para. 6, § 120, para. 4, § 128, para. 2, § 145, para. 3, § 150, para. 3, § 152, para. 2, § 156, para. 3, § 157, § 160, para. 10, § 176, § 182, para. 4, § 186, para. 8, § 192, para. 8, § 194, para. 8, and §§ 208, 262, 273, 274 and 287.

§ 290. Guidelines agreed upon pursuant to § 29 of the Marketing Act before January 1, 2004, continue to apply to securities brokerage companies until they are repealed or replaced by rules issued by the Minister of Business Affairs pursuant to § 43, para. 2, in the Act on Financial Business or § 45, para. 2, in this Act.

§ 291. Chapter 16 of the Act does not apply to the accounting and reporting of securities brokerage companies and securities brokerage holding companies for the accounting year 2021. For this accounting year, Chapter 13 of the Act on Financial Business applies.

§ 292. Exposures and security interests that were lawfully undertaken or entered into on January 1, 1998, between the chosen auditor or an internal audit or deputy audit manager or employees in securities dealers or securities brokerage companies, where the person is employed, may continue until the originally agreed maturity date.
Para. 2. Internal audit and deputy audit managers may, regardless of the prohibition in § 87, maintain and utilize economic interests that the person owns at the time of the Act's entry into force.

§ 293. Directors and branch managers and those equivalent in securities brokerage companies, who on January 1, 1996, lawfully conducted independent business activity or as a board member, employee, or in another way participated in the management or operation of another business activity than that of the securities brokerage company, and who have reported this to Finanstilsynet pursuant to § 37, para. 4, in Act No. 1071 of December 20, 1995, on Securities Brokerage Companies, may, regardless of § 89, continue such business activity. Para. 2. Persons covered by § 89, who on January 1, 2004, had positions covered by the provision, may continue with them without the board's permission, if the relevant position was reported to Finanstilsynet before June 30, 2004. If the securities brokerage company on January 1, 2004, had exposures against the business in which the position is held, the exposure may continue until the originally agreed maturity date. Para. 3. Persons covered by § 90, who on January 1, 2004, had positions covered by the provision, may continue with them without the direction's permission, if the relevant position was reported to Finanstilsynet before June 30, 2004. If the securities brokerage company on January 1, 2004, had exposures against the business in which the position is held, the exposure may continue until the originally agreed maturity date.

§ 294. Rules set pursuant to the Act's § 95, para. 7, regarding the placement of customers' funds in a special customer account by securities brokerage companies and investment companies apply correspondingly to customers' funds received before June 1, 2000.

§ 295. § 126 does not apply to securities brokerage companies if all properties and shares (units) in property companies were acquired before October 8, 1998.
Para. 2. Assets covered by para. 1 may not be written up to a higher book value than the book value the assets had on October 8, 1998.

§ 296. § 172, para. 2, only applies to subordinated capital issued after July 1, 2001.

Chapter 30
Changes in other legislation
Consequential changes in other legislation
§ 297. (Omitted)
Consequential changes in other laws than the Act on Financial Business §§ 298-306. (Omitted)

Chapter 31
The Faroe Islands and Greenland
§ 307. The Act does not apply to the Faroe Islands and Greenland, but may be put into force for the Faroe Islands and Greenland, in whole or in part, by Royal Decree with the changes that the respective Faroese and Greenlandic conditions require.

Act No. 2382 of December 14, 2021 (Supplementing the Taxonomy Regulation and new model for SIFI designation) contains the following entry into force provision:
§ 19
Para. 1. The Act enters into force on January 1, 2022, cf. however para. 2.
Para. 2. § 1, item 4, § 2, item 3, § 3, item 4, § 4, item 6, § 5, item 14, § 7, item 4, § 8, item 1, § 10, item 1, § 11, item 1, § 12, item 1, § 13, item 1, § 15, item 1, § 16, item 1, and § 17, item 1, enter into force on December 17, 2021.
Para. 3-8. (Omitted)

Act No. 568 of May 10, 2022 (Stricter requirements for targets and policies for the underrepresented gender) contains the following entry into force provision:
§ 11
Para. 1. The Act enters into force on January 1, 2023.
Para. 2. (Omitted)

Act No. 570 of May 10, 2022 (Designation of resolution authorities for distressed central counterparties and rules for life insurance companies offering health and accident insurance etc.) contains the following entry into force provision:
§ 13
Para. 1. The Act enters into force on July 1, 2022, cf. however para. 2-4.
Para. 2-7. (Omitted)

Act No. 409 of April 25, 2023 (Implementation of the Liability Committee's proposal on stricter liability assessment for management members etc. in financial companies and changes to the rules on suitability and integrity) contains the following entry into force provision:
§ 10
Para. 1. The Act enters into force on July 1, 2023.
Para. 2-6. (Omitted)
Para. 7. Agreements on exit arrangements, which at the time of the Act's entry into force have been entered into between a securities brokerage company or a securities brokerage holding company and a member of the management, must be published on the company's website pursuant to § 109 a in the Act on Securities Brokerage Companies and Investment Services and Activities as amended by this Act's § 3, item 13, no later than 6 months after the Act's entry into force. Para. 8. § 109 b, § 109 c, para. 2 and 3, and § 109 d in the Act on Securities Brokerage Companies and Investment Services and Activities as amended by this Act's § 3, item 13, apply to agreements on exit arrangements for members of the management in a securities brokerage company or a securities brokerage holding company, which have not yet been updated at the time of the Act's entry into force. Para. 9. § 109 c, para. 1, in the Act on Securities Brokerage Companies and Investment Services and Activities as amended by this Act's § 3, item 13, applies to agreements on exit remuneration for a member of the management in a securities brokerage company or a securities brokerage holding company, which are entered into, extended, or renewed after the Act's entry into force. Para. 10. § 109 c, para. 4 and 5, in the Act on Securities Brokerage Companies and Investment Services and Activities as amended by this Act's § 3, item 13, do not apply to agreements where the director in a securities brokerage company or a securities brokerage holding company has obtained a legal right to exit remuneration at the time of the Act's entry into force. For such agreements, the previously applicable rules apply. Para. 11-32. (Omitted)

Act No. 480 of May 12, 2023 (Extension of the coverage area for the Guarantee Fund for Property Insurance Companies to include life insurance companies conducting work accident insurance business in Denmark, and to include motor liability insurance etc.) contains the following entry into force provision:
§ 10
Para. 1. The Act enters into force the day after publication in the Official Gazette, cf. however para. 2-4.
Para. 2. (Omitted)
Para. 3. § 1, items 1 and 3-11, § 2, § 3, items 1-3, 7-18 and 24-28, § 4, item 3, § 5, item 2, § 6, § 7, items 2 and 4-9, 11, 17 and 18, and §§ 8 and 9 enter into force on July 1, 2023.
Para. 4 and 5. (Omitted)

Act No. 1546 of December 12, 2023 (Mortgage lending of offshore wind turbines, strengthening of Finanstilsynet's supervisory powers and coverage of motor liability insurance by the Guarantee Fund for Property Insurance Companies etc.) contains the following entry into force provision:
§ 15
Para. 1. The Act enters into force on January 1, 2024, cf. however para. 2.
Para. 2. (Omitted)
Para. 3. Rules issued pursuant to § 182, para. 3, in Act No. 1155 of June 8, 2021, on Securities Brokerage Companies and Investment Services and Activities, remain in force until they are repealed or replaced by rules issued pursuant to § 182, para. 4, in the Act on Securities Brokerage Companies and Investment Services and Activities, cf. this Act's § 4, item 4. Para. 4. (Omitted)

Finanstilsynet, March 1, 2024
Louise Mogensen
/ Karina Ankergren

The law change concerns § 101, para. 1, 4th sentence, § 107, para. 4, § 219, para. 2, item 11, § 259, para. 1, § 275, para. 1, item 7 and § 276, item 8.
The law change concerns § 71, § 159, para. 2 and § 266, para. 1, item 1.
The law change concerns § 10, item 63, § 46 a, § 224, para. 2 and 3, § 253, para. 2 and 3 and § 257, para. 1, item 14.
The law change concerns § 10, item 64, § 67, para. 1, § 67, para. 4, 1st sentence, § 67, para. 5, § 82, § 88, para. 1-4, § 88, para. 5, 1st sentence, § 88, para. 6, § 88, para. 7, § 107, para. 2, § 107, para. 2, 2nd and 3rd sentences, § 107, para. 3, 3rd sentence, § 107, para. 4-7, § 109 a, § 109 b, § 109 c, § 109 d, § 266, para. 1, item 1, § 266, para. 2, item 1, § 268 and § 272, para. 3.
The law change concerns § 1 a, § 8, para. 1 and 2, § 10, item 18, § 26, para. 1-3 and 5, § 27, § 41, para. 3, § 43, para. 3, item 7, and para. 5, § 94, para. 2 and 3, § 224 a, § 232, para. 1, 1st sentence, § 233, para. 1, 1st and 2nd sentences, § 252 a, § 265, para. 1 and 2, § 289 and Annex 3, item 2.
The law change concerns § 5, para. 1, 1st sentence, § 6, 1st sentence, § 10, items 64 and 65, § 182, para. 3, § 219 a, § 229, para. 1, 1st sentence, § 266, para. 1, item 1, § 267, para. 2, § 275, para. 1, item 8, and § 289.

Annex 1
Investment services, investment activities and ancillary services
SECTION A

Reception and transmission for investors' account of orders concerning one or more of the instruments mentioned in Annex 2.
Execution of orders with one or more of the instruments mentioned in Annex 2 for investors' account.
Trading for own account with any of the instruments mentioned in Annex 2.
Discretionary portfolio management of individual investors' securities holdings pursuant to instructions from the investors, provided the holdings comprise one or more of the instruments mentioned in Annex 2.
Investment advice.
Underwriting of one or more of the instruments mentioned in Annex 2 in connection with issues or placement of such instruments on a firm commitment basis.
Placement of financial instruments without firm commitment.
Operation of multilateral trading facilities (MTFs).
Operation of organized trading facilities (OTFs).
Safekeeping and administration for investors' account in connection with one or more of the instruments mentioned in Annex 2, including depositary activities and services linked to one or more of the activities mentioned in items 1-9, but not the issuance and administration of securities accounts at the top level as referred to in Section A, point 2, in the Annex to Regulation (EU) No 909/2014 of the European Parliament and of the Council of July 23, 2014 on improving securities settlement in the European Union and on central securities depositories.

SECTION B

Safekeeping of valuables.
Credit or lending to an investor, such that this can execute a transaction with one or more of the instruments mentioned in Annex 2, provided the company providing the credit or loan participates in the transaction.
Advice to companies regarding capital structures, industrial strategy and related questions, as well as advice and services regarding mergers and acquisitions of companies.
Foreign exchange transactions, when the relevant transactions are part of the provision of investment services.
Investment analyses and financial analyses or other forms of general recommendations concerning one or more of the instruments mentioned in Annex 2.
Services in connection with underwriting.
Investment services and investment activities as well as ancillary services of the type mentioned in this Annex regarding the underlying instrument for the derivatives covered by Annex 2, items 5-7 and 10, when these are linked to the investment service or ancillary service.
Mediation and advice on loans and credits for leveraged investments.

Annex 2
Financial instruments

Transferable securities (other than payment instruments), which can be traded on the capital market,
including:
a) shares in companies and other securities equivalent to shares in companies, partnerships and other undertakings as well as depositary receipts in respect of shares, b) bonds and other forms of securitised debt, including depositary receipts in respect of such securities, and c) all other securities giving the right to acquire or sell such securities referred to in points (a) or (b) or which give a cash settlement determined by reference to securities, currencies, interest rates or yields, commodities, other indices and measures, as references,
money-market instruments, including treasury bills, certificates of deposit and commercial papers, but
not payment instruments,
units in collective investment undertakings,
options, futures, swaps, forward rate agreements (FRAs) and any other derivative contract relating to
securities, currencies, interest rates or yields, emission allowances or other derivatives, financial indices or financial measures, which may be physically settled or cash-settled,
options, futures, swaps, forwards and any other derivative contract relating to commodities, which
must be cash-settled, or may be cash-settled, if one of the parties, other than for a non-performance reason or other termination reason, so wishes,
options, futures, swaps and any other derivative contract relating to commodities, which may be
physically settled, provided that they are traded on a regulated market, a multilateral trading facility (MTF) or an organised trading facility (OTF), except for wholesale energy products, which are traded on an organised trading facility (OTF), and which can only be physically settled,
options, futures, swaps, forwards and any other derivative contract relating to commodities, which are
not covered by point 6, and which may be physically settled and do not have a commercial purpose, and which have characteristics of other derivative financial instruments,
credit derivatives,
contracts for difference (CFDs),
options, futures, swaps, forward rate agreements (FRAs) and any other derivative contract relating
to climatic variables, freight rates, inflation rates or other official economic statistics, and any other derivative contract, which must be cash-settled, or may be cash-settled, if one of the parties, other than for a non-performance reason or other termination reason, so wishes, relating to assets, rights, obligations, indices and measures not covered by points 1-9 and 11, and which have characteristics of other derivative financial instruments, taking into account, inter alia, whether they are traded on a regulated market, an organised trading facility (OTF) or a multilateral trading facility (MTF), and
emission allowances consisting of any unit recognised as complying with the requirements of
Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community.
1 March 2024. 76 No. 232.

Annex 3
Calculations relating to requirements for write-down eligible liabilities and subordination Regarding requirements for write-down eligible liabilities

The amount, Y, referred to in Section 202, item 5, point (c), is calculated using the following formula:
Y = α – (β + γ)
(1)
α = The amount constituting the requirement for write-down eligible liabilities for the undertaking, which is a subsidiary of the resolution entity, but which is not itself a resolution entity, pursuant to Section 201, paragraph 1.
β = The own funds issued in accordance with Section 205, items 1 and 2.
γ = The liabilities issued to and purchased by the resolution entity, either directly or indirectly through other entities in the same resolution group.
Regarding requirements for subordination of write-down eligible liabilities
The amount, Y, referred to in Section 203, paragraph 1, is calculated using the following formula:
Z = 2 x η + 2 x θ
η = The amount pursuant to the requirement in Article 11, 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.
θ = The amount pursuant to the individual solvency requirement established pursuant to Section 121 or the individual solvency need established pursuant to Section 120.
1 March 2024. 77 No. 232.

