Regulation on Licensing of Supplementary Individual Pension Providers

1. Based on Article 35, paragraph 1.1 of Law No. 03/L-209 on the Central Bank of the Republic of Kosovo (Official Gazette of the Republic of Kosovo, No. 77/16 August 2010), and Article 13 of Law No. 04/L-101 on Pension Funds in Kosovo (Official Gazette of the Republic of Kosovo, No. 10/8 May 2012), the Board of the Central Bank of the Republic of Kosovo, in its meeting held on 29 December 2014, approved the following:

REGULATION ON LICENSING OF EMPLOYER SUPPLEMENTARY PENSION FUNDS

Article 1
Purpose and Scope

1. This Regulation specifies the conditions, requirements, procedures, and deadlines to be followed for applying for and granting a license for Employer Supplementary Pension Funds (hereinafter "Pension Funds").
2. This Regulation shall be applied by the Central Bank of Kosovo (BQK) to all applicants for a license to establish Pension Funds in the Republic of Kosovo.

Chapter I
General Provisions

Article 2
Definitions
All terms in this Regulation have the same meaning as the terms defined in Article 1 of Law No. 04/L-168 on Amendment and Supplement to Law No. 04/L-101 on Kosovo Pension Funds, and Article 1 of Law No. 04/L-101 on Kosovo Pension Funds (hereinafter "Pension Funds Law"), or with the definitions below for the purpose of this Regulation:
“Licensed entity” means a legal person licensed by the BQK under this Regulation to conduct Pension Fund activities.
“Employer supplementary pension fund” (hereinafter “Pension Fund”) means a legal person established by an employer or a group of employers for their employees and former employees, as well as their beneficiaries, in the form of a fund management body. “Employer supplementary pension” means a pension paid by the pension fund established by an employer in accordance with the Kosovo Pension Funds Law. “Sponsor(s)” means the employer(s) that establish the Pension Fund in accordance with the Pension Funds Law and this Regulation. “Major shareholder” means a shareholder or sponsor holding 10% or more of the equal shares of the Pension Fund.

Article 3
Pension Fund Activity

1. Based on Article 14 of the Pension Funds Law, employers may provide employer supplementary pensions through the establishment of employer supplementary pension funds (“pension funds”).
2. No one may conduct pension fund activities in the Republic of Kosovo without first obtaining a license from the BQK.
3. A licensed Pension Fund may not engage in any other activity except providing pensions and direct services characteristic of this activity.
4. A licensed Pension Fund shall be subject to regulation and supervision by the BQK.

Chapter II
Criteria for Licensing of Pension Funds

Article 4
Application Requirements

1. Interested parties seeking a license for a Pension Fund must meet all requirements under the Pension Funds Law, which are necessary for the application process according to BQK internal acts. The applicant may request the required application forms and instructions from the BQK or find them on the official BQK website.
2. The application is signed by the founder and submitted to the BQK, with physical presence of the founder or representatives of the proposed Pension Fund founders. The application must be submitted together with the complete documentation required by the Pension Funds Law and this Regulation.
3. The provided documentation must be in one of the two official languages of the Republic of Kosovo, either original or a legalized copy.

Article 5
Licensing Criteria

1. An applicant for a Pension Fund license, in addition to the requirements of Article 15 of the Pension Funds Law, must also meet the following conditions:
   a. be registered as a legal person in accordance with the Commercial Companies Law; b. be in good financial condition, demonstrated by audited financial statements and having no unpaid tax obligations;
   c. the founders, directors, and managers of the proposed company are not convicted of any criminal offense and meet the BQK’s “fit and proper” requirements;
2. The application for a Pension Fund license must be accompanied by the following documentation:
   a. BQK form (application); b. business registration certificate;
   c. complete biographies of the founders, board members, and managers, as well as financial statements;
   d. list of proposed board members and managers, their complete biographies, including certificates verifying relevant qualifications and experience; e. Statute; f. organizational structure (organogram); g. business plan; h. conclusions of an independent expert/actuary confirming the existence of valuation and verifying that required contributions are adequate to pay pensions, in case of Defined Benefit Pension Funds;
   i. Statute of the Sponsor(s);
   j. list of participants showing their professional categories, or declarations of all employees of the Sponsor who will participate; k. copy of the proposed agreement with the licensed pension asset manager;
   l. list of banks and their addresses where the Sponsor(s) have banking arrangements, and for which the proposed Pension Fund claims to have banking arrangements, along with a description of such arrangements;
   m. copy of the proposed agreement for asset custody with the licensed custodian; n. name and contact details of the audit firm for the Pension Fund; o. document verifying that the proposed Pension Fund has suitable premises and infrastructure to conduct its activities as a Pension Fund, including installation of the informatized data reporting system to the BQK; p. proof of payment of the license fee based on the number of participants;
3. In addition to the aforementioned requirements, the BQK may request additional information or documentation.

Article 6
Refusal of License Grant
The BQK may refuse the grant of a license in accordance with the conditions set forth in Article 15 of the Pension Funds Law.

