Regulation No. 2022-01: Miscellany of Targeted Review Interventions to Current Supervisory Provisions

THE DEPUTY DIRECTOR GENERAL
OF THE CENTRAL BANK OF THE REPUBLIC OF SAN MARINO

HAVING REGARD to Law 17 November 2005, No. 165 (Law on Banking, Financial and Insurance Enterprises and Services) and in particular Article 39, which grants the Central Bank of the Republic of San Marino the power to issue measures containing binding and general provisions;

HAVING REGARD to the Statute of the Central Bank of the Republic of San Marino approved by Law 29 June 2005, No. 96 and in particular Article 30, paragraph 3, according to which acts of the Central Bank in matters of supervision, deliberated by the Supervisory Coordination, are issued by the General Director, and Article 14, paragraph 5, which regulates the case of absence or impediment of the General Director;

CONSIDERING the opportunity to consolidate at the regulatory level the guidelines and pronouncements already expressed by the Supervisory Coordination, to address requests for procedural simplification coming from the system, and to align, in homogeneous parts, the current supervisory regulations;

CONSIDERING the need to update the content and/or coordinate among themselves the supervisory provisions due to subsequent changes in the reference regulatory framework, as well as to readjust the regulatory standards in matters of prudential asset weighting as well as the procedures and requirements for access without establishment to the San Marino market by foreign financial enterprises, taking into account the different levels of regulatory equivalence;

HAVING REGARD to the resolutions of the Supervisory Coordination and the Board of Directors with which the text of Regulation No. 2022-01, named "Miscellany of Targeted Review Interventions to Current Supervisory Provisions", was approved;

ISSUES the attached Regulation No. 2022-01 which enters into force on 28 February 2022.

San Marino, 23 February 2022
Signed: THE DEPUTY DIRECTOR GENERAL f.f.
Avv. Giuseppe Ucci

MISCELLANY
OF TARGETED REVIEW INTERVENTIONS
TO CURRENT SUPERVISORY PROVISIONS year 2022 / number 01

Article 1 - Amendments to Regulation No. 2006-01 on the Register of Authorized Subjects

1. Article 3 is replaced as follows:
"Article 3 - General Part
1. The REGISTER contains the informative elements relating to the following AUTHORIZED SUBJECTS which are distinguished into:
a) San Marino financial enterprises; b) foreign financial enterprises authorized to exercise reserved activities through branches or under the PSSS regime."

2. For San Marino financial enterprises, the following are indicated:
a) the name; b) the legal form; c) the registered office; d) the administrative headquarters, if different from the registered office; e) the date and number of registration in the REGISTER OF COMPANIES; f) the economic operator code and, for banks, also the relative ABI code; g) the accounting audit firm; h) the share capital (subscribed and paid); i) the corporate executives; j) the list of branches in the Republic and, for bank offices, also the relative CAB; k) the list of branches and representative offices abroad; l) the shareholders registered in the Shareholders' Book, holding participations in the share capital equal to or greater than 2%, complete with BENEFICIAL OWNERS; m) the corporate website (hyperlink) on which the last three approved annual financial statements are published, complete with any accompanying reports and certification; n) any registration in other Registers or Lists kept by the CENTRAL BANK; o) the indication if the subject is subject to a rigor procedure as well as the start and end dates of the aforementioned procedures.

3. For foreign financial enterprises, authorized to exercise reserved activities through branches or under the PSSS regime, the following are indicated:
a) the name, legal form, and registered office; b) the branches, any intermediaries or independent agents used for operations in San Marino territory; c) the foreign competent authority for supervisory purposes.

4. For each of the AUTHORIZED SUBJECTS, the following are also indicated:
a) the date and number of registration in the REGISTER; b) the list of reserved activities and branches of reserved activities for the exercise of which the AUTHORIZED SUBJECT has obtained authorization.

5. The publication of BENEFICIAL OWNERS referred to in letter l) of the previous paragraph 2 entails the indication in the REGISTER also of the shareholders registered in the Shareholders' Book of the San Marino financial enterprise, for participations lower than 2%, when the same shareholders are united by the same BENEFICIAL OWNERS."

2. Paragraphs 4, 5, and 6 of Article 7 are replaced as follows:
"4. During the period in which the authorized subject is subject, by decision of the CENTRAL BANK, to extraordinary administration, resolution, suspension of authorization, suspension of administrative bodies, suspension of payments, the adoption of the measure is indicated in the REGISTER.
5. Foreign financial enterprises, referred to in Article 3, first paragraph, letter b), are required to communicate without delay to the CENTRAL BANK their submission to procedures of extraordinary administration, resolution, compulsory liquidation, ordinary liquidation, suspension of authorization and/or administrative bodies or equivalent procedures or any case of loss or variation of their authorization by decision of the foreign supervisory authority.
6. Specifically for operations concerning the variation of the shareholding of San Marino financial enterprises, the CENTRAL BANK will vary the data contained in the REGISTER, at the following moments:

a) for processes subject to an authorization regime, once the communication of the completion of the authorized acquisition is received; b) for processes subject to a communication regime, once the specific communication is received."