Annex 4
DIRECTIVE (EU) 2019/2034 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL EUROPA-PARLAMENTETS OG RÅDETS DIREKTIV (EU) 2019/2034 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 (Text with EEA relevance) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION HAVE HAVING REGARD to the Treaty on the Functioning of the European Union, and in particular Article 53(1) thereof, having regard to the proposal from the European Commission, after transmission of the draft legislative act to the national parliaments, having regard to the opinion of the European Central Bank 1), having regard to the opinion of the European Economic and Social Committee 2), after the ordinary legislative procedure 3), and whereas:
(1) Sound supervision is an integral part of the regulatory conditions under which financial institutions provide services in the Union. Investment firms, together with credit institutions, are subject to Regulation (EU) No 575/2013 of the European Parliament and of the Council 4) and Directive 2013/36/EU of the European Parliament and of the Council 5) as regards their supervisory treatment and supervision, while their authorisation and other organisational and good conduct requirements are laid down in Directive 2014/65/EU of the European Parliament and of the Council 6). (2) The existing supervisory arrangements under Regulation (EU) No 575/2013 and Directive 2013/36/EU are largely based on successive versions of international regulatory standards set by the Basel Committee on Banking Supervision for large banking groups, and only partially take into account the specific risks associated with the various activities of a large number of investment firms. The specific vulnerabilities and risks associated with these investment firms should therefore be addressed further by means of effective, appropriate and proportionate supervisory arrangements at EU level, which contribute to creating a level playing field throughout the Union, ensure effective supervision while keeping compliance costs down, and ensure sufficient capital for the risks of investment firms. (3) Sound supervision should ensure that investment firms are managed in an orderly manner and in the best interests of their clients. It should take into account the opportunities for investment firms and their clients to engage in excessive risk-taking and the different degrees of risk that investment firms assume and pose. Such supervision should also aim to avoid imposing disproportionate administrative burdens on investment firms. At the same time, such supervision should make it possible to strike a balance between ensuring the safety and soundness of investment firms and avoiding excessive costs that could undermine the viability of their business activities. 1 March 2024. 78 No. 232.

(4) Many of the requirements arising from the framework consisting of Regulation (EU) No 575/2013 and Directive 2013/36/EU are designed to address the common risks of credit institutions. The existing requirements are thus largely calibrated to preserve the lending capacity of credit institutions under varying economic conditions and to protect depositors and taxpayers against potential failures and are not designed to take into account all the different risk profiles that investment firms may have. Investment firms do not have large portfolios of loans to retail and corporate customers and do not accept deposits. The likelihood that their failure could have adverse effects on overall financial stability is lower than for credit institutions, but investment firms nonetheless pose a risk that needs to be addressed by means of a solid framework. The risks faced and posed by most investment firms are thus significantly different from the risks faced and posed by credit institutions, and such differences should be clearly reflected in the Union's supervisory framework. (5) Differences in the application of the existing supervisory frameworks in the various Member States endanger the level playing field for investment firms in the Union, which hinders investors' access to new opportunities and better methods for managing their risks. These differences are due to the general complexity of applying the frameworks to different investment firms on the basis of the services they provide, where some national authorities adapt or streamline this application in national law or practice. In view of the fact that the existing supervisory frameworks do not take into account all the risks faced and posed by certain types of investment firms, large capital add-ons have been applied to certain investment firms in some Member States. Uniform provisions should be laid down regarding these risks to ensure harmonised supervision of investment firms throughout the Union. (6) There is therefore a need for a specific supervisory arrangement for investment firms that are not systemic by virtue of their size and interconnection with other financial and economic actors. Systemic investment firms should, however, continue to be subject to the existing supervisory frameworks under Regulation (EU) No 575/2013 and Directive 2013/36/EU. These investment firms are a sub-group of investment firms to which the frameworks in Regulation (EU) No 575/2013 and Directive 2013/36/EU currently apply, and they do not benefit from special exemptions from the principal requirements therein. The largest and most interconnected investment firms have business models and risk profiles that correspond to those of significant credit institutions. They provide 'bank-like' services and assume risks to a significant extent. Furthermore, systemic investment firms are so large and have business models and risk profiles of such a nature that they pose a threat to stable and well-functioning financial
markets on a par with large credit institutions. It is therefore appropriate that these investment firms continue to be subject to the rules of Regulation (EU) No 575/2013 and Directive 2013/36/EU. (7) It is possible that investment firms that trade on own account, provide underwriting guarantees for financial instruments or place financial instruments on the basis of a firm commitment to a significant extent, or that are clearing members in central counterparties, have business models and risk profiles that correspond to those of credit institutions. In view of their size and activities, it is possible that such investment firms pose a risk to financial stability that can be compared to the risk posed by credit institutions. The competent authorities should have the possibility to require that they continue to be subject to the same supervisory treatment as credit institutions subject to Regulation (EU) No 575/2013, and supervision under Directive 2013/36/EU. (8) There may be Member States where the authorities responsible for the supervision of investment firms are different from the authorities responsible for the supervision of market conduct. It is therefore necessary to create a mechanism for cooperation and exchange of information between these 1 March 2024. 79 No. 232.

authorities to ensure harmonised supervision of investment firms throughout the Union that operates quickly and effectively.
(9) An investment firm may trade via a clearing member in another Member State. In cases where it does so, a mechanism for the exchange of information between the relevant competent authorities in the different Member States should be introduced. Such a mechanism should make it possible to exchange information between the competent authority for the supervision of the investment firm and either the authority supervising the clearing member or the authority supervising the central counterparty, regarding the model and parameters used to calculate the investment firm's margin requirements, where such a calculation method is used as the basis for the investment firm's own funds requirements. (10) To promote the harmonisation of supervisory standards and practices in the Union, the European Supervisory Authority (European Banking Authority), established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council 7), (EBA), should retain primary responsibility for the coordination and convergence of supervisory practices in the field of supervision of investment firms within the European System of Financial Supervision (ESFS) in close cooperation with the European Supervisory Authority (European Securities and Markets Authority), established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council 8), (ESMA). (11) The requirement for the size of the initial capital of an investment firm should be based on the services and activities that investment firms are authorised to provide and perform respectively under Directive 2014/65/EU. The possibility for Member States to reduce the requirement for the size of initial capital in specific situations, pursuant to Directive 2013/36/EU, on the one hand and the situation of uneven implementation of the Directive on the other hand, has led to a situation where the requirement for the size of initial capital differs in the Union. To put an end to this fragmentation, the requirement for the size of initial capital should be harmonised for all investment firms in the Union. With a view to reducing the barriers to market access that currently exist for multilateral trading facilities (MTFs) and organised trading facilities (OTFs), the initial capital for investment firms operating an MTF or an OTF should be set at the amount referred to in this Directive. If an investment firm authorised to operate an OTF has also been authorised to perform trading on own account under the conditions of Article 20 of Directive 2014/65/EU, its initial capital should be set at the amount referred to in this Directive. (12) Even though investment firms should no longer be subject to the scope of Regulation (EU) No 575/2013 or Directive 2013/36/EU, certain concepts used in connection with these legislative acts should retain their well-established meaning. To enable and facilitate consistent interpretation of such concepts when used in EU acts, references in such acts to the initial capital of
investment firms, the supervisory powers conferred on the competent authorities regarding investment firms, the process for assessing the adequacy of internal capital of investment firms, the supervisory review and evaluation process used by the competent authorities for investment firms, and the provisions on governance and remuneration applicable to investment firms, should apply as references to the corresponding provisions in this Directive. (13) A well-functioning internal market requires that the responsibility for the supervision of an investment firm, particularly as regards its solvency and financial soundness, lies with the competent authority of the firm's home Member State. To also achieve effective supervision of investment firms in other Member States where they provide services or have a branch, close cooperation and exchange of information with the competent authorities in these Member States should be ensured. 1 March 2024. 80 No. 232.

(14) The competent authorities in host Member States should be able, in individual cases, to carry out on-the-spot checks and investigate the activities carried out by branches of investment firms on their territory, and require information from said branches regarding their activities for information and supervisory purposes and in particular to ensure stability in the financial system. Supervisory measures for such branches should, however, remain the responsibility of the home Member State. (15) To protect commercially sensitive information, the competent authorities should be subject to rules on professional secrecy when carrying out their supervisory tasks and exchanging confidential information. (16) With a view to strengthening the supervision of investment firms and the protection of their clients, auditors should carry out their verification impartially and immediately notify the competent authorities of matters that could have serious consequences for an investment firm's financial situation or for its administrative and accounting organisation. (17) In connection with this Directive, personal data should be processed in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council 9) and Regulation (EU) 2018/1725 of the European Parliament and of the Council 10). In cases where this Directive allows for the exchange of personal data with third countries, the relevant provisions in Chapter V of Regulation (EU) 2016/679 and Chapter V of Regulation (EU) 2018/1725 should in particular apply. (18) To ensure compliance with the obligations laid down in this Directive and Regulation (EU) 2019/2033 of the European Parliament and of the Council 11), Member States should introduce administrative sanctions and other administrative measures that are effective, proportionate to the infringement and have a dissuasive effect. To ensure that administrative sanctions have a dissuasive effect, they should be published, except in certain well-defined cases. Customers and investors should have access to information on administrative sanctions and other administrative measures imposed on investment firms, to enable them to make informed decisions about their investment opportunities. (19) To uncover infringements of national provisions transposing this Directive and infringements of Regulation (EU) 2019/2033, Member States should have the necessary investigative powers and establish effective and rapid mechanisms for reporting potential and actual infringements. (20) Investment firms that are not considered small and non-interconnected should have accessible internal capital, which, in relation to the specific risks they are or may be exposed to, is of appropriate size and quality and is appropriately distributed. The competent authorities should ensure that investment firms have strategies and processes that are sufficient for them to assess and maintain adequate internal capital. The competent authorities should also be able to
require that small and non-interconnected investment firms apply similar requirements, if relevant. (21) Supervisory review and evaluation powers should continue to be an important regulatory tool that enables the competent authorities to assess qualitative elements, including internal governance and control and risk management processes and procedures, and to set additional requirements where necessary, including in particular own funds and liquidity requirements, in particular for investment firms that are not considered small and non-interconnected, and where the competent authority also considers it justified and appropriate for small and non-interconnected investment firms. (22) The principle of equal pay for male and female workers for equal work or work of equal value is enshrined in Article 157 of the Treaty on the Functioning of the European Union (TFEU). This principle should be applied consistently by investment firms. To adapt remuneration to the risk profile of investment firms and ensure a level playing field, investment firms should be subject to clear principles regarding governance arrangements and remuneration rules that are gender-neutral and 1 March 2024. 81 No. 232.

take into account the differences between credit institutions and investment firms. However, the aforementioned rules should not apply to small and non-interconnected investment firms, as the provisions on remuneration and corporate governance in Directive 2014/65/EU are sufficiently comprehensive for these types of investment firms.

(23) Furthermore, the Commission’s report of 28 July 2016 on the assessment of remuneration rules under Directive 2013/36/EU and Regulation (EU) No 575/2013 showed that the requirements for deferral and payment in instruments referred to in Directive 2013/36/EU are not appropriate for small and non-complex investment firms or for staff with variable remuneration on a limited scale. Clear, consistent and harmonised criteria for designating investment firms and individuals exempt from these requirements are necessary to ensure supervisory convergence and a level playing field. Given the important role of high earners in steering the business and long-term results of investment firms, effective supervision of remuneration practices and trends regarding high earners should be ensured. Competent authorities should therefore be able to monitor the remuneration of high earners.

(24) It is also appropriate to give investment firms some flexibility regarding the manner in which investment firms use non-liquid instruments to pay variable remuneration, provided that such instruments are effective in achieving the objective of aligning staff interests with the interests of various stakeholders such as shareholders and creditors and contribute to aligning variable remuneration with the investment firm’s risk profile.

(25) Investment firms’ income in the form of fees, commissions and other income associated with the provision of various investment services is highly volatile. Limiting the variable component of remuneration to a share of the fixed component of remuneration would affect the investment firm’s ability to reduce remuneration in periods of reduced income and could lead to an increase in the investment firm’s fixed cost base with resulting risks to the investment firm’s ability to withstand periods of economic downturn or falling income. To avoid these risks, non-systemic investment firms should not be subject to a single maximum ratio between the variable and fixed components of remuneration. Such investment firms should instead set their own appropriate ratios. However, this Directive should not preclude Member States from introducing implementing measures in national legislation intended to subject investment firms to stricter requirements regarding the maximum ratio between the variable and fixed components of remuneration. This Directive should also not prevent Member States from imposing such a maximum ratio on all or specific types of investment firms.

(26) This Directive should not prevent Member States from taking a stricter approach regarding remuneration when investment firms receive extraordinary public financial support.

(27) Different governance structures are used in the various Member States. In most cases, a one-tier or two-tier governance structure is used. The definitions set out in this Directive aim to cover all existing structures without expressing a preference for any of them. The definitions are purely functional and aim to set rules with a view to a specific result, regardless of which national company law applies to an institution in the individual Member States. The definitions should therefore not interfere with the general allocation of competences in accordance with national company law.

(28) Governing bodies should be understood as bodies that have a management function and a supervisory function. The powers and structure of governing bodies vary from Member State to Member State. In Member States where governing bodies have a one-tier structure, a single governing body usually performs management and supervisory tasks. In Member States with a two-tier system, the supervisory function is performed by a separate supervisory body, which has no management functions, and the management function is performed by a separate management unit, which is responsible for and answers for the company’s daily management. In accordance with this, different units within the governing body are assigned separate tasks.

(29) In response to the growing demands from citizens for tax transparency and to promote the corporate social responsibility of investment firms, it is appropriate to require that investment firms, unless they are considered small and non-interconnected, disclose certain information annually, including information on profit, tax paid and any public subsidies received.

(30) The supervisory consolidation method required by Regulation (EU) 2019/2033 should, for groups consisting exclusively of investment firms, be accompanied by a group capital test for simpler group structures to take into account risks relating to groups consisting exclusively of investment firms. However, the decision of the group supervisor should in both cases be based on the same principles applicable in the case of supervision at consolidated level under Directive 2013/36/EU. To ensure proper cooperation, the central elements of coordination measures and in particular information requirements in emergencies or cooperation and coordination arrangements should correspond to the central coordination elements used in connection with the common regulatory framework for credit institutions.

(31) The Commission should be able to submit recommendations to the Council regarding negotiations on agreements between the Union and third countries on the practical exercise of supervision of compliance with the group capital test for investment firms whose parent companies are established in a third country, and for investment firms operating in a third country whose parent companies are established in the Union. Furthermore, Member States and the EBA should also be able to conclude cooperation agreements with third countries on the performance of their supervisory tasks.

