Royal Decree of 21 November 2005 on the supplementary supervision of credit institutions, insurance undertakings, investment firms and collective investment management companies belonging to a financial conglomerate

Title

2005003820

21 NOVEMBER 2005. - Royal Decree organizing the supplementary supervision of credit institutions, insurance undertakings, [reinsurance undertakings,] investment firms and collective investment management companies, belonging to a financial conglomerate, and amending the Royal Decree of 22 February 1991 laying down the general regulation relating to the supervision of insurance undertakings and the Royal Decree of 12 August 1994 relating to the consolidated supervision of credit institutions. <AR 2009-09-27/17, art. 27, 005; In force: 25-10-2009> (NOTE: Consultation of versions prior to 30-11-2005 and update as of 19-11-2013)

Source: Economy, SMEs, Middle Classes and Energy - Finance

Publication: 30 November 2005

Number: 2005003820

page: 51773

File number: 2005-11-21/36

Entry into force: 30 November 2005

This text amends the following texts:

1994003525 1991011037

5 archived versions

12 implementing decrees

TITLE I. - The supplementary supervision of credit institutions, insurance undertakings, [1 reinsurance undertakings,]1 investment firms and collective investment management companies, belonging to a financial conglomerate.
CHAPTER I. - Definitions.
Identification of financial conglomerates Definitions. Art. 1 Definition of a financial conglomerate. Art. 2 Identification and notification of a financial conglomerate. Art. 3 CHAPTER II. - Subject matter and modalities of the supplementary supervision of the group.
Section I. - Scope of application.
Art. 4-6
Other financial conglomerates.
Art. 7
Exemption at sub-group level.
Art. 8
Section II. - Parent undertakings in a Member State of the European Economic Area.
Solvency.
Art. 9
Risk concentration.
Art. 10
Intragroup transactions.
Art. 11
Periodic reporting.
Art. 12
Risk management procedures and internal control arrangements Art. 13 Shareholding. Art. 14 Directors. Art. 15 The functions of the commissioner at a mixed financial company Art. 16 Section III. - Parent undertakings in a non-member State of the European Economic Area.
Subject matter and modalities of supervision. Art. 17 Section IV. - Other financial groups.
Identification and subject matter of supervision. Art. 18 Section V. - Competent authority responsible for the supplementary supervision of the group.
Designation.
Art. 19
Tasks.
Art. 20
CHAPTER III. - Communication of information, on-site verification, cooperation and exchange of information between competent authorities.
Communication of information to the Commission. Art. 21 Communication of information to foreign competent authorities. Art. 22 Exchange of data within the group. Art. 23 On-site verification. Art. 24 Cooperation and exchange of information between competent authorities. Art. 25 Cooperation agreements. Art. 26 CHAPTER IV. - Administrative measures and sanctions. Art. 27 TITLE II. - Other provisions. CHAPTER I. - Provisions amending the Royal Decree of 22 February 1991 laying down the general regulation relating to the supervision of insurance undertakings and the Royal Decree of 12 August 1994 relating to the consolidated supervision of credit institutions. Art. 28-29 CHAPTER II. - Final provisions. Art. 30-31 ANNEX. Art. N

Text

TITLE I. - The supplementary supervision of credit institutions, insurance undertakings, [1 reinsurance undertakings,]1 investment firms and collective investment management companies, belonging to a financial conglomerate.

(1)<AR 2009-09-27/17, art. 27, 005; In force: 25-10-2009>

CHAPTER I. - Definitions.

Identification of financial conglomerates

Definitions.