3. In paragraph 2 of Article 8, letter g) is replaced as follows:
   "g) upon receipt from the foreign financial enterprise of the communication referred to in the previous Article 7, paragraph 5,".

4. Paragraph 3 of Article 8 is replaced as follows:
   "3. Concurrently with the cancellation referred to in paragraph 1, and until the deregistration of the company, the CENTRAL BANK will proceed to list the San Marino financial enterprise in the separate section of the REGISTER named "List of Cancelled Subjects", indicating with reference to the cancellation date:
   a) the corporate name; b) the registered office; c) the economic operator code; d) the number of registration in the REGISTER OF COMPANIES; e) the number of registration in the REGISTER; f) the date of registration in the REGISTER; g) the authorized reserved activities; h) the date of cancellation from the REGISTER; i) the cause of cancellation among those described in paragraph 1. In cases of cancellation for compulsory administrative liquidation, the CENTRAL BANK will provide an indication, in the same separate section, of the updated composition of the procedure bodies and its domicile, with relative contact details."

Article 2 - Amendments to Regulation No. 2006-03 on collective investment services

1. The following letters are added to paragraph 1 of Article 1:
"k-bis) "DG financial enterprises": financial enterprises falling within the scope of application of measures to counter the risk of Double Gearing (DG) such as:
1. financial enterprises authorized to carry out reserved activities in the Republic of San Marino;
2. financial enterprises belonging to the same group as those in the previous point 1;
3. financial enterprises that are creditors of the investing SICAV."
"l-bis) "cross-investments": reciprocal investments between two companies, also through the intermediation of one or more third parties, constituted by:
1. share capital participation, hybrid capitalization instruments, or subordinated liabilities;
2. credit facilities, if destined for investments referred to in the previous point 1."

2. Paragraphs 2 and 3 of Article 41 are replaced as follows:
"2. From the sum of "basic capital" and "supplementary capital" the following are deducted:
a) participations in other SICAVs, banks, investment firms, insurance enterprises, and other companies exercising financial activity, held directly or indirectly in a measure greater than 10% of the share capital of the participating company; b) shares in other SICAVs, banks, investment firms, insurance enterprises, and other companies exercising financial activity, held directly or indirectly in a measure not exceeding 10% of the capital of the participating company; c) hybrid capitalization instruments and subordinated liabilities issued by DG FINANCIAL ENTERPRISES, regardless of the allocation portfolio, if computed in the supervisory capital of the issuers.
3. The deduction referred to in the previous paragraph:

• letter a), is equal to the entire total amount;

• letter b), is equal to the part of the total amount that exceeds 10% of the value of the basic and supplementary capital of the investing SICAV, except in the case of CROSS-INVESTMENTS for which the deduction is equally integral up to an amount corresponding;

• letter c), is equal to the amount corresponding to the percentage share computed in the supervisory capital of the issuer, except in the case of CROSS-INVESTMENTS for which the deduction is equally integral."

Article 3 - Amendments to Regulation No. 2007-07 on the collection of savings and banking activity

1. The following points are added to paragraph 1 of Article I.I.2:
   "40.bis "DG financial enterprises": financial enterprises falling within the scope of application of measures to counter the risk of Double Gearing (DG) such as:
   a) financial enterprises authorized to carry out reserved activities in the Republic of San Marino; b) financial enterprises belonging to the same group as those in the previous letter a); c) financial enterprises that are creditors of the investing bank." "43.bis) "cross-investments": reciprocal investments between two companies, also through the intermediation of one or more third parties, constituted by:
   a) share capital participation, hybrid capitalization instruments, or subordinated liabilities; b) credit facilities, if destined for investments referred to in the previous letter a)."

2. In paragraph 1 of Article III.VI.2, letter f) is replaced as follows:
   "f) certification by the Supervisory Authority of the country of origin on the financial solidity, on the adequacy of the organizational, administrative, and accounting structures of the parent company and the possible BANKING GROUP of belonging, in cases where the country of origin is not a member of the E.U. or the E.E.A., nor bound, based on current international agreements, to receive the European financial acquis;".