(32) To guarantee legal certainty and avoid overlaps between the current supervisory framework, which applies to both credit institutions and investment firms, and this Directive, Regulation (EU) No 575/2013 and Directive 2013/36/EU should be amended to exclude investment firms from their scope of application. Investment firms that are part of a banking group should, however, continue to be subject to those provisions of Regulation (EU) No 575/2013 and Directive 2013/36/EU that are relevant for the banking group, for example the provisions on consolidation rules set out in Articles 11 to 24 of Regulation (EU) No 575/2013, and the provisions on intermediate parent undertaking in the Union as referred to in Article 21b of Directive 2013/36/EU.

(33) It is necessary to clarify which steps companies must take to verify whether they fall under the definition of a credit institution, pursuant to Article 4(1)(b) of Regulation (EU) No 575/2013, and therefore must obtain authorisation as a credit institution. Since certain investment firms already carry out the activities listed in Section A, points 3) and 6), of Annex I to Directive 2014/65/EU, it is also necessary to ensure clarity regarding continued authorisation for these activities. It is particularly important that competent authorities ensure that the transition from the current framework to the new one provides sufficient regulatory certainty for investment firms.

(34) To ensure effective supervision, it is important that companies meeting the conditions in Article 4(1)(b) of Regulation (EU) No 575/2013 apply for authorisation as a credit institution. Competent authorities should therefore have the possibility to impose sanctions on companies that do not apply for such authorisation.

(35) The amendment of the definition of ‘credit institution’ in Regulation (EU) No 575/2013 by Regulation (EU) 2019/2033 from the latter’s entry into force may include investment firms that are already operating on the basis of an authorisation issued in accordance with Directive 2014/65/EU. Those companies should be allowed to continue operating on the basis of their authorisation as investment firms until authorisation as a credit institution is granted. These investment firms should submit an application for authorisation as a credit institution no later than when the average of their total monthly assets equals or exceeds one of the thresholds referred to in Article 4(1)(b) of Regulation (EU) No 575/2013 over a period of 12 consecutive months. If investment firms meet one of the thresholds referred to in Article 4(1)(b) of Regulation (EU) No 575/2013 on the date of entry into force of this Directive, the average of their total monthly assets should be calculated taking into account the 12 consecutive months preceding that date. These investment firms should apply for authorisation as a credit institution within one year and one day from the entry into force of this Directive.

(36) The amendment of the definition of ‘credit institution’ in Regulation (EU) No 575/2013 by Regulation (EU) 2019/2033 may also affect companies that have already applied for authorisation as investment firms under Directive 2014/65/EU, and whose application is still pending. Such applications should be transferred to the competent authorities under Directive 2013/36/EU and processed in accordance with the authorisation provisions of that Directive, if the companies’ expected total assets equal or exceed one of the thresholds in Article 4(1)(b) of Regulation (EU) No 575/2013.

(37) Companies referred to in Article 4(1)(b) of Regulation (EU) No 575/2013 should also be subject to all requirements for access to the activity of a credit institution in Section III of Directive 2013/36/EU, including the provisions on withdrawal of authorisation in accordance with Article 18 of that Directive. However, Article 18 of that Directive should be amended to ensure that competent authorities also have the possibility to withdraw the authorisation granted to a credit institution when the credit institution exclusively uses its authorisation to carry out the activities referred to in Article 4(1)(b) of Regulation (EU) No 575/2013 and has average total assets below the thresholds set in that point for a period of five consecutive years.

(38) Under Article 39 of Directive 2014/65/EU, third-country companies providing financial services in the Union are subject to national schemes that may require the establishment of a branch in a Member State. To facilitate the regular monitoring and assessment of the activities carried out by third-country companies through branches in the Union, competent authorities should be informed of the size and scope of the services and activities provided and carried out through branches in their area.

(39) Specific cross-references in Directive 2009/65/EC 12), Directive 2011/61/EU 13) and Directive 2014/59/EU 14) of the European Parliament and of the Council to provisions in Regulation (EU) No 575/2013 and Directive 2013/36/EU, which no longer apply to investment firms from the date of application of this Directive and of Regulation (EU) 2019/2033, should be read as references to the corresponding provisions in this Directive and in Regulation (EU) 2019/2033.

(40) The EBA, in cooperation with ESMA, has drawn up a report based on a thorough background analysis, data collection and consultations on a tailored supervisory scheme for all non-systemic investment firms, which serves as the basis for the revised supervisory framework for investment firms.

(41) To ensure a harmonised application of this Directive, the EBA should draw up regulatory technical standards further clarifying the criteria for allowing certain investment firms to be subject to Regulation (EU) No 575/2013, clarifying which information competent authorities in home and host countries should exchange in connection with supervision, setting out how investment firms should assess the scope of their activities for internal governance requirements, and in particular assessing whether they constitute small and non-interconnected investment firms. Regulatory technical standards should also clarify the categories of employees whose work has a material impact on the company’s risk profile for the purposes of remuneration provisions, and which hybrid core capital instruments and supplementary capital instruments are considered variable remuneration. Finally, regulatory technical standards should clarify the elements for the assessment of specific liquidity risks, the application of additional capital buffer requirements by competent authorities, and the functioning of supervisory colleges. The Commission should supplement this Directive by adopting the regulatory technical standards developed by the EBA by delegated acts in accordance with Article 290 of the TFEU and in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010. The Commission and the EBA should ensure that these standards can be used by all affected investment firms in a manner that is reasonably proportionate to the nature, scale and complexity of the relevant investment firms and their business.

(42) The Commission should also be empowered to adopt implementing technical standards developed by the EBA for the exchange of information between competent authorities and disclosure requirements for competent authorities, and implementing technical standards developed by the EBA by implementing acts in accordance with Article 291 of the TFEU and in accordance with Article 15 of Regulation (EU) No 1093/2010 and Article 15 of Regulation (EU) No 1095/2010.

(43) To ensure uniform application of this Directive and to take into account developments in financial markets, the power to adopt acts should be delegated to the Commission in accordance with Article 290 of the TFEU, to supplement this Directive by clarifying the definitions in this Directive, investment firms’ assessments of internal capital and risk, and the supervisory control and assessment powers of competent authorities. It is particularly important that the Commission conducts relevant consultations during its preparatory work, including at expert level, and that these consultations are conducted in accordance with the principles of the Interinstitutional Agreement of 13 April 2016 on Better Law-Making 15). To ensure equal participation in the preparation of delegated acts, the European Parliament and the Council should in particular receive all documents at the same time as experts of the Member States, and their experts should have systematic access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(44) The objective of this Directive, namely to establish an effective and proportionate supervisory framework to ensure that investment firms authorised to operate in the Union can function on a sound financial basis and be managed in an orderly manner, including in the best interests of their customers, cannot be sufficiently achieved by the Member States but can rather, by reason of its scale and effects, be better achieved at Union level; the Union may therefore adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary to achieve this objective.

(45) In accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents 16), Member States have undertaken to accompany, in justified cases, the notification of transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. In connection with this Directive, the legislator considers that the transmission of such documents to be justified.

HAS ADOPTED THIS DIRECTIVE:

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SECTION I
SUBJECT MATTER, SCOPE AND DEFINITIONS

Article 1
Subject matter
This Directive lays down rules regarding:
a) start-up capital of investment firms; b) the supervisory powers and tools of competent authorities for the exercise of supervision over investment firms; c) the supervision by competent authorities of investment firms in a manner compatible with the rules laid down in Regulation (EU) 2019/2033; d) disclosure requirements for competent authorities in the field of regulation and supervision of investment firms.

Article 2
Scope

This Directive shall apply to investment firms authorised and supervised under Directive 2014/65/EU.
By way of derogation from paragraph 1, Sections IV and V of this Directive shall not apply to investment firms referred to in Article 1(2) and (5) of Regulation (EU) 2019/2033, which are subject to supervision regarding compliance with the supervisory requirements of Sections VII and VIII of Directive 2013/36/EU in accordance with Article 1(2), second subparagraph, of Regulation (EU) 2019/2033.

Article 3
Definitions

For the purposes of this Directive, the following definitions apply:

‘ancillary service business’: a business whose main activity consists in the ownership and management of real estate, the management of data processing services or a similar activity that has an ancillary character in relation to the main activity of one or more investment firms;
‘authorisation’: the grant of authorisation to an investment firm in accordance with Article 5 of Directive 2014/65/EU;
‘branch’: a branch as defined in Article 4(1)(30) of Directive 2014/65/EU;
‘close links’: close links as defined in Article 4(1)(35) of Directive 2014/65/EU;
‘competent authority’: a public authority or a public body in a Member State that is officially recognised and vested with powers by national law to supervise investment firms in accordance with this Directive as part of the applicable supervisory scheme in that Member State;
‘commodity and emission allowance trader’: a commodity and emission allowance trader as defined in Article 4(1)(150) of Regulation (EU) No 575/2013;
‘control’: the relationship between a parent undertaking and a subsidiary undertaking as described in Article 22 of Directive 2013/34/EU of the European Parliament and of the Council 17) or in the accounting standards to which investment firms are subject under Regulation (EC) No 1606/2002 of the European Parliament and of the Council 18), or a similar relationship between a natural or legal person and an undertaking;
‘compliance with the group capital test’: a parent company in an investment firm group’s compliance with the requirements of Article 8 of Regulation (EU) 2019/2033.

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"credit institution": a credit institution as defined in Article 4(1)(1) of Regulation (EU) No 575/2013
"derivatives": derivatives as defined in Article 2(1)(29) of Regulation (EU) No 600/2014 of the European Parliament and of the Council 19)
"financing undertaking": a financing undertaking as defined in Article 4(1)(14) of Regulation (EU) 2019/2033
"gender-neutral remuneration policy": gender-neutral remuneration policy as defined in Article 3(1)(65) of Directive 2013/36/EU as amended by Directive (EU) 2019/878 of the European Parliament and of the Council 20)
"group": a group as defined in Article 2(11) of Directive 2013/34/EU
"consolidated situation": a consolidated situation as defined in Article 4(1)(11) of Regulation (EU) 2019/2033
"group supervisor": a competent authority responsible for supervising whether parent investment firms in the Union and investment firms controlled by parent investment holding companies in the Union or mixed financial holding companies in the Union comply with the group capital test
"home country": a home country as defined in Article 4(1)(55)(a) of Directive 2014/65/EU
"host country": a host country as defined in Article 4(1)(56) of Directive 2014/65/EU
(18) "initial capital": the capital required for authorization as an investment firm, the amount and type of which are specified in Articles 9 and 11
"investment firm": an investment firm as defined in Article 4(1)(1) of Directive 2014/65/EU
"investment firm group": an investment firm group as defined in Article 4(1)(25) of Regulation (EU) 2019/2033
"investment holding company": an investment holding company as defined in Article 4(1)(23) of Regulation (EU) 2019/2033
"investment services and activities": investment services and activities as defined in Article 4(1)(2) of Directive 2014/65/EU
"administrative organ": an administrative organ as defined in Article 4(1)(36) of Directive 2014/65/EU
"administrative organ in its supervisory function": administrative organ acting in its capacity to control and monitor management decision-making
"mixed financial holding company": a mixed financial holding company as defined in Article 2(15) of Directive 2002/87/EC of the European Parliament and of the Council 21)
"mixed holding company": a parent undertaking, other than a financial holding company, an investment holding company, a credit institution, an investment firm or a mixed financial holding company referred to in Directive 2002/87/EC, whose subsidiaries include at least one investment firm
"senior management": senior management as defined in Article 4(1)(37) of Directive 2014/65/EU
"parent undertaking": a parent undertaking as defined in Article 4(1)(32) of Directive 2014/65/EU
"subsidiary": a subsidiary as defined in Article 4(1)(33) of Directive 2014/65/EU
"systemic risk": systemic risk as defined in Article 3(1)(10) of Directive 2013/36/EU
"parent investment firm in the Union": a parent investment firm in the Union as defined in Article 4(1)(56) of Regulation (EU) 2019/2033
"parent investment holding company in the Union": a parent investment holding company in the Union as defined in Article 4(1)(57) of Regulation (EU) 2019/2033
"mixed financial parent holding company in the Union": a mixed financial parent holding company in the Union as defined in Article 4(1)(58) of Regulation (EU) 2019/2033.

The Commission is empowered to adopt delegated acts in accordance with Article 58 to supplement this Directive by clarifying the definitions set out in paragraph 1 for the purpose of:
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a) ensuring uniform application of this Directive; b) taking into account developments in financial markets when applying this Directive.

SECTION II
COMPETENT AUTHORITIES
Article 4
Designation of competent authorities and their powers

Member States shall designate one or more competent authorities to perform the functions and tasks referred to in this Directive and Regulation (EU) 2019/2033. Member States shall notify the Commission, EBA and ESMA of such designation, and if there is more than one competent authority, of the respective functions and tasks of each competent authority.
Member States shall ensure that the competent authorities supervise the activities of investment firms and, where relevant, investment holding companies and mixed financial holding companies in order to assess whether they meet the requirements of this Directive and Regulation (EU) 2019/2033.
Member States shall ensure that the competent authorities have all the necessary powers, including the power to carry out on-the-spot checks in accordance with Article 14, to obtain the information necessary to assess whether investment firms and, where relevant, investment holding companies and mixed financial holding companies meet the requirements of this Directive and Regulation (EU) 2019/2033, and to investigate any failure to meet those requirements.
Member States shall ensure that the competent authorities have the expertise, resources, operational capacity, powers and independence required to perform the functions regarding supervision, investigations and sanctions provided for in this Directive.
Member States shall require investment firms to provide their competent authorities with all information necessary to assess whether the investment firms comply with national provisions transposing this Directive and Regulation (EU) 2019/2033. Investment firms' internal control mechanisms and administrative and accounting procedures shall enable the competent authorities to verify at any time whether those provisions are complied with.
Member States shall ensure that investment firms record all their transactions and document the systems and processes covered by this Directive and Regulation (EU) 2019/2033 in such a way that the competent authorities can at any time assess whether the firms comply with the national provisions transposing this Directive and Regulation (EU) 2019/2033.