Article 7
Fees for Licensing of Pension Providers

1. An applicant seeking a license as a Pension Fund must pay licensing and supervision fees for Pensions in the amounts approved by the BQK.
2. The application fee for a license is non-refundable even in case of refusal by the BQK.

Article 8
Timeframe for License Application Review

1. The BQK reviews the submitted documents in accordance with the requirements of this Regulation.
2. The BQK issues a decision approving or refusing the license application as a Pension Provider within 90 days from the date of receipt of the license application. The BQK immediately informs the applicant upon making the decision.
3. The date of receipt of the license application is considered the date when the applicant has fulfilled all requirements of this Regulation. This date is notified in writing to the applicant by the BQK.
4. The BQK, within 30 days after the date of application receipt, reviews the submitted documentation and notifies the applicant in writing whether the documentation is complete or not.
5. If the submitted documentation is incomplete and/or does not meet the requirements specified in this Regulation, the BQK notifies of deficiencies or non-compliance with the provisions of this Regulation together with a request for information or additional documentation.
6. The BQK suspends the license application review procedures if the requested data and/or documentation are not fulfilled by the applicant within 1 month after notification by the BQK according to paragraph 5 of this article. In case of suspension of the application review procedure, the BQK notifies the applicant in writing.
7. During the application review period, the BQK may request additional information or specific changes/improvements when deemed reasonable.

Article 9
Characteristics of the License

1. The license is granted in writing for an indefinite period and is non-transferable.
2. If within 12 months from the licensing date, the Pension Fund does not commence its activity, the license shall be revoked.

Chapter III
Suspension and Cancellation of Licenses for Pension Funds

Article 10
Conditions and Procedures for License Suspension

1. In cases where the BQK decides to act according to paragraph 2 of Article 19 of the Pension Law, it may suspend the license based on any of the following conditions:
   a. violation by the Pension Fund of the requirements of the Kosovo Pension Funds Law, other applicable laws, and BQK regulations; b. failure to act in accordance with the Pension Regulation;
   c. failure to conclude agreements with the asset manager and/or asset custodian;
   d. failure to act in accordance with BQK requirements regarding the suspension and removal of violations within the time period prescribed by the BQK, including failure to respect the timeframe for correcting or improving such violations; e. if the License was obtained based on intentional falsification, or false information submitted by or relating to the applicant; f. failure to submit reports within the timeframe required by the BQK; g. non-compliance with the BQK’s information requirement when reviewing activities of licensed entities.
2. Within two working days after receiving the license suspension decision, the BQK will notify the Pension Fund in writing as follows:
   a. description of the violation establishing the criteria for license suspension; b. taking necessary measures to correct or improve the violation;
   c. the timeframe within which the violation must be corrected or improved, and relevant documents to be submitted to the BQK for correction and improvement;
   d. list of activities that are prohibited during the suspension period.
3. Within two working days from receiving the license suspension decision for the Pension Provider, the Asset Custodian and Asset Manager shall be informed.

Article 11
Conditions and Procedures for Cancellation of the Pension Fund License

1. In addition to the conditions set forth in Article 19 of the Pension Law, the BQK may cancel the license based on any of the following conditions:
   a. repeated violations, or serious violations by the licensed entity, its Asset Manager, or Custodian, of the requirements of the Pension Law, applicable laws, or BQK regulations; b. repeated failure to meet the timeframes set by the BQK for correcting violations in licensed activities, which have been grounds for license suspension;
   c. repeated failure to meet the timeframes set by the BQK for reporting on licensed activities;
   d. failure of the licensed entity to perform its undertaken functions within one year to ensure pensions; e. liquidation or termination of the licensed entity; f. for other reasons, as determined by applicable regulations or directives issued by the BQK regarding the Kosovo Pension Funds Law or applicable laws.
2. Immediately after receiving the license cancellation decision, the BQK will notify the licensed entity in writing that its license has been cancelled. The notification must present the cancellation criteria and prohibition of developing any activity for which the license was issued. Furthermore, the notification must be presented to the Asset Custodian and Asset Manager.
3. If his license is cancelled, the Pension Fund is obliged to present all notes and documents pertaining to pension assets within the timeframe and subsequent procedures specified by Pension Regulations, unless the BQK, in the interest of participants and beneficiaries, orders an earlier or different manner for such presentation.
4. The winding-up procedure of the Pension Fund after receiving the license cancellation decision shall be carried out according to the provisions of Article 19 of the Pension Law.

Article 12
Judicial Reviews

1. An applicant for a Pension Fund License may appeal to the competent court against the BQK’s decision refusing the license application.
2. A Pension Fund may appeal to the competent court against the BQK’s decision on suspension or cancellation of the license.

Article 13
Repeal
Upon entry into force of this Regulation, Rule No. 1 on Amendment to the Rule on Licensing of Employer Supplementary Pension Funds dated 2 May 2002 is repealed.

Article 14
Entry into Force
This Regulation shall enter into force on 5 January 2015.

Chairman of the Board of the Central Bank

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Bedri Peci