3. Paragraph 1 of Article III.VI.9 is replaced as follows:
   "1. The application must contain all information useful for the acceptance of the request, with particular regard:
   a) to the description of the services and products intended to be offered; b) to the methods by which it is intended to operate, and, in cases where the country of origin is not a member of the E.U. or the E.E.A. nor bound based on current international agreements to receive the European financial acquis, attach the certification by the Supervisory Authority of the country of origin on the financial solidity, on the adequacy of the organizational, administrative, and accounting structures of the foreign bank and the possible BANKING GROUP of belonging."

4. Consistent with the literal wording of Article 75, paragraph 4, of the LISF:

• in letter b) of paragraph 1 of Article III.VI.1, the words "agreements for the exchange of information" are replaced by "specific agreements";
• in letter b) of paragraph 1 of Article III.VI.8 and in letter c) of paragraph 1 of Article III.VI.13, the words "for the exchange of information" are eliminated;
• in letter e) of paragraph 1 of Articles III.VI.1 and III.VI.8, the words "and to the exchange of information with the CENTRAL BANK related thereto;" are added at the end."

5. Paragraphs 1, 2, and 3 of Article VII.II.4 are replaced as follows:
   "1. From the sum of "basic capital" and "supplementary capital" the following are deducted:
   a) participations in FINANCIAL ENTERPRISES held directly or indirectly in a measure greater than 10% of the share capital of the participating company;

b) shares in FINANCIAL ENTERPRISES held directly or indirectly in a measure not exceeding 10% of the capital of the participating company; c) hybrid capitalization instruments and subordinated liabilities issued by DG FINANCIAL ENTERPRISES, regardless of the allocation portfolio, if computed in the supervisory capital of the issuers.
2. The deduction referred to in the previous paragraph:

• letter a), is equal to the entire total amount;
• letter b), is equal to the part of the total amount that exceeds 10% of the value of the basic and supplementary capital of the investing bank gross of the deductions referred to in this article, except in the case of CROSS-INVESTMENTS for which the deduction is equally integral up to an amount corresponding;
• letter c), is equal to the amount corresponding to the percentage share computed in the supervisory capital of the issuer, except in the case of CROSS-INVESTMENTS for which the deduction is equally integral.
  3. The investments referred to in letter b) of the previous paragraph 1, not deducted as they do not exceed the capital threshold, fall within the scope of application of the following Article VII.III.4, paragraph 1, letter f)."

6. In paragraph 1 of Article VII.III.4, letter i) is replaced as follows:
"i) 150% for financial instruments of issuers that have not punctually honored the deadlines for capital repayment and/or interest payment, including shares of Collective Investment Undertakings (CIUs) in cases of suspension of redemptions due to the management regulation."

Article 4 - Amendments to Regulation No. 2011-03 on the activity of granting financing (finance companies)

1. The following points are added to paragraph 1 of Article I.I.2:
   "39.bis "DG financial enterprises": financial enterprises falling within the scope of application of measures to counter the risk of Double Gearing (DG) such as:
   a) financial enterprises authorized to carry out reserved activities in the Republic of San Marino; b) financial enterprises belonging to the same group as those in the previous letter a); c) financial enterprises that are creditors of the investing finance company." "42.bis) "cross-investments": reciprocal investments between two companies, also through the intermediation of one or more third parties, constituted by:
   a) share capital participation, hybrid capitalization instruments, or subordinated liabilities; b) credit facilities, if destined for investments referred to in the previous letter a)."

2. In paragraph 1 of Article III.VI.2, letter f) is replaced as follows:
   "f) certification by the Supervisory Authority of the country of origin on the financial solidity, on the adequacy of the organizational, administrative, and accounting structures of the parent company and the possible FINANCIAL GROUP of belonging, in cases where the country of origin is not a member of the E.U. or the E.E.A., nor bound, based on current international agreements, to receive the European financial acquis;".

3. Paragraph 1 of Article III.VI.9 is replaced as follows:
   "1. The application must contain all information useful for the acceptance of the request, with particular regard:
   a) to the description of the services and products intended to be offered; b) to the methods by which it is intended to operate, and, in cases where the country of origin is not a member of the E.U. or the E.E.A. nor bound based on current international agreements to receive the European financial acquis, attach the certification by the Supervisory Authority of the country of origin on the financial solidity, on the adequacy of the organizational, administrative, and accounting structures of the foreign FINANCE COMPANY and the possible FINANCIAL GROUP of belonging."

4. Consistent with the literal wording of Article 75, paragraph 4, of the LISF:

• in letter b) of paragraph 1 of Article III.VI.1, the words "agreements for the exchange of information" are replaced by "specific agreements";
• in letter b) of paragraph 1 of Article III.VI.8 and in letter c) of paragraph 1 of Article III.VI.13, the words "for the exchange of information" are eliminated;
• in letter e) of paragraph 1 of Articles III.VI.1 and III.VI.8, the words "and to the exchange of information with the CENTRAL BANK related thereto;" are added at the end."