Article 5
Discretionary powers of competent authorities to impose certain requirements of Regulation (EU) No 575/2013 on certain investment firms

Competent authorities may decide to apply the requirements of Regulation (EU) No 575/2013 pursuant to Article 1(2), first subparagraph, point (c), of Regulation (EU) 2019/2033 to an investment firm carrying out any of the activities listed in Section A, points 3) and 6), of Annex I to Directive 2014/65/EU, if the total value of the investment firm's consolidated assets amounts to or exceeds EUR 5 billion calculated as an average over the preceding 12 months, and if one or more of the following criteria are met:
a) The investment firm carries out those activities to such an extent that its failure or financial difficulties could lead to systemic risk.
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b) The investment firm is a clearing member as defined in Article 4(1)(3) of Regulation (EU) 2019/2033. c) The competent authority considers it justified in light of the size, nature, scale and complexity of the activities of the investment firm concerned, taking into account the principle of proportionality and one or more of the following factors:
i) the significance of the investment firm for the economy of the Union or a relevant Member State; ii) the significance of the cross-border activities of the investment firm; iii) the interconnectedness of the investment firm with the financial system.
2. Paragraph 1 shall not apply to commodity or emission allowance traders, collective investment undertakings or insurance undertakings.
3. Where a competent authority decides to apply the requirements of Regulation (EU) No 575/2013 to an investment firm in accordance with paragraph 1, that investment firm shall be subject to supervision regarding compliance with the supervisory requirements in Title VII and VIII of Directive 2013/36/EU.
4. Where a competent authority decides to withdraw a decision taken in accordance with paragraph 1, it shall immediately notify the investment firm.
Any decision taken by a competent authority in accordance with paragraph 1 shall cease to apply if an investment firm no longer reaches the threshold referred to in that paragraph, calculated for a period of 12 consecutive months.
5. Competent authorities shall immediately inform EBA of any decision taken in accordance with paragraphs 1, 3 and 4.
6. EBA shall develop draft regulatory technical standards to further clarify the criteria in paragraph 1(a) and (b) and ensure consistent application thereof. EBA shall submit those draft regulatory technical standards to the Commission by 26 December 2020.
The Commission is empowered to supplement this Directive by adopting the regulatory technical standards referred to in the second subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

Article 6
Cooperation within a Member State i) Competent authorities shall cooperate closely with public authorities or bodies responsible for the supervision of credit institutions and financing undertakings in their Member State. Member States shall require those competent authorities and public authorities or bodies to immediately exchange all information that is crucial or relevant for the performance of their functions and tasks. ii) Competent authorities that are different from the authorities designated in accordance with Article 67 of Directive 2014/65/EU shall establish a mechanism for cooperation with those authorities and for the exchange of all information relevant for the performance of their respective functions and tasks.

Article 7
Cooperation within the European System of Financial Supervision

In performing their tasks, competent authorities shall take into account the convergence of supervisory tools and supervisory practices in the application of the legal provisions adopted pursuant to this Directive and Regulation (EU) 2019/2033.
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Member States shall ensure that:
a) the competent authorities, as parties to the ESFS, cooperate in trust and full mutual respect, particularly when ensuring the exchange of relevant, reliable and comprehensive information among themselves and with the other parties to the ESFS; b) the competent authorities participate in the activities of EBA and, where relevant, in the supervisory colleges referred to in Article 48 of this Directive and in Article 116 of Directive 2013/36/EU; c) the competent authorities make every effort to ensure compliance with guidelines and recommendations issued by EBA in accordance with Article 16 of Regulation (EU) No 1093/2010, and respond to warnings and recommendations issued by the European Systemic Risk Board (ESRB) in accordance with Article 16 of Regulation (EU) No 1092/2010 of the European Parliament and of the Council 22); d) the competent authorities cooperate closely with the ESRB; e) the tasks and powers assigned to the competent authorities do not prevent them from performing their tasks as members of EBA or of the ESRB or under this Directive and Regulation (EU) 2019/2033.

Article 8
EU dimension of supervision
The competent authorities in each Member State shall duly consider the potential impact that their decisions may have on the stability of the financial system in other affected Member States and in the Union as a whole, particularly in emergencies, based on the information available at the time.

SECTION III
INITIAL CAPITAL
Article 9
Initial capital

Investment firms shall, in accordance with Article 15 of Directive 2014/65/EU, have an initial capital of EUR 750 000 in order to be granted authorization to provide any investment service or carry out any investment activity listed in Section A, points 3) and 6), of Annex I to Directive 2014/65/EU.
Investment firms shall, in accordance with Article 15 of Directive 2014/65/EU, have an initial capital of EUR 75 000 in order to be granted authorization to provide any investment service or carry out any investment activity listed in Section A, points 1), 2), 4), 5) and 7), of Annex I to Directive 2014/65/EU, without having authorization to hold either client money or client instruments.
Other investment firms than those referred to in paragraphs 1, 2 and 4 of this Article shall, in accordance with Article 15 of Directive 2014/65/EU, have an initial capital of EUR 150 000.
Investment firms authorized to provide the investment service or carry out the investment activities listed in Section A, point 9), of Annex I to Directive 2014/65/EU shall have an initial capital of EUR 750 000 if those investment firms deal or are authorized to deal on own account.
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Article 10
References to initial capital in Directive 2013/36/EU References in other EU legal acts to the level of initial capital laid down in Directive 2013/36/EU shall be read from 26 June 2021 as references to the level of initial capital laid down in Article 9 of this Directive in the following manner:
a) References to the initial capital of investment firms laid down in Article 28 of Directive 2013/36/EU shall be read as references to Article 9(1) of this Directive. b) References to the initial capital of investment firms in Articles 29 and 31 of Directive 2013/36/EU shall be read as references to Article 9(2), (3) or (4) of this Directive, depending on the types of investment services and activities provided or carried out by the investment firms. c) References to initial capital laid down in Article 30 of Directive 2013/36/EU shall be read as references to Article 9(1) of this Directive.

Article 11
Composition of initial capital
The initial capital of investment firms shall be composed in accordance with Article 9 of Regulation (EU) 2019/2033.

SECTION IV
SUPERVISION
CHAPTER 1
Principles of supervision
Division 1
Powers and tasks of home and host countries
Article 12
Powers of the competent authorities of the home and host countries Responsibility for the supervision of investment firms lies with the competent authorities of the home country; this does not affect the provisions of this Directive imposing responsibility on the competent authorities of the host country.

Article 13
Cooperation between competent authorities in different Member States

The competent authorities in the different Member States shall cooperate closely in order to perform their tasks under this Directive and Regulation (EU) 2019/2033, in particular by exchanging information on investment firms without delay, including:
a) information on the management and ownership of investment firms; b) information on the compliance of investment firms with capital adequacy requirements; c) information on the compliance of investment firms with concentration risk requirements and liquidity requirements; 1 March 2024. 91 No. 232.

d) information on the administrative and accounting procedures and internal control mechanisms of investment firms; e) information on other relevant factors that may affect the risk posed by investment firms.
2. The competent authorities of the home country shall immediately inform the competent authorities of the host country of information and results concerning any problems and risks posed by an investment firm with regard to customer protection or the stability of the financial system in the host country, which they have identified in connection with the supervision of the investment firm's activities.
3. The competent authorities of the home country shall respond to information communicated by the competent authorities of the host country by taking all measures necessary to prevent or remedy any problems and risks referred to in paragraph 2. The competent authorities of the home country shall, upon request, report in detail to the competent authorities of the host country on how they have taken into account the information and results communicated by the competent authorities of the host country.
4. If the competent authorities of the host country, after receiving the information and results referred to in paragraph 2, are of the opinion that the competent authorities of the home country have not taken the necessary measures referred to in paragraph 3, the competent authorities of the host country may, after notifying the competent authorities of the home country and EBA and ESMA, take relevant measures to protect customers to whom services are provided or the stability of the financial system.
Competent authorities may refer cases to EBA where a request for cooperation, in particular a request to exchange information, has been rejected or not responded to within a reasonable time limit. Without prejudice to Article 258 TFEU, EBA may act in such cases within the framework of the powers conferred on it under Article 19 of Regulation (EU) No 1093/2010. EBA may also assist the competent authorities on its own initiative in accordance with the second subparagraph of Article 19(1) of that Regulation to reach an agreement on the exchange of information under this Article.
5. If the competent authorities of the home country disagree with the measures taken by the competent authorities of the host country, they may refer the matter to EBA, which shall act in accordance with the procedure in Article 19 of Regulation (EU) No 1093/2010. When EBA acts in accordance with that Article, it shall take a decision within one month.
6. For the purpose of assessing the condition in Article 23(1), first subparagraph, point (c), of Regulation (EU) 2019/2033, the competent authority of the home country of an investment firm may request the competent authority of the home country of a clearing member for information regarding the margin model and parameters used in calculating the margin requirements of that investment firm.
7. EBA shall develop draft regulatory technical standards specifying the requirements regarding the type and nature of information referred to in paragraphs 1 and 2.
The Commission is empowered to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.
8. EBA shall develop draft implementing technical standards to establish standard forms, templates and procedures for use in relation to the requirements concerning the exchange of information in order to facilitate the supervision of investment firms.
The Commission is empowered to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1093/2010.
9. EBA shall submit to the Commission by 26 June 2021 the draft technical standards referred to in paragraphs 7 and 8.
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Article 14
On-the-spot checks and investigation visits at branches established in another Member State

If an investment firm authorized in another Member State carries on business through a branch, the host country shall ensure that the competent authorities of the home country, after notifying the competent authorities of the host country, carry out on-the-spot checks of the information referred to in Article 13(1) and investigate such branches themselves or through intermediaries authorized for that purpose.
The competent authorities of the host country shall have the power, for supervisory purposes and if they deem it relevant for the stability of the financial system in the host country, to carry out on-the-spot checks and investigations of the activities carried out by branches of investment firms on their territory and to require information from a branch regarding its activities.
Prior to such checks and investigations, the competent authorities of the host country shall immediately consult the competent authorities of the home country.
As soon as possible after such checks and investigations, the competent authorities of the host country shall communicate to the competent authorities of the home country the information obtained and investigation results relevant to the risk assessment of the investment firm concerned.

Division 2
Confidentiality and reporting obligations
Article 15
Confidentiality and exchange of confidential information

Member States shall ensure that the competent authorities and all persons working for or having worked for those competent authorities, including the persons referred to in Article 76(1) of Directive 2014/65/EU, are subject to professional secrecy with regard to this Directive and Regulation (EU) 2019/2033.
Confidential information received by such competent authorities and persons in the course of their duties may only be disclosed in summary or aggregate form, provided that individual investment firms or persons cannot be identified, unless in cases covered by criminal law.
If an investment firm has been declared bankrupt or is subject to compulsory liquidation, confidential information not relating to third parties may be disclosed in the course of civil or commercial proceedings if such disclosure is necessary to conduct those proceedings.
Competent authorities shall use only the confidential information collected, exchanged or transmitted in accordance with this Directive and Regulation (EU) 2019/2033 for the purpose of performing their tasks, in particular for the purpose of:
a) monitoring compliance with the supervisory requirements of this Directive and Regulation (EU) 2019/2033; b) imposing sanctions; c) referring decisions of competent authorities to a higher administrative authority; d) referring matters to the courts under Article 23.
Other natural and legal persons and other bodies than the competent authorities receiving confidential information in accordance with this Directive and Regulation (EU) 2019/2033 may only use
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the aforementioned information for the purposes explicitly set by the competent authority, or in accordance with national law.

The competent authorities may exchange confidential information for the purposes of paragraph 2, may explicitly state how such information is to be processed, and may explicitly restrict further transmission of the information.
The obligation referred to in paragraph 1 shall not prevent the competent authorities from transmitting confidential information to the Commission where such information is necessary for the Commission to exercise its powers.
The competent authorities may provide the EBA, ESMA, ESRB, the central banks of the Member States, the European System of Central Banks (ESCB) and the European Central Bank in their capacity as monetary policy authorities and, where relevant, public authorities responsible for the oversight of payment and settlement systems, with confidential information, if such information is necessary for them to carry out their tasks.

Article 16
Cooperation agreements with third countries on the exchange of information

The competent authorities as well as the EBA and ESMA may, in accordance with Article 33 of Regulation (EU) No 1093/2010 or Article 33 of Regulation (EU) No 1095/2010, as appropriate, in order to carry out their supervisory tasks under this Directive or Regulation (EU) 2019/2033 and to exchange information, enter into cooperation agreements with the supervisory authorities of third countries and with authorities or bodies in third countries responsible for the following tasks, provided that the information disclosed is subject to confidentiality obligations at least equivalent to those set out in Article 15 of this Directive:

a) supervision of financing institutions and financial markets, including supervision of financial entities authorised to operate as central counterparties, where central counterparties are recognised in accordance with Article 25 of Regulation (EU) No 648/2012 of the European Parliament and of the Council 23)

b) resolution and insolvency proceedings of investment firms and similar procedures

c) supervision of bodies involved in the resolution and insolvency proceedings of investment firms and similar procedures

d) statutory audit of financing institutions or institutions managing guarantee schemes

e) supervision of persons responsible for carrying out the statutory audit of the accounts of financing institutions

f) supervision of persons active on emission allowance markets, in order to ensure a consolidated overview of financial markets and spot markets

g) supervision of persons active on agricultural commodity derivatives markets, in order to ensure a consolidated overview of financial markets and spot markets.

Article 17
Duties of persons responsible for the audit of annual accounts and consolidated accounts

Member States shall provide that a person authorised in accordance with Directive 2006/43/EC of the European Parliament and of the Council 24), who performs in an investment firm the tasks described in Article 73 of Directive 2009/65/EC or Article 34 of Directive 2013/34/EU, or any other statutory task, shall have the duty to report immediately to the competent authorities on any matter or decision concerning that investment firm or concerning an undertaking having close links with that investment firm, which

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a) constitutes a significant breach of the laws or administrative provisions adopted in accordance with this Directive

b) may affect the continued functioning of the investment firm or

c) may lead to a refusal of audit opinion or the issuance of a qualification.