Article 1.For the purposes of Title I of this Decree, the following shall be understood by:
1° the insurance law: the Law of 9 July 1975 relating to the supervision of insurance undertakings; [2 1°bis the law relating to reinsurance: the Law of 16 February 2009 relating to reinsurance;]2 2° the banking law: the Law of 22 March 1993 relating to the status and supervision of credit institutions; 3° the law concerning investment firms: the Law of 6 April 1995 [1 relating to the status and supervision of investment firms]1; 4° the law relating to certain forms of collective management of investment portfolios: [5 the Law of 3 August 2012]5 relating to certain forms of collective management of investment portfolios; 5° sectoral regulation: the banking law, the insurance law, [2 the law relating to reinsurance,]2 the law concerning investment firms, the law relating to certain forms of collective management of investment portfolios, as well as the decrees and regulations taken in implementation of these laws, with the exception of provisions relating to the supplementary supervision of regulated companies belonging to a financial conglomerate; comparable national regulatory and supervisory practices in force in other States; 6° the Directive: Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms belonging to a financial conglomerate, and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council; 7° a regulated undertaking: a legal person which is either a credit institution as defined in Article 1, paragraph 2, of the banking law, or an insurance undertaking as defined in Article 91bis, 1° and 2°, of the insurance law, [2 or a reinsurance undertaking as defined in Article 82, 3° and 4°, of the law relating to reinsurance,]2 or an investment firm as defined in Article 44 of the law concerning investment firms, or a collective investment management company as defined [5 in Article 3, 12° of the law relating to certain forms of collective management of investment portfolios]5, and any other company incorporated under foreign law which, if it had its registered office in Belgium, would be required to obtain authorization to carry on the activity of an investment firm or a collective investment management company; 8° the financial sector: a sector composed of one or more of the following undertakings:
a) a regulated undertaking having the status of a credit institution, a financial institution within the meaning of Article 3, § 1, 5°, of the banking law, a auxiliary banking services undertaking within the meaning of Article 1, points 5 and 23, of Directive 2000/12/EC of 20 March 2000 concerning the taking up and pursuit of the business of credit institutions; these undertakings form part of the same financial sector, referred to as the 'banking sector'; b) a regulated undertaking having the status of an insurance undertaking [2 or a reinsurance undertaking]2, an insurance holding company within the meaning of Article 91bis, 9°, of the insurance law; these undertakings form part of the same financial sector, referred to as the 'insurance sector'; c) a regulated undertaking having the status of an investment firm, an undertaking providing auxiliary services within the meaning of Article 46, 2°, of the law concerning investment firms, a financial institution within the meaning of Article 46, 7°, of the law concerning investment firms; these undertakings form part of the same financial sector, referred to as the 'investment services sector'; d) a mixed financial company; the least important financial sector within a financial conglomerate means the financial sector which has the lowest average within the meaning of Article 2, § 3, paragraph 1, a), and the most important financial sector within a financial conglomerate means the sector which has the highest average within the meaning of Article 2, § 3, paragraph 1, a); 9° sectoral supervision of the group: the supervision exercised on regulated undertakings in application of Article 49 of the banking law, Chapter VIIbis of the insurance law, [2 Title VIII of the law relating to reinsurance,]2 Article 95 of the law concerning investment firms or of [5 Article 241 of the law relating to certain forms of collective management of investment portfolios]5, as well as the supervision exercised in application of comparable national regulatory and supervisory practices in force in other States; 10° parent undertaking, subsidiary, control, consortium, participation, qualified participation: the concepts within the meaning of the definition given in the provisions relating to the sectoral supervision of the group; close links: the concept within the meaning of the definition given in Article 2, § 6, 10°bis, of the insurance law, [2 in Article 4, 15°, of the law relating to reinsurance,]2 in Article 3, § 1, 1°bis, of the banking law, in Article 46, 2°bis, of the law concerning investment firms and in [5 Article 3, 33° of the law relating to certain forms of collective management of investment portfolios]5; 11° a group: a set of undertakings consisting of a parent undertaking, its subsidiaries, the undertakings in which the parent undertaking or its subsidiaries hold directly or indirectly a participation, as well as the undertakings with which a consortium is formed and the undertakings which are controlled
by these latter or in which these latter hold a participation; 12° a financial conglomerate: a group which satisfies the following conditions:
a) the group includes at least one regulated undertaking having the status of a credit institution, an insurance undertaking [2 or an investment firm]2 or an investment firm, either at the head of the group or as a subsidiary; b) if the undertaking at the head of the group is a regulated undertaking, it is either the parent undertaking of an undertaking belonging to the financial sector, or an undertaking which holds directly or indirectly a participation in an undertaking belonging to the financial sector, or an undertaking which forms a consortium with an undertaking belonging to the financial sector; c) if the undertaking at the head of the group is not a regulated undertaking, the activities of the group are carried out mainly in the financial sector; d) the group carries on its activities both in the insurance sector and in the banking sector and/or the investment services sector; e) the activities of the group in the insurance sector and the activities of the group in the banking sector and the investment services sector are significant, within the meaning of Article 2, § 3; 13° a mixed financial company: a parent undertaking, other than a regulated undertaking, which is at the head of a financial conglomerate; 14° a competent authority: a national authority responsible, in application of the sectoral regulation, for the prudential supervision of regulated undertakings; 15° the competent authorities concerned:
a) the competent authorities of the Member States of the European Economic Area, which are responsible for the sectoral supervision of the group relating to regulated undertakings which form part of a financial conglomerate; b) the competent authority responsible for the supplementary supervision of the group within the meaning of Article 19, if it does not form part of the authorities referred to in point a); c) the other competent authorities which, in the opinion of the authorities referred to in points a) and b), are concerned with the achievement of the objectives of the supplementary supervision of a financial conglomerate; 16° intragroup transactions: transactions carried out, directly or indirectly, for consideration or not, between regulated undertakings and other undertakings forming part of the same financial conglomerate or with natural or legal persons linked to these undertakings by close links, whether or not these transactions concern the execution of a contractual obligation; 17° risk concentration: the aggregate of positions taken by undertakings forming part of a financial conglomerate, which are likely to give rise to losses and which are significant enough to compromise the financial situation in general and solvency in particular of the regulated undertakings forming part of said financial conglomerate, these positions possibly resulting from counterparty/credit risk, investment risk, insurance risk, market risk or other significant risks, or from a combination or interaction of these risks; 18° [4 the supervisory authority]4: [5 the National Bank of Belgium or the Financial Services and Markets Authority, depending on whether the regulated undertaking is, respectively, a credit institution, an insurance undertaking, a reinsurance undertaking or a stock exchange company, or a portfolio management and investment advice company or a collective investment management company;]5 19° the European Committee of Financial Conglomerates: the Committee established by Article 21 of the Directive; 20° the Law of 2 August 2002: the Law of 2 August 2002 relating to the supervision of the financial sector and financial services. [5 21° mixed committee: the committee referred to in Article 54 of Regulation No 1093/2010, Regulation No 1094/2010 and Regulation No 1095/2010 respectively; 22° 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; 23° Regulation No 1094/2010: Regulation No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC; 24° Regulation No 1095/2010: Regulation No 1095/2010 of the European Parliament and of the
Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC; 25° 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; 26° the Law of 22 February 1998: the Law of 22 February 1998 laying down the organic statute of the National Bank of Belgium.]5 ---------- (1)<AR 2009-03-23/07, art. 6, 004; In force: 02-05-2009> (2)<AR 2009-09-27/17, art. 27, 005; In force: 25-10-2009> (4)<AR 2013-11-12/04, art. 16, 006; In force: 29-11-2013> (5)<AR 2013-11-12/04, art. 17, 006; In force: 29-11-2013>

Definition of a financial conglomerate.

Art. 2.§ 1. To determine whether a group is a financial conglomerate within the meaning of Article 1, 12°, the thresholds defined in the following paragraphs are applied.
§ 2. The activities of a group are deemed to be carried out mainly in the financial sector within the meaning of Article 1, 12°, c), if the ratio between the aggregate total balance sheet of the group's undertakings belonging to the financial sector and the aggregate total balance sheet of all the group's undertakings exceeds 40%.
§ 3. The activities of the undertakings of a group which form part of the same financial sector are deemed to be significant within the meaning of Article 1, 12°, e), if, a) either the average of the following two ratios is greater than 10%: the ratio between the aggregate total balance sheet of the group's undertakings which form part of the same financial sector and the aggregate total balance sheet of all the group's undertakings which belong to the financial sector, and the ratio between the common solvency requirements of the group's undertakings which form part of the same financial sector and the common solvency requirements of all the group's undertakings which belong to the financial sector; b) either the aggregate total balance sheet of the undertakings which form part of the least important financial sector within the group exceeds 6 billion EUR; if, in this case, the activities of the group's undertakings which form part of said financial sector do not reach the average referred to in point a), [1 the supervisory authority]1, in its capacity as the competent authority concerned, and the other competent authorities concerned may decide, by common accord, not to consider the group as a financial conglomerate, or to exempt the group from the application of certain provisions of this Decree concerning the supplementary supervision of the group, if the application of these provisions is not necessary or would be inappropriate or confusing given the objectives of the supplementary supervision of the group. For the application of the first paragraph, the banking sector and the investment services sector are aggregated and considered to form part of the same financial sector. [1 The supervisory authority]1, in its capacity as the competent authority responsible for the supplementary supervision of the group, notifies the competent authorities concerned of other Member States of the European Economic Area of the decisions taken in application of the first paragraph, b), second paragraph. § 4. For the purposes of the application of §§ 2 and 3, the competent authorities concerned may decide, by common accord, a) not to include an undertaking in the calculation of the thresholds, for the same reason that this undertaking may, in application of Article 9, § 2, paragraph 2, not be included in the calculation of solvency requirements; b) to consider as a financial conglomerate a group which no longer satisfies the thresholds provided for in §§ 2 and 3, paragraph 1, a), but which has satisfied them for three consecutive years, in order to avoid a sudden change in the supervisory regime, or to take another decision, or even to reconsider a previous decision, in the event of a significant and lasting change in the structure of the group; c) in exceptional cases, to replace or supplement the criterion based on the aggregate total balance sheet with one or both of the following parameters, if they consider that these parameters, given the objectives of
the supplementary supervision of the group, better reproduce the group's activity; these parameters are the group's revenue structure and off-balance sheet activities; [1 the supervisory authority]1 defines the method of calculation of these parameters. If a group is considered to be a financial conglomerate in accordance with §§ 2 and 3, the decisions referred to in the first paragraph, a) and b), are taken on the basis of a proposal from the competent authority responsible for the supplementary supervision of the group. § 5. If a financial conglomerate subject to supplementary supervision no longer satisfies one or more of the thresholds fixed in §§ 2 and 3, these thresholds are replaced, for the following three years, by the following thresholds: 40% becomes 35%, 10% becomes 8% and 6 billion EUR becomes 5 billion EUR. By derogation from the first paragraph, the competent authority responsible for the supplementary supervision of the group may decide, with the agreement of the other competent authorities concerned, not to or no longer apply these lower thresholds during the aforementioned three-year period, taking into account the objectives of the supplementary supervision of the group. § 6. The calculations relating to the aggregate total balance sheet, as referred to in this Article, are carried out on the basis of the aggregated total balance sheet of the undertakings forming part of the group, starting from their most recent annual accounts, according to the rules defined by [1 the supervisory authority]1. The undertakings in which the group holds a participation are taken into account to the extent of the amount of their total balance sheet corresponding to the aggregated proportional share held by the group. If, for a specific group or parts of the group, consolidated accounts are drawn up, the calculations are carried out from these accounts. The solvency requirements referred to in this Article are calculated in accordance with the provisions of the sectoral regulation applicable to the regulated undertakings concerned. ---------- (1)<AR 2013-11-12/04, art. 16, 006; In force: 29-11-2013>

