Regulation on the Application of the Factoring Act and Other Regulations to Factoring Companies in Liquidation

UNOFFICIAL CONSOLIDATED TEXT REGULATION ON THE APPLICATION OF THE PROVISIONS OF THE FACTORING ACT AND OTHER REGULATIONS TO FACTORING COMPANIES IN LIQUIDATION (Official Gazette No. 52/15 and 142/22)

The Regulation on Amendments to the Regulation on the Application of the Provisions of the Factoring Act and Other Regulations to Factoring Companies in Liquidation (Official Gazette No. 142/22) entered into force and is applicable from December 15, 2022.

Regulation on the Application of the Provisions of the Factoring Act and Other Regulations to Factoring Companies in Liquidation – Unofficial Consolidated Text (Official Gazette No. 52/15 and 142/22)

1. General Provisions

Article 1. (1) This Regulation prescribes the method of application of the provisions of the Factoring Act ("Official Gazette", No. 94/14, hereinafter: the Act) and other regulations applicable to factoring companies, the obligations of factoring companies in liquidation towards the Croatian Financial Services Supervisory Agency (hereinafter: the Agency), exemptions of factoring companies in liquidation from certain obligations, as well as other matters related to the implementation of the liquidation procedure of factoring companies arising from regulations governing factoring companies. (2) In addition to the Act, the Companies Act, and this Regulation, the provisions of the law governing the keeping of the court register shall also apply to the liquidation procedure of factoring companies. (3) Factoring companies in liquidation are obliged to adhere to the provisions of the Act and its subordinate regulations, as well as other regulations applicable to factoring companies not in liquidation, unless otherwise specified by this Regulation.

Liquidators

Article 2. (1) Only a natural person who meets the conditions for appointment as a member of the management board of a factoring company in accordance with the provisions of Article 47 of the Act, which prescribe the conditions for a member of the management board of a factoring company, may be appointed as a liquidator of a factoring company. (2) The conditions for a member of the management board of a factoring company set out in Article 46(4), Article 47(1) point 8, and Article 47(3) of the Act, as well as the provisions of Article 48 of the Act prescribing the conditions and procedure for issuing consent for the performance of the function of a member of the management board, do not apply to the appointment of a liquidator. (3) The liquidator of a factoring company is obliged to submit to the Agency evidence of compliance with the conditions set out in this Article of the Regulation within 15 days from the adoption of the decision appointing the liquidator, in accordance with the regulation that more precisely prescribes the conditions and required documentation for membership in the management board of a factoring company.

Obligations of the Factoring Company or Liquidator Regarding the Liquidation Procedure

Article 3. (1) In accordance with Article 106(2) of the Act, the management board and supervisory board of a factoring company are obliged to conduct prior consultations with the Agency before adopting a decision on liquidation. This implies timely reporting to the Agency on all circumstances relevant to the decision on liquidation. The management board must participate in full composition, and the supervisory board in the composition necessary for its valid operation in accordance with the founding act of the factoring company and other applicable regulations. Exceptionally, if the management board is justifiably prevented from participating in full composition, at least one member of the management board may participate, provided that such member represents the company independently and individually, and subject to prior submission to the Agency of a written notice explaining the absence of the prevented member(s) of the management board. (2) The liquidator of a factoring company is obliged to notify the Agency of the decision on the liquidation of the factoring company within 3 working days from the date of its adoption. Within 8 days from the date of adoption of the decision on liquidation, the liquidator is obliged to submit to the Agency a notice accompanied by the original or certified copy of the decision on liquidation of the factoring company. (3) The liquidator of a factoring company is obliged to prepare and submit to the Agency a liquidation procedure plan and a report on the status of assets and liabilities of the factoring company as of the day preceding the date of adoption of the decision on liquidation of the factoring company, within 30 days from the date of adoption of the decision on liquidation or appointment as liquidator. (4) The liquidator is obliged to prepare and submit to the Agency audited initial liquidation financial statements as of the day preceding the date of adoption of the decision on liquidation of the factoring company, within 30 days from the date of adoption of the decision on liquidation of the factoring company. (5) The liquidator of a factoring company is obliged to submit to the Agency reports on the progress and actions of the liquidation procedure of the factoring company within 30 days after the expiration of six-month periods, starting from the date of opening the liquidation procedure. (6) Exceptionally from the provision of paragraph 5 of this Article, the Agency may request reports on the progress of the liquidation procedure from the liquidator in shorter periods. (7) The liquidator is obliged to prepare and submit to the Agency final liquidation reports and a report on the conducted liquidation of the factoring company within 30 days from the date of settlement of all liabilities and any payment of remaining assets to shareholders or members of the factoring company, and is responsible for the preparation of these reports.