Section 3
Sanctions, investigation powers and right of appeal

Article 18
Administrative sanctions and other administrative measures

Without prejudice to the supervisory powers of the competent authorities referred to in Chapter 2, Section 4 of Title IV of this Directive, including investigation powers and powers to impose remedial measures, or to the right of Member States to introduce and impose criminal sanctions, Member States shall lay down rules on administrative sanctions and other administrative measures and ensure that their competent authorities have the power to impose such sanctions and measures for infringements of national provisions transposing this Directive and Regulation (EU) 2019/2033, including where an investment firm:

a) does not have internal governance arrangements as referred to in Article 26

b) fails to report information to the competent authorities on compliance with the capital requirements set out in Article 11 of Regulation (EU) 2019/2033, or provides incomplete or inaccurate information, in breach of Article 54(1)(b) of Regulation (EU) 2019/2033

c) fails to report information to the competent authorities on concentration risk, or provides incomplete or inaccurate information, in breach of Article 54(1)(e) of Regulation (EU) 2019/2033

d) is exposed to a concentration risk exceeding the thresholds set out in Article 37 of Regulation (EU) 2019/2033, subject to Articles 38 and 39 of that Regulation

e) repeatedly or consistently fails to hold liquid assets, in breach of Article 43 of Regulation (EU) 2019/2033, subject to Article 44 of that Regulation

f) fails to provide information or provides incomplete or inaccurate information, in breach of Part Six of Regulation (EU) 2019/2033

g) makes payments to holders of instruments that form part of the investment firm’s own funds, in cases where Article 28, 52 or 63 of Regulation (EU) No 575/2013 prohibits such payments to holders of instruments that form part of own funds

h) is found to be responsible for a serious infringement of national provisions adopted in accordance with Directive (EU) 2015/849 of the European Parliament and of the Council 25)

i) allows one or more persons who do not comply with Article 91 of Directive 2013/36/EU to become or remain members of the administrative, management or supervisory bodies.

If Member States do not lay down rules on administrative sanctions for infringements which are subject to national criminal law, they shall notify the Commission of the relevant criminal law provisions.

The administrative sanctions and other administrative measures shall be effective, proportionate and dissuasive.

The administrative sanctions and other administrative measures referred to in the first subparagraph of paragraph 1 shall include:
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a) a public statement indicating the identity of the responsible natural or legal person or the responsible investment firm, investment holding company or mixed financial holding company and the nature of the infringement

b) an order requiring the responsible natural or legal person to bring the conduct to an end and to refrain from repeating that conduct

c) a temporary ban on the exercise of functions in investment firms imposed on members of the administrative, management or supervisory bodies of the investment firm in question or on any other natural person who is held responsible

d) for legal persons, administrative pecuniary sanctions of up to 10 % of the total annual net turnover of that company in the preceding financial year, including gross income consisting of interest income and similar income, income from shares and other securities with variable or fixed yields, and fees and commission income

e) for legal persons, administrative pecuniary sanctions of up to twice the amount of the profit gained or loss avoided because of the infringement, where that profit or loss can be calculated

f) for natural persons, administrative pecuniary sanctions of up to EUR 5 000 000 or, in Member States where the euro is not the currency, the corresponding value in national currency on 25 December 2019.

Where the company referred to in the first subparagraph, point (d), is a subsidiary, the relevant gross income shall be the gross income shown in the consolidated accounts of the ultimate parent undertaking for the preceding financial year.

Member States shall ensure that the competent authority, in the event of an investment firm’s infringement of national provisions transposing this Directive or of the provisions of Regulation (EU) 2019/2033, may apply administrative sanctions to members of the administrative, management or supervisory bodies and to other natural persons who, under national law, are responsible for the infringement.

Member States shall ensure that, when choosing the type of administrative sanctions or other administrative measures referred to in paragraph 1 and when determining the amount of administrative pecuniary sanctions, the competent authorities take into account all relevant circumstances, including, where appropriate:

a) the gravity and duration of the infringement

b) the degree of responsibility of the natural or legal person responsible for the infringement

c) the financial strength of the natural or legal person responsible for the infringement, including the total turnover of the legal person or the annual income of the natural person

d) the magnitude of the profit gained or loss avoided by the legal persons responsible for the infringement, insofar as it can be determined

e) the losses incurred by third parties as a result of the infringement

f) the level of cooperation with the relevant competent authorities

g) previous infringements by the natural or legal person responsible for the infringement

h) any potential systemic consequences of the infringement.

Article 19
Investigation powers

Member States shall ensure that the competent authorities have all the information-gathering and investigation powers that are necessary to carry out their tasks, including:

a) the power to require the following natural or legal persons to provide information on:

i) investment firms established in the Member State concerned

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ii) investment holding companies established in the Member State concerned

iii) mixed financial holding companies established in the Member State concerned

iv) mixed-activity holding companies established in the Member State concerned

v) persons belonging to the entities referred to in points (i) to (iv)

vi) third parties to whom the entities referred to in points (i) to (iv) have outsourced operational functions or activities

b) the power to conduct all necessary investigations of all the persons referred to in point (a), who are established or present in the Member State concerned, including:

i) the power to require the production of documents from the persons referred to in point (a)

ii) the power to examine the books and records of the persons referred to in point (a) and to take copies of or extracts from those books and records

iii) the power to obtain written or oral statements from the persons referred to in point (a) or from their representatives or staff

iv) the power to interview any other relevant person with a view to collecting information relating to the subject matter of the investigation

c) the power to conduct all necessary investigations of the business premises of the legal persons referred to in point (a) and of any other undertaking involved in the supervision of compliance with the group capital test, where a competent authority is the group supervisor, subject to prior notification of other competent authorities concerned.

Article 20
Publication of administrative sanctions and other administrative measures

Member States shall ensure that the competent authorities publish on their official websites without undue delay all administrative sanctions and other administrative measures imposed in accordance with Article 18 which are not subject to appeal or against which no appeal has been lodged. That publication shall include information on the type and nature of the infringement and the identity of the natural or legal person to whom the sanction is imposed or against whom the measure is taken. The information shall be published only after the person concerned has been informed of the sanctions or measures and only to the extent that such publication is necessary and proportionate.
Where Member States allow the publication of administrative sanctions or other administrative measures imposed in accordance with Article 18 which are subject to appeal, the competent authorities shall also publish on their official websites information on the status and outcome of such appeals.
In the following cases, the competent authorities shall publish the administrative sanctions or other administrative measures imposed in accordance with Article 18 in an anonymised manner:

a) Publication of personal data, where the sanction or measure is imposed on a natural person, would be considered disproportionate.

b) Publication would jeopardise an ongoing criminal investigation or the stability of financial markets.

c) Publication would cause disproportionate damage to the investment firms or natural persons concerned.

The competent authorities shall ensure that information published in accordance with this Article remains on their official websites for at least five years. Personal data may only be kept on the competent authority’s official website if that is permitted in accordance with applicable data protection rules.
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Article 21
Reporting of sanctions to the EBA

The competent authorities shall notify the EBA of administrative sanctions and other administrative measures imposed in accordance with Article 18, of any appeal concerning those sanctions and other administrative measures and of the outcome thereof. The EBA shall maintain exclusively a central database of administrative sanctions and other administrative measures reported to it, for the purpose of exchanging information between competent authorities. Only the competent authorities and ESMA shall have access to the database, which shall be updated regularly and at least once a year.

The EBA shall maintain a website with links to each competent authority’s publication of administrative sanctions and other administrative measures imposed in accordance with Article 18 and indicate how long each Member State publishes administrative sanctions and other administrative measures.

Article 22
Reporting of infringements

Member States shall ensure that the competent authorities put in place effective and reliable mechanisms to enable the prompt reporting of potential or actual infringements of national provisions transposing this Directive and Regulation (EU) 2019/2033 to the competent authorities.

Those mechanisms shall include the following:

a) specific procedures for the receipt, processing and follow-up of such reports, including the establishment of secure communication channels

b) appropriate protection of employees of investment firms who report infringements committed in an investment firm against retaliation, discrimination and other types of unfair treatment from the investment firm

c) protection of personal data, both with regard to persons who report infringements and natural persons who are allegedly responsible for the infringements, in accordance with Regulation (EU) 2016/679

d) clear rules ensuring that a person who reports infringements committed in an investment firm is guaranteed confidentiality in all cases, unless the disclosure of information is required by national law in the context of further investigations or subsequent administrative or judicial proceedings.

Member States shall require investment firms to have appropriate procedures so that their employees can report infringements internally through a specific independent channel. Those procedures may be provided by the social partners, provided that the procedures ensure the same protection as that referred to in paragraph 1, points (b), (c) and (d).

Article 23
Right of appeal

Member States shall ensure that decisions and measures taken pursuant to Regulation (EU) 2019/2033 or pursuant to laws and administrative provisions adopted in accordance with this Directive are subject to the right of appeal.

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CHAPTER 2
Supervisory process

Section 1
Process for the assessment of the adequacy of internal capital and risk

Article 24
Internal capital and liquid assets

Investment firms that do not meet the conditions for classification as small and non-interconnected investment firms set out in Article 12(1) of Regulation (EU) 2019/2033 shall have sound, effective and comprehensive arrangements, strategies and processes for the ongoing assessment and maintenance of an internal capital and liquid assets of a size, type and distribution that they consider sufficient to cover the nature and scale of the risks that they pose to others and that the investment firms themselves are or may become exposed to.
The arrangements, strategies and processes referred to in paragraph 1 shall be appropriate and proportionate to the nature, scale and complexity of the activities of the investment firms concerned. They shall be subject to regular internal control.

The competent authorities may request investment firms that meet the conditions for classification as small and non-interconnected investment firms set out in Article 12(1) of Regulation (EU) 2019/2033 to apply the requirements of this Article to the extent that the competent authorities deem appropriate.

Section 2
Internal governance, transparency, risk treatment and remuneration

Article 25
Scope of this Section

This Section shall not apply if an investment firm determines, on the basis of Article 12(1) of Regulation (EU) 2019/2033, that it meets all the conditions for classification as a small and non-interconnected investment firm set out therein.
If an investment firm that has not met all the conditions in Article 12(1) of Regulation (EU) 2019/2033 subsequently meets those conditions, the application of this Section shall cease after a period of six months from the date on which those conditions are met. This Section shall cease to apply to an investment firm only after that period if the investment firm has continued to meet the conditions set out in Article 12(1) of Regulation (EU) 2019/2033 without interruption during that period and has notified the competent authority thereof.
If an investment firm determines that it no longer meets all the conditions set out in Article 12(1) of Regulation (EU) 2019/2033, it shall notify the competent authority and comply with the provisions of this Section no later than 12 months after the date on which the assessment took place.
Member States shall require investment firms to apply the provisions of Article 32 to remuneration for services rendered or results achieved in the financial year following the financial year in which the assessment referred to in paragraph 3 took place.
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Where this Section applies and Article 8 of Regulation (EU) 2019/2033 applies, Member States shall ensure that this Section applies to investment firms on an individual basis.

Where this Section applies and Article 7 of Regulation (EU) 2019/2033 applies, Member States shall ensure that this Section applies to investment firms on an individual and consolidated basis.

Notwithstanding the third subparagraph, this Section shall not apply to subsidiaries included in a consolidated situation and established in a third country, if the parent undertaking in the Union can demonstrate to the competent authorities that the application of this Section is contrary to the legislation of the third country in which those subsidiaries are established.

Article 26
Internal governance

Member States shall ensure that investment firms have robust governance arrangements, including the following:

a) a clear organisational structure with a well-defined, transparent and consistent allocation of responsibilities

b) effective procedures to identify, manage, monitor and report the risks to which the investment firms are or may become exposed, or the risks that they pose or may pose to others

c) adequate internal control mechanisms, including sound administrative and accounting procedures

d) a remuneration policy and practice that is consistent with and promotes sound and effective risk management.

The remuneration policy and practice referred to in the first subparagraph, point (d), shall be gender-neutral.

When implementing the arrangements referred to in paragraph 1, the criteria referred to in Articles 28 to 33 shall be taken into account.
The arrangements referred to in paragraph 1 shall be appropriate and proportionate to the nature, scale and complexity of the risks associated with the investment firms’ business model and activities.
The EBA shall issue guidelines on the application of the governance arrangements referred to in paragraph 1 in consultation with ESMA.

The EBA shall issue guidelines on gender-neutral remuneration policies for investment firms in accordance with Article 16 of Regulation (EU) No 1093/2010 in consultation with ESMA.

Within two years of the date of publication of those guidelines, the EBA shall, on the basis of the information collected by the competent authorities, issue a report on the application of gender-neutral remuneration policies by investment firms.

Article 27
Country-by-country reporting

Member States shall require investment firms that have a branch or a subsidiary that is a financing institution as defined in Article 4(1)(26) of Regulation (EU) No 575/2013 in another Member State or in a third country other than the Member State or third country in which the authorisation for the investment firm was granted, to publish the following information on an annual basis per Member State and per third country:

a) name, nature of the activities and location of any subsidiaries and branches

b) turnover

c) number of employees on a full-time equivalent basis

d) profit before tax

e) tax on profit

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f) received public subsidies.
2. The information referred to in paragraph 1 of this Article shall be revised in accordance with Directive 2006/43/EC and attached, where possible, as an annex to the annual accounts or, if applicable, the consolidated annual accounts of the investment firm concerned.

Article 28
Role of the management body in risk management

Member States shall ensure that the management body of an investment firm approves and regularly reviews the investment firm's risk appetite strategy and policies for the identification, measurement, management, monitoring and limitation of risks to which the investment firm is or could be exposed, taking into account the macroeconomic environment and the business cycle of the investment firm.
Member States shall ensure that the management body devotes sufficient time to ensuring proper handling of the matters referred to in paragraph 1, and that it allocates sufficient resources to manage all material risks to which the investment firm is exposed.
Member States shall ensure that investment firms establish reporting lines to the management body for all material risks and for all risk management policies and any changes thereto.
Member States shall require that all investment firms that do not meet the criteria set out in Article 32(4)(a) establish a risk committee composed of members of the management body who do not perform a management function in the investment firm concerned.
The members of the risk committee referred to in the first subparagraph shall have appropriate knowledge, professional competence and expertise to fully understand, handle and monitor the investment firm's risk strategy and risk appetite. They shall ensure that the risk committee advises the management body on the investment firm's overall current and future risk appetite and strategy and assists the management body in monitoring the senior management's implementation of that strategy. The management body retains overall responsibility for the investment firm's risk strategies and policies.
Member States shall ensure that the management body in its supervisory function and the risk committee of the management body, if a risk committee has been established, have access to information on the risks to which the investment firm is or could be exposed.