Identification and notification of a financial conglomerate.

Art. 3. § 1. The supervisory authority verifies whether the Belgian regulated entities it has authorized are part of a financial services group. It does so in close cooperation with the other competent authorities that have authorized other regulated entities within the group. If the supervisory authority considers that the group in question is a financial services group and that it is not already subject to supplementary supervision, it notifies the other competent authorities concerned of the Member States of the European Economic Area.

§ 2. The supervisory authority, in its capacity as the competent authority responsible for the supplementary supervision of the group, informs the parent undertaking of the group or, in the absence of a parent undertaking, the regulated entity that shows the highest total balance sheet in the most important financial sector of the group, that the group has been identified as a financial services group and that it has been designated as the authority responsible for the supplementary supervision of the group. The supervisory authority also informs the competent authorities of the other Member States of the European Economic Area that have authorized regulated entities within the group, the competent authorities of the State in which the mixed financial holding company has its registered office, the joint committee, as well as, if it deems necessary given the objectives of supplementary supervision, the competent authorities of non-member States of the European Economic Area.

(1) AR 2013-11-12/04, art. 16, 006; Effective: 29-11-2013 (2) AR 2013-11-12/04, art. 18, 006; Effective: 29-11-2013

CHAPTER II. - Subject matter and procedures for the supplementary supervision of the group.

Section 1. - Scope.
Financial services groups headed by a regulated entity subject to the law of a Member State of the European Economic Area

Art. 4. Belgian regulated entities that are at the head of a financial services group and Belgian regulated entities that are part of a financial services group headed by a regulated entity constituted under the law of a Member State of the European Economic Area are subject to supplementary supervision exercised at the group level.

The supplementary supervision of the group is exercised in accordance with the provisions of Articles 9 to 13. The competent authority responsible for the supplementary supervision of the group is designated in application of the provisions of Article 19.

Financial services groups headed by a mixed financial holding company subject to the law of a Member State of the European Economic Area

Art. 5. Belgian regulated entities that are part of a financial services group headed by a mixed financial holding company constituted under the law of a Member State of the European Economic Area are subject to supplementary supervision exercised at the group level.

The supplementary supervision of the group is exercised in accordance with the provisions of Articles 9 to 16. The competent authority responsible for the supplementary supervision of the group is designated in application of the provisions of Article 19.

Financial services groups headed by an entity subject to the law of a non-member State of the European Economic Area

Art. 6. Belgian regulated entities that are part of a financial services group headed by a mixed financial holding company or a regulated entity constituted under the law of a non-member State of the European Economic Area, and which are not subject to supplementary supervision exercised at the group level in application of Article 4 or Article 5, are subject to supplementary supervision exercised at the group level.

The supplementary supervision of the group is exercised in accordance with the provisions of Article 17.

Other financial services groups.

Art. 7. Belgian regulated entities that are not subject to supplementary supervision exercised at the group level in application of Articles 4, 5 and 6 are subject to supplementary supervision in accordance with the provisions of Article 18.

Exemption at the sub-group level.

Art. 8. The supervisory authority, in its capacity as the competent authority responsible for the supplementary supervision of a financial services group that is itself part of another financial services group subject to supplementary supervision as referred to in Article 4 or Article 5, may exempt the sub-group, in whole or in part, from the application of the provisions of this Royal Decree concerning the supplementary supervision of the group if the objectives of the supplementary supervision of the regulated entities are sufficiently achieved by the supplementary supervision exercised on the other financial services group.

(1) AR 2013-11-12/04, art. 16, 006; Effective: 29-11-2013

Section II. - Parent undertakings subject to a Member State of the European Economic Area.

Solvency.

Art. 9. § 1. Belgian regulated entities that are part of a financial services group are subject to supplementary supervision of solvency at the group level.

The supplementary supervision covers:
1° compliance with the requirement that own funds are permanently at least equal to the solvency requirements; the own funds and the solvency requirements at the level of the financial services group are calculated according to one of the methods defined in Annex I; 2° the adequacy of management procedures and internal control devices relating to the solvency of the group, in accordance with the provisions of Article 13.

§ 2. For the application of § 1, all companies in the group that belong to the financial sector fall within the scope of the supplementary supervision of the group.

By way of derogation from the first paragraph, companies may, for the application of § 1, first paragraph, 1°, be excluded from the supplementary supervision of the group for reasons analogous to those that, under sectoral regulation, justify their exclusion from the sectoral supervision of the group. In the case referred to in Article 107, 1°, of the Royal Decree of 30 January 2001 implementing the Companies Code, this possibility may only be used if the companies concerned together satisfy the condition laid down. The exclusion of a company is subject to prior authorization from the supervisory authority in its capacity as the authority responsible for the supplementary supervision of the group. In the case referred to in Article 108, § 1, of the aforementioned Royal Decree of 30 January 2001, the supervisory authority shall, except in cases of urgency, consult the other competent authorities concerned beforehand.

(1) AR 2013-11-12/04, art. 16, 006; Effective: 29-11-2013

Risk concentration.

Art. 10. § 1. Belgian regulated entities that are part of a financial services group are subject to supplementary supervision regarding risk concentration at the group level.

