Regulation on Significant Transactions of Supervised Entities in a Financial Conglomerate

Evidentiary Data Collection of Regulations Register Regulation on Significant Transactions of Supervised Entities in a Financial Conglomerate Official Gazette of the Republic of Slovenia, No. 36/07 ID: PRAV6551 EVA: 2005-1611-0023 SOP: 2007-01-1932 Adopted: 5. 4. 2007 Published: 19. 4. 2007 Effective from: 20. 4. 2007 Type of Act: Regulation Responsible Authority: Ministry of Finance Adopting Authority: Ministry of Finance Forms The electronic edition of the Official Gazette is the official edition from 1 January 2006. Prior to this date, official editions were published in paper form. Text

Pursuant to the fourth paragraph of Article 30 of the Financial Conglomerates Act (Official Gazette of the Republic of Slovenia, No. 43/06), the Minister of Finance issues

REGULATION

on significant transactions of supervised entities in a financial conglomerate

1. GENERAL PROVISIONS

Article 1

(content of the regulation)

This regulation determines:

• the definition of types of transactions within the group,
• the definition of significant transactions within the group,
• the obligations of the coordinator and other supervisory authorities regarding the implementation of supplementary supervision of transactions carried out within the financial conglomerate,
• the method and deadlines for reporting on significant transactions of supervised entities in the financial conglomerate.

Article 2

(meaning of terms)

The terms used in this regulation have the same meaning as in the Financial Conglomerates Act (Official Gazette of the Republic of Slovenia, No. 43/06; hereinafter: ZFK).

Article 3

(definition of types of transactions within the group)

(1) The following transactions are particularly considered as types of transactions within the group under Article 4 of the ZFK:

a) credits, guarantees, and other securities between persons; b) trading transactions between persons (e.g., one person or group of persons trades with another person or group of persons, or trades in the name and for the account of that other person or group of other persons); c) transactions related to cross-ownership between persons; d) transactions with major shareholders; e) management transactions (funds, assets), other services (custodial services), and back-office services; f) transactions arising from the investment of client assets between persons; g) transactions arising from the purchase or sale of assets (real estate, financial instruments) between persons; h) transactions by which risks are transferred (e.g., insurance, reinsurance, or other transactions) between persons; i) liquidity management between persons; j) cost-sharing agreements between persons for joint projects.

(2) For the purpose of point d) of the first paragraph of this Article, a major shareholder is considered to be a person who reaches or exceeds a 10% share in the capital or a 10% share in the voting rights of a person in the group, unless defined otherwise by a decision under the second paragraph of Article 4 of this regulation.

(3) For a single transaction within the group, two or more transactions (aggregated status) that are similar in their economic purpose and are treated as a single transaction within the group for this purpose are also considered.

2. SIGNIFICANT TRANSACTIONS WITHIN THE GROUP AND OBLIGATIONS OF THE COORDINATOR

Article 4

(significant transactions within the group)

(1) In accordance with the second sentence of the third paragraph of Article 30 of the ZFK, a transaction within the group is significant if its value exceeds at least 5% of the total capital requirements at the level of the financial conglomerate, calculated in accordance with the Regulation on the Calculation of Supplementary Capital Requirements for Supervised Entities and the Calculation of Adjusted Capital Requirements for Unsupervised Entities in a Financial Conglomerate (Official Gazette of the Republic of Slovenia, No. 8/07; hereinafter: the Regulations on the Calculation of Supplementary Capital Requirements).

(2) Notwithstanding the first paragraph of this Article, the coordinator may, after consulting with other supervisory authorities in accordance with the first sentence of the third paragraph of Article 30 of the ZFK, define significant transactions by value and type for a specific financial conglomerate by decision. In doing so, it defines in particular:

a) the types of transactions within the group from the first paragraph of Article 3 of this regulation; b) the base from which the reporting threshold is determined (e.g., capital, sum of premiums, balance sheet total, technical provisions); c) the threshold, i.e., the % of the base from point b) of this paragraph or the value (amount) of transactions within the group to be reported.

Article 5

(obligations of the coordinator and other supervisory authorities)

(1) In defining significant transactions within the group, under Article 4 of this regulation, the coordinator and other supervisory authorities take into account the specificity of the group regarding the services it provides, capital and risk management procedures under Article 32 of the ZFK, and internal control systems under Article 33 of the ZFK.

(2) Regarding appropriate capital and risk management procedures, the coordinator must, based on the second paragraph of Article 34 of the ZFK, in particular verify whether the following are ensured within the financial conglomerate:

• appropriate systems (procedures) for identifying risks,
• appropriate systems for measuring or assessing risks, possibly also with correlation analyses,
• appropriate systems for monitoring risks, including reporting on risks,
• appropriate systems for managing and controlling risks, including the determination of limits on transactions within the group.

(3) To achieve the objectives of supplementary supervision of transactions within the group at the level of the financial conglomerate, supervisory authorities may, in accordance with the first paragraph of Article 31 of the ZFK, for a specific financial conglomerate, require the submission of other evidence for qualitative monitoring of transactions within the group (e.g., description of the transaction or contracts/agreements, interest rates, fees – commissions, payment terms, securities, other special conditions, or explanations).

(4) In accordance with the first paragraph of Article 31 of the ZFK, supervisory authorities may determine quantitative or other limits on transactions within the group at the level of the financial conglomerate.

3. REPORTING ON SIGNIFICANT TRANSACTIONS WITHIN THE GROUP AND ENTRY INTO FORCE

Article 6

(obligation to provide, calculate, and report)

(1) Entities in the financial conglomerate must provide the entity referred to in the fourth paragraph of Article 30 of the ZFK with all data and information necessary for fulfilling obligations under this regulation and the provisions of the ZFK.

(2) The entity required to report to the coordinator on significant transactions of supervised entities within the group under the fourth paragraph of Article 30 of the ZFK must submit a report on each significant transaction of supervised entities in the financial conglomerate and relevant data as of the last day of each half-year.

(3) The report from the previous paragraph of this Article must be submitted in written form. Unless otherwise determined by a decision under the second paragraph of Article 4 of this regulation, the report must include in particular:

• significant transactions within the group that exceed the threshold from the first or second paragraph of Article 4 of this regulation with another entity in the financial conglomerate;
• the value of the transactions from the first bullet point of this paragraph in thousands of EUR;
• the share (%) of the transaction from the first bullet point of this paragraph in relation to the total capital requirements at the level of the financial conglomerate, calculated in accordance with the provisions of the Regulations on the Calculation of Supplementary Capital Requirements, or another base from point b) of the second paragraph of Article 4 of this regulation.

(4) The coordinator may, by decision for a specific financial conglomerate, more precisely define the form and content of the report from the previous paragraph of this Article.

(5) The deadline for submitting reports is no later than 30 April of the current year for the status as of 31 December of the previous year, and no later than 30 September for the status as of 30 June of the current year.

(6) Upon the request of the coordinator, a report must also be submitted for the status as of the date and within the deadline determined by the coordinator.

Article 7

(submission of the first report)

The entity referred to in the second paragraph of Article 6 of this regulation must submit the first report based on Article 6 of this regulation for the status as of 31 December 2007.

Article 8

(entry into force of the regulation)

This regulation enters into force on the day following its publication in the Official Gazette of the Republic of Slovenia.

No. 400-01-1/2004/

Ljubljana, 6 April 2007

EVA 2005-1611-0023

dr. Andrej Bajuk l.r. Minister for Finance