Article 29
Risk treatment

Competent authorities shall ensure that investment firms have robust strategies, policies, processes and systems for the identification, measurement, management and monitoring of:
a) material sources of and impacts from client risks and any material impact on the capital base; b) material sources of and impacts from market risks and any material impact on the capital base; c) material sources of and impacts from the investment firm's own risks, notably those that could absorb the available capital base; d) liquidity risk within relevant time horizons, including same day, to ensure that investment firms maintain sufficient liquid assets, including as regards the handling of material risk sources referred to in points (a), (b) and (c). The strategies, policies, processes and systems shall be proportionate to the complexity, risk profile and scope of activities of investment firms and to the risk tolerance set by the management body, and reflect the significance of investment firms in each Member State where they carry out activities. With regard to point (a) of the first subparagraph and the second subparagraph, competent authorities shall take into account national law concerning the segregation of clients' money. With regard to point (a) of the first subparagraph, investment firms shall consider taking out professional liability insurance as an effective tool in connection with their risk management. With regard to point (c) of the first subparagraph, material risk sources for the investment firm itself include, where relevant, material changes in the book value of assets, including claims against affiliated agents, breakdowns among clients or counterparties, positions in financial instruments, foreign currencies and commodities, and obligations under performance-based pension schemes. Investment firms shall take due account of any material impact on the capital base when such risks are not sufficiently covered by the capital base requirements calculated in accordance with Article 11 of Regulation (EU) 2019/2033.
If investment firms are required to wind down or cease their activities, competent authorities shall require that investment firms, taking into account the viability and sustainability of their business models and strategies, take due account of requirements and necessary resources that are realistic in terms of timeframe and maintenance of the capital base and liquid assets throughout the process of exit from the market.
Notwithstanding Article 25, paragraphs 1(a), (c) and (d) of this Article shall apply to investment firms that meet the conditions for classification as small and non-interconnected investment firms set out in Article 12(1) of Regulation (EU) 2019/2033.
The Commission is empowered to adopt delegated acts in accordance with Article 58 supplementing this Directive to ensure that investment firms' strategies, policies, processes and systems are robust. In this regard, the Commission shall take into account developments in financial markets, notably the emergence of new financial products, developments in accounting standards and developments facilitating convergence in supervisory practices.

Article 30
Remuneration Committee

Member States shall ensure that investment firms comply with the following principles when designing and applying their policy for categories of staff, including senior management, risk-takers, staff involved in control functions and any staff whose total remuneration is at least equal to the lowest remuneration of senior management or risk-takers, whose work has a material impact on the risk profile of the investment firm or on the assets it manages:
a) The remuneration policy is clearly documented and is proportionate to the size, internal organisation and nature of the investment firm and to the scale and complexity of its activities. b) The remuneration policy is gender-neutral. c) The remuneration policy is consistent with and promotes sound and effective risk management. d) The remuneration policy is consistent with the business strategy, objectives and values of the investment firm and takes into account the long-term effects of investment decisions made. e) The remuneration policy includes measures to avoid conflicts of interest, promotes responsible business conduct and encourages risk awareness and prudent risk-taking. f) The management body of the investment firm, in its supervisory function, ensures that the remuneration policy is defined and reviewed at regular intervals and has overall responsibility for overseeing its implementation. g) The implementation of the remuneration policy is subject to central and independent internal control by control functions at least once a year. h) Staff performing control functions work independently of the departments they oversee, have appropriate authority and are remunerated according to the achievement of the objectives linked to their functions, regardless of the results of the business areas they control. i) The remuneration committee referred to in Article 33 or, if no such committee is established, the management body in its supervisory function, directly oversees the remuneration of senior management within risk management and compliance functions. j) The remuneration policy distinguishes, taking into account national provisions on wage setting, clearly between the criteria underlying the determination of:
i) fixed basic salary, which primarily reflects relevant professional experience and organisational responsibility, as part of the employee's job description as part of the terms of employment; ii) variable pay, which reflects sustainable and risk-adjusted results for the employee as well as results beyond the employee's job description. k) The fixed remuneration component constitutes a sufficiently high proportion of total remuneration so that a fully flexible policy for variable remuneration components can be pursued, including the possibility of not paying variable remuneration components.
Member States shall ensure, with regard to point (k) of paragraph 1, that investment firms set appropriate ratios between the fixed and variable components of total remuneration in their remuneration policies, taking into account the business activities of investment firms and associated risks and the influence that the different categories of staff referred to in paragraph 1 have on the company's risk profile.
Member States shall ensure that investment firms establish and apply the principles referred to in paragraph 1 in a manner commensurate with their size and internal organisation and the nature, scale and complexity of their activities.
EBA, in consultation with ESMA, shall develop draft regulatory technical standards to specify appropriate criteria for the identification of categories of staff whose work has a material impact on the risk profile of the investment firm, as referred to in paragraph 1 of this Article. EBA and ESMA shall duly take into account Commission Recommendation 2009/384/EF 26) as well as existing guidelines on remuneration under Directives 2009/65/EC, 2011/61/EU and 2014/65/EU, and aim to minimise deviations from existing provisions.
EBA shall submit those draft regulatory technical standards to the Commission by 26 June 2021.
The Commission is empowered to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

Article 31
Investment firms receiving extraordinary public financial support Member States shall ensure that when an investment firm receives extraordinary public financial support as defined in Article 2(1)(28) of Directive 2014/59/EU:
a) the investment firm does not pay variable remuneration to members of the management body; b) variable remuneration is limited to a portion of net revenues, if variable remuneration paid to staff other than members of the management body is incompatible with maintaining a robust capital base in an investment firm and the timely cessation of extraordinary public financial support to it.

Article 32
Variable remuneration

Member States shall ensure that any variable remuneration awarded and paid by an investment firm to the categories of staff referred to in Article 30(1) meets the following requirements under the same conditions as those laid down in Article 30(3):
a) If the variable remuneration is performance-based, the total variable remuneration shall be based on a combination of an assessment of the individual staff member's and the relevant business unit's results and the investment firm's overall results. b) When assessing the individual staff member's results, both financial and non-financial criteria shall be taken into account. c) The performance assessment referred to in point (a) shall be based on a multi-year period, taking into account the investment firm's business cycle and business risks. d) The variable remuneration shall not affect the investment firm's ability to maintain a robust capital base. e) Guaranteed variable remuneration shall occur only in connection with new staff members and only in the first year of employment, and when the investment firm has a solid capital base. f) Payments arising upon early termination of an employment contract shall reflect the results achieved by the staff member over a period and must not reward poor performance or misconduct. g) Compensation or buy-out packages linked to contracts from previous employment shall be aligned with the long-term interests of the investment firm. h) When measuring results underlying the calculation of pools of variable remuneration, all types of current and future risks as well as capital costs and liquidity required under Regulation (EU) 2019/2033 shall be taken into account. i) The allocation of variable pay components in the investment firm shall take into account all types of current and future risks. j) At least 50 % of the variable remuneration shall consist of the following instruments:
i) shares or equivalent equity interests, depending on the legal structure of the investment firm concerned; ii) share-like instruments or equivalent non-liquid instruments, depending on the legal structure of the investment firm concerned; iii) hybrid core capital instruments or additional tier 1 capital instruments or other instruments that can be fully converted into common equity instruments or written down, and which adequately reflect the credit quality of the investment firm as a going concern; iv) non-liquid instruments that reflect the instruments in the managed portfolios. k) Notwithstanding point (j), competent authorities may, if an investment firm does not issue the instruments specified in that point, approve the use of alternative arrangements that fulfil the same purpose. l) At least 40 % of the variable remuneration shall be deferred for three to five years, as appropriate, depending on the investment firm's business cycle, the nature of the firm's business, the firm's risks and the tasks of the staff member concerned, unless the variable remuneration represents a very large amount, in which case at least 60 % of the variable remuneration shall be deferred. m) Up to 100 % of the variable remuneration shall be reduced if the investment firm's financial results have been modest or negative, including through arrangements relating to deduction or claw-back procedures that are subject to criteria established by investment firms and which relate in particular to situations where the staff member concerned:
i) participated in or was responsible for behaviour resulting in significant losses for the investment firm; ii) is no longer considered suitable and honest. n) Discretionary pension benefits shall be consistent with the investment firm's business strategy, objectives, values and long-term interests.
Member States shall ensure, with regard to paragraph 1, the following:
a) The persons referred to in Article 30(1) shall not use personal hedging strategies or payroll and liability-related insurance to undermine the principles referred to in paragraph 1. b) Variable pay shall not be paid through financial arrangements or methods that make it easier to fail to comply with this Directive or Regulation (EU) 2019/2033.
The instruments referred to in paragraph 1(j) shall, for the purposes of that provision, be subject to an appropriate retention policy designed to align the incentives of the persons with the long-term interests of the investment firm and its creditors and clients. Member States or their competent authorities may impose restrictions on the nature and design of these instruments or prohibit the use of certain instruments for variable remuneration.
The deferral of variable remuneration referred to in paragraph 1(l) shall not be paid out faster than on a pro rata basis.
As regards paragraph 1(n), if a staff member leaves the investment firm before retirement age, the investment firm shall retain the discretionary pension benefits for a period of five years in the form of instruments referred to in point (j). If a staff member reaches retirement age and retires, the discretionary pension benefits shall be paid to the person in the form of instruments referred to in point (j) after a five-year retention period.
Paragraph 1(j) and (l), and paragraph 3, third subparagraph, shall not apply to:
a) investment firms whose average value of on-balance sheet and off-balance sheet assets over the four-year period immediately preceding the financial year in question amounts to EUR 100 million or less; b) persons whose annual variable remuneration does not exceed EUR 50 000 and does not constitute more than one quarter of their total annual remuneration.
Notwithstanding paragraph 4(a), a Member State may raise the threshold mentioned therein, provided that the investment firm meets the following criteria:
a) the investment firm is not one of the three largest investment firms in terms of total asset value in the Member State where it is established; b) the investment firm is not subject to, or is subject to simplified obligations regarding, recovery and resolution planning in accordance with Article 4 of Directive 2014/59/EU; c) the size of the investment firm's on-balance sheet and off-balance sheet trading book activities is EUR 150 million or less; d) the size of the investment firm's on-balance sheet and off-balance sheet derivatives activities is EUR 100 million or less; e) the threshold does not exceed EUR 300 million; and f) it is appropriate to raise the threshold taking into account the nature and scope of the investment firm's activities, its internal organisation and, if relevant, the characteristics of the group to which it belongs.
Notwithstanding paragraph 4(a), a Member State may lower the threshold referred to in that point, provided that it is appropriate to do so taking into account the nature and scope of the investment firm's activities, its internal organisation and, if relevant, the characteristics of the group to which it belongs.
Notwithstanding paragraph 4(b), a Member State may decide that staff entitled to annual variable remuneration below the threshold and share referred to in that point are not covered by the exemption therein due to special national market conditions regarding remuneration practices or as a result of the nature of these staff members' areas of responsibility and job profiles.
EBA, in consultation with ESMA, shall develop draft regulatory technical standards to specify which categories of instruments meet the conditions set out in paragraph 1(j)(iii) and to specify possible alternative arrangements, as referred to in paragraph 1(k).
EBA shall submit those draft regulatory technical standards to the Commission by 26 June 2021.
The Commission is empowered to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.
EBA, in consultation with ESMA, shall issue guidelines to facilitate the implementation of paragraphs 4, 5 and 6 and ensure consistent application thereof.

Article 33
Remuneration Committee

Member States shall ensure that investment firms that do not meet the criteria set out in Article 32(4)(a) establish a remuneration committee. The remuneration committee shall have a balanced gender composition and provide a competent and independent opinion on remuneration policies and practices and incentives introduced for risk management as well as capital and liquidity management. The remuneration committee may be established at group level.
Member States shall ensure that the remuneration committee is responsible for preparing decisions on remuneration to be taken by the management body, including decisions that have consequences for the risks and risk management of the investment firm concerned. The chairperson and members of the remuneration committee shall be members of the management body who do not perform a management function in the investment firm concerned. If worker representation in the management body is provided for in national law, the remuneration committee shall include one or more worker representatives.
When preparing the decisions referred to in paragraph 2, the remuneration committee shall take into account the public interest as well as the long-term interests of shareholders, investors and other stakeholders in the investment firm.

Article 34
Supervision of remuneration policy

Member States shall ensure that competent authorities collect information published in accordance with Article 51(1)(c) and (d) of Regulation (EU) 2019/2033, as well as information from investment firms on the difference in pay between men and women, and use that information to benchmark remuneration trends and practices.
Competent authorities shall provide that information to EBA.
EBA shall use the information it receives from competent authorities in accordance with paragraphs 1 and 4 to benchmark remuneration trends and practices at EU level.
EBA, in consultation with ESMA, shall issue guidelines for the application of sound remuneration policies. Those guidelines shall take into account at least the requirements referred to in Articles 30 to 33 and the principles for sound remuneration policies referred to in Recommendation 2009/384/EF.
Member States shall ensure that investment firms provide competent authorities with information on the number of natural persons in each investment firm who are remunerated at 1 million EUR or more per financial year, in remuneration frameworks of 1 million EUR, including information on their areas of responsibility, the business area concerned, and the main elements of remuneration, bonus, long-term incentives, and pension contributions.
Member States shall ensure that investment firms provide competent authorities, upon request, with the aggregate remuneration figures for each member of the management body or senior management.
The competent authorities shall send the information referred to in the first and second paragraphs to the EBA, which shall publish them in a common reporting format broken down by home country. The EBA may, in consultation with ESMA, issue guidelines to facilitate the implementation of this Article and ensure the uniformity of the collected information.

Article 35
EBA report on environmental, social and governance risks The EBA shall draw up a report on the introduction of technical criteria for exposures to activities significantly linked to environmental, social and governance (ESG) objectives in connection with the supervisory review and evaluation process, with a view to assessing the possible sources of risk effects on investment firms, taking into account existing EU acts in the field of ESG classification. The EBA report referred to in paragraph 1 shall cover at least:
a) a definition of ESG risks, including physical risks and transition risks in connection with the transition to a more sustainable economy, and including, as regards transition risks, risks associated with the write-down of assets as a result of regulatory changes, qualitative and quantitative criteria and benchmarks relevant for the assessment of such risks, and a method for assessing the possibility of such risks arising in the short, medium or long term, and the possibility of such risks having significant financial consequences for an investment firm; b) an assessment of the possibility that significant concentrations of specific assets increase ESG risks, including physical risks and transition risks for an investment firm; c) a description of the processes by which an investment firm can identify, assess and manage ESG risks, including physical risks and transition risks; d) the criteria, parameters and benchmarks by which supervisors and investment firms can assess the impact of short-, medium- and long-term ESG risks for the purpose of the supervisory review and evaluation process. The EBA shall submit the report on its results to the European Parliament, the Council and the Commission by 26 December 2021 at the latest. On the basis of this report, the EBA may, if necessary, adopt guidelines to introduce criteria regarding ESG risks for the supervisory review and evaluation process, taking into account the results of the EBA report referred to in this Article.