The supplementary supervision covers:
1° the identification and reporting of significant risk concentrations; 2° the adequacy of management procedures and internal control devices regarding risk concentration in the group, in accordance with the provisions of Article 13.

The supervision covers in particular the following aspects: the so-called contagion risk within the group, the existence of conflicts of interest, circumventions of the regulation on risk concentration, as well as the level and extent of risk concentration.

§ 2. For the application of § 1, all companies in the group that belong to the financial sector fall within the scope of the supplementary supervision of the group regarding risk concentration.

§ 3. For the application of § 1, first paragraph, 1°, the supervisory authority, in its capacity as the authority responsible for the supplementary supervision of the group, in concertation with the other competent authorities concerned and after consulting the financial services group, sets the thresholds for the identification and reporting of each significant risk concentration. It determines the thresholds on the basis of the following two parameters or only one of these parameters: regulatory own funds and technical provisions.

If no threshold has been set, risk concentrations are considered significant if they exceed 10% of the solvency requirement of the financial services group in question.

§ 4. Without prejudice to the provisions of § 1, the supervisory authority, in its capacity as the authority responsible for the supplementary supervision of the group, may impose limitation standards or other equivalent supervisory measures for the management of risk concentration at the level of a financial services group. In order to prevent circumvention of sectoral regulation on risk concentration, it may also decide to apply the sectoral provisions in this matter by analogy at the level of the financial services group. It consults the other competent authorities concerned beforehand.

If a mixed financial holding company is at the head of a financial services group, this company is included in the sectoral supervision of the group regarding risk concentration which is exercised on the most important financial sector of the group.

(1) AR 2013-11-12/04, art. 16, 006; Effective: 29-11-2013

Intragroup transactions.

Art. 11. § 1. Belgian regulated entities that are part of a financial services group are subject to supplementary supervision regarding intragroup transactions within the group.

The supplementary supervision covers:
1° the identification and reporting of significant intragroup transactions; 2° the adequacy of management procedures and internal control devices regarding intragroup transactions, in accordance with the provisions of Article 13.

The supervision covers in particular the following aspects: the so-called contagion risk within the group, the existence of conflicts of interest, circumventions of the regulation on intragroup transactions, as well as the level and extent of intragroup transactions.

§ 2. For the application of § 1, all companies in the group, as well as persons linked to companies in the group by close links, fall within the scope of the supplementary supervision of the group regarding intragroup transactions.

§ 3. For the application of § 1, first paragraph, 1°, the supervisory authority, in its capacity as the authority responsible for the supplementary supervision of the group, in concertation with the other competent authorities concerned and after consulting the financial services group, sets adequate thresholds for the identification and reporting of any significant intragroup transaction. It determines the thresholds on the basis of the following two parameters or only one of these parameters: regulatory own funds and technical provisions.

If no threshold has been set, intragroup transactions are considered significant if they exceed 5% of the solvency requirement of the financial services group in question.

§ 4. Without prejudice to the provisions of § 1, the supervisory authority, in its capacity as the authority responsible for the supplementary supervision of the group, may impose limitation standards or other equivalent supervisory measures for the achievement of the objectives of the supplementary supervision of the group regarding intragroup transactions. In order to prevent circumvention of sectoral regulation on intragroup transactions, it may also decide to apply the sectoral provisions in this matter by analogy at the level of the financial services group. It consults the other competent authorities concerned beforehand.

If a mixed financial holding company is at the head of a financial services group, this company is included in the sectoral supervision of the group regarding intragroup transactions which is exercised on the most important financial sector of the group.

(1) AR 2013-11-12/04, art. 16, 006; Effective: 29-11-2013

Periodic reporting.

Art. 12. § 1. For the supplementary supervision of the group regulated in this section, the following statements are submitted to the competent authority responsible for the supplementary supervision of the group, according to the procedures it determines, and at least twice a year:
1° an accounting statement covering the financial situation of the financial services group and comprising at least the balance sheet and the income statement; 2° a statement confirming compliance with the standards defined by or pursuant to Article 9, § 1, first paragraph, 1°, Article 10, § 4, and Article 11, § 4, as well as a statement indicating the significant risk concentrations and significant intragroup transactions referred to in Article 10, § 1, first paragraph, 1°, and Article 11, § 1, first paragraph, 1°; for this purpose, the supervisory authority determines, in its capacity as the authority responsible for the supplementary supervision of the group, in concertation with the other competent authorities concerned, the categories of operations, risks and positions that must be notified for the monitoring of significant risk concentrations and intragroup transactions; it takes into account in this regard the specificities of the group structure and the risk management of the financial services group concerned.

§ 2. The statements referred to in § 1 are notified by the company located at the head of the financial services group. If this company is a mixed financial holding company, the supervisory authority may, in its capacity as the authority responsible for the supplementary supervision of the group, after concertation with the other authorities and with the group concerned, designate a regulated entity of the group that will be responsible for notifying the statements.

§ 3. The senior management of the company responsible, in accordance with § 2, for notifying the statements referred to in § 1, and if applicable the management committee, declares to the supervisory authority that the statements transmitted to it by the company at the end of the first half of the financial year and at the end of the financial year are in conformity with the accounting records and inventories. It is required for this purpose that these statements be complete, i.e., that they mention all the data appearing in the accounting records and inventories on the basis of which they are drawn up, and that they be correct, i.e., that they correspond exactly with the accounting records and inventories on the basis of which they are drawn up. The senior management confirms having taken the necessary steps to ensure that the aforementioned statements are drawn up in accordance with the current instructions of the supervisory authority, as well as by applying the accounting and valuation rules governing the preparation of consolidated accounts, or, for periodic statements that do not relate to the end of the financial year, by applying the accounting and valuation rules that governed the preparation of the consolidated accounts for the last financial year.]

(1) AR 2009-03-23/07, art. 7, 004; Effective: 02-05-2009 (2) AR 2013-11-12/04, art. 16, 006; Effective: 29-11-2013

Risk management procedures and internal control devices.

Art. 13. § 1. Belgian regulated entities that are part of a financial services group must have risk management procedures and internal control devices, as well as an administrative and accounting organization, that are adequate for the group.

§ 2. Risk management procedures include:
a) adequate administration and management, with approval and periodic evaluation of the strategy and policy by the competent bodies, in particular those of the parent undertaking, covering all significant risks incurred at the level of the financial services group; b) an adequate solvency policy, which contributes to anticipating for the group the future consequences of the business strategy followed on the group's risk profile and the solvency requirements referred to in Article 9; c) adequate procedures ensuring that risk management and monitoring systems are sufficiently integrated into the group's organization and that the systems used in the group's companies are consistent with each other, so that at the level of the financial services group, risks are correctly identified, monitored and managed. [1 d) regularly updated devices to participate in the realization and, if necessary, the development of appropriate rescue and resolution mechanisms and plans for failures.]

