Guidelines on the Verification and Approval of the Prospectus and on the Performance of Other Obligations in Connection with the Public Offer and Admission to Trading of Securities on a Regulated Market

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Based on the provisions of Article 15(4) of the Act on the Croatian Financial Services Supervisory Agency (Official Gazette nos. 140/05 and 12/12) and Article 696 of the Capital Markets Act (Official Gazette nos. 65/18, 17/20, 83/21 and 151/22), the Croatian Financial Services Supervisory Agency, at its Board of Directors meeting held on 19 January 2023, adopts

GUIDELINES ON THE VERIFICATION AND APPROVAL OF THE PROSPECTUS AND ON THE PERFORMANCE OF OTHER OBLIGATIONS IN CONNECTION WITH THE PUBLIC OFFER AND ADMISSION TO TRADING OF SECURITIES ON A REGULATED MARKET

1. INTRODUCTION
On 30 June 2017, Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (hereinafter: the Prospectus Regulation) was published in the Official Journal of the European Union, which applies in full from 21 July 2019. The Prospectus Regulation ensures the uniform application of provisions concerning the offer of securities to the public and the admission of securities to trading on a regulated market at the level of the European Union (hereinafter: the EU), replacing the previous regulatory framework consisting of Directive 2003/71/EC and all its subsequent amendments and supplements, Regulation (EC) No 809/2004 and all its subsequent amendments and supplements, including the regulatory technical standards prescribed by Delegated Regulation (EU) No 382/2014 and Delegated Regulation (EU) No 2016/301. In accordance with the provision of Article 405(1) of the Capital Markets Act (Official Gazette nos. 65/18, 17/20, 83/21 and 151/22; hereinafter: CMA), the Croatian Financial Services Supervisory Agency (hereinafter: Hanfa) is the competent authority for the implementation of the Prospectus Regulation in the Republic of Croatia, which includes making a decision on the application for approval of a prospectus for the public offer of securities and/or admission of securities to trading on a regulated market in accordance with the provisions of the Prospectus Regulation (when the Republic of Croatia is the home Member State in accordance with the provision of Article 2(1)(m) of the Prospectus Regulation and when the approval of the prospectus has been transferred to Hanfa in accordance with the provision of Article 20(8) of the Prospectus Regulation) and conducting supervision over the implementation of the Prospectus Regulation and the CMA in part concerning public offers of securities and admission of securities to trading on a regulated market. The regulatory framework applicable to the public offer and admission of securities to trading on a regulated market consists of the CMA and relevant subordinate regulations adopted on the basis of the CMA, and the Prospectus Regulation, including all its amendments and supplements, then implementing and delegated acts of the EU based on the Prospectus Regulation, as well as other documents adopted by the European Securities and Markets Authority (hereinafter: ESMA) (such as guidelines, questions and answers, etc.). The list of regulations constituting the regulatory framework is available on Hanfa's website. In accordance with the provision of Article 696 of the CMA and Article 20(7) of the Prospectus Regulation, Hanfa adopts these Guidelines on the verification and approval of the prospectus and on the performance of other obligations in connection with the public offer and admission of securities to trading on a regulated
market (hereinafter: Guidelines). These Guidelines apply together with the regulations constituting the regulatory framework applicable to the public offer and admission of securities to trading on a regulated market.

2. PURPOSE OF THE GUIDELINES
The purpose of these Guidelines is to provide issuers, offerors, and persons seeking admission to trading on a regulated market with information on the procedure for submitting an application to Hanfa for approval of a prospectus in connection with a public offer and/or admission of securities to trading on a regulated market, and the procedure for the verification and approval of the prospectus by Hanfa as the competent authority in the Republic of Croatia. The purpose of these Guidelines is also to provide other information regarding rights and obligations in connection with the public offer and admission of securities to trading on a regulated market, all in accordance with the provisions of the Prospectus Regulation and the CMA.

3. APPLICATION OF THE GUIDELINES
These Guidelines are intended for issuers, offerors, and persons seeking admission to trading on a regulated market (hereinafter: Applicant) and other stakeholders in the public offer of securities and admission of securities to trading on a regulated market.

