Regulation on the Capital and Technical Reserves of a Pension Management Company Managing Voluntary Pension Funds – Unofficial Consolidated Text (NN, Nos. 68/14, 41/17, 112/19, 146/22 and 52/24)

Croatian Financial Services Supervisory Agency, 10000 Zagreb, Franje Račkoga 6, p.p. 164, Croatia t: 01 6173 200, f: 01 4811 507, e: info@hanfa.hr, OIB: 49376181407, MB: 02016419, w: www.hanfa.hr

RULEBOOK
ON THE REGULATORY CAPITAL AND TECHNICAL RESERVES OF A PENSION COMPANY MANAGING VOLUNTARY PENSION FUNDS (NN 68/14, 41/17, 112/19, 146/22 and 52/24 – Unofficial Consolidated Text)

Article 1.
(1) This Rulebook prescribes:
– the method for calculating the regulatory capital of a pension company, the characteristics of the items constituting it, and the deductible items, – additional capital requirements for pension companies that, in addition to the activity of establishing and managing voluntary pension funds, also engage in the activity of establishing and managing UCITS funds, – the content of the report on the calculation of regulatory capital, as well as the method and deadlines for submission, – the criterion for calculating the technical reserves of a pension company. (2) The basis for calculating the regulatory capital of a pension company is the accounting data from the business books of the pension company, which are kept in accordance with the laws and subordinate acts governing the financial reporting of the pension company. (3) An integral part of this Rulebook consists of:
a) instructions for calculating the regulatory capital of a pension company (Appendix 1), b) the report on the calculation of regulatory capital (Appendix 2).

CHAPTER I.
PENSION COMPANIES THAT DO NOT MANAGE A CLOSED FUND WITH DEFINED BENEFITS

OBLIGOR
Article 2. (NN 52/24)
The obligor for maintaining regulatory capital is a pension company that performs one or both of the activities from Article 11, paragraph 1 of the Voluntary Pension Funds Act ("Narodne novine", Nos. 19/2014, 29/2018, 115/2018 and 156/2023 hereinafter: the Act), provided that none of the funds under its management is a closed fund with defined benefits.

MINIMUM AMOUNT OF REGULATORY CAPITAL
Article 3.
(1) The minimum amount of regulatory capital of a pension company performing the activity from Article 11, paragraph 1, point a) of the Act must at all times be greater than or equal to the amount from Article 19, paragraph 1 of the Act. (2) The minimum amount of regulatory capital of a pension company performing the activities from Article 11, paragraph 1, points a) and b) of the Act must at all times be greater than or equal to:
a) the sum of one half of the lowest amount of share capital from Article 18, paragraph 1 of the Act and the share capital of the management company determined by the regulation governing the conditions for establishing and operating management companies for open-ended investment funds with public offer, or b) the amount of one quarter of the general expenses of the pension company from the previous financial year.

CALCULATION OF REGULATORY CAPITAL
Article 4.
(1) The regulatory capital of a pension company consists of the items from Article 5 of this Rulebook reduced by the deductible items of regulatory capital from Article 6 of this Rulebook.
(2) The provisions of this Rulebook relating to a pension company established as a joint-stock company apply mutatis mutandis to a pension company established as a limited liability company.

REGULATORY CAPITAL
Article 5. (NN 52/24)
(1) The items included in the basic regulatory capital of a pension company are:
a) subscribed and paid-up share capital (paid amounts for business shares or nominal value of ordinary shares realized upon issuance of those shares), b) all types of reserves formed from profit after taxation, c) retained earnings of previous years determined on the basis of audited annual financial statements (not burdened by any future obligations) and approved by the members or shareholders of the pension company and allocated in accordance with the decision of the general meeting of the pension company on the use of profit, d) profit of the current year determined on the basis of audited annual financial statements (not burdened by any future obligations) and approved by the members or shareholders of the pension company, or allocated in accordance with the decision of the general meeting of the pension company on the use of profit, or profit determined on the basis of financial statements for periods during the year and confirmed by the auditor, which, in accordance with the decision of the members or shareholders, or the general meeting of the pension company on the use of profit, not burdened by any future obligations, is allocated to reserves and/or retained earnings during the year, and e) capital reserves (amounts above the nominal value/accounting value realized upon issuance of shares from point a) of this paragraph and additional payments by shareholders of the pension company into the capital of the pension company). (2) Regulatory capital must have the following characteristics:
a) it is fully paid up and subscribed, b) it is unconditionally irrevocable, c) it is fully and without restriction available to cover losses from current operations as soon as they occur, d) it is not burdened by tax payments; otherwise, before use to cover risks and losses, all tax obligations must be taken into account, e) in the event of bankruptcy or liquidation of the pension company, it is available to cover losses after the obligations to all creditors have been met.