§ 3. Internal control devices include:
a) adequate procedures for monitoring solvency at the group level, so that all significant risks are correctly identified and monitored and that own funds are sufficient with regard to the risks incurred; b) the adequacy of procedures and systems for the identification, measurement, monitoring and management of intragroup transactions and risk concentrations.

§ 4. Belgian regulated entities must have an administrative and accounting organization that ensures the correctness and compliance with current regulations of the information and data communicated for the supplementary supervision of the group and the preparation of annual accounts.

(1) AR 2013-11-12/04, art. 19, 006; Effective: 29-11-2013

Shareholding.

Art. 14. § 1. Without prejudice to the provisions of sectoral regulation and the Act of 2 May 2007 on the publicity of significant holdings, any natural or legal person proposing to acquire, directly or indirectly, a qualifying holding in a mixed financial holding company governed by Belgian law is required to notify the [1 supervisory authority]1 in advance, stating the percentage of its holding. Any natural or legal person proposing to increase its qualifying holding such that the percentage of voting rights or securities held by it reaches or exceeds 20%, 33% or 50% or such that the mixed financial holding company becomes its subsidiary is also subject to notification. <AR 2008-02-14/42, art. 30, 003; En vigueur : 01-09-2008>

Within one month of the entry into force of this Decree, any natural or legal person who holds in a mixed financial holding company governed by Belgian law securities meeting the criteria of the first paragraph is required to notify the [1 supervisory authority]1, in accordance with the rules established in the first paragraph.

§ 2. [1 The supervisory authority]1 has a period of three months, from the date of the notification referred to in § 1, to oppose the project if it has reason to consider that the person referred to in § 1 does not possess the necessary qualities with regard to the need to ensure sound and prudent management of the regulated undertaking within the group.

§ 3. Any natural or legal person proposing to dispose of its direct or indirect qualifying holding in a mixed financial holding company governed by Belgian law is required to notify the [1 supervisory authority]1 in advance, stating the percentage of the holding concerned. Any natural or legal person proposing to reduce its qualifying holding such that the percentage of voting rights or securities held by it falls below the threshold of 20%, 33% or 50% or such that the mixed financial holding company ceases to be its subsidiary is also subject to notification.

§ 4. As soon as they become aware of them, mixed financial holding companies governed by Belgian law notify the [1 supervisory authority]1 of any acquisition or disposal of holdings in their capital that results in a crossing of a threshold as referred to in §§ 1 and 3.

They also notify the [1 supervisory authority]1, at least once a year, of the identity of shareholders or partners holding qualifying holdings, as well as the extent of these holdings as they appear from the data established during the annual general meetings of shareholders or partners, or from information received in the context of the obligations of listed companies.

§ 5. If there is a risk that the influence exercised by the persons referred to in § 1 prevents sound and prudent management of the regulated undertakings, [1 the supervisory authority]1 may take appropriate measures to put an end to this situation. Without prejudice to other measures provided for by the legislation under which this Decree is adopted, these measures may include injunctions and may go as far as a request to the competent court, sitting as in summary proceedings, to suspend the exercise of voting rights attached to the securities held by shareholders or partners. The court may also declare null and void all or part of the general meeting decisions taken in the aforementioned cases.

Similar measures apply to natural or legal persons who fail to comply with the obligation referred to in §§ 1 and 3 regarding prior notification. When a holding is acquired despite the objection of [1 the supervisory authority]1, the latter requests the competent court, sitting as in summary proceedings, to suspend the exercise of the voting rights concerned or to declare the votes cast null and void.

§ 6. If [1 the supervisory authority]1 is not the authority responsible for the supplementary supervision of the group, it operates, for the application of this Article, in close collaboration with said authority responsible for the supplementary supervision of the group.

(1)<AR 2013-11-12/04, art. 16, 006; En vigueur : 29-11-2013>

Directors.

Art. 15. § 1. The effective management of a mixed financial holding company governed by Belgian law must be entrusted to at least two natural persons. They must possess the necessary professional integrity and adequate experience to exercise this function.
[Persons who participate in the administration or management of a mixed financial holding company governed by Belgian law, without participating in its effective management, must have the necessary expertise and adequate experience to assume their tasks.
If the statutes of a mixed financial holding company governed by Belgian law 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.] <AR 2007-10-29/33, art. 40, 1°, 002; En vigueur : 08-11-2007>

§ 2. The provisions of Articles 19, [26bis], 27 and 28 of the Banking Act, Articles 9bis and 90, §§ 2 and following, of the Insurance Act, [1 Articles 17, § 2, 25, § 2, 26 and 27 of the Act on reinsurance,]1 Articles 61, [69bis], 70 and 71 of the Act concerning investment firms, and [3 Articles 200, 211 and 212 of the Act on certain forms of collective portfolio management]3, apply by analogy to the persons referred to in § 1. <AR 2007-10-29/33, art. 40, 2°, 002; En vigueur : 08-11-2007>

§ 3. If [2 the supervisory authority]2 is not the authority responsible for the supplementary supervision of the group, it operates, for the application of this Article, in close collaboration with said authority responsible for the supplementary supervision of the group.

(1)<AR 2009-09-27/17, art. 27, 005; En vigueur : 25-10-2009> (2)<AR 2013-11-12/04, art. 16, 006; En vigueur : 29-11-2013> (3)<AR 2013-11-12/04, art. 20, 006; En vigueur : 29-11-2013>

The functions of the commissioner at a mixed financial holding company.

Art. 16. § 1. The functions of the commissioner as referred to by the Companies Code are entrusted, in a mixed financial holding company governed by Belgian law, to one or more auditors or audit firms approved by [3 the supervisory authority]3 in accordance, as the case may be, with Article 52 of the Banking Act, [2 Article 40 of the Insurance Act, Article 42 of the Act on reinsurance]2 or Article 96 of the Act concerning investment firms. The board of auditors or the audit firms appointed to a mixed financial holding company must have a composition such that they are, either individually or together, approved in each of the financial sectors in which the financial services group carries on significant activity. [3 The supervisory authority]3 may, with reference to the parameters referred to in Article 2, §§ 3 and 4, determine what is meant by significant activity. The provisions of sectoral regulation on audit supervision apply by analogy to the commissioner referred to in the first paragraph.