4. VERIFICATION AND APPROVAL OF THE PROSPECTUS
4.1. Scope of Application
These Guidelines relate to the application for approval of a prospectus and other applications under the Prospectus Regulation and the CMA (hereinafter: Application).
The types of Applications submitted to Hanfa are:
1. application for approval of a prospectus in accordance with the provision of Article 20 of the Prospectus Regulation
2. application for approval of a Universal Registration Document in accordance with the provision of Article 9 of the Prospectus Regulation
3. application for approval of a Registration Document and application for approval of the notice of securities and the summary of the prospectus in accordance with the provision of Article 10 of the Prospectus Regulation
4. application for approval of a supplement to the prospectus, Registration Document, or Universal Registration Document in accordance with the provision of Article 10(1), Article 23, and Article 26(5) of the Prospectus Regulation
5. application for omission of information from the prospectus in accordance with the provision of Article 18 of the Prospectus Regulation
6. application for notification in accordance with the provisions of Articles 25 and 26 of the Prospectus Regulation (notifications)
7. application for approval of the transfer of prospectus approval to the competent authority of another Member State or for approval of the acceptance of the transfer of prospectus approval from the competent authority of another Member State in accordance with the provision of Article 20(8) of the Prospectus Regulation.
The provisions of these Guidelines regarding the application for approval of a prospectus in accordance with the provision of Article 20 of the Prospectus Regulation and regarding the verification and approval of the prospectus apply mutatis mutandis to the other applications listed in sub-points 2 to 7 of this point.

4.2. Procedure for Verification and Approval of the Prospectus
4.2.1. Hanfa as Competent Authority
Hanfa conducts the procedure for verification and approval of the prospectus in accordance with the provisions of Article 20 of the Prospectus Regulation and the provisions of Chapter V of Delegated Regulation 2019/980 of 14 March 2019 supplementing Regulation (EU) 2017/1129 of the European Parliament and of the Council as regards the form, content, verification, and approval of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Commission Regulation (EC) No 809/2004 (hereinafter: Delegated Regulation 2019/980).

4.2.2. Content of the Application and Prescribed Attachments to the Application
The Application, together with the corresponding attachments, is submitted by the Applicant to Hanfa in electronic form via electronic means, direct access to Hanfa's reporting system using the appropriate interface on Hanfa's website (https://reports.hanfa.hr/), in the manner prescribed by the Technical Instruction for the preparation and submission of applications for approval of a prospectus in connection with the public offer and admission of securities to trading on a regulated market in electronic form (hereinafter: Technical Instruction), published on Hanfa's website. The Application is prepared by filling out the ZP form located in Annex II of the Technical Instruction. The ZP form is submitted in PDF format and must be signed with a qualified electronic signature in accordance with the Technical Instruction. Along with the Application submitted to Hanfa, the Applicant attaches the following documentation:

1. a submission with an explanation of the Application
2. a draft prospectus, depending on the Application
3. a power of attorney for representing the Applicant in the proceedings before Hanfa, if the Applicant has appointed an authorized representative
4. a confirmation of payment of the fee to Hanfa in accordance with the current regulation on the type and amount of Hanfa fees
5. other prescribed documentation and information from point 4.2.2.3 of these Guidelines.
   Documentation attached to the Application is submitted in PDF format which is searchable, as a single document or multiple separate documents, at the choice of the Applicant, and does not need to be signed with a qualified electronic signature, unless a power of attorney for representing the Applicant (e.g., attorney's power of attorney) is attached to the Application, which is always submitted as a separate document in PDF format and must be signed with a qualified electronic signature of the Applicant. The power of attorney may be submitted to Hanfa via postal service providers or in person, in which case it is submitted in original or notarized copy. The final draft of the prospectus is always submitted signed with a qualified electronic signature, and it is signed by all persons as prescribed by the Prospectus Regulation and the CMA.

