Royal Decree of 12 August 1994 on Consolidated Supervision of Credit Institutions, Investment Firms, and Collective Investment Scheme Management Companies

Title

1994003525

12 AUGUST 1994. - [Royal Decree on consolidated supervision of credit institutions, investment firms, and collective investment scheme management companies]. <Title replaced by Royal Decree 2007-10-29/33, art. 2, 003; In force: 08-11-2007> (NOTE: Consultation of versions prior to 30-11-2005 and update as of 19-11-2013)

Source: Finances

Publication: 12 October 1994

Number: 1994003525

page: 25887

File number: 1994-08-12/68

Entry into force: 22 October 1994

**Erratum:**Publication of 3 February 1995, number 1995003014, page 2472, Errata

6 archived versions

13 implementing decrees

CHAPTER I. - Definitions.
Art. 1-2
CHAPTER II. - (Parent companies that are (regulated entities) having their registered office in the European Economic Area.) <AR 2005-11-21/36, art. 29, § 3, 002; In force: 30-11-2005> <AR 2007-10-29/33, art. 5, 003; In force: 08-11-2007> Art. 3 CHAPTER III. - (Parent companies that are financial companies having their registered office in the European Economic Area.) <AR 2005-11-21/36, art. 29, § 5, 002; In force: 30-11-2005>. Art. 4-7 Chapter IIIbis. Parent companies having their registered office outside the European Economic Area. <inserted by AR 2005-11-21/36, art. 29, § 10; In force: 30-11-2005> Art. 7bis CHAPTER IV. - Parent companies that are mixed companies. Art. 8, 8bis, 9 CHAPTER V. - (Tasks, cooperation between competent authorities, communication of information, on-site verification). <AR 2007-10-29/33, art. 15, 003; In force: 08-11-2007> Art. 9bis, 9ter, 9quater, 10-15 CHAPTER VI. - Sanctions. Art. 16 CHAPTER VII. - Transitional and final provisions. Art. 17, 17bis, 18-19

Text

CHAPTER I. - Definitions.

Article 1.<AR 2007-10-29/33, art. 3, 003; In force: 08-11-2007> For the application of this decree, the following terms shall be understood as:
1° the banking law: the law of 22 March 1993 on the status and supervision of credit institutions; 2° the law concerning investment firms: the law of 6 April 1995 on the status and supervision of investment firms; 3° the law on collective management of investment portfolios: [3 the law of 3 August 2012 on certain forms of collective management of investment portfolios]3; 4° the law of 2 August 2002: the law of 2 August 2002 on the supervision of the financial sector and financial services; 5° Directive 2006/48/EC: Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 on the taking up and pursuit of the business of credit institutions (recast); 6° Directive 2006/49/EC: Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions (recast); 7° the Royal Decree organizing supplementary supervision of groups: the Royal Decree of 21 November 2005 organizing the supplementary supervision of credit institutions, insurance undertakings, investment firms, and collective investment scheme management companies, forming part of a financial services group, and amending the Royal Decree of 22 February 1991 establishing the General Regulations on the supervision of insurance undertakings and the Royal Decree of 12 August 1994 on consolidated supervision of credit institutions; 8° the Royal Decree on consolidated accounts of credit institutions, investment firms, and management companies: the Royal Decree of 23 September 1992 on consolidated accounts of credit institutions, investment firms, and collective investment scheme management companies; 9° regulated entity: a credit institution, an investment firm having the status of a stock exchange company [1 or portfolio management and investment advice company]1, or a management company; 10° credit institution: an enterprise as defined in Article 1, paragraph 2, of the banking law; 11° investment firm: an enterprise as defined in Article 44 of the law concerning investment firms; 12° management company: the collective investment scheme management company that manages a common investment fund, in accordance with Article 11, § 1, of the law on collective management of investment portfolios, or the collective investment scheme management company designated by an investment company, in accordance with Article 43 of the same law, and any other company constituted under foreign law that, if it had its registered office in Belgium, would be required to obtain authorization to exercise the activity of a management company; 13° financial institution: an enterprise as defined in Article 3, § 1, 5°, of the banking law and Article 46, 7°, of the law concerning investment firms; 14° financial company: an institution as defined in Article 49, § 1, 2°, of the banking law, Article 95, § 1, paragraph 1, 2°, of the law concerning investment firms, and [3 Article 241, § 1, 2°, of the law on certain forms of collective
management of investment portfolios]3; 15° mixed company: an enterprise other than a credit institution, an investment firm, a financial company, or a mixed financial company as defined in Article 49bis of the banking law and Article 95bis of the law concerning investment firms, which exclusively or jointly with others controls one or more credit institutions, one or more investment firms, or one or more management companies; 16° competent authority: a national authority responsible for the prudential supervision of credit institutions, investment firms, or management companies; [2 17° FSMA: the Financial Services and Markets Authority;]2. [2 18° the Bank: the National Bank of Belgium, referred to in the law of 22 February 1998; " 19° prudential supervision authority: the Bank or the FSMA, depending on whether it concerns the prudential supervision of credit institutions and stock exchange companies or that of portfolio management and investment advice companies and collective investment scheme management companies; 20° consolidated supervisor: a supervision authority defined in Article 3, § 1, 19°, of the banking law, or Article 46, 45°, of the law on investment firms, respectively;]2 [3 21° the European Banking Authority: the European Banking Authority established by Regulation No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC; 22° the European Systemic Risk Board: the European Systemic Risk Board established by Regulation No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on macro-prudential oversight of the financial system in the European Union and establishing a European Systemic Risk Board; 23° Regulation No 1093/2010: Regulation No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC.]3

(1)<AR 2009-03-23/07, art. 1, 004; In force: 02-05-2009> (2)<AR 2011-10-04/01, art. 2, 006; In force: 11-10-2011> (3)<AR 2013-11-12/04, art. 2, 007; In force: 29-11-2013>

Art. 2.<AR 2007-10-29/33, art. 4, 003; In force: 08-11-2007> § 1. For the application of this decree, the term consolidated situation shall mean the situation of the consolidated group constituted by a consolidating company with other Belgian and foreign companies included in the consolidation.
§ 2. The situation of the consolidated group, referred to in § 1, is determined in accordance with the rules on the communication of periodic information on a consolidated basis, as established by [1 the prudential supervision authority]1 in application, as the case may be, of Article 49, § 2, paragraph 4, of the banking law, Article 95, § 2, paragraph 4, of the law concerning investment firms, or [2 Article 241, § 2, paragraph 4, of the law on certain forms of collective management of investment portfolios]2, and, if necessary in the absence of adequate rules, in accordance with the provisions of the Royal Decree on consolidated accounts of credit institutions, investment firms, and management companies. § 3. By way of derogation from § 2, the application of this decree is governed by the following rules:
1° A consolidating company has the option to include subsidiaries in its consolidated situation using the proportional integration method, provided that it clearly demonstrates that its liability is proportionally limited to the share it holds in the capital of the subsidiary, due to the liability assumed by other shareholders proportionally to their contribution to the capital, and the sufficient solvency of the latter. 2° The exemption from the obligation of sub-consolidation as defined in Article 4 of the Royal Decree on consolidated accounts of credit institutions, investment firms, and management companies, is subject to the prior authorization of [1 the prudential supervision authority]1 and compliance with the following additional conditions:
a) the parent company of the exempted company is a regulated entity or a financial company, constituted under Belgian law; b) the exempted company or its parent company does not have as a subsidiary a credit institution, an investment firm, or a financial institution having its registered office outside the European Economic Area, nor does it have an interest in such a company.
By way of derogation from paragraph 1, [1 the prudential supervision authority]1 may also exempt a regulated entity from the obligation of sub-consolidation that does not meet the guarantee requirement referred to in Article 4, paragraph 2, of the Royal Decree on consolidated accounts of credit institutions, investment firms, and management companies, or that does not meet the conditions provided for in Article 113, § 2, of the Companies Code, if this company meets the other conditions referred to in paragraph 1 and if the exemption from the obligation of sub-consolidation does not, in the opinion of [1 the prudential supervision authority]1, jeopardize sufficient protection of the creditors of the exempted regulated entity. 3° When it deems necessary, [1 the prudential supervision authority]1 may, for the whole or certain aspects of prudential supervision, require:
a) that a company that is not a subsidiary but in which an interest is held or with which there is another capital link, also be included in the consolidated situation or treated using the equity method; b) that a company in which significant influence is exercised over the direction of management, outside of any interest or other capital link, be included in the consolidated situation, either by proportional integration or by the equity method. In its assessment for the application of paragraph 1, [1 the prudential supervision authority]1 takes into account the risks arising, for the consolidating company, from its relationship with the company concerned, and in particular the liability incurred by the consolidating company due to its interest, its capital link, or the significant influence it exercises. For the application of paragraphs 1 and 2, holding, directly or indirectly, shareholding rights representing 20% or more of the voting rights or capital of a company is irrebuttably considered as constituting an interest. 4° The non-inclusion of a subsidiary in the consolidated situation is subject, in the cases referred to in Articles 107, 108, and 109 of the Royal Decree of 30 January 2001 implementing the Companies Code, to the prior authorization of [1 the prudential supervision authority]1 For the application of Article 107, paragraph 1, 1°, of the aforementioned Royal Decree, one or more companies are considered to present negligible importance if their total balance sheet or their combined total balance sheet is less than 10 million EUR and represents less than 1% of the total balance sheet of the consolidating company. 5° Insurance undertakings, reinsurance undertakings, insurance holding companies, and reinsurance holding companies that are either subsidiaries or companies in which an interest is held, are included in the consolidated situation:
a) for the application of the provisions of Article 3, § 1, paragraph 2, and Article 4, § 1, paragraph 2; b) for the verification of solvency standards referred to in Article 3, § 1, paragraph 3, 1°, b), and 2°, b), and Article 4, § 1, paragraph 3, 1°, b), and 2°, b); for the verification referred to in paragraph 1, b), [1 the prudential supervision authority]1 may permit or impose the use of one of the calculation methods provided for by the Royal Decree organizing supplementary supervision of groups, or permit or impose the application of the deduction rule provided for by the regulations of [1 the prudential supervision authority]1 issued in execution of Article 43 of the banking law and Article 90 of the law concerning investment firms; by way of derogation from paragraph 1, insurance undertakings, reinsurance undertakings, insurance holding companies, or reinsurance holding companies are, for the verification of solvency standards, excluded from the consolidated situation if the parent company of these companies or the company holding an interest in these companies is at the head of a financial services group subject to supplementary supervision as defined in Article 49bis of the banking law or Article 95bis of the law concerning investment firms, and that these companies are included in the supplementary supervision; c) for the verification of risk concentration standards and requirements relating to an adequate policy concerning capital needs, as referred to in Article 3, § 1, paragraph 3, 1°, b), and 2°, b), and Article 4, § 1, paragraph 3, 1°, b), and 2°, b).

(1)<AR 2011-10-04/01, art. 7, 006; In force: 11-10-2011> (2)<AR 2013-11-12/04, art. 3, 007; In force: 29-11-2013>

CHAPTER II. - (Parent companies that are (regulated entities) having their registered office in the European Economic Area.) <AR 2005-11-21/36, art. 29, § 3, 002; In force: 30-11-2005> <AR 2007-10-29/33, art. 5, 003; In force: 08-11-2007>

Art. 3. [2007-10-29/33], art. 6, 003; En vigueur : 08-11-2007>

§ 1. Belgian regulated entities that are parent companies are subject to supervision exercised by [1 the Prudential Supervision Authority]1 on the basis of their consolidated situation.

The supervision covers the following aspects: the financial situation of the consolidated group; management, organization, and internal control, as referred to in Articles 20 and 20bis of the Banking Act, Articles 62 and 62bis of the Act concerning investment firms, and [2 Article 201 of the Act relating to certain forms of collective management of investment portfolios]2, for the consolidated group; the adequacy of the administrative and accounting organization and internal control within the entities included in the consolidated situation, in order to ensure that the information and details provided within the framework of consolidated supervision are correct and comply with applicable rules; and the influence exerted by the entities included in the consolidated situation on other entities.