§ 2. [1 The commissioners appointed to mixed financial holding companies referred to in § 1 collaborate in the supervision exercised by [3 the supervisory authority]3, under their personal and exclusive responsibility and in accordance with this paragraph, with the rules of the profession and the instructions of [3 the supervisory authority]3. To this end:
1° they assess the adequacy of the risk management procedures, internal control arrangements, as well as the administrative and accounting organization, referred to in Article 13. They communicate their conclusions on this matter to [3 the supervisory authority]3; 2° they report to [3 the supervisory authority]3 on:
a) the results of the limited review of the statements referred to in Article 12, transmitted by the mixed financial holding companies to [3 the supervisory authority]3 at the end of the first half of the financial year, confirming that they are not aware of any facts that would appear to indicate that these statements have not, in all significant respects, been prepared in accordance with the current instructions of [3 the supervisory authority]3. They further confirm that these statements finalized at the end of the half-year are, with regard to accounting data, in all significant respects, in agreement 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 that would appear to indicate that these statements finalized 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; [3 the supervisory authority]3 may specify which statements are concerned in this case; b) the results of the audit of the statements referred to in Article 12, transmitted by the mixed financial holding companies to [3 the supervisory authority]3 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 [3 the supervisory authority]3. They further confirm that these statements finalized at the end of the financial year are, with regard to accounting data, in all significant respects, in agreement 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 finalized at the end of the financial year have been prepared by applying the recognition and valuation rules governing the preparation of consolidated accounts; [3 the supervisory authority]3 may specify which statements are concerned in this case; 3° they report to [3 the supervisory authority]3 on their own initiative as soon as they observe decisions, facts or developments that influence or may significantly influence the aspects referred to in 1° and 2° and Articles 9 to 11 or that may constitute violations of this Decree. Without prejudice to the provisions of the first paragraph, 3°, [3 the supervisory authority]3 may request the commissioners to provide it with periodic or occasional reports on the
aforementioned aspects.]1

§ 3. When the parent undertaking is a mixed financial holding company incorporated under the law of another Member State of the European Economic Area, and when the supplementary supervision of the group is exercised by [3 the supervisory authority]3, the functions referred to in § 2 are exercised in a similar manner by the commissioner charged with similar functions at the mixed financial holding company. In the absence of such a commissioner, the functions referred to are exercised by the commissioner appointed to a Belgian regulated undertaking of the group. ---------- (1)<AR 2009-03-23/07, art. 8, 004; En vigueur : 02-05-2009> (2)<AR 2009-09-27/17, art. 27, 005; En vigueur : 25-10-2009> (3)<AR 2013-11-12/04, art. 16, 006; En vigueur : 29-11-2013>

Section III. - Parent companies subject to the law of a non-member State of the European Economic Area.

Object and modalities of supervision.

Art. 17. § 1. Belgian regulated undertakings that are part of a financial services group headed by a mixed financial holding company or a regulated undertaking incorporated under the law of a non-member State of the European Economic Area, and that are not subject to supplementary supervision exercised at the group level in application of Article 4 or Article 5, are subject to supplementary supervision exercised at the group level in accordance with the provisions of this Article.

§ 2. [1 The supervisory authority]1 verifies whether the undertakings referred to in § 1 are subject to supervision, exercised by a competent authority of a non-member State of the European Economic Area, equivalent to the supplementary group supervision referred to in the provisions of Articles 4 and 5. Before taking its decision, [1 the supervisory authority]1 consults the competent authorities concerned regarding the equivalence or non-equivalence of this supplementary group supervision.[2 The supervisory authority does everything in its power to comply with any applicable guidelines developed by the Joint Committee in accordance with Regulations No 1093/2010, No 1094/2010 and No 1095/2010 respectively.]2.

If, by analogy of the provisions of Article 19, a competent authority other than [1 the supervisory authority]1 is responsible for the supplementary supervision of the group, the verification and consultation are carried out by this other competent authority, and [1 the supervisory authority]1 may communicate to this other competent authority its findings and its view on the equivalence referred to in the first paragraph.

[2 If the supervisory authority does not agree with the decision taken by another competent authority in accordance with the first paragraph, Article 19 of Regulations No 1093/2010, No 1094/2010 and No 1095/2010 respectively applies.]2

§ 3. If the procedure referred to in § 2 leads to the conclusion that there is no equivalent supplementary group supervision, the Belgian regulated undertakings concerned are subject to supplementary group supervision by analogy of the regime applicable to financial services groups headed by an undertaking subject to the law of a Member State of the European Economic Area as referred to in Articles 4 and 5.

§ 4. By way of derogation from § 3, [1 the supervisory authority]1 may, in its capacity as the competent authority responsible for the supplementary supervision of the group, decide, after consultation with the other competent authorities concerned, to apply another method of supplementary group supervision, which method must achieve the objectives of supplementary group supervision as defined by the Directive. [1 The supervisory authority]1 may, in particular, require that regulated undertakings incorporated under the law of a Member State of the European Economic Area be grouped into a financial services group headed by an undertaking incorporated under the law of a Member State of the European Economic Area, to which the provisions of Articles 4 and 5 apply. [1 The supervisory authority]1 notifies, in its capacity as the competent authority responsible for the supplementary supervision of the group, the other competent authorities concerned of Member States of the European Economic Area, as well as [1 the European supervisory authority]1, of any decision taken in application of this paragraph. ---------- (1)<AR 2013-11-12/04, art. 16, 006; En vigueur : 29-11-2013> (2)<AR 2013-11-12/04, art. 21, 006; En vigueur : 29-11-2013>

Section IV. - Other financial groups.

Identification and object of supervision.

Art. 18. If, in cases other than those referred to in Articles 4, 5 and 6, an undertaking has a holding in, or another capital link with, one or more other undertakings, or, outside of any holding or other capital link, exercises significant influence on such undertakings, and if one of the aforementioned undertakings is a Belgian regulated undertaking, [1 the supervisory authority]1 may, in its capacity as the competent authority concerned, decide in concert with the other competent authorities concerned of Member States of the European Economic Area to exercise supplementary supervision on the regulated undertakings of the group. The competent authorities concerned jointly define the modalities of this supplementary group supervision, and determine in particular which Articles of this Decree are applicable. They take their decision taking into account the objectives of supplementary group supervision as defined by this Decree. The competent authority responsible for the supplementary supervision of the group is designated by analogy of the provisions of Article 19.

For the application of the provisions of the first paragraph, the conditions of Article 1, 12°, d) and e) must be met.

If, in application of the first paragraph, it is decided to carry out supplementary group supervision, the provisions of Article 3, § 2, apply by analogy.

(1)<AR 2013-11-12/04, art. 16, 006; En vigueur : 29-11-2013>

Section V. - Competent authority responsible for the supplementary supervision of the group.

Designation.

Art. 19. § 1. The supplementary group supervision exercised on Belgian regulated undertakings that are part of a financial services group as referred to in Articles 4 and 5 is exercised by [1 the supervisory authority]1.

§ 2. By way of derogation from § 1 and when the regulated undertaking at the head of the financial services group is a foreign undertaking whose registered office is located in a Member State of the European Economic Area, the supplementary group supervision is exercised by the competent authority of this regulated undertaking.