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Section 3
Supervisory review and evaluation process

Article 36
Supervisory review and evaluation

Competent authorities shall, insofar as is relevant and necessary having regard to the size, risk profile and business model of investment firms, supervise the arrangements, strategies, processes and mechanisms implemented by investment firms to comply with this Directive and Regulation (EU) 2019/2033, and assess the following, if appropriate and relevant, to ensure sound management and coverage of their risks:
a) the risks referred to in Article 29; b) the geographical location of investment firms' exposures; c) the business model of investment firms; d) the assessment of systemic risks taking into account the identification and measurement of systemic risk in accordance with Article 23 of Regulation (EU) No 1093/2010 or ESRB recommendations; e) the risks to the security of investment firms' network and information systems with a view to ensuring confidentiality, integrity and availability in connection with their processes, data and assets; f) investment firms' exposure to interest rate risk as a result of activities outside the trading book; g) investment firms' governance systems and the ability of members of the management body to perform their tasks. For the purposes of this Article, competent authorities shall duly take into account whether investment firms have professional liability insurance.
Member States shall ensure that competent authorities determine the frequency and extent of the supervision and evaluation referred to in paragraph 1, taking into account the size, nature, scale and complexity of the investment firms concerned and, where relevant, their systemic importance, and taking into account the principle of proportionality.
Only if the competent authorities consider it necessary on account of the size, nature, scale and complexity of the investment firms concerned shall they decide on a case-by-case basis whether and how this supervision and evaluation is to be carried out with regard to investment firms that meet the conditions for classification as small and non-interconnected investment firms set out in Article 12(1) of Regulation (EU) 2019/2033. For the purposes of the first subparagraph, account shall be taken of national law concerning the segregation of customer funds.
In carrying out the supervision and making the assessment referred to in paragraph 1, point (g), competent authorities shall have access to agendas, minutes and documents relating to meetings of the management body and its committees, as well as the results of the internal or external assessment of the management body's performance.
The Commission is empowered to adopt delegated acts in accordance with Article 58 to supplement this Directive with a view to ensuring that the arrangements, strategies, processes and mechanisms of investment firms ensure sound management and coverage of their risks. The Commission shall take into account in this regard the development of financial markets, in particular the emergence of new financial products, the development of accounting standards and developments that facilitate convergence in supervisory practice.

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Article 37
Ongoing supervision of the permission to use internal models

Member States shall ensure that competent authorities regularly and at least every three years supervise investment firms' compliance with the requirements for permission to use internal models referred to in Article 22 of Regulation (EU) 2019/2033. Competent authorities shall in particular take into account changes in an investment firm's business and the use of the aforementioned internal models for new products, and supervise and assess whether the investment firm uses well-developed and up-to-date techniques and practices in connection with the aforementioned internal models. Competent authorities shall ensure that significant deficiencies in an investment firm's internal models with regard to risk coverage are remedied, or take steps to limit the consequences, including by requiring capital add-ons or higher multiplication factors.
If there are many breaches for internal market risk models, as referred to in Article 366 of Regulation (EU) No 575/2013, which indicate that the internal models are not or no longer accurate, competent authorities shall withdraw the permission to use the internal models or impose appropriate measures to ensure that the internal models are improved immediately within a set deadline.
If an investment firm that has been granted permission to use internal models no longer meets the requirements for the use of those internal models, competent authorities shall require the investment firm to demonstrate that the impact of the non-compliance is immaterial, or to submit a plan and a deadline for compliance with those requirements. Competent authorities shall require that the submitted plan be improved if it is unlikely that the plan will lead to full compliance with the requirements, or if the deadline is not appropriate.
If it is unlikely that the investment firm will meet the requirements within the set deadline, or if it has not satisfactorily demonstrated that the impact of the non-compliance is immaterial, Member States shall ensure that competent authorities withdraw the permission to use internal models or restrict it to areas where the requirements are met, or to areas where the requirements can be met within an appropriate deadline.
The EBA shall analyse internal models across investment firms and analyse how investment firms using internal models treat similar risks or exposures. The EBA shall inform ESMA thereof.
The EBA shall draw up guidelines with benchmarks on how investment firms should use internal models, and how those internal models should be used for similar risks or exposures, in order to promote consistent and effective supervisory practice on the basis of that analysis and in accordance with Article 16 of Regulation (EU) No 1093/2010.
Member States shall encourage competent authorities to take that analysis and those guidelines into account in connection with the supervision referred to in paragraph 1.

Section 4
Supervisory measures and powers

Article 38
Supervisory measures
Competent authorities shall require an investment firm to take the necessary measures at an early stage to address the following problems:
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a) an investment firm does not meet the requirements of this Directive or of Regulation (EU) 2019/2033; b) the competent authorities have evidence that an investment firm is likely to breach the national provisions transposing this Directive or the provisions of Regulation (EU) 2019/2033 within the next 12 months.

Article 39
Supervisory powers

Member States shall ensure that competent authorities have the necessary supervisory powers to intervene in the activities of investment firms in an effective and proportionate manner when carrying out their tasks.
Competent authorities shall have the following powers for the purposes of Article 36, Article 37(3) and Article 38, and the application of Regulation (EU) 2019/2033:
a) to require investment firms to have a capital base exceeding the requirements of Article 11 of Regulation (EU) 2019/2033 in the situations referred to in Article 40 of this Directive, or to adapt the capital base and liquid assets required in the event of significant changes in the business of the investment firms concerned; b) to require that the arrangements, processes, mechanisms and strategies implemented in accordance with Articles 24 and 26 be strengthened; c) to require investment firms to submit a plan for renewed compliance with the supervisory requirements of this Directive and Regulation (EU) 2019/2033 within one year, to set a deadline for the implementation of that plan, and to require improvements to the plan with regard to scope and deadline; d) to require investment firms to apply a specific provisioning policy or asset treatment with regard to capital base requirements; e) to introduce restrictions on or limit the business, transactions or networks of investment firms, or to require the divestment of activities that pose excessive risk to the financial soundness of an investment firm; f) to require that the risk associated with the activities, products and systems of investment firms, including outsourced activities, be reduced; g) to require investment firms to limit variable remuneration as a percentage of net income where such remuneration is incompatible with maintaining a robust capital base; h) to require investment firms to use net profits to strengthen the capital base; i) to require an investment firm to limit or prohibit distributions or interest payments to shareholders, partners or holders of hybrid core capital instruments, if such a limitation or prohibition is not considered to be a default by the investment firm; j) to introduce supplementary or more frequent reporting requirements than those laid down in this Directive and in Regulation (EU) 2019/2033, including reporting on capital and liquidity positions; k) to impose specific liquidity requirements in accordance with Article 42; l) to impose additional disclosure requirements; m) to require investment firms to limit the risks to the security of their network and information systems with a view to ensuring confidentiality, integrity and availability in connection with their processes, data and assets.
With regard to paragraph 2, point (j), competent authorities may only require investment firms to provide additional or more frequent reporting if the information to be reported is not overlapping, and if one of the following conditions is met:
a) One of the cases referred to in Article 38, points (a) and (b), exists. b) The competent authority considers it necessary to obtain the evidence referred to in Article 38, point (b).
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c) The additional information is required for the supervisory review and evaluation process referred to in Article 36.
Information is considered to be overlapping if the competent authority already has the same or substantially the same information, if that information can be produced by the competent authority or can be obtained by the same competent authority by other means than requiring investment firms to report it. A competent authority may not require additional information if the information is available to the competent authority in another format or level of detail than the additional information to be reported, and if that other format or level of detail does not prevent it from producing information that is substantially the same.

Article 40
Additional capital base requirements

Competent authorities may only impose additional capital base requirements, as referred to in Article 39(2)(a), if, on the basis of the supervision under Articles 36 and 37, they find one of the following situations for an investment firm:
a) The investment firm is exposed to risks or elements of risks, or poses risks to others, that are significant and are not covered or not sufficiently covered by the capital base requirements, in particular the K-factor requirements, in Part Three or Part Four of Regulation (EU) 2019/2033; b) The investment firm does not meet the requirements referred to in Articles 24 and 26, and other supervisory measures are unlikely to improve the arrangements, processes, mechanisms and strategies sufficiently within a reasonable time; c) The adjustments for the prudent valuation of the trading book are not sufficient to allow the investment firm to sell or hedge its positions in the short term without suffering significant losses under normal market conditions; d) The supervision carried out in accordance with Article 37 shows that the non-compliance with the requirements for the use of the permitted internal models is likely to result in an insufficient capital level; e) The investment firm repeatedly fails to establish or maintain a sufficient level of additional capital base, as referred to in Article 41.
For the purposes of paragraph 1, point (a), risks or elements of risks shall be considered to be uncovered or insufficiently covered by the capital base requirements in Parts Three and Four of Regulation (EU) 2019/2033 only if the capital considered sufficient by the competent authority after the supervisory review of the assessment made by investment firms in accordance with Article 24(1) of this Directive, with regard to size, type and distribution, lies above the capital base requirement for investment firms in Part Three or Part Four of Regulation (EU) 2019/2033.
With regard to the first subparagraph, capital considered sufficient may include risks or elements of risks that are explicitly excluded from the capital base requirements in Part Three or Part Four of Regulation (EU) 2019/2033.
Competent authorities shall set the level of the required additional capital base, as referred to in Article 39(2)(a), as the difference between the capital considered sufficient in accordance with paragraph 2 of this Article and the capital base requirement in Part Three or Part Four of Regulation (EU) 2019/2033.
Competent authorities shall require investment firms to meet the additional capital base requirement referred to in Article 39(2)(a) with capital base on the following conditions:
a) At least three quarters of the additional capital requirement shall be met with core capital. b) At least three quarters of the core capital shall consist of own funds.
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c) This capital base may not be used to meet the capital base requirements referred to in Article 11(1)(a), (b) and (c) of Regulation (EU) 2019/2033.

Competent authorities shall justify in writing their decision to impose additional capital base requirements, as referred to in Article 39(2)(a), by providing a clear explanation of the full assessment of the elements referred to in paragraphs 1 to 4 of this Article. This includes, in the case referred to in paragraph 1, point (d) of this Article, a specific statement as to why the capital set in accordance with Article 41(1) is no longer considered sufficient.
The EBA shall draw up regulatory technical standards to specify how risks and elements of risks as referred to in paragraph 2 are to be measured, including risks or elements of risks that are explicitly excluded from the capital base requirements in Part Three or Part Four of Regulation (EU) 2019/2033, in consultation with ESMA.
The EBA shall ensure that the draft regulatory technical standards contain guiding qualitative benchmarks for the additional capital base referred to in Article 39(2)(a), taking into account the different business models and legal forms that investment firms may have, and that it is proportionate in light of:
a) the implementation burden for investment firms and competent authorities; b) the possibility that the higher capital base requirements that apply if investment firms do not use internal models justify the imposition of lower capital base requirements when risks and elements of risks are assessed in accordance with paragraph 2.
The EBA shall submit these draft regulatory technical standards to the Commission by 26 June 2021 at the latest.
The Commission is empowered to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.
Competent authorities may impose an additional capital base requirement in accordance with paragraphs 1 to 6 on investment firms that meet the conditions for classification as small and non-interconnected investment firms set out in Article 12(1) of Regulation (EU) 2019/2033, on the basis of a case-by-case assessment, and when the competent authorities consider it justified.

Article 41
Guidance on additional capital base

Taking into account the principle of proportionality and in relation to the size, systemic importance, nature, scale and complexity of the activities carried out by investment firms that do not meet the conditions for classification as small and non-interconnected investment firms set out in Article 12(1) of Regulation (EU) 2019/2033, competent authorities may require such investment firms to have capital base levels that, based on Article 24, are significantly higher than the requirements of Part Three of Regulation (EU) 2019/2033 and of this Directive, including the additional capital base requirements referred to in Article 39(2)(a), to ensure that cyclical fluctuations do not lead to non-compliance with those requirements or jeopardise investment firms' ability to wind down or suspend activities in an orderly manner.
Competent authorities shall, if necessary, supervise the capital base level set by individual investment firms that do not meet the conditions for classification as small and non-interconnected investment firms in Article 12(1) of Regulation (EU) 2019/2033, in accordance with paragraph 1 of this Article, and shall communicate, where relevant, the conclusions of that supervision to the investment firm concerned, including any expectation of adjustment of the capital base level set in accordance with paragraph 1 of this Article.
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such notification must contain a date set by the competent authority for when the adjustment must be completed at the latest.

Article 42
Special liquidity requirements

Competent authorities shall impose only the special liquidity requirements referred to in Article 39(2)(k) of this Directive if, on the basis of the supervision carried out in accordance with Articles 36 and 37 of this Directive, they conclude that investment firms which do not meet the conditions for classification as small and non-interconnected investment firms in Article 12(1) of Regulation (EU) 2019/2033, or which meet the conditions in Article 12(1) of Regulation (EU) 2019/2033 but are not exempt from the liquidity requirement in accordance with Article 43(1) of Regulation (EU) 2019/2033, are in one of the following situations:

a) The investment firm is exposed to liquidity risk or elements of liquidity risk that are significant and are not covered or not sufficiently covered by the liquidity requirement in Part Five of Regulation (EU) 2019/2033.

b) The investment firm does not meet the requirements referred to in Articles 24 and 26 of this Directive, and other administrative measures are unlikely to improve the arrangements, processes, mechanisms and strategies sufficiently within a reasonable time.

For the purposes of paragraph 1(a) of this Article, liquidity risk or elements of liquidity risk shall be considered only as not covered or not sufficiently covered by the liquidity requirement in Part Five of Regulation (EU) 2019/2033 if the liquidity considered sufficient by the competent authority following the supervisory review of the assessment carried out by investment firms in accordance with Article 24(1) of this Directive, with regard to size and type, exceeds the liquidity requirement for the investment firm in Part Five of Regulation (EU) 2019/2033.
Competent authorities shall set the level of the special liquidity requirement referred to in Article 39(2)(k) of this Directive as the difference between the liquidity considered sufficient in accordance with paragraph 2 of this Article and the liquidity requirement in Part Five of Regulation (EU) 2019/2033.
Competent authorities shall require investment firms to meet the special liquidity requirement referred to in Article 39(2)(k) of this Directive with liquid assets as defined in Article 43 of Regulation (EU) 2019/2033.
Competent authorities shall justify in writing their decision to impose a special liquidity requirement referred to in Article 39(2)(k) by providing a clear explanation of the full assessment of the elements referred to in paragraphs 1 to 3 of this Article.
EBA shall develop draft regulatory technical standards to specify, in a manner appropriate to the size, internal organisation and the nature, scale and complexity of their activities, how the liquidity risk and the elements of liquidity risk referred to in paragraph 2 are to be measured.
EBA shall submit those draft regulatory technical standards to the Commission by 26 June 2021.
The Commission is empowered to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

Article 43
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Cooperation with resolution authorities
Competent authorities shall notify the relevant resolution authorities of any requirement for additional own funds in accordance with Article 39(2)(a) of this Directive for an investment firm that is within the scope of Directive 2014/59/EU, and of any expectation of adjustment as referred to in Article 41(2) of this Directive in respect of such an investment firm.