Regulated entities are, furthermore, required to respect, on the basis of their consolidated situation, the following limits, standards, and obligations:

1° in the case referred to in Articles 49, §§ 2 and 3, of the Banking Act:
a) the limits and conditions provided for by Article 32 of that Act; b) the standards regarding solvency and risk concentration, as well as the requirements relating to an adequate policy concerning capital needs, as referred to in Articles 43, §§ 1 to 3, of that same Act, as well as in the regulation of [1 the Prudential Supervision Authority]1 adopted in implementation of that Article; c) the information disclosure obligations, as referred to in Article 43, § 4, of that same Act, as well as in the regulation of [1 the Prudential Supervision Authority]1 adopted in implementation of that Article;

2° in the case referred to in Articles 95, §§ 2 and 3, of the Act concerning investment firms:
a) the limits and conditions provided for by Article 76 of that Act; b) the standards regarding solvency and risk concentration, as well as the requirements relating to an adequate policy concerning capital needs, as referred to in Articles 90, §§ 1 to 3, of that same Act, as well as in the regulation of [1 the Prudential Supervision Authority]1 adopted in implementation of that Article; c) the information disclosure obligations, as referred to in Article 90, § 4, of that same Act, as well as in the regulation of [1 the Prudential Supervision Authority]1 adopted in implementation of that Article;

3° in the case referred to [2 in Article 241, §§ 2 and 3, of the Act relating to certain forms of collective management of investment portfolios]2:
a) the limits and conditions provided for by Article 167 of that Act; b) the standards regarding solvency and risk concentration, as well as the requirements relating to an adequate policy concerning capital needs, as referred to in Article 184, §§ 1 to 3, of that same Act, as well as in the regulation of [1 the Prudential Supervision Authority]1 adopted in implementation of that Article; c) the information disclosure obligations, as referred to in Article 184, § 4, of that same Act, as well as in the regulation of [1 the Prudential Supervision Authority]1 adopted in implementation of that Article.

§ 2. Without prejudice to the provisions of § 3, consolidated supervision does not entail individual supervision by [1 the Prudential Supervision Authority]1 of the entities included in the consolidated situation.

§ 3. Consolidated supervision does not prejudice the supervision, on an individual basis, of the regulated entities included in the consolidated situation.

Notwithstanding the provision of the first paragraph, [1 the Prudential Supervision Authority]1 may exempt Belgian regulated entities from the obligation to comply, on an individual basis, with the standards regarding solvency and risk concentration provided for in § 1, third paragraph, 1°, b), 2°, b), and 3°, b), in the following cases:

1° when the regulated entity is a parent company and the individual supervision of that regulated entity is of marginal importance regarding the nature and volume of the activities of the subsidiaries included in the consolidation, taking into account the sufficient solvency of those subsidiaries;

2° when the regulated entity is a subsidiary included in the consolidated supervision exercised by [1 the Prudential Supervision Authority]1 in accordance with § 1, and that entity demonstrates that it satisfies the following conditions:
a) there are no obstacles to the rapid transfer of capital or the rapid repayment of liabilities by its parent company; b) either the parent company provides full guarantee to [1 the Prudential Supervision Authority]1 regarding the prudent management of the subsidiary and stands as guarantor for the commitments undertaken by the subsidiary, or the risks of the subsidiary are negligible; c) the risk assessment, measurement, and control procedures of the parent company cover the subsidiary; and d) the parent company exercises legal control over the subsidiary within the meaning of Article 5, § 2, of the Companies Code.

In the case referred to in the third paragraph, 1°, [1 the Prudential Supervision Authority]1 notifies its decision to the competent authorities of the other Member States of the European Economic Area and publishes this information on its website, in accordance with the provisions of Article 157bis of the Banking Act and Article 147bis of the Act concerning investment firms.

§ 4. Belgian regulated entities that are subsidiaries of a regulated entity having its registered office in another Member State of the European Economic Area, or in which such a foreign entity holds a participation, are subject to supervision exercised on the basis of the consolidated situation of the foreign regulated entity, in accordance with the provisions of Directive 2006/48/EC and Directive 2006/49/EC.

§ 5. The provisions of Article 55 of the Banking Act, Article 101 of the Act concerning investment firms, and [2 Article 247 of the Act relating to certain forms of collective management of investment portfolios]2, which concern the functions of the approved auditor of a regulated entity, apply by analogy in the case of regulated entities subject to supervision on the basis of their consolidated situation in accordance with § 1.

(1)<AR 2011-10-04/01, art. 7, 006; En vigueur : 11-10-2011> (2)<AR 2013-11-12/04, art. 4, 007; En vigueur : 29-11-2013>

CHAPTER III. - (Of parent companies that are financial companies having their registered office in the European Economic Area.) <AR 2005-11-21/36, art. 29, § 5, 002; En vigueur : 30-11-2005>.

Art. 4.<AR 2007-10-29/33, art. 7, 003; En vigueur : 08-11-2007; voir également l'art. 42>

§ 1. Belgian regulated entities whose parent company is a financial company having its registered office in a Member State of the European Economic Area are, without prejudice to the obligations arising from the provisions of Chapter II of this Decree, subject to supervision on the basis of the consolidated situation of the financial company.

Regulated entities are, furthermore, required to respect, on the basis of the consolidated situation of the financial company, the following limits, standards, and obligations:

1° in the case referred to in Article 49, § 4, of the Banking Act:
a) the limits and conditions provided for by Article 32 of that Act; b) the standards regarding solvency and risk concentration, as well as the requirements relating to an adequate policy concerning capital needs, as referred to in Article 43, §§ 1 to 3, of that same Act, as well as in the regulation of [1 the Prudential Supervision Authority]1 adopted in implementation of that Article, excluding the requirement relating to the general solvency ratio, the requirement regarding the coverage of fixed assets, and the requirement concerning the coverage of fixed costs; c) the information disclosure obligations, as referred to in Article 43, § 4, of that same Act, as well as in the regulation of [1 the Prudential Supervision Authority]1 adopted in implementation of that Article;

2° in the case referred to in Article 95, § 4, of the Act concerning investment firms:
a) the limits and conditions provided for by Article 76 of that Act; b) the standards regarding solvency and risk concentration, as well as the requirements relating to an adequate policy concerning capital needs, as referred to in Article 90, §§ 1 to 3, of that same Act, as well as in the regulation of [1 the Prudential Supervision Authority]1 adopted in implementation of that Article, excluding the requirement relating to the general solvency ratio, the requirement regarding the coverage of fixed assets, and the requirement concerning the coverage of fixed costs; c) the information disclosure obligations, as referred to in Article 90, § 4, of that same Act, as well as in the regulation of [1 the Prudential Supervision Authority]1 adopted in implementation of that Article;

3° in the case referred to [2 in Article 241, § 4, of the Act relating to certain forms of collective management of investment portfolios]2:
a) the limits and conditions provided for by [2 Article 217 of that same Act]2; b) the standards regarding solvency and risk concentration, as well as the requirements relating to an adequate policy concerning capital needs, as referred to in [2 Article 234, §§ 1 to 3, of that same Act]2, as well as in the regulation of [1 the Prudential Supervision Authority]1 adopted in implementation of that Article, excluding the requirement regarding the coverage of fixed assets and the requirement regarding the coverage of general costs; c) the information disclosure obligations, as referred to in [2 Article 234, § 4, of that same Act]2, as well as in the regulation of [1 the Prudential Supervision Authority]1 adopted in implementation of that Article.

§ 2. Consolidated supervision does not entail supervision, on an individual basis, of the financial company or any other entity included in the consolidated situation.

Consolidated supervision does not, however, prejudice the supervision, on an individual basis, of the regulated entities included in the consolidated situation, subject to the provisions of Chapter II.

§ 3. Notwithstanding the provisions of § 2, first paragraph, [1 the Prudential Supervision Authority]1 must be informed of the identity of the natural or legal persons who intend to acquire shares or parts, representing or not the capital, conferring or not the right to vote, of a Belgian financial company, such that they would hold, directly or indirectly, at least 5% of the capital or voting rights.

The provisions of Article 24 of the Banking Act apply by analogy.

§ 4. Notwithstanding the provisions of § 2, first paragraph, the effective management of a Belgian financial company must be entrusted to at least two natural persons who possess the necessary professional integrity and adequate experience to exercise these functions.

Persons who participate in the administration or management of a Belgian financial company, without participating in its effective management, must possess the necessary expertise and adequate experience to assume their tasks.

If the statutes of a Belgian financial company provide for the establishment of a management committee as referred to in Article 524bis of the Companies Code, this management committee must include at least two directors.

The provisions of Articles 19, 26bis, 27, and 28 of the Banking Act apply by analogy to the persons referred to in the first and second paragraphs.

(1)<AR 2011-10-04/01, art. 7, 006; En vigueur : 11-10-2011> (2)<AR 2013-11-12/04, art. 5, 007; En vigueur : 29-11-2013>

Art. 5.<AR 2007-10-29/33, art. 8, 003; En vigueur : 08-11-2007>

§ 1. The supervision of Belgian regulated entities, referred to in Article 4, § 1, is exercised by [1 the Prudential Supervision Authority]1

§ 2. By way of derogation from § 1 and when the financial company is a foreign entity having its registered office in a Member State of the European Economic Area, the supervision is exercised according to the following modalities:

1° if the financial company has as a subsidiary a regulated entity located in that State, the supervision is exercised by the competent authority of that State;

2° if several regulated entities having their registered office in a Member State of the European Economic Area have the same financial company as parent company, and none of these entities has been authorized in the State in which the financial company has its registered office, the supervision is exercised by the competent authority that authorized the regulated entity possessing the highest total balance sheet.

§ 3. If several financial companies having their registered office in different Member States of the European Economic Area are the parent company of the same regulated entity, and if there is in each of said States a regulated entity that is included in the consolidated supervision, the supervision is exercised by the competent authority of the regulated entity possessing the highest total balance sheet.

§ 4. The provisions of §§ 2 and 3 are not applicable in the case referred to [2 in Article 241, § 4, of the Act relating to certain forms of collective management of investment portfolios]2.

§ 5. [1 The Prudential Supervision Authority]1 and the competent authorities of the other Member States of the European Economic Area may, in the interest of good organization of supervision, mutually agree to derogate from the jurisdiction rules provided for in §§ 1, 2, 3, and 4. [2 In this case, the Prudential Supervision Authority notifies the European Commission and the European Banking Authority, acting as the competent authority.]2

[1 The Prudential Supervision Authority]1 and the competent authorities may agree that the consolidated supervision of regulated entities having their registered office in a Member State of the European Economic Area, other than Belgium, and whose parent company is a Belgian financial company, will be exercised by [1 the Prudential Supervision Authority]1 BR}Before taking a decision, the competent authorities concerned consult on this matter the financial company or the regulated entity possessing the highest total balance sheet within the group.

[2 For the application of the provisions of the first and second paragraphs of this section, the Prudential Supervision Authority concludes agreements with the competent authorities concerned, in accordance with the provisions respectively set forth in Articles 36/14, § 1, 3°, and 36/16, § 2, of the Act of 22 February 1998, and in Articles 75, § 1, 4°, and 77, § 2, of the Act of 2 August 2002, depending on whether the Prudential Supervision Authority is the Bank or the FSMA. If the Prudential Supervision Authority is responsible for consolidated supervision, it informs the European Commission, the European Banking Authority, and the holding financial company or the regulated entity displaying the highest total balance sheet of the group.]2

(1)<AR 2011-10-04/01, art. 7, 006; En vigueur : 11-10-2011> (2)<AR 2013-11-12/04, art. 6, 007; En vigueur : 29-11-2013>

Art. 6.§ 1. For the purpose of the exercise, by [2 the Prudential Supervision Authority]2, of the supervision of (regulated entities) on the basis of the consolidated situation of financial companies, regulated by this Chapter, the following statements are submitted (at least) every semester to [2 the Prudential Supervision Authority]2, according to the modalities determined by the latter: <AR 2007-10-29/33, art. 9, 1°, 003; En vigueur : 08-11-2007>

1° a consolidated accounting statement comprising the balance sheet and income statement, prepared in accordance with (the accounting recognition and valuation rules provided for by) the Royal Decree on consolidated accounts (of credit institutions, investment firms, and management companies) (...), or (according to equivalent rules) when it concerns a foreign financial company; <AR 2007-10-29/33, art. 9, 2°, 003; En vigueur : 08-11-2007>

2° (a statement confirming compliance with the limits and standards imposed by Article 4, § 1, third paragraph, 1°, a) and b), 2°, a) and b), and 3°, a) and b)). <AR 2007-10-29/33, art. 9, 3°, 003; En vigueur : 08-11-2007>

§ 2. (former § 3) Without prejudice to the provisions of the second paragraph of this section, the information and statements referred to (in § 1) may be communicated by (the Belgian subsidiary regulated entity) of the financial company. When the information is communicated by (the regulated entity), the financial company remains, with (the reporting entity), responsible for ensuring that the information is correct and communicated in a timely manner. <AR 2005-11-21/36, art. 29, § 8, 002; En vigueur : 30-11-2005> <AR 2007-10-29/33, art. 9, 4°, 003; En vigueur : 08-11-2007>

When the financial company has its registered office outside Belgium, [2 the Prudential Supervision Authority]2 may require that the information and statements referred to be communicated to it by (the Belgian regulated entity that it has as a subsidiary). <AR 2007-10-29/33, art. 9, 4°, 003; En vigueur : 08-11-2007>

[1 § 3. The effective management of the financial company, and if applicable the management committee, declares to the [2 the Prudential Supervision Authority]2 that the aforementioned statements transmitted to it by the financial company for its consolidated situation at the end of the first social semester and at the end of the social year, are in conformity with the accounting and inventories. It is required in this respect that these statements be complete, i.e., that they mention all the data appearing in the accounting and inventories on the basis of which they are prepared, and that they be correct, i.e., that they correspond exactly with the accounting and inventories on the basis of which they are prepared. The effective management confirms having done what is necessary to ensure that the aforementioned statements are prepared according to the current instructions of [2 the Prudential Supervision Authority]2, as well as by application of the accounting recognition and valuation rules governing the preparation of consolidated accounts, or, for statements not relating to the end of the year, by application of the accounting recognition and valuation rules that governed the preparation of consolidated accounts for the last year.]1

(1)<AR 2009-03-23/07, art. 2, 004; En vigueur : 02-05-2009> (2)<AR 2011-10-04/01, art. 7, 006; En vigueur : 11-10-2011>

[Art. 6] [7].<AR 2007-10-29/33, art. 10, 003; En vigueur : 08-11-2007> § 1. The functions of statutory auditor provided for by the Companies Code are entrusted, in a financial company governed by Belgian law, to one or more approved auditors or to one or more approved audit firms, approved by [2 the Prudential Supervision Authority]2, in accordance with Article 50 of the Banking Law, for the exercise of the functions of statutory auditor with a regulated entity.