§ 3. By way of derogation from § 1 and when the mixed financial holding company at the head of the financial services group is a foreign undertaking whose registered office is located in a Member State of the European Economic Area, the supplementary group supervision is exercised according to the following rules:
1° if the mixed financial holding company in the State referred to has a subsidiary that is a regulated undertaking, by the competent authority of that State; if there are several subsidiaries in that State that are regulated undertakings, each with a different competent authority, the supplementary group supervision is exercised by the competent authority of the regulated undertaking of the most important financial sector; 2° if several mixed financial holding companies with their registered office in different Member States of the European Economic Area are at the head of the financial services group, and if there is a regulated undertaking in each of these States, the supplementary group supervision is exercised by the competent authority of the regulated undertaking with the highest total balance sheet if the activities of these undertakings are in the same financial sector, or by the competent authority of the regulated undertaking of the most important financial sector; 3° if several regulated undertakings with their registered office in the European Economic Area have the same mixed financial holding company as their parent undertaking and if none of these undertakings has an authorization in the State where the mixed financial holding company has its registered office, the supplementary group supervision is exercised by the competent authority that granted the authorization to the regulated undertaking with the highest total balance sheet in the most important financial sector; 4° if the financial services group is a group without a parent undertaking at the head of the group, as well as in cases other than the aforementioned cases, the supplementary group supervision is exercised by the competent authority that granted the authorization to the regulated undertaking with the highest total balance sheet in the most important financial sector;

§ 4. [1 The supervisory authority]1 and the other competent authorities concerned may, in particular cases, agree by common accord to derogate from the competence rules defined in §§ 1, 2 and 3 if their application, taking into account the structure of the financial services group and the relative importance of the group's activity in the different Member States of the European Economic Area, is not adequate, and entrust another competent authority with the supplementary supervision of the group. They consult the financial services group before taking a decision on this matter. ---------- (1)<AR 2013-11-12/04, art. 16, 006; En vigueur : 29-11-2013>

Tasks.

[Art. 19] [20].§ 1. The tasks of the competent authority responsible for the complementary supervision of the group include:
a) coordinating the collection and dissemination of useful and essential information, in normal situations as well as in emergency situations, including the dissemination of information important for supervision by a competent authority under sectoral regulation; b) monitoring, including assessing, the financial situation of the financial services group; c) monitoring compliance with the provisions of Articles 9, 10, and 11 regarding solvency, risk concentration, and intra-group transactions, as well as compliance with reporting obligations referred to in Article 12; d) monitoring, including assessing, the structure, organization, and internal control mechanisms of the financial services group, as referred to in Article 13; e) planning and coordinating supervisory activities, in normal situations as well as in emergency situations, in cooperation with other relevant competent authorities; f) taking measures and sanctions against the mixed financial company, as provided for in Articles 102 and 103 of the Banking Law, Articles 81 and 82 of the Insurance Law, [1 Articles 73 and 74 of the Reinsurance Law,]1 Articles 108 and 109 of the Law concerning Investment Firms, and [3 Articles 254 and 255 of the Law relating to certain forms of collective investment in transferable securities]3; g) other tasks, measures, and decisions assigned to them by or under this Decree and the Directive. § 2. The relevant competent authorities may, where appropriate in consultation with other competent authorities, agree to entrust the competent authority responsible for the complementary supervision of the group with supervisory tasks other than those provided for in § 1. § 3. When [2 the supervisory authority]2 acts as a competent authority, without being responsible for the complementary supervision of the group, it collaborates, without prejudice to the provisions of Chapter III, with other competent authorities as well as with the competent authority responsible for the complementary supervision of the group, with a view to carrying out the tasks referred to in § 1. § 4. Without prejudice to the delegation of specific supervisory powers and responsibilities in accordance with sectoral regulation, the designation of a competent authority responsible for the complementary supervision of the group does not in any way modify the tasks and responsibilities of the relevant competent authorities as defined by sectoral regulation. ---------- (1)<AR 2009-09-27/17, art. 27, 005; En vigueur : 25-10-2009> (2)<AR 2013-11-12/04, art. 16, 006; En vigueur : 29-11-2013> (3)<AR 2013-11-12/04, art. 22, 006; En vigueur : 29-11-2013>

CHAPTER III. - Communication of information, on-site verification, cooperation, and exchange of information between competent authorities.

Communication of information to the Commission.

[Art. 19] [21].§ 1. Without prejudice to the provisions of Article 12 regarding periodic reporting, [1 the supervisory authority]1 may request regulated or unregulated companies that are part of a financial services group to communicate to it all relevant information and data useful for its supervision as defined in Chapter II.
§ 2. Companies that are not included in the complementary supervision of the group and that are part of a financial services group are required to communicate to [1 the supervisory authority]1 all information and data that it deems necessary for its complementary supervision of the group.
If a Belgian regulated company that is part of a financial services group is not included in the complementary supervision of the group by the foreign competent authority responsible for the complementary supervision of the group, the company at the head of the group transmits to [1 the supervisory authority]1 the information and data that it considers useful for its supervision of the regulated company in execution of sectoral regulation. § 3. Without prejudice to the provisions of the second paragraph, the information and data referred to in §§ 1 and 2 may be communicated to [1 the supervisory authority]1 by the mixed financial company or the regulated company(ies) constituted under Belgian law and part of the financial services group. In this case, the foreign company remains, together with the reporting company, responsible for ensuring that this information and data are correct and communicated in a timely manner. When companies subject to the obligations referred to in §§ 1 and 2 have their registered office outside the European Economic Area, [1 the supervisory authority]1 may require that the information and data be communicated to it by the mixed financial company or regulated companies having their registered office in a Member State of the European Economic Area and part of the financial services group. § 4. Statutory auditors appointed to a regulated company or a mixed financial company constituted under Belgian law have, for the exercise of their functions in execution of sectoral regulation and this Decree, access to and may review all documents and records emanating from the companies of the group, whether or not these companies are included in the complementary supervision of the group. The provisions of Article 76 of the Law of 2 August 2002 apply regarding the information of which they have taken knowledge in execution of the first paragraph. ---------- (1)<AR 2013-11-12/04, art. 16, 006; En vigueur : 29-11-2013>

Communication of information to foreign competent authorities.

[Art. 20] [22].Belgian regulated or unregulated companies that are part of a financial services group communicate to the foreign competent authority responsible for the complementary supervision of the financial services group the information and data that it considers useful for its supervision:
1° when this authority is from a Member State of the European Economic Area, within the framework of its supervision as defined by the Directive; 2° when this authority is from a non-Member State of the European Economic Area and the obligation of cooperation and information arises from cooperation agreements concluded by [1 the supervisory authority]1 with the relevant foreign competent authority. ---------- (1)<AR 2013-11-12/04, art. 16, 006; En vigueur : 29-11-2013>

Exchange of data within the group.

[Art. 21] [23].Belgian and foreign companies that are part of a financial services group mutually communicate information and data useful for the exercise of the complementary supervision of the group organized by this Decree, without being able to raise objections based on private law, unless contrary legal provisions exist.

On-site verification.