DEDUCTIBLE ITEMS OF REGULATORY CAPITAL
Article 6. (NN 52/24)
The deductible items of the regulatory capital of a pension company are as follows:
a) illiquid assets, assets that cannot be immediately liquidated for the timely settlement of the pension company's due obligations, such as investments in long-term intangible assets (goodwill, licenses, patents, trademarks, and concessions), b) shares of the pension company in other pension companies, c) losses in subsidiaries, d) due receivables, e) financial assets acquired by the pension company that are not in compliance with Article 37, paragraphs 1 and 2 of the Act, f) retained losses of previous years determined on the basis of audited annual financial statements, g) loss of the current year determined on the basis of an audited annual financial statement and approved by the members or shareholders of the pension company, or by the general meeting of the pension company, or loss determined on the basis of financial statements for periods during the year, h) unrealized losses from the revaluation of financial assets at fair value through other comprehensive income, negative net revaluation reserves arising from investments in associated companies, and other negative net revaluation reserves. Positive revaluation reserves are not included in the calculation of regulatory capital.

GENERAL OPERATING EXPENSES
Article 7.
(1) For the purpose of calculating one quarter of the general expenses from the previous financial year, the pension company uses data on total business expenses (positions in the statement of comprehensive income) which include the following items:
– fund management costs (account group 64-expenses from fund management) except for the amount of commission calculated for legal entities authorized to offer pension programs and shares in UCITS funds, which represents part of the entry fee, annual management fee, or exit fee, – general administrative costs (account group 60-material costs, account group 61-service costs, account group 62-salary, honorarium, and other remuneration costs, and 63-other administrative costs), – amortization and impairment costs of long-term assets (account group 65-amortization and impairment cost (except financial assets)), – provisions for costs and risks (account group 69-costs of provisions for unforeseen liabilities), – financial expenses and other costs (account group 66-unrealized losses and impairment of financial assets, account group 68-interest expenses and negative exchange rate differences, account group 67– loss from sale of financial instruments and other assets). (2) The general expenses from paragraph 1 of this Article are calculated on the basis of data from audited annual financial statements for the financial year immediately preceding the period for which the management company calculates regulatory capital.

REPORTING
Article 8.
The pension company is obliged to submit to HANFA the report on the calculation of regulatory capital from Appendix 2 of this Rulebook in accordance with the provisions of this Rulebook.

DEADLINES FOR SUBMISSION OF REPORTS
Article 9.
(1) The pension company is obliged to prepare the report on the calculation of regulatory capital as of the last day of the financial year and as of the last day of the half-year period of the financial year.
(2) The pension company is obliged to submit to HANFA the report on the calculation of regulatory capital within two months after the end of the half-year reporting period and within 4 months after the end of the financial year. (3) In addition to the dates mentioned in paragraph 1 of this Article, HANFA may request the pension company to submit the report from Appendix 2 of this Rulebook on any other day within the period determined by HANFA.

AUDIT OF REPORTS
Article 10.
(1) The pension company is obliged to submit to HANFA the report on the calculation of regulatory capital from Article 8 of this Rulebook as of the last day of the financial year, audited by an independent external authorized auditor. (2) The independent external authorized auditor, during the audit of the report on the calculation of regulatory capital from Article 8 of this Rulebook, is obliged to check the correctness, accuracy, and completeness of the report and assess whether it is prepared in accordance with the Act and this Rulebook and whether it is consistent with the annual financial statements of the pension company as of the reporting date. (3) For the purposes of auditing the report on the calculation of regulatory capital from paragraph 1 of this Article, the pension company is obliged to conclude an engagement with an independent external authorized auditor expressing reasonable assurance. (4) The pension company is obliged to publish the audited report on the calculation of regulatory capital on its website within the deadlines from Article 9 of this Rulebook.

