Order on Intra-Group Transactions

Order on Intra-Group Transactions 1)

Pursuant to Section 181, subsection 1, and Section 373, subsection 4, of the Act on Financial Business, cf. Act Consolidation No. 1013 of 21 August 2024, Section 172, subsection 1, and Section 316, subsection 1, of Act No. 718 of 13 June 2023 on Insurance Business, and Section 136, subsection 1, and Section 270, subsection 1, of the Act on Securities Firms and Investment Services and Activities, cf. Act Consolidation No. 232 of 1 March 2024, it is hereby ordered:

Scope of Application

Section 1. This Order applies to credit institutions, mortgage credit institutions, insurance companies, cross-sectoral pension funds, securities firms, and investment management companies. Sections 7 and 8 of this Order apply to undertakings covered by Section 166, subsections 1 and 2, of the Act on Insurance Business.

Subsection 2. The undertakings mentioned in subsection 1 are hereinafter referred to as financial undertakings.

Intra-Group Transactions

Section 2. An intra-group transaction is understood to be a transaction of any kind, including administration agreements, entered into between:

1. Credit institutions, mortgage credit institutions, insurance companies, cross-sectoral pension funds, securities firms, investment management companies and

a) undertakings that are directly or indirectly connected to the financial undertaking as subsidiaries, associated undertakings, parent undertakings, or as associated undertakings of the parent undertaking and other subsidiaries,

b) undertakings or persons connected to the financial undertaking through close links, cf. Section 5, subsection 1, no. 15, of the Act on Financial Business, Section 9, subsection 1, no. 15, of the Act on Insurance Business, and Section 10, subsection 1, no. 16, of the Act on Securities Firms and Investment Services and Activities, or

c) undertakings not covered by a and b, where the persons in the management of the majority of the undertakings are the same, or where the undertakings are subject to joint management pursuant to an agreement or articles of association.

Subsection 2. To the extent that the transactions are insignificant, Sections 4-6 do not apply.

Section 3. Intra-group transactions must be entered into on a written basis.

Section 4. Intra-group transactions must be entered into on market-based terms. If a genuine market does not exist, a reasoned estimate shall be used instead.

Subsection 2. To the extent that the intra-group transactions concern common group tasks, administration, or common functions in general, a cost-covering basis may be used. The costs and cost allocation must not favor a financial undertaking or an undertaking covered by Section 2 to the detriment of another financial undertaking or another undertaking covered by Section 2. The same applies to switching between the use of market terms and a cost-covering basis, as well as when changing the cost allocation method.

Subsection 3. The determination of the price or costs for the individual transaction must be stated in the appendix to the transaction or other written basis.

Guidelines

Section 5. The financial undertaking must draw up written, general guidelines for intra-group transactions.

Subsection 2. The guidelines must be approved by the board of directors of the financial undertaking.

Procedures

Section 6. The financial undertaking must draw up written procedures for intra-group transactions, which must at a minimum contain information about:

1. which undertakings or persons the financial undertaking has the connection specified in Section 2 with,

2. the terms of the transactions, cf. Section 4, including the calculation of the price for each type of transaction,

3. the cost allocation method, and

4. other matters of significant importance.

Subsection 2. The procedures must ensure that:

1. the transactions are entered into on a written basis,

2. transactions can subsequently be found and documented,

3. the transactions and their documentation can be audited, and

4. compliance with the guidelines can be verified.

Section 7. Undertakings covered by Section 166, subsections 1 and 2, of the Act on Insurance Business must regularly and at least once a year report to the Danish Financial Supervisory Authority (Finanstilsynet) about any significant risk concentration at the group level, unless a decision has been made pursuant to Article 215, subsection 2, 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 (Solvency II).

Subsection 2. The Danish Financial Supervisory Authority determines, after consultation with the group or group of undertakings and supervisory authorities in other countries within the European Union or in countries with which the Union has concluded an agreement in the financial sector, the types of risks that must be reported under all circumstances.

Subsection 3. When identifying significant risk concentrations to be reported, the Danish Financial Supervisory Authority determines, after consultation with the group or group of undertakings and supervisory authorities in other countries within the European Union or in countries with which the Union has concluded an agreement in the financial sector, appropriate threshold values based on solvency capital requirements, insurance technical provisions, or both.

Section 8. Undertakings covered by Section 166, subsections 1 and 2, of the Act on Insurance Business must regularly and at least once a year report to the Danish Financial Supervisory Authority (Finanstilsynet) about any significant intra-group transaction between insurance companies in the group or group of undertakings, including transactions carried out with a natural person having close links to an undertaking within the group or group of undertakings, unless a decision has been made pursuant to Article 215, subsection 2, 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 (Solvency II). Very significant intra-group transactions must be reported as soon as possible.

Subsection 2. The Danish Financial Supervisory Authority determines, after consultation with the group or group of undertakings and supervisory authorities in other countries within the European Union or in countries with which the Union has concluded an agreement in the financial sector, the types of intra-group transactions that must be reported under all circumstances, taking into account the group and its risk management structure. Section 6a, subsection 3, applies correspondingly.

Penalties

Section 9. Violation of the provisions of Sections 3-6, Section 7, subsection 1, and Section 8, subsection 1, is punishable by a fine.

Subsection 2. Companies and other legal persons may be subject to criminal liability pursuant to the rules in Chapter 5 of the Danish Criminal Code.

Entry into Force

Section 10. This Order enters into force on 1 January 2025.

Subsection 2. Order No. 904 of 1 September 2004 on Intra-Group Transactions is repealed.

Danish Financial Supervisory Authority, 5 December 2024 Louise Mogensen / Line Bergmann

5 December 2024. No. 1426.

1. The Order contains provisions implementing parts of Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, as well as Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council, (the Consolidated Supervision Directive) (Official Journal of the European Communities 2003 No. L 35, p. 1).

Law Gazette A
2024 Published on 10 December 2024
5 December 2024. No. 1426.
Ministry of Industry, Business and Financial Affairs, Danish Financial Supervisory Authority, file no. 24-019416 CQ003063