Articles 50, 51, 52, paragraph 3, 53, 54 and 55, paragraphs 2 to 5, of the Banking Law apply by analogy.

§ 2. The auditors appointed for financial companies referred to in § 1 collaborate in the consolidated supervision exercised by [2 the Prudential Supervision Authority]2, under their personal and exclusive responsibility and in accordance with this paragraph, the rules of the profession and the instructions of [2 the Prudential Supervision Authority]2. To this end:

1° they evaluate the internal control measures [1 as referred to]1 in Articles 20, § 3, paragraph 1, and 20bis, §§ 2, 3 and 4, of the Banking Law, in Articles 62, § 3, paragraph 1, and 62bis, §§ 2, 3 and 4, of the Law concerning investment firms and in [3 Article 201, § 3, paragraph 1, of the Law relating to certain forms of collective management of investment portfolios]3;

2° [1 they report to [2 the Prudential Supervision Authority]2 on:

a) the results of the limited review of the statements transmitted by the financial company to [2 the Prudential Supervision Authority]2 for its consolidated situation at the end of the first half of the financial year, confirming that they are not aware of any facts which would appear to indicate that these statements have not, in all significant respects, been prepared in accordance with the current instructions of [2 the Prudential Supervision Authority]2. They further confirm that these statements adopted at the end of the half-year are, with regard to accounting data, in all significant respects, in accordance with the accounting records and inventories, in the sense that they are complete, i.e. that they mention all the data appearing in the accounting records and inventories on the basis of which they are prepared, and that they are correct, i.e. that they correspond exactly with the accounting records and inventories on the basis of which they are prepared; they also confirm that they are not aware of any facts which would appear to indicate that these statements adopted at the end of the half-year have not been prepared by applying the recognition and valuation rules that governed the preparation of the consolidated accounts for the last financial year; [2 the Prudential Supervision Authority]2 may specify which statements are concerned in this case;

b) the results of the audit of the statements transmitted by the financial company to [2 the Prudential Supervision Authority]2 for its consolidated situation at the end of the financial year, confirming that these statements have, in all significant respects, been prepared in accordance with the current instructions of [2 the Prudential Supervision Authority]2. They further confirm that these statements adopted at the end of the financial year are, with regard to accounting data, in all significant respects, in accordance with the accounting records and inventories, in the sense that they are complete, i.e. that they mention all the data appearing in the accounting records and inventories on the basis of which they are prepared, and that they are correct, i.e. that they correspond exactly with the accounting records and inventories on the basis of which they are prepared; they also confirm that these statements adopted at the end of the financial year have been prepared by applying the recognition and valuation rules governing the preparation of the consolidated accounts; [2 the Prudential Supervision Authority]2 may specify which statements are concerned in this case;]1

3° they provide [2 the Prudential Supervision Authority]2, at its request, with special reports on the organisation, activities and financial structure of the consolidated group, the costs of which are borne by the financial company, the regulated entity or both jointly;

4° in the context of their mission with the financial company or of an audit mission with an entity linked to the financial company, they report to [2 the Prudential Supervision Authority]2 on their own initiative as soon as they observe:

a) decisions, facts or developments that influence or may influence significantly the situation of a regulated entity from a financial perspective or from the perspective of its administrative and accounting organisation or its internal control;

b) decisions or facts concerning the financial company that may constitute violations of the Companies Code, the articles of association, the Banking Law, the Law concerning investment firms, the Law relating to the collective management of investment portfolios or this Decree;

c) other decisions or facts that are likely to lead to the refusal or reservations regarding the certification of consolidated accounts.

§ 3. When the parent undertaking is a financial company with its registered office abroad and consolidated supervision is exercised by [2 the Prudential Supervision Authority]2, the functions defined in § 2 are exercised in a similar manner by the auditor appointed for the Belgian law regulated entity that the entity in question has as a subsidiary.

(1)<AR 2009-03-23/07, art. 3, 004; En vigueur : 02-05-2009>

(2)<AR 2011-10-04/01, art. 7, 006; En vigueur : 11-10-2011>

(3)<AR 2013-11-12/04, art. 7, 007; En vigueur : 29-11-2013>

Chapter IIIbis. Of parent undertakings having their registered office outside the European Economic Area. <inserted by AR 2005-11-21/36, art. 29, § 10; En vigueur : 30-11-2005>

[Art. 7] [7bis].<inserted by AR 2005-11-21/36, art. 29, § 10; En vigueur : 30-11-2005> § 1. (The regulated entities) governed by Belgian law whose parent undertaking is (a regulated entity) or a financial company having its registered office in a State not a member of the European Economic Area and which are not already subject to consolidated supervision in accordance with the provisions of Chapters II and III, (are subject) to consolidated supervision in accordance with the provisions of this Article. <AR 2007-10-29/33, art. 11, 1°, 003; En vigueur : 08-11-2007>

§ 2. [1 The Prudential Supervision Authority]1 verifies whether (the regulated entities referred to in § 1 are subject) to supervision exercised by a competent authority of a State not a member of the European Economic Area which is equivalent to the consolidated supervision provided for by the provisions of Chapters II and III. Before taking its decision, [1 the Prudential Supervision Authority]1 consults the other competent authorities concerned of Member States of the European Economic Area on the equivalence or otherwise of this consolidated supervision. It takes into account any guidelines issued by the European Banking Committee in this matter in accordance with the provisions (of Directive 2006/48/EC and Directive 2006/49/EC). [2 The Prudential Supervision Authority consults the European Banking Authority before taking its decision.]2 <AR 2007-10-29/33, art. 11, 2°, 003; En vigueur : 08-11-2007>

If, by analogy of the provisions of Article 5, a competent authority other than [1 the Prudential Supervision Authority]1 is responsible for consolidated supervision, [1 the Prudential Supervision Authority]1 may communicate to this other competent authority its findings and its view on the equivalence referred to in paragraph 1.

§ 3. If the procedure provided for in § 2 leads to the conclusion that there is no equivalent consolidated supervision, (the Belgian law regulated entities concerned are subject) to consolidated supervision by analogy of the provisions of Chapters II and III. <AR 2007-10-29/33, art. 11, 3°, 003; En vigueur : 08-11-2007>

§ 4. By way of derogation from § 3, [1 the Prudential Supervision Authority]1 may, in its capacity as the competent authority responsible for consolidated supervision, decide, after consultation with the other competent authorities concerned, to apply another adequate supervision method, which must achieve the objectives of consolidated supervision as referred to by (Directive 2006/48/EC and Directive 2006/49/EC). [1 The Prudential Supervision Authority]1 may, in particular, require that (the regulated entities) and any other establishments subject to prudential supervision which are constituted under the law of a Member State of the European Economic Area, be included in a group headed by an undertaking constituted under the law of a Member State of the European Economic Area, and apply the provisions of Chapters II and III on the basis of the consolidated situation of this undertaking. [1 The Prudential Supervision Authority]1, in its capacity as the competent authority responsible for consolidated supervision, notifies the other competent authorities concerned [2 the European Banking Authority,]2 and (, the European Commission and the financial company or regulated entity holding the highest total balance sheet within the group,) of any decision taken in application of this paragraph. <AR 2007-10-29/33, art. 11, 4°, 003; En vigueur : 08-11-2007>

§ 5. For the application of the provisions of §§ 3 and 4, [1 the Prudential Supervision Authority]1 concludes the necessary agreements with the foreign competent authorities concerned, in accordance with the provisions of Articles 75, § 1, 4°, and 77, § 2, of the Law of 2 August 2002.

(1)<AR 2011-10-04/01, art. 7, 006; En vigueur : 11-10-2011>

(2)<AR 2013-11-12/04, art. 8, 007; En vigueur : 29-11-2013>

CHAPTER IV. - Of parent undertakings that are mixed financial holdings.

[Art. 8] [8bis].§ 1. [1 The Prudential Supervision Authority]1 may request information and details from mixed financial holdings and their subsidiaries that it deems useful for the exercise of its supervision, on an individual and consolidated basis, (of credit institutions, investment firms and management companies, constituted under Belgian law,) which these holdings control. <AR 2007-10-29/33, art. 12, 1°, 003; En vigueur : 08-11-2007>

These information and details must enable [1 the Prudential Supervision Authority]1 to assess in particular the following aspects: the solidity (of the credit institution, the investment firm and the management company), the influence of the entities referred to on the management of the credit institution and the operations (of the credit institution, the investment firm and the management company) with other group companies. <AR 2007-10-29/33, art. 12, 1°, 003; En vigueur : 08-11-2007>

(The entities referred to in paragraph 1 have adequate administrative and accounting organisation and internal control, in order to guarantee that the information and details to be provided in application of this Article and Article 8bis are correct and comply with the applicable rules.) <AR 2007-10-29/33, art. 12, 2°, 003; En vigueur : 08-11-2007>

§ 2. When the mixed financial holding or one or more of its subsidiaries have their registered office outside (the European Economic Area), the implementation details of the provisions of § 1 are fixed in (agreements concluded between [1 the Prudential Supervision Authority]1 and the foreign competent authorities concerned in accordance with the provisions of Articles 75, § 1, 4°, and 77, § 2, of the Law of 2 August 2002.) <AR 2005-11-21/36, art. 29, § 11, 2° and § 17, 002; En vigueur : 30-11-2005>

§ 3. The provisions of (Article 6, § 2) apply by analogy with regard to (credit institutions, investment firms and management companies, constituted under Belgian law,) which are subsidiaries of mixed financial holdings. <AR 2007-10-29/33, art. 12, 1°, 003; En vigueur : 08-11-2007>

(1)<AR 2011-10-04/01, art. 7, 006; En vigueur : 11-10-2011>

[Art. 8] [8bis].<inserted by AR 2005-11-21/36, art. 29, § 12; En vigueur : 30-11-2005> Without prejudice to the obligations arising from (the application of regulatory standards on risk concentration, imposed in execution of Article 43 of the Banking Law, Article 90 of the Law concerning investment firms and [2 Article 234 of the Law relating to certain forms of collective management of investment portfolios]2), [1 the Prudential Supervision Authority]1 exercises general supervision over transactions that take place between (a regulated entity) governed by Belgian law, on the one hand, and its parent undertaking which is a mixed financial holding and the other subsidiaries of the latter, on the other hand. <AR 2007-10-29/33, art. 13, 003; En vigueur : 08-11-2007>

(Regulated entities) must have adequate administrative and accounting organisation, as well as risk management procedures and internal control arrangements that allow them to correctly identify, measure and monitor the transactions referred to in paragraph 1. [1 The Prudential Supervision Authority]1 ensures that this is indeed the case. It may impose specific reporting obligations concerning the transactions referred to in paragraph 1. <AR 2007-10-29/33, art. 13, 003; En vigueur : 08-11-2007>

If the nature and extent of the transactions referred to in paragraph 1 compromise the financial situation (of the regulated entity concerned), [1 the Prudential Supervision Authority]1 takes appropriate measures. Without prejudice to any other possible measures, it may require that these transactions be reduced. <AR 2007-10-29/33, art. 13, 003; En vigueur : 08-11-2007>

(1)<AR 2011-10-04/01, art. 7, 006; En vigueur : 11-10-2011>

(2)<AR 2013-11-12/04, art. 9, 007; En vigueur : 29-11-2013>

[Art. 8] [9].[1 The Prudential Supervision Authority]1 may request confirmation of the correctness and completeness of the information and details communicated in application of Article 8:

1° when the reporting entity is a company governed by Belgian law, to the statutory auditor of this entity;

2° when the reporting entity has established its registered office outside Belgium, to the (auditor) approved of the (regulated entity) governed by Belgian law that the mixed financial holding has as a subsidiary. <AR 2007-10-29/33, art. 14, 003; En vigueur : 08-11-2007>

(1)<AR 2011-10-04/01, art. 7, 006; En vigueur : 11-10-2011>

CHAPTER V. - (Tasks, cooperation between competent authorities, communication of information, on-site verification). <AR 2007-10-29/33, art. 15, 003; En vigueur : 08-11-2007>

Art. 9bis.<inséré par AR 2007-10-29/33, art. 16; En vigueur : 08-11-2007> § 1. For the purposes of exercising consolidated supervision as referred to in Chapters IIa to IV, [1 the Prudential Supervision Authority]1 closely cooperates with foreign competent authorities that have authorized credit institutions, investment firms, and collective investment management companies included in consolidated supervision or in the supervision referred to in Chapter IV [3, and with the European Banking Authority]3. [1 The Prudential Supervision Authority]1 may communicate to the aforementioned competent authorities confidential information useful to them for the exercise of their supervisory missions under Directive 2006/48/EC and Directive 2006/49/EC. In this regard, [1 the Prudential Supervision Authority]1 and these authorities shall, upon request, exchange any relevant information and shall, on their own initiative, transmit any essential information.