METHOD OF SUBMISSION OF REPORTS
Article 11. (NN 52/24)
(1) The pension company submits to HANFA the report on the calculation of regulatory capital from Article 8 of this Rulebook in accordance with the technical instructions of HANFA.
(2) The pension company is obliged to submit the audited report on the calculation of regulatory capital from Article 8 of this Rulebook, together with the opinion of the independent external authorized auditor on the report on the calculation of regulatory capital as of the last day of the financial year, in the manner and in accordance with the Technical Instruction for using the system for data submission in electronic form of the Croatian Financial Services Supervisory Agency reports.hanfa.hr and the Instruction for filling out WEB forms for management companies: DZU UCITS, UAIF, OMD and DMD. (3) It is considered that the pension company has submitted the reports from paragraphs 1 and 2 of this Article at the moment when the report is accepted on the HANFA server for receiving reports. (4) In justified cases of technical impossibility of submission or submission that was not correctly performed (e.g., system failure, inability to read received documentation, etc.), the pension company is obliged to submit the report from Article 8 of this Rulebook in the manner prescribed by paragraphs 1 and 2 of this Article in written form, directly or by mail, for the purpose of timely reporting. The pension company is obliged to submit the report in the manner prescribed by paragraphs 1 and 2 of this Article as soon as the reasons for the impossibility of submission cease, and no later than within 8 days from the cessation of the circumstances that caused the technical impossibility of such submission. (5) HANFA may, if necessary, request the pension company to submit certain documentation prescribed by this Rulebook in original or certified copy, regardless of the electronic submission performed.

CHAPTER II.
PENSION COMPANIES THAT MANAGE A CLOSED FUND WITH DEFINED BENEFITS

OBLIGOR
Article 12.
The obligor for the application of the provisions of Chapter II of this Rulebook is a pension company that manages a closed fund with defined benefits.

ADEQUACY OF REGULATORY CAPITAL
Article 13.
(1) The pension company is obliged to ensure regulatory capital for the purposes and in the manner prescribed by Article 271 of the Act.
(2) The regulatory capital of a pension company consists of basic regulatory capital and supplementary regulatory capital after being reduced by the deductible items of regulatory capital.
(3) The guarantee regulatory capital of a pension company consists of the items of basic and supplementary regulatory capital.
(4) For the purposes of calculating regulatory capital and guarantee regulatory capital, respectively, the characteristics of basic and supplementary regulatory capital and the items constituting them, the deductible items of regulatory capital, and the limitations on regulatory capital are prescribed by law and subordinate acts governing the business of pension insurance companies. (5) The regulatory capital of a pension company must be at least equal to the solvency margin, while the guarantee regulatory capital must not be less than one third of the solvency margin. (6) For the purposes of calculating the solvency margin and the adequacy of regulatory capital of a pension company, the provisions of laws and subordinate acts governing the business of pension insurance companies apply mutatis mutandis.

TECHNICAL RESERVES
Article 14.
(1) The pension company is obliged to form technical reserves in accordance with Articles 267 and 268 of the Act.
(2) In addition to the provisions of paragraph 1 of this Article, the company is obliged to apply mutatis mutandis the provisions of laws and subordinate acts governing the business of pension insurance companies when forming technical reserves.

TRANSITIONAL AND FINAL PROVISIONS
Article 15.
This Rulebook enters into force on the eighth day from the date of publication in "Narodne novine", except for the provisions of Articles 8, 9, and 11 of this Rulebook, which enter into force on January 1, 2015.

FINAL PROVISION
Rulebook on Amendments and Supplements to the Rulebook on Capital and Technical Reserves of a Pension Company Managing Voluntary Pension Funds (NN 41/17), which entered into force on May 1, 2017
Article 6.
This Rulebook will be published in "Narodne novine" and enters into force on May 1, 2017.