Article 4. After the completion of the liquidation procedure, the liquidator is obliged to keep all business books of the factoring company in accordance with the Companies Act and accounting regulations.

Obligations of the Factoring Company in Liquidation in Reporting to the Agency

Article 5. (1) A factoring company in liquidation is obliged to submit to the Agency the following reports in accordance with the regulation prescribing the structure and content, as well as the method and deadlines for submission of financial and additional reports of factoring companies, based on Article 67 of the Act: – Report on Financial Position (FP), – Report on Comprehensive Income (CI), – Report on Portfolio Structure – Factoring (PS-F), – Report on Portfolio Structure – Factoring Including Bill Purchase (PS-FOM), – Report on Portfolio Structure – Supplier (Reverse) Factoring (PS-SF), – Report on Portfolio Structure – Transactions Directly or Indirectly Related to Factoring Transactions (PS-DIR). (2) A factoring company in liquidation is not obliged to submit to the Agency: – reports on capital in accordance with the regulation prescribing the capital of factoring companies based on Article 23 of the Act, – reports on status changes in accordance with the regulation prescribing the content of reports, method, and deadlines for reporting to the Agency based on Article 70 of the Act, except for reports on facts and circumstances under Article 70(1) points 1, 3, 5, and 6 of the Act, for which the legal obligation remains for factoring companies in liquidation.

Exemptions of Factoring Companies in Liquidation from the Application of Provisions of the Act

Article 6. The provisions of the Act regulating the following do not apply to factoring companies in liquidation:

1. Capital (Article 23 of the Act),
2. Issuance of Agency consent for the acquisition of qualified holdings in a factoring company and factoring companies in another legal entity (Articles 29 to 38 of the Act),
3. Risk management system (provisions of Article 64 of the Act),
4. Internal audit (provisions of Article 65 of the Act).

Other Provisions

Article 7. (1) Factoring companies in liquidation are obliged to publicly announce information on the opening of the liquidation procedure within 5 working days from the date of adoption of the decision on opening the liquidation procedure via their websites, notices posted in clearly visible places in the business premises of the factoring company and its branches, or in another suitable manner chosen by the factoring company. (2) The information on the opening of the liquidation procedure must necessarily contain: – the name, surname, and residence of the liquidator, – the company name and seat of the factoring company, – the date of adoption of the decision on liquidation, – the reason for opening the liquidation procedure, – a brief explanation of the liquidation procedure, including the estimated duration and possible impact of the liquidation on customers, suppliers, and other parties in business relations with the factoring company, – where, when, and how additional information on the liquidation of the factoring company can be obtained. (3) Based on Article 107(3) of the Act, within the scope of the obligation under paragraphs 1 and 2 of this Article, the factoring company in liquidation is obliged to inform the public about the transactions that the factoring company in liquidation will conduct, as well as the prohibition on concluding, initiating, or conducting new transactions.

Article 7.a All reports from factoring companies in liquidation under this Regulation must be submitted in accordance with the instruction on the method of data submission to the Agency.

Article 8. The provisions of this Regulation apply mutatis mutandis to the liquidation of a branch of a factoring company from a Member State under Article 59 of the Act and a branch of a factoring company from a third country under Article 61 of the Act.

Final Provisions

Article 9. This Regulation enters into force on the eighth day from the date of publication in the "Official Gazette".