4.2.2.1. The Submission with an Explanation of the Application must contain the following information:

1. company name, registered office, business address, OIB (Personal Identification Number) and LEI of the Applicant, or if the Applicant is a natural person, name and surname, OIB, and address of residence
2. explanation of the Application (reason for submitting the Application, indicating whether it concerns a prospectus for issuance or offer and/or admission)
3. basic data on the securities that are the subject of the offer and/or admission to trading on a regulated market
4. monetary amount of the issuance or offer, if applicable
5. contact details (including email address) of the natural person at the Applicant whom Hanfa can contact for the purposes of the prospectus approval procedure (contact person)
6. explanation of relevant circumstances under Article 18 of the Prospectus Regulation, when it concerns an application for omission of information from the prospectus in accordance with Article 18 of the Prospectus Regulation
7. other additional data and information that the Applicant considers important at their own discretion
8. list of documentation attached to the Application.

4.2.2.2. The first draft of the prospectus and all subsequently submitted drafts of the prospectus are submitted to Hanfa in searchable electronic form that allows text or keyword searching, for the purpose of an efficient and timely procedure for reviewing the draft prospectus.

4.2.2.3. The Applicant is obliged to attach the following documentation and information to the Application submitted to Hanfa, in accordance with these Guidelines and the provision of Article 42(2) of Delegated Regulation 2019/980, depending on the circumstances of the case and the nature of the Application:

1. a copy of the notarized minutes of the issuer's general meeting at which the decision on the issuance, offer, and/or admission of securities to trading on a regulated market was made
2. a copy of the decision of another competent body (management board and/or supervisory board or administrative board) of the Applicant on the issuance, offer, and/or admission of securities to trading on a regulated market, when applicable
3. a list of cross-references, if the order of listing information in the draft prospectus differs from the order of listing these information in the annexes to Delegated Regulation 2019/980
4. information and documentation included in the prospectus by reference, in accordance with the provision of Article 19(3) of the Prospectus Regulation, unless Hanfa has already approved this information or it was submitted to Hanfa in searchable electronic form
5. translation of the supplement in accordance with the provision of Article 26(4) of the Prospectus Regulation, if necessary
6. a statement by the issuer that, to the best of their knowledge, all prescribed information for publication in accordance with national provisions transposing Directive 2004/109/EC of the European Parliament and of the Council, if applicable, and in accordance with Regulation (EU) No 596/2014 of the European Parliament and of the Council, were submitted and published in accordance with those acts in the past 18 months or in the period from the beginning of the publication obligation, whichever period is shorter, if the issuer submits a draft Universal Registration Document for approval or submits a Universal Registration Document without prior approval for the purpose of acquiring the status of frequent issuer
7. an explanation of how the requirement for amendment or additional information in accordance with the provision of Article 9(9) second subparagraph of the Prospectus Regulation is fulfilled in the Universal Registration Document, if the Universal Registration Document is submitted without prior approval
8. all other information and documentation requested by Hanfa for the purposes of verification and approval of the prospectus.

4.2.3. Confirmation of Receipt of the Application
4.2.3.1. Hanfa will confirm receipt of the Application to the Applicant electronically to the email address of the contact person as soon as possible, and no later than the end of the second working day from the day of receipt of the Application in Hanfa's reporting system.
4.2.3.2. Hanfa will provide the Applicant with the following in the confirmation of receipt of the Application:
a) the case class code under which the Application is registered b) contact details of the authorized Hanfa person (including email address) to whom the Applicant can address inquiries regarding the submitted Application.

4.2.4. Completeness, Understandability, and Consistency of Financial Information and Presentation of Risk Factors in the Draft Prospectus (Criteria for Verification of Draft Prospectus Content)
4.2.4.1. When preparing the draft prospectus, the Applicant is obliged to take the following into account regarding financial information:

1. the prospectus contains audited and/or unaudited financial statements for historical periods presented in the prospectus, in accordance with relevant provisions of Delegated Regulation (EU) 2019/980
2. when presenting financial information in the prospectus, financial information from audited and/or unaudited financial statements is used, and the Applicant is obliged to ensure consistency between the financial information presented in the prospectus and the financial information from audited and/or unaudited financial statements
3. when calculating alternative performance measures, financial information from audited and/or unaudited financial statements in the prospectus is used, and the Applicant is obliged to follow ESMA's and Hanfa's guidelines on alternative performance measures
4. the applicant is obliged to ensure the correct calculation of absolute and relative changes in financial information and absolute and relative shares of individual financial information in their entirety
5. when presenting balance sheet positions, the comparative period for the period during the year (e.g., 30.9.) represents the last day of the previous period (e.g., 31.12.), and when presenting income statement positions, the comparative period for the period during the year (e.g., 1-9/20x1) represents the same period in the previous year (e.g., 1-9/20x0)
6. the applicant is required to prepare financial statements (including audited annual financial statements and audited and/or unaudited interim financial statements, if they are included in the historical periods of the prospectus) in accordance with the relevant provisions of Delegated Regulation (EU) 2019/980 in accordance with the relevant financial reporting framework applicable to the issuer of securities.