Article 44
Disclosure requirements
Member States shall ensure that competent authorities have the power to:

a) require investment firms which do not meet the conditions for classification as small and non-interconnected investment firms set out in Article 12(1) of Regulation (EU) 2019/2033, and investment firms referred to in Article 46(2) of Regulation (EU) 2019/2033 to disclose the information referred to in Article 46 of that Regulation more than once a year, and to set deadlines for such disclosure;

b) require investment firms which do not meet the conditions for classification as small and non-interconnected investment firms set out in Article 12(1) of Regulation (EU) 2019/2033, and investment firms referred to in Article 46(2) of Regulation (EU) 2019/2033 to use specific media and places, in particular the websites of investment firms, for disclosures other than annual accounts;

c) require parent undertakings to disclose once a year, either in full or by way of cross-references to equivalent information, a description of their legal structure and the management structure and organisational structure of the investment firm group in accordance with Article 26(1) of this Directive and Article 10 of Directive 2014/65/EU.

Article 45
Obligation to notify EBA

Competent authorities shall notify EBA of:

a) their supervisory review and assessment process, referred to in Article 36;

b) the methodology used for the decisions referred to in Articles 39, 40 and 41;

c) the levels of administrative penalties set by Member States, referred to in Article 18.
EBA shall forward the information referred to in this paragraph to ESMA.

EBA shall, in consultation with ESMA, assess the information from competent authorities with a view to developing consistency in the supervisory review and assessment process. EBA may, in order to complete its assessment, after consulting ESMA, request additional information from competent authorities on a proportionate basis and in accordance with Article 35 of Regulation (EU) No 1093/2010.
EBA shall publish the aggregate information referred to in paragraph 1, first subparagraph, point (c), on its website.
EBA shall report to the European Parliament and to the Council on the degree of convergence between Member States' application of this Chapter. EBA shall carry out peer reviews in accordance with Article 30 of Regulation (EU) No 1093/2010, where necessary. EBA shall notify ESMA of such peer reviews.
EBA and ESMA shall, in accordance with Article 16 of Regulation (EU) No 1093/2010 and Article 16 of Regulation (EU) No 1095/2010 respectively, where relevant, issue guidelines to the competent authorities with a view to further specifying, in a manner corresponding to the size, internal organisation and the nature, scale and complexity of their activities, the common procedures and methodologies for the supervisory review and assessment process referred to in paragraph 1, and for the assessment of the treatment of the risks referred to in Article 29 of this Directive.

CHAPTER 3
Supervision of investment firm groups
Section 1
Supervision of investment firm groups at consolidated level and supervision of compliance with the group capital test

Article 46
Determination of group supervisor

Member States shall ensure that, where the parent undertaking of an investment firm group is a parent investment undertaking in the Union, consolidated supervision or supervision of compliance with the group capital test shall be carried out by the competent authority of that parent investment undertaking in the Union.
Member States shall ensure that, where the parent undertaking of an investment firm is a parent investment holding company in the Union or a mixed financial holding company in the Union, consolidated supervision or supervision of compliance with the group capital test shall be carried out by the competent authority of that investment firm.
Member States shall ensure that, where two or more investment firms authorised in two or more Member States have the same parent investment holding company in the Union or the same mixed financial holding company in the Union, consolidated supervision or supervision of compliance with the group capital test shall be carried out by the competent authority of the investment firm authorised in the Member State where the investment holding company or the mixed financial holding company is established.
Member States shall ensure that, where parent undertakings of two or more investment firms authorised in two or more Member States consist of more than one investment holding company or mixed financial holding company with head offices in different Member States, and there is an investment firm in each of those Member States, consolidated supervision or supervision of compliance with the group capital test shall be carried out by the competent authority of the investment firm with the largest total balance sheet.
Member States shall ensure that, where two or more investment firms authorised in the Union have the same investment holding company in the Union or mixed financial holding company in the Union as parent undertaking, and none of those investment firms is authorised in the Member State where the investment holding company or the mixed financial holding company is established, consolidated supervision or supervision of compliance with the group capital test shall be carried out by the competent authority of the investment firm with the largest total balance sheet.
Competent authorities may, by common agreement, decide not to apply the criteria in paragraphs 3, 4 and 5 if, taking into account the investment firms concerned and the scope of their activities in the relevant Member States, it would not be appropriate to apply them for the purpose of effective consolidated supervision or supervision of compliance with the group capital test, and designate another competent authority to carry out consolidated supervision or supervision of compliance with the group capital test. In that case, the competent authorities shall, before taking such a decision, give the parent investment holding company in the Union or the mixed financial holding company in the Union or the investment firm with the largest total balance sheet, as appropriate, the opportunity to comment on the intended decision. The competent authorities shall notify the Commission and EBA of such a decision.

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Article 47
Information requirements in emergency situations In the event of an emergency, including a situation as described in Article 18 of Regulation (EU) No 1093/2010 or a situation of negative market developments that could potentially threaten market liquidity and the stability of the financial system in one of the Member States where entities of an investment firm group are authorised, the group supervisor determined in accordance with Article 46 of this Directive shall, as soon as practically possible, subject to Chapter 1, Section 2 of this Part, notify EBA, the ESRB and any relevant competent authorities and provide all information necessary for them to perform their tasks.

Article 48
Supervisory colleges

Member States shall ensure that the group supervisor determined in accordance with Article 46 of this Directive may, where necessary, establish supervisory colleges to facilitate the performance of the tasks referred to in this Article and to ensure coordination and cooperation with relevant third-country supervisory authorities, in particular if necessary for the application of Article 23(1), first subparagraph, point (c), and Article 23(2) of Regulation (EU) 2019/2033 to exchange and update relevant information on margin models with the supervisory authorities of qualifying central counterparties.
Supervisory colleges shall establish the framework for the performance by the group supervisor, EBA and the other competent authorities of the following tasks:

a) the tasks referred to in Article 47;

b) the coordination of information requests, where necessary to facilitate consolidated supervision, referred to in Article 7 of Regulation (EU) 2019/2033;

c) the coordination of information requests in cases where several competent authorities of investment firms that are part of the same group need to request information from the competent authority of the home country of a clearing member or the competent authority of the qualifying central counterparty regarding the margin model and the parameters used for the calculation of the relevant investment firms' margin requirements;

d) the exchange of information between all competent authorities and with EBA in accordance with Article 21 of Regulation (EU) No 1093/2010 and with ESMA in accordance with Article 21 of Regulation (EU) No 1095/2010;

e) the achievement of agreement on the voluntary delegation of tasks and responsibilities between competent authorities, where relevant;

f) the increase of supervisory efficiency by seeking to avoid unnecessary duplication of supervisory requirements.

Supervisory colleges may also be established, where relevant, where subsidiaries of an investment firm group, the parent undertaking of which is an investment firm in the Union, a parent investment holding company in the Union or a mixed financial holding company in the Union, are located in a third country.
EBA shall participate in the meetings of supervisory colleges in accordance with Article 21 of Regulation (EU) No 1093/2010.
The following authorities shall be members of supervisory colleges:

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a) the competent authorities responsible for the supervision of subsidiaries of an investment firm group, the parent undertaking of which is an investment firm in the Union, a parent investment holding company in the Union or a mixed financial holding company in the Union;

b) third-country supervisory authorities, where relevant, subject to confidentiality requirements which, in the opinion of all the competent authorities, are equivalent to the requirements of Chapter 1, Section 2 of this Part.

The group supervisor determined in accordance with Article 46 shall chair the meetings of the supervisory college and take decisions. That group supervisor shall keep all members of the supervisory college fully informed in advance of the main issues to be discussed and the activities to be considered. The group supervisor shall also keep all members of the supervisory college fully informed in a timely manner of the decisions taken at those meetings or the measures implemented.
The group supervisor shall take into account the relevance of the supervisory activity to be planned or coordinated by the authorities referred to in paragraph 5 when taking decisions.
The establishment of supervisory colleges and their functioning shall be formalised in writing.
In the event of disagreement on a decision taken by the group supervisor on the functioning of supervisory colleges, any concerned competent authority may refer the matter to EBA and request EBA's assistance in accordance with Article 19 of Regulation (EU) No 1093/2010.
EBA may also, on its own initiative, in accordance with Article 19(1), second subparagraph, of Regulation (EU) No 1093/2010, assist competent authorities in the event of disagreement on the functioning of supervisory colleges as referred to in this Article.
EBA shall develop draft regulatory technical standards to further specify the conditions under which supervisory colleges are to perform the tasks referred to in paragraph 1.
EBA shall submit those draft regulatory technical standards to the Commission by 26 June 2021.
The Commission is empowered to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.

Article 49
Cooperation requirements

Member States shall ensure that the group supervisor and the competent authorities referred to in Article 48(5) provide each other with all relevant information as required, including the following:

a) an indication of the legal structure and management structure, including organisational structure, of investment firm groups, covering all regulated and unregulated entities, unregulated subsidiaries as well as the parent undertakings and the competent authorities of the regulated entities in investment firm groups;

b) procedures for the collection of information from the investment firms in an investment firm group and procedures for the verification of that information;

c) any negative development in the investment firms or in other entities of an investment firm group that could seriously affect those investment firms;

d) any significant penalties and extraordinary measures imposed or taken by the competent authorities in accordance with national provisions implementing this Directive;

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e) the imposition of specific own funds requirements in accordance with Article 39 of this Directive.

Competent authorities and the group supervisor may refer issues to EBA, referred to in Article 19(1) of Regulation (EU) No 1093/2010, if relevant information has not been provided without undue delay in accordance with paragraph 1, or if a request for cooperation, in particular for the exchange of relevant information, has been refused or not answered within a reasonable time.
EBA may, in accordance with Article 19(1), second subparagraph, of Regulation (EU) No 1093/2010 and on its own initiative, assist competent authorities in developing consistent forms of cooperation.
Member States shall ensure that competent authorities consult each other on the following before adopting a decision that may have an impact on the supervisory tasks of other competent authorities:

a) changes in the shareholding, organisational or management structure of investment firms in an investment firm group that require the approval or consent of the competent authorities;

b) significant penalties imposed on investment firms by the competent authorities or any other extraordinary measures taken by those authorities;

c) specific own funds requirements imposed in accordance with Article 39.

The group supervisor shall be consulted if the competent authorities are to impose significant penalties or take any other extraordinary measures as referred to in paragraph 3, point (b).
Notwithstanding paragraph 3, a competent authority shall not be obliged to consult other competent authorities in emergency situations, or where such consultation could jeopardise the effectiveness of its decisions, and in such cases the competent authority shall without delay inform the other concerned competent authorities of its decision not to consult.

Article 50
Verification of information concerning entities located in other Member States

Member States shall ensure that, if a competent authority in a Member State needs to verify information concerning investment firms, investment holding companies, mixed financial holding companies, financing institutions, ancillary service undertakings, mixed holding companies or subsidiaries located in another Member State, including subsidiaries that are insurance undertakings, and makes a request to that effect, the relevant competent authorities in that other Member State shall carry out that verification in accordance with paragraph 2.
The competent authorities that have received a request in accordance with paragraph 1 shall do one of the following:

a) carry out the verification themselves within the framework of their powers;

b) allow the competent authorities that made the request to carry out the verification;

c) request an auditor or other expert to carry out the verification impartially and report the results immediately.
The competent authorities that made the request may participate in the verification for the purposes of points (a) and (c).

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Section 2
Investment holding companies, mixed financial holding companies and mixed holding companies

Article 51
Inclusion of holding companies in supervision of compliance with the group capital test Member States shall ensure that investment holding companies and mixed financial holding companies are included in the supervision of compliance with the group capital test.

Article 52
Management qualifications
Member States shall require that members of the management body of an investment holding company or a mixed financial holding company have a good reputation and possess sufficient knowledge, professional competence and experience to perform their duties effectively, taking into account the specific role of an investment holding company or a mixed financial holding company.

Article 53
Holding companies with mixed activities

Member States shall provide that, where the parent undertaking of an investment firm is a mixed holding company, the competent authorities responsible for supervising that investment firm may:

a) require that the mixed holding company provide them with all information that may be relevant for the supervision of that investment firm;

b) supervise transactions between the investment firm and the mixed holding company and its subsidiaries and require that the investment firm have appropriate risk management procedures and internal control mechanisms, including sound reporting and accounting procedures, in order to identify, measure, monitor and control such transactions.

Member States shall provide that their competent authorities may carry out or have external auditors carry out on-the-spot checks of the information received from mixed holding companies and their subsidiaries.

Article 54
Penalties
In accordance with Chapter 2, Section 3 of this Part, Member States shall ensure that administrative penalties or other administrative measures, aimed at bringing to an end or remedying breaches of the laws and administrative provisions transposing this Directive or at preventing further breaches, may be imposed on investment holding companies, mixed financial holding companies and mixed holding companies or their actual managers.

Article 55
Assessment of third-country supervision and other supervisory methods

Member States shall ensure that, where two or more investment firms that are subsidiaries of the same parent undertaking, which has its head office in a third country, are not subject to effective supervision at group level, the competent authority shall assess whether the investment firms are subject to supervision by a third

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the supervisory authority of the country equivalent to the supervision referred to in this Directive and Part One of Regulation (EU) 2019/2033.

If the conclusion of the assessment referred to in paragraph 1 of this Article is that such equivalent supervision does not apply, Member States shall open up the possibility of appropriate supervisory methods that meet the objectives of supervision in accordance with Article 7 or 8 of Regulation (EU) 2019/2033. The competent authority that would be the group supervisor if the parent company were established in the Union shall decide on these supervisory methods after consulting the other relevant competent authorities. Any measures taken under this paragraph shall be reported to the other relevant competent authorities, EBA, and the Commission.
The competent authority that would be the group supervisor if the parent company were established in the Union may, in particular, require the establishment of an investment holding company or a mixed financial holding company in the Union and apply Article 7 or 8 of Regulation (EU) 2019/2033 to this investment holding company or mixed financial holding company.

Article 56
Cooperation with third-country supervisory authorities

Executive Order on Investment Firm Companies and Investment Services and Activities

Lineage: In force