FINAL PROVISION
Rulebook on Amendments and Supplements to the Rulebook on Capital and Technical Reserves of a Pension Company Managing Voluntary Pension Funds (NN 112/19), which entered into force on November 28, 2019
Article 4.
This Rulebook enters into force on the eighth day from the date of publication in "Narodne novine".

TRANSITIONAL AND FINAL PROVISIONS
Rulebook on Amendments to the Rulebook on Capital and Technical Reserves of a Pension Company Managing Voluntary Pension Funds (NN 146/22), which entered into force on January 1, 2023
Article 5.
(1) This Rulebook will be published in "Narodne novine" and enters into force on January 1, 2023.
(2) The pension company is obliged to submit the first reports in accordance with Article 4 of this Rulebook for reporting periods starting from January 1, 2023.
(3) Reports for periods until January 1, 2023 are submitted in accordance with Appendix 2 of the Rulebook on Capital and Technical Reserves of a Pension Company Managing Voluntary Pension Funds ("Narodne novine" Nos. 68/14, 41/17, 112/19) in the manner prescribed by Article 2 of this Rulebook, which amends Article 11, paragraph 1 of that Rulebook.

FINAL PROVISION
Rulebook on Amendments and Supplements to the Rulebook on Capital and Technical Reserves of a Pension Company Managing Voluntary Pension Funds (NN 52/24), which entered into force on May 11, 2024
Article 8.
This Rulebook enters into force on the eighth day from the date of publication in "Narodne novine".

APPENDIX 1. (NN 52/24)
INSTRUCTIONS FOR CALCULATING THE REGULATORY CAPITAL OF A PENSION COMPANY These Instructions further prescribe the content and format of the report on the calculation of regulatory capital and the method of preparing and filling out the report on the calculation of regulatory capital that the pension company is obliged to submit to HANFA.

I. GENERAL PROVISIONS
"Name of the Company" – the name of the pension company that is the reporting obligor is entered on an individual basis.
"OIB of the Company" – the OIB (Personal Identification Number) of the pension company determined by the Tax Administration is entered.
"Date" – the last day of the reporting period is entered in the format dd.mm.yyyy.
Items that increase positions in the report are entered as positive amounts, while items that decrease positions in the report (deductible items) are entered as negative amounts or with a minus sign (–).

II. INSTRUCTIONS FOR PREPARING AND FILLING OUT THE REPORT ON THE CALCULATION OF REGULATORY CAPITAL
REPORT: Regulatory Capital
The pension company calculates the regulatory capital in accordance with the provisions of this Rulebook, and the result of the calculation is entered into the report positions. Certain positions of the report are filled out as follows:

1. Regulatory Capital Items
   Positions 1.1 to 1.6 relate to the items of regulatory capital that, with a positive or negative sign, constitute regulatory capital, before reduction by the deductible items from Article 6 of this Rulebook. The positions for calculating regulatory capital are filled out as follows:
   1.1. Paid-up ordinary shares: enter the nominal value of paid-up (and subscribed) ordinary shares that constitute the share capital of the pension company.
   1.2. Paid-up business shares: for a pension company established as a limited liability company, enter the nominal value of the paid-up (and subscribed) business share that constitutes the share capital of the pension company.
   1.3. Reserves formed from profit after taxation: enter the mathematical sum of reserves relating to:
   1.3.1. Legal reserves – the amount of net profit allocated to this type of reserve, taking into account the provisions of Articles 220 and 222 of the Companies Act,
   1.3.2. Statutory reserves – the amount of net profit allocated to reserves in accordance with the Statute of the pension company, taking into account the provisions of Articles 220 and 222 a. (406 a) of the Companies Act,
   1.3.3. Other reserves – the amount of net profit allocated to reserves formed in accordance with the provisions of Articles 220 and 222 a. (406 a) of the Companies Act.
   1.4. Capital reserves: enter the paid-up amount exceeding the nominal value of shares (ordinary) that constitute the share capital of the pension company. Capital reserves also include additional payments by shareholders or members of the pension company into the capital of the pension company (Article 222 (406 a) of the Companies Act).
   1.5. Retained earnings: enter the amount of retained earnings of previous years, shown in the financial statement, which was determined on the basis of audited annual financial statements (not burdened by any future obligations) and approved by the members or shareholders of the pension company, or allocated in accordance with the decision of the general meeting of the pension company on the use of profit. In the financial statements for the first quarter of the current year, the pension company may also include part of the profit from the previous year (item profit of the previous year), if the pension company decided to retain this part of the profit with the approval of the decision by the members or shareholders or the supervisory board of the pension company.
   1.6. Profit of the current year (based on annual financial statements) – enter the amount of profit of the current year determined on the basis of audited annual financial statements (not burdened by any future obligations – reduced by paid dividends, paid taxes, and other obligations from profit in the reporting period) and approved by the members or shareholders of the pension company or allocated in accordance with the decision of the general meeting of the pension company on the use of profit.
   1.7. Sum of items (1.1 to 1.6): enter the mathematical sum of positions 1.1 to 1.6.