The information referred to in the first paragraph is considered essential if it is important for assessing the financial solidity of the credit institution, investment firm, or collective investment management company in question. The following information must be considered essential:

1° the structure of the group to which the companies referred to in the first paragraph belong, the identification of all significant credit institutions, investment firms, and collective investment management companies belonging to the group, as well as the competent authorities responsible for supervising these companies;

2° the procedures governing the collection of information from the companies concerned and the verification of this information;

3° negative developments experienced by the companies referred to in the first paragraph or other companies belonging to the group, which could seriously affect the companies referred to in the first paragraph that are part of the group;

4° significant sanctions and measures taken by the competent authorities in accordance with Directive 2006/48/EC and Directive 2006/49/EC, including the additional requirements referred to in Article 43, § 3, of the Banking Act, Article 95, § 3, of the Act on Investment Firms, and [3 Article 234, § 3, of the Act on certain forms of collective portfolio management]3.

[3 The Prudential Supervision Authority may, as provided by respectively Article 77, § 1, of the Act of 2 August 2002 or Article 36/16, § 3, of the Act of 22 February 1998, depending on whether the Prudential Supervision Authority is the FSMA or the Bank, refer to the European Banking Authority situations in which:

a) a competent authority has not communicated essential information; b) requests for cooperation, in particular for the exchange of relevant information, have been rejected or have not been followed up within a reasonable time.]3

§ 3. When [1 the Prudential Supervision Authority]1 wishes, for the purposes of its supervision of regulated entities on a social or sub-consolidated basis, to obtain information that has already been communicated to the authority responsible for consolidated supervision, it addresses itself, as far as possible, to the authority in question to obtain this information.

§ 4. Without prejudice to the collaboration agreements provided for in other provisions of this Royal Decree, [1 the Prudential Supervision Authority]1 concludes with foreign competent authorities the necessary agreements for the exercise of consolidated supervision and supervision referred to in Chapter IV. These agreements regulate, where applicable, the modalities for exercising this supervision, including the modalities for cooperation and the exchange of information between competent authorities, subject to compliance with the provisions of Chapter 3, Section 6, of the Act of 2 August 2002.

[2 § 5. Within the colleges of supervisory authorities as referred to in Article 49, § 5ter, of the Banking Act and Article 95, § 5ter, of the Act on Investment Firms, the Prudential Supervision Authority, in its capacity as consolidated supervisor, and the other competent authorities concerned perform the following tasks:

a) exchange information; b) agree to entrust tasks and delegate competencies, on a voluntary basis, if necessary; c) define prudential supervision programs based on an assessment of the group's risk; d) enhance the effectiveness of supervision by avoiding unnecessary duplication of supervisory requirements; e) apply the prudential requirements provided by Directive 2006/48/EC consistently across all entities within a banking group, without prejudice to the options and faculties provided by Community legislation; f) apply Article 9ter, § 1, 2bis, of this Royal Decree, taking into account the work of other bodies that may be established in this area.

Competent authorities participating in the colleges of supervisory authorities cooperate closely. Confidentiality requirements do not prevent competent authorities from exchanging confidential information within the colleges of supervisory authorities. The establishment and functioning of the colleges of supervisory authorities do not affect the rights and responsibilities of competent authorities under Directive 2006/48/EC.

[3 The European Banking Authority is considered a competent authority within the framework of this paragraph.]3

§ 6. The establishment and functioning of the colleges are based on written agreements, defined by the Prudential Supervision Authority in its capacity as consolidated supervisor after consulting the competent authorities concerned.

The competent authorities responsible for supervising subsidiaries of a parent credit institution in the European Union or a parent financial company in the European Union, and the competent authorities of a host Member State in which significant branches as defined in Article 49, §§ 5bis and 5ter, of the Banking Act and Article 95, §§ 5bis and 5ter, of the Act on Investment Firms are established, [3 the European Banking Authority, and]3 the central banks, if applicable, as well as the competent authorities of third countries, if applicable and provided that confidentiality requirements are, in the opinion of all competent authorities, equivalent to those provided for in Title V, Chapter 1, Section 2, of Directive 2006/48/EC, may participate in the colleges of supervisory authorities.

The Prudential Supervision Authority, in its capacity as consolidated supervisor, chairs the meetings of the college and decides which competent authorities participate in a meeting or activity of the college. The Prudential Supervision Authority, in its capacity as consolidated supervisor, fully informs all members of the college in advance of the organization of these meetings, the main issues to be addressed, and the activities to be examined. The Prudential Supervision Authority, in its capacity as consolidated supervisor, also fully and timely informs all members of the college of the measures taken during these meetings or actions carried out.

The decision taken by the Prudential Supervision Authority in its capacity as consolidated supervisor takes into account the relevance of the supervisory activity to be planned and coordinated for these authorities, in particular the potential impact on the stability of the financial system in the Member States concerned, including in emergency situations, and the obligations referred to in Article 9quater, § 1.

Subject to the confidentiality requirements provided for in Title V, Chapter 1, Section 2, of Directive 2006/48/EC, the Prudential Supervision Authority, in its capacity as consolidated supervisor, informs [3 the European Banking Authority]3 of the activities of the college of supervisory authorities, including in emergency situations, and communicates to [3 the European Banking Authority]3 all particularly relevant information for the purposes of convergence in supervision.]2

(1)<AR 2011-10-04/01, art. 7, 006; En vigueur : 11-10-2011> (2)<AR 2011-10-04/01, art. 3, 006; En vigueur : 11-10-2011> (3)<AR 2013-11-12/04, art. 10, 007; En vigueur : 29-11-2013>

Art. 9ter.<inséré par AR 2007-10-29/33, art. 17; En vigueur : 08-11-2007> § 1. Without prejudice to other competencies and tasks assigned to it by this Royal Decree in its capacity as the authority responsible for consolidated supervision and supervision referred to in Chapter IV, [1 the Prudential Supervision Authority]1 ensures, in this capacity:

1° the coordination of the collection and dissemination, within the framework of its supervision, of relevant or essential information, both in the normal course of business and in emergency situations; 2° [2 the planning and coordination of supervisory activities for business continuity, in cooperation with other competent authorities;]2 3° [2 the planning and coordination of supervisory activities in cooperation with other competent authorities and, if necessary, with central banks, in preparation for and during emergency situations, including negative developments in the situation of credit institutions or financial markets, using, if possible, existing communication channels defined to facilitate crisis management. The aforementioned planning and coordination include the adoption of exceptional measures, the preparation of joint assessments, the implementation of emergency plans, and the communication of information to the public. [3 When the consolidated supervisor does not perform the tasks referred to in this paragraph or when the competent authorities responsible for supervising subsidiaries of a parent credit institution in the European Union or a parent financial holding company in the European Union do not cooperate with the consolidated supervisor to the required extent, the Prudential Supervision Authority may refer the matter to the European Banking Authority, as provided by respectively Article 77, § 1, of the Act of 2 August 2002 or Article 36/16, § 3, of the Act of 22 February 1998, depending on whether the Prudential Supervision Authority is the FSMA or the Bank.]3]2

[1 The Prudential Supervision Authority]1 may, within the limits of Directive 2006/48/EC and Directive 2006/49/EC, agree with other competent authorities to entrust the authority responsible for consolidated supervision with other supervisory tasks than those referred to in this paragraph, provided that these are tasks necessary for the adequate exercise by this latter authority of its consolidated supervision [3 The Prudential Supervision Authority concludes bilateral agreements for this purpose and notifies them to the European Banking Authority.]3.

[2 The Prudential Supervision Authority, in its capacity as consolidated supervisor, alerts as soon as possible the central banks members of the European System of Central Banks [3, the European Banking Authority, the European Systemic Risk Board]3 as well as the concerned departments of central administrations responsible for legislation regarding the supervision [of credit institutions, investment firms, collective investment management companies, insurance companies, reinsurance companies, resolution bodies and entities assimilated to resolution bodies, and payment institutions], and communicates to them all essential information necessary for the pursuit of their missions when an emergency situation occurs, in particular an unfavorable development of financial markets, likely to threaten market liquidity and the stability of the financial system in one of the Member States in which entities of a group comprising credit institutions or investment firms have been authorized or in which significant branches as defined in Article 49, §§ 5bis and 5ter, of the Banking Act and Article 95, §§ 5bis and 5ter, of the Act on Investment Firms are established.]2

[2 § 1/1. The Prudential Supervision Authority, in its capacity as consolidated supervisor, does everything in its power to achieve, together with the competent authorities responsible, in a Member State, for the supervision of subsidiaries of a parent credit institution in the European Union or a parent financial company in the European Union, a common decision to determine the adequacy of the consolidated level of own funds held by the group with regard to its financial situation and risk profile, and the required level of own funds for each entity within the group comprising credit institutions on a consolidated basis.

The common decision is reached within four months from the date on which the Prudential Supervision Authority, in its capacity as consolidated supervisor, submits to the other competent authorities concerned a report containing the assessment of the group's risk. Furthermore, the common decision duly takes into account the risk assessment of the subsidiaries, carried out by the competent authorities concerned.

The common decision, duly reasoned, is recorded in a document which is communicated by the Prudential Supervision Authority, in its capacity as consolidated supervisor, to the parent credit institution in the European Union. In case of disagreement, the Prudential Supervision Authority, in its capacity as consolidated supervisor, consults [3 the European Banking Authority]3 at the request of any other competent authority. The Prudential Supervision Authority, in its capacity as consolidated supervisor, may consult the European Banking Committee of its own initiative.

In the absence of such a common decision by the competent authorities within four months, a decision on the application of Article 43, § 3, of the Banking Act and Article 90, § 3, of the Act on Investment Firms is taken, on a consolidated basis, by the Prudential Supervision Authority, in its capacity as consolidated supervisor, after an appropriate examination of the risk assessment of the subsidiaries carried out by the competent authorities concerned.

The decision on the application, on an individual or sub-consolidated basis, of Article 43, § 3, of the Banking Act and Article 90, § 3, of the Act on Investment Firms is taken by the respective competent authorities responsible for supervising subsidiaries of a parent credit institution in the European Union or a parent financial company in the European Union, after an appropriate examination of the opinions and reservations expressed by the Prudential Supervision Authority, in its capacity as consolidated supervisor. [3 If, at the end of the four-month period, one of the competent authorities responsible for supervising subsidiaries of a parent credit institution in the European Union or a parent financial holding company in the European Union has referred the matter to the European Banking Authority in accordance with Article 19 of Regulation No 1093/2010, the competent authority postpones its decision and awaits a possible decision that the European Banking Authority adopts in accordance with Article 19 of Regulation No 1093/2010, and renders its decision in conformity with the decision of the European Banking Authority. The four-month period refers to the conciliation period as defined in Regulation No 1093/2010. The European Banking Authority is not referred to beyond the four-month period or after a common decision has been taken.]3

The decisions, duly reasoned, are recorded in a document; they take into account the risk assessment and the opinions and reservations of the other competent authorities, communicated during this four-month period. The Prudential Supervision Authority, in its capacity as consolidated supervisor, communicates the document to all competent authorities concerned and to the parent credit institution in the European Union.

All competent authorities take into account the opinion [3 of the European Banking Authority]3 when [3 it has been consulted]3 and explain, if necessary, the reasons for which they deviate significantly from it.

The common decision referred to in the first paragraph and the decisions taken by the competent authorities in the absence of a common decision are recognized as determinative and are applied by the competent authorities in the Member States concerned.