4.2.4.2. The prospectus must also contain data on risk factors, which must be described under a separate point/chapter titled "Risk Factors".
In accordance with the provision of Article 16(1) of the Prospectus Regulation, risk factors listed in the prospectus must be limited to risks that are specific to the issuer and/or the securities and which are material for making an informed investment decision, and which are supported by the content of the Registration Document and the securities notice.
When compiling the prospectus, the Applicant assesses the materiality of risk factors based on the likelihood of their occurrence and the expected extent of their negative impact.
The Applicant is obliged to describe the most material risk factors in the prospectus, with an explanation of the likelihood of the occurrence of the risk and the impact of each of these risks on the issuer and/or the securities being issued, offered, or admitted. The assessment of the materiality of risk factors can be marked as low, medium, or high.
The Applicant should ensure that the materiality of risk factors based on the likelihood of their occurrence and the expected extent of their negative impact is consistent throughout all parts of the prospectus where this information appears.
When identifying risks specific to the Applicant, it is necessary to consider the key audit matters listed in the independent auditor's report attached to the financial statements for historical periods included in the prospectus, and to assess the materiality of these matters based on the likelihood of their occurrence and the expected extent of their negative impact.
Applicants compiling a prospectus submitted to Hanfa take into account ESMA's Guidelines on Risk Factors in accordance with the Prospectus Regulation.
In the procedure for verification and approval of the prospectus, Hanfa applies the Guidelines on Risk Factors in accordance with the Prospectus Regulation to review the specificity, significance, and presentation of risk factors by category, depending on their nature.

4.2.5. Time Limits for Hanfa's Decision on the Application
Hanfa is obliged to make a decision on the Application within the time limit prescribed by the provision of Article 20 of the Prospectus Regulation (which time limit is determined according to the type of prospectus being approved).
If Hanfa does not make a decision on the Application within the prescribed time limit, the Application of the Applicant shall not be deemed to be approved.

4.2.6. Amendments to the Draft Prospectus
4.2.6.1. If, in the procedure for verification and approval of the prospectus, initiated upon the Application of the Applicant, in accordance with the provision of Article 20(4) of the Prospectus Regulation, Hanfa determines that the draft prospectus does not meet the conditions of completeness, understandability, and consistency, taking into account the criteria for verification of information contained in the prospectus prescribed by the provisions of Articles 36 to 41 of Delegated Regulation 2019/980 as well as points 4.2.4 of these Guidelines, Hanfa will, no later than within the time limit mentioned in point 4.2.5 of these Guidelines, and depending on the specific case, submit to the Applicant a request for amendments and/or supplements to the draft prospectus and/or documentation.
The request for amendments and/or supplements to the draft prospectus and/or documentation will be submitted by Hanfa to the Applicant electronically by email to the email address of the Applicant's contact person, and in the case of minor changes, orally, and will set a deadline for submission of the requested items.
When the Applicant explicitly requests that requests for amendments and/or supplements to the draft prospectus and/or documentation during the procedure be submitted in written form, Hanfa will, in accordance with the provisions of the General Administrative Procedure Act (Official Gazette nos. 47/09 and 110/21), invite the Applicant to make amendments and/or supplements by a decision. Hanfa will inform the Applicant of this right in the request for amendments and/or supplements to the draft prospectus and/or documentation which Hanfa sends to the Applicant by email. The time limit that Hanfa will set for the submission of amendments and/or supplements to the draft prospectus and/or documentation depends on the scope and complexity of the requested amendments and/or supplements in each specific case, and on whether the Applicant needs to engage other persons for the same. Hanfa will proceed in the same manner in the case of incomprehensibility or incompleteness of the Application and documentation necessary for deciding on the Application. Depending on the content or orderliness of the submitted amendments and/or supplements requested, Hanfa is authorized to again request from the Applicant amendments and supplements to the draft prospectus and/or documentation that it deems necessary in the same manner.