2. Deductible Items of Regulatory Capital
   Positions 2.1 to 2.9 relate to items that are deducted from regulatory capital, taking into account the provisions of Article 6 of this Rulebook. The positions for deductible items of regulatory capital are filled out as follows:
   2.1. Illiquid assets: (Article 6, point a) of this Rulebook) enter with a negative sign the total amount of illiquid assets that cannot be immediately liquidated for the timely settlement of the pension company's due obligations, such as investments in long-term intangible assets (goodwill, licenses, patents, trademarks, and concessions). Software or software support in development is not considered a deductible item when calculating regulatory capital.
   2.2. Shares in other pension companies: (Article 6, point b) of this Rulebook) enter with a negative sign the total amount of shares in other pension companies.
   2.3. Losses in subsidiaries: (Article 6, point c) of this Rulebook) enter with a negative sign the amount of loss realized in the subsidiaries of the pension company, determined on the basis of the annual financial statements of each individual subsidiary.
   2.4. Due receivables: (Article 6, paragraph, point d) of this Rulebook) enter with a negative sign the sum of all due receivables.
   2.5. Assets not in compliance with Article 37, paragraphs 1 and 2 of the Act: (Article 6, point e) of this Rulebook) enter with a negative sign the total amount of assets acquired by the pension company that are not in compliance with Article 37, paragraphs 1 and 2 of the Act.
   2.6. Retained losses: (Article 6, point f) of this Rulebook) enter with a negative sign the amount of losses from previous financial years, shown in the financial position report of the pension company, which were determined on the basis of audited annual financial statements and approved by the members or shareholders, or the general meeting of the pension company.
   2.7. Loss of the current year: (Article 6, point g) of this Rulebook) enter with a negative sign the amount of loss of the current year determined on the basis of audited annual financial statements approved by the members or shareholders or the general meeting of the pension company, or loss determined on the basis of financial statements for periods during the year.
   2.8. Unrealized losses of financial assets at fair value through other comprehensive income: (Article 6, point h) of this Rulebook) enter with a negative sign unrealized losses from the revaluation of financial assets at fair value through other comprehensive income.
   2.9. Negative net revaluation reserves: (Article 6, point h) of this Rulebook) enter with a negative sign negative net revaluation reserves arising from investments in associated companies and other negative net revaluation reserves.
   2.10. Sum of items (2.1 to 2.9): enter the mathematical sum of positions 2.1 to 2.9.

3. General expenses from the previous financial year
   3.1. Fund management costs – relates to costs of the management company recorded in account group 64-fund management costs,
   3.2. General administrative costs – relates to costs of the management company recorded in account group 60-material costs; 61-service costs; 62-salary, honorarium, and other remuneration costs; 63-other administrative costs,
   3.3. Amortization and impairment costs of long-term assets – relates to costs of the management company recorded in account group 65-amortization and impairment cost (except financial assets),
   3.4. Provisions for costs and risks – relates to costs of the management company recorded in account group 69-costs of provisions for unforeseen liabilities
   3.5. Financial expenses and other costs – relates to costs of the management company recorded in account group 66-unrealized losses and impairment of financial assets; 68-interest expenses and negative exchange rate differences; 67– loss from sale of financial instruments and other assets
   3.6. Sum of items (3.1 to 3.5): sum of positions 3.1 to 3.5 defined by Article 7 of this Rulebook (capital requirement

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