The common decision referred to in the first paragraph and the decisions taken in the absence of a common decision in accordance with paragraphs 4 and 5 are updated annually and, in exceptional cases, when a competent authority responsible for supervising subsidiaries of a parent credit institution in the European Union or a parent financial company in the European Union submits to the Prudential Supervision Authority, in its capacity as consolidated supervisor, a written and rigorously reasoned request to update the decision regarding the application of Article 43, § 3, of the Banking Act and Article 90, § 3, of the Act on Investment Firms. In the latter case, the update may be subject to a bilateral examination by the Prudential Supervision Authority, in its capacity as consolidated supervisor, and the competent authority originating the request.]2

§ 2. [1 The Prudential Supervision Authority]1 consults the other competent authorities responsible for supervising credit institutions, investment firms, and collective investment management companies that are part of a group subject to consolidated supervision, before taking a decision on:

1° changes affecting the shareholding, organizational, or management structure of these companies and requiring, in accordance with the provisions of Directive 2006/48/EC, the approval of the authorities referred to in the introductory phrase; 2° the approval and conditions of approval of the methods that credit institutions, investment firms, and collective investment management companies belonging to a group use, in their own manner, for the calculation of solvency requirements provided for in Articles 3 and 4, within the limits of the provisions of the regulation of [1 the Prudential Supervision Authority]1 taken in execution of Article 43 of the Banking Act, Article 90 of the Act on Investment Firms, and [3 Article 234 of the Act on certain forms of collective portfolio management]3; 3° the measures and sanctions referred to in Article 9bis, § 1, 4°, which may be taken in accordance with the provisions of Directive 2006/48/EC and Directive 2006/49/EC regarding the aforementioned companies and financial companies.

The request for approval of the own methods of calculation, as referred to in the first paragraph, 2°, is submitted by the parent credit institution having its registered office in a Member State of the European Economic Area or, in the case where the parent company is a financial company having its registered office in a Member State of the European Economic Area, by its common subsidiaries, to the authority responsible for consolidated supervision.[1 The Prudential Supervision Authority]1, as the authority responsible for consolidated supervision, communicates the reasoned decision to the applicant. In the absence of a common decision, as referred to in the first paragraph, within a maximum period of six months, [1 the Prudential Supervision Authority]1, as the authority responsible for consolidated supervision, decides on the request itself. If applicable, [1 the Prudential Supervision Authority]1 as the authority responsible for consolidated supervision communicates its reasoned decision in writing to the applicant and to the other competent authorities, including the comments and opinions of these other authorities. If [1 the Prudential Supervision Authority]1 is not the authority responsible for consolidated supervision, it takes into account the reasoned decision of the authority responsible for consolidated supervision. [3 If, at the end of the six-month period, one of the competent authorities concerned has referred the matter to the European Banking Authority in accordance with Article 19 of Regulation No 1093/2010, the Prudential Supervision Authority in its capacity as the authority responsible for consolidated supervision defers its decision and awaits a decision that the European Banking Authority may adopt in accordance with Article 19, paragraph 3, of said regulation on its decision and renders a decision conforming to the decision of the European Banking Authority. The six-month period refers to the conciliation period as defined in said regulation. The European Banking Authority adopts its decision within one month. It is not referred to beyond the six-month period or after a common decision has been taken.]3

[1 The Prudential Supervision Authority]1 may derogate from the obligation provided for in the first paragraph, 3°, in case of urgency or when such consultation could compromise the effectiveness of its measures or sanctions. In this case, it informs the other competent authorities without delay of the measures and sanctions it has taken.

(1)<AR 2011-10-04/01, art. 7, 006; En vigueur : 11-10-2011> (2)<AR 2011-10-04/01, art. 4, 006; En vigueur : 11-10-2011> (3)<AR 2013-11-12/04, art. 11, 007; En vigueur : 29-11-2013>

Articles

[Art. 9ter] [9quater]. [1 § 1. The Prudential Supervision Authority, in its capacity as the competent authority of the home Member State, communicates to the competent authorities of the host Member State in which a branch of significant importance is established the following information:

information on negative developments affecting credit institutions, investment firms, or other entities of a group that could seriously affect credit institutions or investment firms; and
information on significant sanctions and exceptional measures it has taken in its capacity as competent authority.
The planning and coordination, by the Prudential Supervision Authority in its capacity as the competent authority of the home Member State, of supervisory activities in anticipation of and during emergency situations, including negative developments affecting credit institutions, investment firms, or financial markets, are carried out in cooperation with the competent authorities of the host Member State.
If the Prudential Supervision Authority, in its capacity as the competent authority of the home Member State, becomes aware of an emergency situation in a credit institution or investment firm, it alerts as soon as possible the central banks that are members of the European System of Central Banks as well as the relevant departments of central administrations responsible for legislation on the supervision of credit institutions, financial institutions, investment services, and insurance undertakings. § 2. The Prudential Supervision Authority, in its capacity as the competent authority responsible for the supervision of a credit institution or investment firm having significant branches in other Member States, establishes and chairs a college of supervisory authorities to facilitate cooperation. The establishment and functioning of the college are based on written provisions defined by the Prudential Supervision Authority, in its capacity as the competent authority of the home Member State, after consulting the competent authorities concerned. The Prudential Supervision Authority, in its capacity as the competent authority of the home Member State, determines which competent authorities participate in a meeting or activity of the college. The decision taken by the Prudential Supervision Authority in its capacity as the competent authority of the home Member State takes into account the relevance of the supervisory activity to be planned or coordinated for these authorities, notably the potential impact on the stability of the financial system in the Member States concerned. The Prudential Supervision Authority, in its capacity as the competent authority of the home Member State, informs all members of the college fully in advance of the organization of these meetings, the main issues to be addressed, and the activities to be examined. The Prudential Supervision Authority also informs all members of the college fully and in good time of the measures taken during these meetings or the actions taken.]1 [2 The European Banking Authority is considered a competent authority within the framework of this article.]2

(1) <Inserted by Royal Decree [2011-10-04/01], art. 5, 006; Effective: 11-10-2011> (2) <Royal Decree [2013-11-12/04], art. 12, 007; Effective: 29-11-2013>

[Art. 10]. § 1. [1 The Prudential Banking and Financial Authority]1 may request companies included in the consolidated situation to communicate to it the information and details useful for the exercise of its supervision of (regulated entities) as defined in (Chapters II, III, and IIIbis). <RD 2005-11-21/36, art. 29, § 13, 002; Effective: 30-11-2005> <RD [2007-10-29/33], art. 18, 1°, 003; Effective: 08-11-2007> § 2. Subsidiaries of credit institutions or financial companies, which are excluded from consolidation, are required to communicate to [1 the Prudential Supervision Authority]1 the information and details that it deems useful for the exercise of its supervision of (regulated entities) on a consolidated basis. When, within the framework of consolidated supervision exercised by a foreign competent authority, (a Belgian regulated entity is not included) in the consolidated situation of its (foreign parent company), the parent company is required to communicate to [1 the Prudential Supervision Authority]1 the information and details that it deems useful for the exercise of its supervision (of the Belgian regulated entity). <RD [2007-10-29/33], art. 18, 2°, 003; Effective: 08-11-2007> § 3. When the companies subject to the obligations referred to in §§ 1 and 2 have their registered office outside Belgium, [1 the Prudential Banking and Financial Authority]1 may require that the information and details be communicated to it by (the Belgian regulated entity). The provisions of (Article 6, § 2), first paragraph, apply by analogy in this case. <RD [2007-10-29/33], art. 18, 3°, 003; Effective: 08-11-2007> (§ 3bis. When, for the application of §§ 1, 2, and 3, the information and details requested have already been communicated to another competent authority, [1 the Prudential Supervision Authority]1 addresses, as far as possible, that authority to obtain this information and details.) <RD [2007-10-29/33], art. 18, 4°, 003; Effective: 08-11-2007> § 4. For the exercise of their functions provided for by (the Banking Law, the Law on Investment Firms, and the Law on the Collective Management of Investment Portfolios, as well as by this Decree), the (auditors) appointed at parent companies that are Belgian regulated entities, as well as the statutory auditors referred to in Article 7, have access to and may review all documents and records emanating from companies included in the consolidated situation and from subsidiaries excluded from consolidation. <RD [2007-10-29/33], art. 18, 5°, 003; Effective: 08-11-2007> The same right is granted to the (auditors) referred to in Article 9, regarding information and details emanating from mixed companies and their subsidiaries. <RD [2007-10-29/33], art. 18, 5°, 003; Effective: 08-11-2007>

(1) <RD [2011-10-04/01], art. 7, 006; Effective: 11-10-2011>

[Art. 11]. (Credit institutions, investment firms, management companies, financial companies, mixed companies, and their subsidiaries, constituted under Belgian law), communicate to the foreign competent authority the information and details that it deems useful for the exercise of its consolidated supervision of credit institutions: <RD [2007-10-29/33], art. 19, 003; Effective: 08-11-2007> 1° when this authority falls under the law of a Member State of the (European Economic Area), within the framework of its supervision as defined in accordance with (European legislation); <RD 2005-11-21/36, art. 29, § 17, 002; Effective: 30-11-2005> 2° when this authority falls under the law of a non-Member State of the (European Economic Area) and the obligation to inform arises from (collaboration agreements concluded by [1 the Prudential Supervision Authority]1 with the foreign competent authorities concerned in accordance with the provisions of Article 75, § 1, 4°, and Article 77, § 2, of the Law of 2 August 2002). <RD 2005-11-21/36, art. 29, § 14, and § 17, 002; Effective: 30-11-2005>

(1) <RD [2011-10-04/01], art. 7, 006; Effective: 11-10-2011>

[Art. 12]. Companies included in consolidated supervision, as well as mixed companies and their subsidiaries and companies referred to in Article 10, § 2, mutually communicate to each other the information and details useful for the exercise of consolidated supervision, organized by this Decree, without being able to raise objections based on private law.

[Art. 13]. § 1. [1 The Prudential Supervision Authority]1 may carry out on-site inspections, in the companies referred to in Article 12, of compliance with the obligations provided for by this Decree as well as of the correctness and completeness of the information and details communicated. It may, at the expense of these companies and the (Belgian regulated entity), appoint (auditors) or foreign experts approved by it for this purpose to carry out these inspections. <RD [2007-10-29/33], art. 20, 003; Effective: 08-11-2007> § 2. When the companies referred to in § 1 are established in another Member State of the (European Economic Area), [1 the Prudential Supervision Authority]1 carries out or has these inspections carried out only after having notified the competent authority of that State and unless that authority carries out these inspections itself or allows an auditor or expert to do so. (If [1 the Prudential Supervision Authority]1 does not carry out the inspection itself, it may still be associated with it, if it deems necessary.) <RD 2005-11-21/36, art. 29, § 15 and § 17, 002; Effective: 30-11-2005> When the companies referred to have their registered office outside the (European Economic Area), the modalities of the on-site inspection are governed by agreements such as those referred to in Article 11, first paragraph, 2°. <RD 2005-11-21/36, art. 29, § 17, 002; Effective: 30-11-2005> § 3. Within the framework of their consolidated supervision, foreign competent authorities are empowered to carry out on-site inspections, in the companies referred to in Article 12 having their registered office in Belgium, of the information and details they have received, or may appoint approved auditors or experts approved by them to do so, under the following conditions:
1° when the competent authority falls under a Member State of the (European Economic Area), the provisions of § 2, first paragraph, apply by analogy; <RD 2005-11-21/36, art. 29, § 17, 002; Effective: 30-11-2005> 2° when the competent authority falls under a non-Member State of the European Community, the provisions of § 2, second paragraph, apply by analogy.

(1) <RD [2011-10-04/01], art. 7, 006; Effective: 11-10-2011>

[Art. 14]. (Repealed) <RD 2005-11-21/36, art. 29, § 16, 002; Effective: 30-11-2005>

[Art. 15]. (Repealed) <RD 2005-11-21/36, art. 29, § 16, 002; Effective: 30-11-2005>

CHAPTER VI. - Sanctions.

[Art. 16]. (Repealed) <RD 2005-11-21/36, art. 29, § 16, 002; Effective: 30-11-2005>

CHAPTER VII. - Transitional and Final Provisions.

[Art. 17]. <RD [2007-10-29/33], art. 21, 003; Effective: 08-11-2007> Belgian financial companies must comply with the provisions of Article 4, § 4, third paragraph, by 1 January 2008 at the latest.

[Art. 17bis]. [1 Until 31 December 2012, the period referred to in Article 9ter, § 1/1, is six months.]1

(1) <Inserted by Royal Decree [2011-10-04/01], art. 6, 006; Effective: 11-10-2011>

[Art. 18]. [1 The Financial Services and Markets Authority]1 may, in special cases, authorize derogations from the provisions of this Decree. The use of this power may not be contrary to the provisions of (European legislation). <RD [2007-10-29/33], art. 22, 003; Effective: 08-11-2007>

(1) <RD [2011-10-04/01], art. 7, 006; Effective: 11-10-2011>

[Art. 19]. Our Minister of Finance is charged with the execution of this Decree.
Given at Châteauneuf-de-Grasse, on 12 August 1994.
ALBERT
By the King:
The Minister of Finance,
Ph. MAYSTADT

Preamble

ALBERT II, King of the Belgians,
To all, present and future, Greetings.
Having regard to Council Directive 92/30/EEC of 6 April 1992 on the supervision of credit institutions on a consolidated basis; Having regard to the Law of 22 March 1993 on the status and supervision of credit institutions, notably Articles 49, 63, and 101; Having regard to the opinion of the Council of State; On the proposal of Our Minister of Finance, We have decreed and decree:

Modification Sheet

Royal Decree of 12-11-2013 published on 19-11-2013

Articles modified:
1; 2; 3; 4; 5; 7; 7bis; 8bis; 9bis; 9ter; 9quater

Royal Decree of 04-10-2011 published on 11-10-2011

Articles modified:
1; 9bis; 9ter; 9quater; 17bis; 2; 3; 4; 5; 6; 7; 7bis; 8; 8bis; 9; 9bis; 9ter; 10; 11; 13; 18

Royal Decree of 03-03-2011 published on 09-03-2011

Articles modified:
1-7; 7bis; 8; 8bis; 9-9ter; 10; 11; 13; 18

Royal Decree of 23-03-2009 published on 22-04-2009

Articles modified:
1; 6; 7

Royal Decree of 29-10-2007 published on 08-11-2007

Articles modified:
TITLE; 1; 2; 3; 4; 5; 7; 7BIS; 8;

Articles modified:
9; 9BIS; 9TER; 10; 11; 13; 17; 18

Articles modified:
6; 8BIS

Royal Decree of 21-11-2005 published on 30-11-2005

Articles modified:
1-6; 7; 7BIS; 8; 8BIS; 10; 11; 13;

Article modified: 14-17

Report to the King

REPORT TO THE KING.