5. Paragraphs 1, 2, and 3 of Article VII.II.4 are replaced as follows:
"1. From the sum of "basic capital" and "supplementary capital" the following are deducted:
a) participations in FINANCIAL ENTERPRISES held directly or indirectly in a measure greater than 10% of the share capital of the participating company; b) shares in FINANCIAL ENTERPRISES held directly or indirectly in a measure not exceeding 10% of the capital of the participating company; c) hybrid capitalization instruments and subordinated liabilities issued by DG FINANCIAL ENTERPRISES, regardless of the allocation portfolio, if computed in the supervisory capital of the issuers."

2. The deduction referred to in the previous paragraph:

• letter a), is equal to the entire total amount;
• letter b), is equal to the part of the total amount that exceeds 10% of the value of the basic and supplementary capital of the investing FINANCE COMPANY gross of the deductions referred to in this article, except in the case of CROSS-INVESTMENTS for which the deduction is equally integral up to an amount corresponding;
• letter c), is equal to the amount corresponding to the percentage share computed in the supervisory capital of the issuer, except in the case of CROSS-INVESTMENTS for which the deduction is equally integral.
  3. The investments referred to in letter b) of the previous paragraph 1, not deducted as they do not exceed the capital threshold, fall within the scope of application of the following Article VII.III.4, paragraph 1, letter f)."

6. In paragraph 1 of Article VII.III.4, letter i) is replaced as follows:
"i) 150% for financial instruments of issuers that have not punctually honored the deadlines for capital repayment and/or interest payment, including shares of Collective Investment Undertakings (CIUs) in cases of suspension of redemptions due to the management regulation."

Article 5 - Amendments to Regulation No. 2009-01 on the preparation of the annual financial statements of insurance enterprises exercising life branches

1. Paragraph 3 of Article 3 is replaced as follows:
   "3. INSURANCE ENTERPRISES are required to publish on their website, within thirty days from the approval by the shareholders' meeting, the financial statements accompanied by everything listed in the previous paragraph 1, with the sole exception of the more technical attachments such as the technical report of the appointed actuary and the schedule of assets covering technical reserves."

2. The following paragraph is added to Article 3:
   "4. At least the financial statements of the last three fiscal years are published on the website."

Article 6 - Amendments to Circular No. 2017-03 on informational obligations regarding corporate financial statements

1. Paragraph 4.2 is replaced as follows:
"4.2 Publication of annual financial statements
1. Authorized subjects must publish on their website, within thirty days from the approval by the shareholders' meeting, the financial documentation composed at least of:

a) Management Report (including also a report on corporate governance in cases provided for in art. VI.I.2 of the REGULATION); b) Financial Statement Schemes; c) Notes to the Financial Statements; d) Report of the Board of Statutory Auditors; e) Report of the Audit Firm.
2. At least the financial statements of the last three fiscal years are published on the website."

2. The following Table is inserted in paragraph 8.6:
   "Table 36.4: data relating to acquiring activity The completion of the table is reserved for subjects carrying out acquiring activity.
   At 31.12.t At 31.12.t-1
   P.O.S. Number Amount Number Amount
   Number of Points of Sale (P.O.S.) contracted with the reporting entity Number of merchants contracted with the reporting entity Payment operations at merchants contracted with the reporting entity A.T.M. Number Amount Number Amount Number of Automatic Teller Machines (A.T.M.) managed by the reporting entity Withdrawal operations at A.T.M. managed by the reporting entity Operations at A.T.M. managed by the reporting entity other than withdrawal operations

3. In paragraph 8.1, the introduction to Table 6.1 (Participations and Participations in group enterprises) is replaced as follows:
   "Table 6.1: Participations and Participations in group enterprises Information is provided for each company in which the REPORTING SUBJECT holds a participation regardless of the percentage of interest held. For each participating company, the following information is indicated derived from the last annual financial statement which, if not already approved by the Shareholders' Meeting, has at least been approved, in draft, by the statutorily competent administrative body: the name and legal form, the registered office, the amount of net equity, the activity carried out, the amount of share capital, the economic result of the fiscal year, the percentage share of capital held, the value attributed in the financial statements to the participation, the fair value, the share of net equity, the difference between the share of net equity and the value attributed in the financial statements to the participation. If the value attributed in the financial statements to the participation is greater than the share of net equity, such higher value is subject to comment at the bottom of the table. The provision of Article V.I.1, paragraph 6, does not apply to the completion of this table. The net equity of the participating company is calculated including also the profit destined for reserves or deducting the loss. With regard to participations in "other participating companies" with a book value lower than a certain threshold (communicated in the OPERATIONAL MANUAL), the option is provided to indicate only the name "