4.2.6.2. The Applicant may, before the expiration of the time limit set by Hanfa for the submission of amendments and/or supplements to the draft prospectus and/or documentation, submit an application to Hanfa for an extension of that time limit.
The Applicant submits their application for extension of the time limit by email to the email address of the contact person at Hanfa, to whom they address the submitted Application.
The Applicant is obliged to explain the grounds on which their application for extension of the time limit is based, and is obliged to indicate in the application the date until which the extension of the time limit is requested.
Hanfa will approve the Applicant's request for extension of the time limit if, upon processing the Application, it establishes the justification of the reasons for extension of the time limit, and the appropriateness of the time limit until which the extension is requested.
Otherwise, Hanfa will reject the Applicant's request for extension of the time limit.
Hanfa will notify the Applicant of the approval of the request for extension of the time limit or the rejection of the request by email to the email address of the Applicant's contact person, unless the Applicant requests the delivery of a decision.

4.2.6.3. The Applicant is obliged to submit, regarding Hanfa's request for amendments and/or supplements to the draft prospectus, within the allotted time limit and in the manner prescribed by the Technical Instruction:

1. the amended and supplemented draft prospectus in which amendments and supplements are clearly marked (track changes)
2. the amended and supplemented draft prospectus in clean copy
3. an explanation of each individual amendment and supplement to the draft prospectus following the comments received from Hanfa; if the amendments entered into the draft prospectus are self-evident or clearly eliminate the deficiencies identified by Hanfa (or the Applicant themselves), it is considered that for the purposes of the explanation that the Applicant is obliged to attach, it is sufficient to indicate the parts of the prospectus where the amendments were made to eliminate these deficiencies
4. other documentation from Hanfa's request.

4.2.6.4. Until the moment of making a decision on the Application, Hanfa may invite the Applicant to make amendments and supplements to the draft prospectus or submit documentation, in order to fulfill requirements regarding the completeness, consistency, and understandability of the information given in the prospectus.

4.2.6.5. If the Universal Registration Document referred to in Article 9(2) second subparagraph of the Prospectus Regulation or its amendments do not fulfill the principles of completeness, understandability, and consistency, or if Hanfa determines in the conducted procedure that amendments or additional information are necessary, Hanfa will notify the issuer by email to the email address of the Applicant's contact person. If the omission, error, or inaccuracy must be eliminated without undue delay, as prescribed in Article 9(9) third subparagraph of the Prospectus Regulation, Hanfa will notify the issuer of this.

4.2.6.6. If the Applicant cannot or does not wish to carry out the necessary amendments and/or supplements to the draft prospectus or submit the documentation, as well as in other cases prescribed by the CMA, Hanfa is, depending on the case, authorized by its decision to reject or dismiss the Applicant's Application for approval of the prospectus, stating the reasons for making such a decision.

4.2.7. Submission of the Final Draft of the Prospectus for Approval
4.2.7.1. When Hanfa determines that the Application is in order, it will notify the Applicant of this by email to the email address of the Applicant's contact person, and invite them to submit the signed final draft of the prospectus for approval.
The Application of the Applicant is considered to be in order when Hanfa determines that the draft prospectus is entirely prepared in accordance with the provisions of the CMA, the Prospectus Regulation, and Delegated Regulation 2019/980, or the regulatory framework applicable to the public offer of securities and admission of securities to trading on a regulated market, and that all necessary and prescribed documentation listed in point 4.2.2 of these Guidelines, as well as subsequently submitted documentation upon Hanfa's request, is attached to the Application.

4.2.7.2. The final draft of the prospectus is submitted to Hanfa for approval, in clean copy in electronic form as a PDF document, signed with a qualified electronic signature, and signed by all persons as prescribed by the Prospectus Regulation and the CMA, together with all information from Article 42(2) of Delegated Regulation 2019/980, which has changed in relation to the previous...