Sire,

The decree that I have the honor to submit to Your signature regulates the consolidated supervision of Belgian credit institutions.

By its Directive 92/30/EEC of 6 April 1992 on the supervision of credit institutions on a consolidated basis, the Council of the European Communities introduced the obligation to subject credit institutions having their head office in the Community to consolidated supervision, and defined the modalities of this supervision. Furthermore, the countries of the Group of Ten agreed, within the Basel Committee on Banking Supervision, on minimum standards regarding the supervision of banking groups operating internationally (cf. the document "Minimum Standards for the Supervision of International Banking Groups and Their Establishments Abroad", June 1992).

Article 49 of the Law of 22 March 1993 on the status and supervision of credit institutions introduced certain basic principles set out in the aforementioned Directive into Belgian law and empowers the King to complete the regulation in this matter. The decree that I submit to Your signature is taken in execution of this enabling provision. The text of the decree takes into account the observations formulated by the Council of State in its opinion, except regarding certain specific aspects whose most significant ones will be mentioned and commented on in the remainder of this report.

The decree reproduces a number of the principles regarding consolidated supervision set out in Article 49 of the Law, so that it constitutes an autonomous text and therefore more intelligible. In its opinion, the Council of State observes that, in accordance with a constant principle, it does not belong to the King to reproduce, in an implementing decree, certain provisions of the Law on which it is based, the purpose of this rule being to ensure respect for the hierarchy of norms as well as legal certainty. The Government considers it nevertheless appropriate, given the technical nature of the matter regulated by the decree, to reproduce, for the aforementioned purpose, a number of the provisions of Article 49 of the Law. It has, in this regard, proceeded with prudence and ensured, where necessary, that the text of the decree is in close conformity with the legal provisions.

Consolidation carried out for prudential purposes allows the supervisory authority to consider a group of companies - in this case, a banking group - as a whole as a single micro-economic entity. It allows obtaining a more faithful and complete image of the real solvency base and, more generally, of the financial solidity of the group and in particular of the credit institutions that compose it (notably in that it leads to the elimination of reciprocal holdings of own funds and allows better taking into account the presence of intra-group participations financed by debt and the simultaneous use of the same own funds in several entities of the group - a phenomenon called "double gearing" -). It also improves for the supervisory authority the transparency of shareholding and intra-group relations, which allows the authority in question to intervene more quickly when the stability of credit institutions is threatened from within the group (cf. e.g. the risk for a credit institution to have to face the negative repercussions of financial difficulties affecting significant companies of the group - a phenomenon known as "contagion" -).

Experience has furthermore demonstrated the necessity of subjecting banking groups to consolidated supervision, regardless of how they have structured themselves legally and micro-economically.

In accordance with the provisions of European Law, the decree submitted to Your signature regulates in a different and therefore specific manner the consolidated supervision of credit institutions that are parent companies, credit institutions that are subsidiaries of financial companies, and credit institutions that are subsidiaries of mixed companies.

The decree determines the technical rules to follow for the establishment of the consolidated situation.

The consolidated supervision of credit institutions that are parent companies is not new in either European or Belgian legislation.

Firstly, Directive 83/350/EEC of 13 June 1983 had already introduced such an obligation. However, given that at that time, European work aimed at coordinating national banking legislations had not reached a sufficiently advanced stage, this Directive provided that supervision should in principle be exercised according to the national rules in force. The same approach prevailed to a non-negligible extent for consolidation techniques. Furthermore, since Directive 89/647/EEC of 18 December 1989, credit institutions are also required to comply with the solvency standard on a consolidated basis.

In Belgium, the supervision of credit institutions on the basis of their consolidated situation currently already extends to the solvency coefficients provided for covering credit risk and to the limitation standards regarding risk concentration (see the decree of the Banking and Financial Commission of 19 March 1991 concerning the regulation on own funds of credit institutions) and regarding the holding of partnership rights (see the decree of the Banking Commission of 29 May 1990 relating to the holding of partnership shares by banks and private savings banks, repealed and replaced by the provisions of Article 32 of the Law of 22 March 1993) (Furthermore, risk-coverage ratios for country risks also apply on a consolidated basis (see the circular of the Banking and Financial Commission of 15 December 1992). Moreover, credit institutions are required to communicate their financial situation on a consolidated basis (see the decree of the Banking and Financial Commission of 28 April 1992 concerning periodic information relating to the financial situation of credit institutions, to be communicated to the National Bank of Belgium and the Banking and Financial Commission).). The Banking and Financial Commission furthermore ensures that credit institutions have adequate organization and internal control for the entire consolidated group. Thus, the object of consolidated supervision of credit institutions that are parent companies already largely corresponds in Belgium to the new European provisions. What is new, however, is the introduction into Belgian law, in execution of Directive 92/30/EEC, of the obligation to comply on a consolidated basis with own fund requirements regarding the coverage of market risk (See Council Directive 93/6/EEC of 15 March 1993 on the adequacy of own funds of investment firms and credit institutions. The decree provides for a transitional regime applicable until the transposition of this Directive (cf. infra).).

The supervision of credit institutions in their capacity as subsidiaries of financial companies, based on the consolidated situation of the latter, constitutes a significant innovation in both European and Belgian legislation. The financial company is defined as a financial institution (For the application of this decree, the notion "financial institution" is defined in the same way as in the Law of 22 March 1993.) whose subsidiaries are exclusively or mainly credit institutions or financial institutions and of which at least one subsidiary is a credit institution. It is therefore groups whose parent company is not a credit institution, but whose activity is nevertheless mainly banking, that is to say that the main activity of the group's companies consists in carrying out financial operations and providing financial services, as defined in Article 3, § 2, of the Law of 22 March 1993, including other activities situated in the direct continuation of banking activity and services having an auxiliary character relative to the activities of credit institutions.

European legislation, however, does not concern itself with the creation of a "banking company" status as exists in certain countries (notably France and the United States). Directive 92/30/EEC expressly states that consolidated supervision of a financial company does not mean in any way that national authorities - which can indeed impose a stricter system than European rules, considered as minimum rules - are required to exercise supervision on the financial company taken individually. The decree submitted to Your signature does not go further than the minimum European obligation and therefore fits well in this regard into the perspective of European regulation.

A particular aspect concerns credit institutions whose parent company is a financial company having its head office outside the Community. These institutions are not yet subject to any obligation of positive international law imposing prudential supervision on the basis of the consolidated situation of the financial company. In accordance with the aforementioned recommendation of the Basel Committee on Banking Supervision - subscribed to by Belgium - according to which all banking groups must be subject to appropriate supervision, the decree provides that Belgian credit institutions belonging to such a group must also be subject to supervision on the basis of the consolidated situation of their parent financial company. This obligation furthermore avoids that credit institutions be treated differently and thus unequally depending on whether the parent company has its head office in the Community or outside it, and thereby discourages "regulatory arbitrage".

The ratios and limits that the decree imposes on credit institutions on the basis of the consolidated situation of their parent financial company are the same as those applicable to credit institutions that are parent companies, with the exception of limitations regarding participations and holding of partnership rights and provided that the solvency standards provided for covering credit risk remain limited to the ratio "own funds relative to the weighted volume of risks" (called "risk assets ratio").

Finally, it is also new in European and Belgian regulations to require, for groups exercising diverse activities and whose parent company controls at least one credit institution (groups designated in the decree as "mixed companies"), to communicate to the competent authorities the information that they deem useful for their supervision of the credit institution subsidiaries of the group.

The following part of this report consists of a commentary on the provisions of the decree. When good understanding requires it, the commentary also includes more general considerations; whenever Directive 92/30/EEC allows Member States to choose between several possibilities, the text of the commentary justifies, if necessary, the option chosen.

Commentary on the Articles.

CHAPTER I. - Definitions.

Articles 1 and 2. These articles define certain essential notions for the application and interpretation of the decree.

Article 2 defines the notion "consolidated situation". For the application of this decree, the consolidated situation is in principle determined by applying the definitions and rules that apply to credit institutions regarding the establishment of their consolidated accounting statement (annual accounts and periodic information schema to be communicated to the National Bank of Belgium and the Banking and Financial Commission). The greatest concordance is indeed appropriate between, on the one hand, the rules applicable to the establishment of the consolidated accounting statement, and, on the other hand, those governing the establishment of the consolidated situation for prudential supervision purposes. § 2 determines the definitions and rules of accounting law that are applicable for the establishment of the consolidated situation.

The necessity of concordance is however not an absolute axiom. Indeed, the complexity and differences observed in group structures as well as the specific requirements of prudential supervision require the supervisory authority to show the necessary flexibility in its assessment of the consolidated situation. The decree meets this requirement by attributing to the Banking and Financial Commission a clearly defined margin of evaluation.

In the same vein, Directive 92/30/EEC contains, for the determination of the consolidated situation, certain specific rules compared to European legislation on consolidated accounts (namely the Seventh Directive, of 13 June 1983, and Directive 86/635/EEC of 8 December 1986). Aligning with the aforementioned Directive, the decree submitted to Your signature also deviates on certain points from the Belgian accounting law applicable to credit institutions, or provides the option to deviate within certain limits. More precisely regarding the scope of consolidation, the exemption from the obligation to consolidate, and the methods of consolidation, the decree provides the following specific rules:

the inclusion of subsidiaries, including joint ventures, in the consolidated statement according to the proportional consolidation method is subject to the condition that it is established that the parent company's liability is limited to its shareholding, taking into account the liability and financial capacity of other shareholders (art. 2, § 3, 1°); the limitation of liability must in principle be evidenced by written agreements;
the exemption from the obligation of sub-consolidation is subject to the additional condition that the credit institution covered by the exemption and its parent company both have their registered office in Belgium (art. 2, § 3, 2°);
the authorities have the possibility to require that companies with which there is a capital link but which are not subsidiaries be included in the consolidated statement or treated according to the equity method, and that companies in which significant influence is exercised over management direction, outside any capital link, be included in the consolidated statement according to the proportional consolidation method or treated according to the equity method (art. 2, § 3, 3°);
the non-consolidation of subsidiaries under accounting law rules is subject to prior authorization from the Banking and Financial Commission (art. 2, § 3, 4°, first paragraph);
the decree contains a rebuttable presumption of "negligible importance" as referred to in Article 13, first paragraph, 1°, of the Royal Decree on consolidated accounts of companies (art. 2, § 3, 4°, second paragraph); the cases referred to in Articles 13, 2° to 4° inclusive, 14, and 15 of the aforementioned Royal Decree meet the provisions of Article 3, (3), first and third indents, of Directive 92/30/EEC, under which companies may be excluded from consolidation when legal obstacles prevent them from communicating information or, given the objectives of supervising credit institutions, their consolidation would be inappropriate or misleading;
finally, the decree regulates the modalities for including insurance company subsidiaries in the consolidated statement (art. 2, § 3, 4°, third paragraph).

Under Directive 92/30/EEC, insurance companies are not financial institutions, and European legislation does not yet provide for any positive law obligation requiring the inclusion of such companies in the consolidated supervision of credit institutions. Discussions are nevertheless ongoing both within the European Community and among the G10 countries to organize adequate supervision of "financial conglomerates" (defined as financial groups operating in at least two of the following sectors: banking activity, insurance activity, investment activity). It would not be appropriate for Belgian legislation to fully anticipate the conclusions of these works at this time. Furthermore, the Banking and Financial Commission has already established and applied in the past a policy regarding shareholdings in insurance companies and more specifically the inclusion, in the consolidated supervision of credit institutions, of subsidiaries with the status of insurance company - see notably the 1990-91 annual report of the Banking and Financial Commission, pp. 36 et seq. -. Given that this policy is not, in principle, contrary to the provisional conclusions of the ongoing international discussion, it is indicated to maintain it provisionally pending comprehensive and more definitive regulation at the international level. The policy in question also harmonizes with the approach followed in the Royal Decree on consolidated accounts of credit institutions, notably in its Article 5, § 3.

The decree therefore makes a distinction between, on the one hand, insurance company subsidiaries whose activity is a direct extension of banking activity or relates to auxiliary services to it, and, on the other hand, other insurance company subsidiaries. Insurance companies that are part of the first group are those whose activity, although regulated by insurance legislation and reserved for insurance companies, consists of offering instruments that, from a conceptual point of view, are savings and/or investment products, such as capitalization instruments and certain life insurance instruments with capitalization characteristics (often also referred to as "savings insurance"). These companies must be included without further ado in the consolidated statement. Insurance companies belonging to the second group are, for their part - unless they themselves control one or more credit institutions - included in consolidated supervision only for the following aspects: risk concentration limitation standards and - in the case of parent companies that are credit institutions - limits on the holding of shareholder rights and participations.

European legislation prescribes that credit institutions, financial institutions, and auxiliary banking service companies (i.e., companies whose main activity is auxiliary in nature relative to the main activity of one or more credit institutions) be included in the consolidated statement (see Articles 3 and 5, (5), of Directive 92/30/EEC).

This decree defines the consolidation scope by reference to the rules applicable for the preparation of the consolidated financial statement. Consequently, subsidiaries that are neither credit institutions, nor financial institutions, nor auxiliary banking service companies may be excluded from consolidation - without prejudice to provisions regarding insurance companies - within the limits of Article 5 of the Royal Decree on consolidated accounts of credit institutions.

CHAPTER II. - Parent companies that are credit institutions.

Article 3. This article determines the rules of supervision exercised, based on their consolidated statement, on Belgian credit institutions that are parent companies, and establishes in particular the object of this supervision. In Directive 92/30/EEC, this matter is regulated in Articles 3, (1), (5), (6), and (7) and 4, (1).

Credit institutions must at all times respect the limitations, coefficients, and standards defined in § 1, third paragraph.

§ 3, first paragraph, states the principle that consolidated supervision does not replace the supervision of credit institutions on a social (individual) basis. This rule, which also applies in accounting law, is dictated by the distinct legal personality of the companies included in the consolidated statement and by the necessity to protect their creditors.

Directive 92/30/EEC however allows Member States to derogate under certain conditions from the application of sub-consolidated and/or social basis standards [see art. 3, (7)]. Without prejudice to the modalities of double supervision on a social and consolidated basis as defined in specific regulations taken in execution of Articles 32 and 43 of the law - which, in accordance with European regulations on this matter, aim at the balanced distribution of own funds and risks within the group -, the decree defines the conditions under which credit institutions may be exempted from respecting rules regarding sub-consolidated and/or social basis supervision.

Credit institutions that are parent companies may be exempted from social basis supervision when this supervision is of marginal importance. This is the case, for example, when the credit institution has no other subsidiaries than companies that constitute special financing vehicles, intended to collect external resources on a subordinated basis (Article 3, § 3, second paragraph, 1°, of the decree).

Credit institutions that are subsidiaries are exempted from social basis compliance, under conditions analogous to those applicable for exemption on a sub-consolidated basis (Article 3, § 3, second paragraph, 2°, of the decree).

Exemption on a sub-consolidated basis is regulated by Article 2, § 3, 2°, of the decree. The regulation refers to the conditions applicable in accounting law for exemption from the obligation to prepare annual sub-consolidated accounts. To these conditions is added the obligation for the parent company and the subsidiary to have their registered office in Belgium, in accordance with the exemption condition provided by European Law which stipulates that the Member State to which the subsidiary belongs for its authorization and supervision must be the same as that to which its parent company belongs.

CHAPTER III. - Parent companies that are financial companies.

Article 4. § 1 of this article states the principle that any Belgian credit institution that is a subsidiary of a financial company is subject to supervision based on the consolidated statement of the financial company. In Directive 92/30/EEC, this matter is regulated in Article 3, (2), (5), and (6). When the credit institution in question is also a parent company, it remains subject to supervision based on its consolidated statement, in accordance with the provisions of Chapter II of this decree.

The second paragraph of § 1 defines the object of supervision exercised based on the consolidated statement of the financial company. The limitations, coefficients, and standards must be respected at all times, as is the case for credit institutions on the basis of their social or consolidated statement. However, in accordance with Directive 92/30/EEC, the decree does not provide - contrary to the case of credit institutions that are parent companies - with the obligation to respect, on the basis of the consolidated statement of the financial company, standards regarding the holding of shareholder rights and participations.

§ 2 states the principle that consolidated supervision in no way implies the exercise of individual supervision over the financial company as such.

Unlike credit institutions that are subsidiaries of Belgian credit institutions (see Articles 2, § 3, 2°, and 3, § 3, second paragraph, 2°, of the decree), credit institutions whose parent company is a financial company cannot, by virtue of the decree, be exempted from respecting obligations on a sub-consolidated or social basis. Indeed, to allow such exemption, European legislation requires in particular that the financial company be subject to the same type of prudential supervision as credit institutions, which is not the case under Belgian law. When the credit institutions in question are themselves parent companies subject to the provisions of Chapter II, Article 3, § 3, second paragraph, applies in full.

Article 5. This article states the rules on the basis of which the competent authority is designated for exercising consolidated supervision on credit institutions having a financial company as parent company.

The regulation regarding financial companies having their registered office in the European Community is in conformity with the provisions of Article 4 of Directive 92/30/EEC.

In the case of financial companies having their registered office outside the Community, supervision is in principle exercised by the Banking and Financial Commission, unless it is agreed that a foreign competent authority exercises this supervision under modalities equivalent to those provided by European law.

Article 6. This article regulates the reporting obligation and the modalities applicable to it, with a view to verifying compliance with the coefficients and standards defined in Article 5.

The obligation, for financial companies, to prepare their periodic financial statement on a consolidated basis in accordance with the rules and formats applicable to credit institutions (in application of Article 2) or to equivalent rules, aligns with Article 29, § 3, of the Royal Decree on consolidated accounts of companies. This article stipulates that if the activity of the companies included in the consolidation, considered as a whole, is primarily a banking activity, the financial statement is prepared according to the rules applicable to credit institutions.

In the case of financial companies that have their registered office outside the Community and whose consolidated supervision is exercised, in application of Article 5, § 4, by foreign competent authorities, compliance with standards equivalent to European standards must be confirmed at least once a year.

In accordance with the principle that the decree does not introduce a status for financial companies as such, the reporting obligation may be fulfilled by the Belgian credit institution subsidiary of the company. For financial companies whose registered office is established outside Belgium, the Banking and Financial Commission may however require that the reporting obligation be fulfilled by the Belgian subsidiary credit institution.

Article 7. This article introduces the obligation to entrust, in Belgian financial companies, the functions of statutory auditor to an auditor or audit firm approved by the Banking and Financial Commission to exercise the functions of statutory auditor for credit institutions; it also defines the mission exercised by the statutory auditors appointed for these companies within the framework of the consolidated supervision of credit institutions (§ 1).

Given that the supervision governed by Chapter III of this decree falls within the framework of the prudential supervision of credit institutions, the decree opts for a regime inspired directly by that elaborated by the Law of 22 March 1993 concerning the revised supervision of credit institutions (see Title II, Chapter III, Section II of the law).

The decree provides that the statutory auditor of the financial company collaborates with the authorities in the exercise of their mission to supervise credit institutions. The fact that this statutory auditor must be approved to exercise the functions of statutory auditor for credit institutions is dictated by the nature of his mission intended to support this supervision. This collaboration requires the statutory auditor to have an in-depth knowledge of financial markets and financial legislation, all the more so as these are groups that primarily conduct banking activity and generally prepare their consolidated financial statement according to the accounting and valuation rules and formats applicable to credit institutions.

The mission of the statutory auditor for these financial companies is furthermore defined analogously to that of the statutory auditor appointed for a credit institution. This means in particular that he does not bear primary responsibility for monitoring compliance with regulatory coefficients and standards, but must ensure in the first place that the statements transmitted to the Banking and Financial Commission are accurate and that the organizational structures have the adequate character required (§ 2).

When it concerns a foreign financial company and consolidated supervision is exercised by the Banking and Financial Commission, the aforementioned mission is ensured by the statutory auditor of the Belgian credit institution that is a subsidiary of the financial company. For the exercise of his mission, the statutory auditor may, where necessary, call upon external auditors and certified accountants appointed for the company and its other subsidiaries, in accordance with professional rules. The underlying motivation is that supervision exercised on groups operating internationally is only effective if it can rely on effective cooperation between the relevant national authorities, auditors, and accountants of the various companies in the group. Internationally, there is increasing awareness of the need for such cross-border cooperation, and measures are being taken to facilitate this cooperation (see conventions concluded between authorities and between professional associations of auditors and accountants, associations whose functions and competencies are, in several countries, inscribed in legislation). See also the provisions of Article 15 of the decree.

CHAPTER IV. - Parent companies that are mixed companies.

Article 8. This article introduces a general information communication obligation for mixed companies and their subsidiaries, both national and foreign, within the framework of the prudential supervision exercised by the Banking and Financial Commission on Belgian credit institutions that are subsidiaries of the aforementioned companies. In the absence of consolidated supervision, this information will enable the Banking and Financial Commission to obtain a more correct and complete image of the financial situation and position of the credit institution. In Directive 92/30/EEC, this matter is regulated in Article 6.

The Commission will determine, based on the specific characteristics of each case, the information to be provided. It may in particular request information enabling it to assess the situation of a credit institution within the group. Thus, it may be useful to examine the influence of other companies in the group on the management of the credit institution, the modalities and destination of financial flows between the credit institution and other companies in the group, and, more generally, the interdependence between the aforementioned companies. This information must also help verify if the shareholder possesses the necessary qualities under Articles 17 and 24 of the Law of 22 March 1993.

When the mixed company (or one or more of its subsidiaries) is foreign, the communication of information is governed analogously to that applicable to foreign financial companies.

Article 9. This article stipulates that the Banking and Financial Commission may, on an ad hoc basis, request the statutory auditor to verify the accuracy of the information communicated as referred to in the previous article.

As with financial companies, the regulation differs depending on whether the mixed company and/or its subsidiaries are Belgian or not. In this regard, refer to the last paragraph of the commentary on Article 7, which deals with the case of foreign companies.

CHAPTER V. - Communication of information, on-site verification, collaboration between authorities.

Article 10. This article introduces a general obligation to communicate information enabling the Banking and Financial Commission to verify in particular compliance with the provisions of Article 3, § 1, Article 4, § 1, and Article 6, § 1 (§§ 1 and 2). It also establishes a right of oversight in favor of statutory auditors for the exercise of their mission (§ 4).

§ 2 transposes Article 3, (4) and (10), of Directive 92/30/EEC. § 3 follows from Article 6, § 3, second paragraph, of the decree. Regarding § 4, refer to the last paragraph of the commentary on Article 7.

Article 11. This article imposes, under certain conditions, on credit institutions, financial companies, mixed companies, and their subsidiaries, of Belgian law, the obligation to communicate information to foreign competent authorities. This provision constitutes the counterpart to the obligations imposed by the decree on companies and establishments whose registered office is established abroad, for the purpose of supervision exercised by the Banking and Financial Commission.

In this regard, and in line with the provisions of the Law of 22 March 1993, the regulation establishes a distinction depending on whether the foreign authority concerned falls under the law of a Member State of the Community.

Article 12. This provision is in conformity with the provision of Article 7, (1), of Directive 92/30/EEC, according to which Member States must take the necessary measures so that no legal obstacle hinders the communication of information by the concerned companies and establishments.

By objections derived from private law, we mean here the objections resulting from the contractual duty of discretion of the concerned companies.

Article 13. This article regulates the right of the Banking and Financial Commission to conduct on-site verification, in the companies and establishments, of the information communicated to it in application of the decree (§ 1). Specific procedural rules are provided for cases where the concerned company or establishment is foreign (§ 2).

This article also regulates on-site verifications carried out in Belgium by foreign authorities (§ 3).

§§ 2 and 3 transpose Article 7, (7), of Directive 92/30/EEC regarding cross-border verification in Member States of the Community. They also regulate the case of cross-border verification conducted from Belgium in non-member States and (vice versa). (Err. 12-08-1994; M.B. 03-02-1995, p. 2472)

Article 14. This article regulates collaboration, including the exchange of information, between Belgian and foreign authorities responsible for the supervision of credit institutions, insurance companies, and investment firms. Directive 92/30/EEC provides that Member States authorize the exchange between their authorities of all information necessary for the implementation of consolidated supervision of credit institutions, as defined in the Directive. More particularly, Article 14 of this decree implements Article 7, (3) and (4), of Directive 92/30/EEC regarding cooperation between authorities belonging to Member States of the Community and joins Article 8 of the Directive regarding cooperation with third countries. Furthermore, this article is inspired by the regulation on collaboration as provided by the Law of 22 March 1993, notably under Title VII of said law.

In this Decree, the term investment firm means an undertaking as defined in Article 1(2) of Directive 93/22/EEC of 10 May 1993 on investment services in the securities field.

Article 15. This article is residual compared to the other provisions of the Decree regarding cooperation agreements between authorities. It must be combined with Article 101 of the Law of 22 March 1993 which regulates cooperation agreements between authorities, including agreements concluded on the basis of this Article 15.

CHAPTER VI. - Sanctions.

Article 16. Without prejudice to the penalties and other sanctions provided for in Title VIII of the Law of 22 March 1993, this article, adopted on the basis of Article 49, §§ 5, last paragraph, and 6, of the Law of 22 March 1993, declares the administrative sanctions defined in Articles 102 and 103 of the Law applicable to financial companies, mixed companies, and their Belgian and foreign subsidiaries, which fall within the scope of the Decree and do not comply with the provisions of the Law and the Decree.

To be complete, it should be recalled that the Law of 22 March 1993 provides for various general measures enabling the Banking and Financial Commission to intervene when necessary to preserve sound and prudent management of credit institutions.

In this regard, reference should be made notably to Article 24, § 7, of the Law. Non-compliance with the provisions of the Decree by parent companies of Belgian credit institutions may constitute an indication leading to the presumption that, as shareholders, they do not possess the necessary qualities or do not offer sufficient guarantees to ensure sound and prudent management of the credit institution. Credit institutions or financial companies that are shareholders of a credit institution and are not subject to adequate supervision on a consolidated basis, either due to the way they have structured themselves as a group or due to the absence of such an obligation in their supervisory status, may be considered as not possessing the necessary qualities within the meaning of Article 17, paragraph 2, or Article 24, § 3, of the Law, which constitutes sufficient grounds to refuse their approval as a credit institution or to take measures against them under Article 24, § 7, of the Law.

In this regard, reference should also be made to Article 20, paragraph 2, of the Law, which stipulates that group structures must allow for adequate individual and consolidated supervision. This principle is also stated in the fifth recital of Directive 92/30/EEC, according to which approval may be refused or withdrawn in the case of group structures that the authorities consider inappropriate for the exercise of banking activities, notably because these activities are not or could not be supervised satisfactorily.

Article 17. This article includes, in accordance with Article 9(2) of Directive 92/30/EEC, a transitional regime for investment firms.

By investment firms, we mean here in particular Belgian stockbroking companies.

Article 18. This article recalls the provision of Article 49, § 7, of the Law of 22 March 1993, according to which the Banking and Financial Commission may authorize derogations from the decrees and regulations adopted pursuant to this article.

The Commission may grant derogations in specific cases, provided that these derogations are not contrary to the European rules defined by Directive 92/30/EEC. Regarding the power of derogation of the Banking and Financial Commission, reference should be made to the answer given by the Minister of Finance to questions regarding the follow-up given to the opinion of the Legislation Section of the Council of State concerning the draft law on the status and supervision of credit institutions: see Parl. Doc., Senate, 616-2, of 24 February 1993, p. 15.

I have the honor to be,
Sire,
Of Your Majesty, the very respectful and very faithful servant, The Minister of Finance, Ph. MAYSTADT

OPINION OF THE COUNCIL OF STATE.

The Council of State, Legislation Section, Second Chamber, seized by the Minister of Finance on 28 December 1993 of a request for an opinion on a draft Royal Decree without a title, but presented in these terms in the report to the King: "Draft Royal Decree on the consolidated supervision of credit institutions", gave on 7 March 1994 the following opinion:

General Observation.

In accordance with a constant principle, it does not belong to the King to reproduce, in an implementing decree, certain provisions of the law on which it is based. This rule is not merely formal, as its purpose is to ensure respect for the hierarchy of norms as well as legal certainty.

If the author of the project intends to make the examined text more readable, as appears from the report to the King, he can achieve this objective, for example, by using a circular in which he will give the necessary explanations to ensure the proper understanding of the draft decree or by using a circular coordinating informally the provisions of the law and those of the draft Royal Decree.

It is under this reservation that the following observations are formulated.

Examination of the project.

Title.

The title appearing at the head of the report to the King must be reproduced at the head of the text of the decree.

Preamble.

In accordance with legislative rules, it is appropriate to (interchange) paragraphs 1 and 2 in order to respect the hierarchy of norms. (Err. 12-08-1994; M.B. 03-02-1995, p. 2472)

Furthermore, the Dutch text of paragraph 1, which becomes paragraph 2, would be better drafted as proposed in the Dutch version of this opinion.

Operative Part.

In accordance with legislative rules, it will be written in the French text: "Chapter One".

In the Dutch text of the title of Chapter One, the word "Voorwerp" should be replaced by the word "Onderwerp".

Article 1. Article 1 merely announces the subject matter dealt with in the following articles and therefore has no normative character. It should be omitted.

Indeed, the implementation of Directive 92/30/EEC, desired by its Article 9, § 1, paragraph 2, results from the mention of this directive in the preamble.

Article 2. The Dutch text of points 5 and 8 would be better drafted as proposed in the Dutch version of this opinion.

Article 2.1. The Dutch text of § 1 would be better drafted as proposed in the Dutch version of this opinion.

In § 2, the words "Subject to the provisions of § 3" duplicate the words "By derogation from § 2" appearing in § 3. They should be omitted.
In § 2, according to legislative rules, the words placed in parentheses are not indispensable to the understanding of the text. They must be omitted.
The Dutch text of § 3, 1°, would be better drafted as proposed in the Dutch version of this opinion.
In § 3, 2°, the word "supplementary" is superfluous and must be omitted.
Regarding § 3, 3°, b, it is appropriate to avoid, in accordance with legislative rules, incidental phrases in an enumeration. The second sentence will find its place better in a separate paragraph following point 4, starting with the words: "In its assessment for the application of paragraph 1, 3°, ...".
In § 3, 4°, the date of the Royal Decree referred to therein should be indicated.
The Dutch text of paragraph 2 of point 4, which becomes paragraph 3, would be better drafted as proposed in the Dutch version of this opinion.
The Dutch text of paragraph 3 of point 4, which becomes paragraph 4, would be better drafted as proposed in the Dutch version of this opinion.

Article 3. 1. The Dutch text of § 1, (paragraph 2, should be drafted taking into account the observation made in the Dutch version of this opinion.) (Err. 12-08-1994; M.B. 03-02-1995, p. 2472)

In § 1, paragraph 3, the introductory phrase of the French text would be more adequately drafted as follows: "Credit institutions are, furthermore, required to ...".
In § 3, paragraph 2, the words: "Notwithstanding the provision of paragraph 1" could be avoided by writing: "The Banking and Financial Commission may however exempt ...".

Article 4. In paragraph 2, 1°, the part of the sentence presented in the form of a paragraph constitutes an incidental phrase whose use should be avoided. It should be made a separate paragraph of Article 5 with a reference to § 1, paragraph 2, 1°.

Furthermore, the words "in functie van" should be replaced by the words "in verhouding tot" in the Dutch text of this paragraph.

Article 5. 1. In § 1, it must be written: "The supervision of Belgian credit institutions, referred to in Article 5, § 1, is exercised ...".

§ 2, 2° calls for a remark similar to that formulated regarding Article 5 of the draft.

The Dutch text of paragraph 1 of § 2, 2°, would be better drafted as proposed in the Dutch version of this opinion.

Taking into account the general observation, the second sentence of § 3, paragraph 3, must be omitted.

Indeed, the provision declares applicable to the matter regulated, another provision of higher mandatory force which is already applicable to it by itself.

The Dutch text at the end of the first sentence of § 4 would be better drafted as proposed in the Dutch version of this opinion.
In § 4, according to constant case law, the analogical procedure used in the second sentence is questionable, notably because it may have the consequence of widening the scope of the law. It is appropriate, when the King has the power, to reproduce the provision to which reference is made, subject to necessary adaptations.

Article 6. 1. In § 1, it must be written: "... of financial companies, regulated by this chapter, the following statements are submitted ...".

The Dutch text of § 2, paragraph 1, first sentence, should be drafted as indicated in (the) Dutch version of this opinion. (Err. 12-08-1994; M.B. 03-02-1995, p. 2472)

In § 2, paragraph 2, the words "of this paragraph" and the words "of this Decree" are unnecessary and must be omitted.

In § 3, paragraph 1, first sentence, the words "Without prejudice to the provisions of paragraph 2 of this paragraph," could be avoided by inserting the word "however" between the words "may" and "require" in paragraph 2.

Furthermore, account should be taken, in the same sentence, of the observation made in the Dutch version of this opinion.

Article 7. 1. Regarding § 1, paragraph 2, reference should be made to observation no. 5 formulated under (Article 5). (Err. 12-08-1994; M.B. 03-02-1995, p. 2472)

In § 2, paragraph 2, the words "in a more general way" have no normative effect and must be omitted.
In § 2, paragraph 3, the words "of this paragraph" will be omitted and the words "to these" will be replaced by the word "to".
In § 3, the words "in question" must be replaced by the word "referred to".

Article 8. 1. The Dutch text of § 1, paragraphs 1 and 2, should be drafted taking into account the observations made in the Dutch version of this opinion.

In § 2, the words "of this article" must be omitted.

At the end of the sentence, it will be written more simply: "... and the competent foreign authorities".

In § 3, it is appropriate either to delete the words "by analogy" or to specify in the text the adaptations by which Article 7, § 3, of the draft applies to credit institutions that are subsidiaries of mixed companies.

Subject to this observation, it is proposed to draft the Dutch text at the end of this paragraph as indicated in the Dutch version of this opinion.

Article 9. In the introductory phrase, the words "of this Decree" must be omitted.

Title of Chapter V. In the Dutch text, it should be written: "... cooperation between authorities".

Article 10. 1. In § 1, the words "of this Decree" must be omitted.

In the French text of § 2, paragraph 2, the words "in question" must be omitted.
In the French text of § 3, first sentence, the words "of this article" must be omitted.

Regarding the second sentence of § 3, reference should be made to observation no. 3 formulated under (Article 8). (Err. 12-08-1994; M.B. 03-02-1995, p. 2472)

The Dutch text of § 4, paragraph 1, would be better drafted as proposed in the Dutch version of this opinion.

Article 12. It is appropriate to clarify in the report to the King what is meant by the words "without being able to oppose objections based on private law", whereas the directive uses the words "without being able to oppose any obstacle of a legal nature". It would be useful, furthermore, to clarify this precision by citing some examples.

Furthermore, it must be written: "... on a consolidated basis, organized by this Decree ...".

Article 13. 1. In the Dutch text of § 2, paragraph 2, the word "modaliteiten" should be replaced by the words "nadere regelen".

In § 3, the words "under the conditions mentioned below" should be replaced by the words "under the following conditions" and moved to the end of the introductory phrase, in place of the words "in which case".
In § 3, 1° and 2°, reference should be made to observation no. 3 formulated regarding Article 9.

Article 14. In §§ 2 and 4, reference is again made to observation no. 5 formulated regarding (Article 5). (Err. 12-08-1994; M.B. 03-02-1995, p. 2472)

Furthermore, the Dutch text of § 2, 1°, should be drafted taking into account the observation made in the Dutch version of this opinion.

Article 15. In the Dutch text, the word "modaliteiten" should be replaced by the words "nadere regelen" each time it appears.

Article 17. The recourse to legislation by analogy, already criticized regarding previous articles, is all the less admissible as it concerns the applicable sanctions, notably an administrative fine whose maximum amount is fixed at fifty million francs.

Chapter VII. - The title will be written as follows: "Transitional and final provisions".

Article 17. In paragraph 1, one could write: "... which ... are included in the consolidated situation ..., are however left out of the consolidated situation ... to specific solvency requirements".

The Dutch text of paragraph 2 would be better drafted as proposed in the Dutch version of this opinion.

Article 18. As specified in the second sentence of the article, it goes without saying that the power of derogation (Opinion L. 21.563/2 of 13 July 1992) attributed to the Banking and Financial Commission can only be understood as the power to derogate from the provisions of the draft Decree that do not transpose the provisions of the directive.

In the absence of the Decree specifying the criteria that the Banking and Financial Commission must take into consideration to authorize derogations, it will have a very broad discretionary power.

As the Law of 29 July 1991 on the formal motivation of administrative acts is applicable to the decisions of the Banking and Financial Commission, the conditions under which this derogation facility is used may be subject to regular publicity in the annual report provided for by Article 8bis of the Royal Decree no. 185 of 9 July 1935 relating to the Banking and Financial Commission.

This way of proceeding is imposed to allow the objectification of the derogation decisions taken by the Banking and Financial Commission.

The chamber was composed of:

Messieurs:

J.-J. Stryckmans, chamber president;
Y. Boucquey,
Y. Kreins, Councilors of State;
J. De Gavre,
P. Gothot, assessors of the Legislation Section; Ms. J. Gielissen, clerk.

The concordance between the French version and the Dutch version has been verified under the control of Mr. J.-J. Stryckmans.

The report was presented by Mr. J. Regnier, first auditor. The note of the Coordination Bureau was drafted and explained by Ms. C. Debroux, junior referendary.

The clerk, The president,
J. Gielissen. J.-J. Stryckmans.