[Art. 22] [24].§ 1. [1 The supervisory authority]1 may carry out on-site verification, in the companies referred to in Article 21, of compliance with the obligations provided for by this Decree as well as of the correctness and completeness of the information and data communicated. It may, at the expense of these companies, appoint statutory auditors or foreign experts approved by it for this purpose, to carry out these verifications. § 2. When the companies referred to in § 1 are established in another Member State of the European Economic Area, [1 the supervisory authority]1 carries out or has these verifications carried out only after having notified the competent authority of that State and unless that authority carries out these verifications itself or allows an auditor or expert to do so. If [1 the supervisory authority]1 does not carry out the verification itself, it may nevertheless be associated with it if it deems necessary. When the companies referred to have their registered office outside the European Economic Area, the procedures for on-site verification are governed by agreements as referred to in Article 22, 2°. § 3. In the framework of their complementary supervision of the group, foreign competent authorities are authorized to carry out on-site verification, in the companies referred to in Article 21 having their registered office in Belgium, of the information and data 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 is from a Member State of the European Economic Area, the provisions of § 2, first paragraph, apply by analogy; 2° when the competent authority is from a non-Member State of the European Economic Area, the provisions of § 2, second paragraph, apply by analogy.

(1)<AR 2013-11-12/04, art. 16, 006; En vigueur : 29-11-2013>

Cooperation and exchange of information between competent authorities.

[Art. 23] [25].§ 1. [1 The supervisory authority]1 collaborates, if necessary, with foreign competent authorities [2 and the European Systemic Risk Board]2 for the exercise of supervision of regulated companies that are part of a financial services group. [1 The supervisory authority]1 may communicate to these competent authorities [2 and the European Systemic Risk Board]2 confidential information useful for the exercise of supervision under sectoral regulation and for the complementary supervision of financial services groups. Without prejudice to the provisions of sectoral regulation, they mutually communicate, upon request, all useful information and communicate on their own initiative all essential information. [1 The supervisory authority]1 may also exchange information relating to companies part of a financial services group with the authorities referred to in Article 75, § 1, 1°, of the Law of 2 August 2002 [2 respectively in Article 36/14, § 1, 1°, of the Law of 22 February 1998 or ]2 which are not competent authorities [2, depending on whether the supervisory authority is the National Bank of Belgium or the Financial Services and Markets Authority]2. The cooperation and exchange of information referred to in this paragraph are carried out in respect of the provisions [2 respectively of Chapter IV/1, Section 4, of the Law of 22 February 1998 or]2 of Chapter 3, Section 6, of the Law of 2 August 2002 [2, depending on whether the supervisory authority is the National Bank of Belgium or the Financial Services and Markets Authority]2. § 2. [1 The supervisory authority]1, in its capacity as the authority responsible for the complementary supervision of the group, may request foreign competent authorities of the company at the head of the group to require from this company all useful information for the exercise of its complementary supervision of the group, and request that this information be transmitted to it. When this authority is from a non-Member State of the European Economic Area, the provisions of Article 22, 2°, apply by analogy. § 3. When, for the application of Article 21, § 1, the information requested in execution of sectoral regulation has already been communicated to another competent authority, the competent authority responsible for the complementary supervision of the group will, as far as possible, address this authority to obtain this information. ---------- (1)<AR 2013-11-12/04, art. 16, 006; En vigueur : 29-11-2013> (2)<AR 2013-11-12/04, art. 23, 006; En vigueur : 29-11-2013>

Cooperation agreements.

[Art. 24] [26].Without prejudice to the cooperation agreements referred to in other provisions of this Decree, [1 the supervisory authority]1 concludes with foreign competent authorities the agreements necessary to achieve the complementary supervision of the group as defined in this Decree. These agreements regulate, if necessary, the procedures for the exercise of this control, including the procedures for cooperation and exchange of information between competent authorities, in respect of the provisions of Chapter 3, Section 6, of the Law of 2 August 2002. They may in particular regulate decision-making procedures between the relevant competent authorities as referred to in Articles 2, 3, 9, 17, 18, 24, and 27. ---------- (1)<AR 2013-11-12/04, art. 16, 006; En vigueur : 29-11-2013>

CHAPTER IV. - Administrative measures and sanctions.

[Art. 25] [27].When [2 the supervisory authority]2 finds that a regulated company, financial company, insurance holding company, or mixed financial company, part of a financial services group, circumvents or attempts to circumvent sectoral regulation, it takes, with respect to the regulated company, recovery measures and may impose, on the aforementioned companies, administrative sanctions as provided for in Articles 57, 102, and 103 of the Banking Law, regarding credit institutions, financial companies, and mixed financial companies; Articles 26, 27, 81, and 82 of the Insurance Law, regarding insurance undertakings, insurance holding companies, and mixed financial companies; [1 Articles 47, 48, 73, and 74 of the Reinsurance Law, regarding reinsurance undertakings,]1 Articles 104, 108, and 109 of the Law concerning Investment Firms, regarding investment firms, financial companies, and mixed financial companies; and Articles 197, 201, and 202 of the Law relating to certain forms of collective investment in transferable securities, regarding management companies for collective investment schemes, financial companies, and mixed financial companies. [2 The supervisory authority]2 and the other relevant competent authorities coordinate, if necessary, the administrative measures they take in execution of the provisions on complementary supervision of financial services groups. ---------- (1)<AR 2009-09-27/17, art. 27, 005; En vigueur : 25-10-2009> (2)<AR 2013-11-12/04, art. 16, 006; En vigueur : 29-11-2013>

TITLE II. - Other provisions.

CHAPTER I. - Provisions amending the Royal Decree of 22 February 1991 establishing the General Regulation on the supervision of insurance undertakings and the Royal Decree of 12 August 1994 on consolidated supervision of credit institutions.

[Art. 26] [28].§ 1. In Annex V, I, of the Royal Decree of 22 February 1991 establishing the General Regulation on the supervision of insurance undertakings, the following modifications are made:
1° in point 1.1, the last sentence of the first paragraph is replaced by the following sentence:
" However, the CBFA may authorize or impose at any time the application of the deduction and aggregation method as described in point I.3, or the method based on the deduction of requirements as described in point I.4, when these methods are more adequate. "; 2° in point 1.1, the fourth paragraph is completed as follows:
" If there are no capital links between companies part of an insurance group, the CBFA determines the part of the solvency deficit that must be taken into account. "; 3° in point 1.2.a), the second sentence is replaced by the following sentence:
" For this purpose, the values of the elements referred to in Article 15bis, § 4, of the Law must be eliminated for the calculation of the adjusted solvency margin. The method of elimination depends on the method applied (consolidated accounting method, deduction and aggregation method, or method based on the deduction of requirements). "; 4° in point 2, first paragraph, the words " to the provisions of the Royal Decree of 6 March 1990 on consolidated accounts of companies as made applicable to insurance and reinsurance companies by the Royal Decree of 13 February 1996 on consolidated accounts of insurance companies " are replaced by the words " to the provisions of the Companies Code and the Royal Decree of 30 January 2001 implementing the Companies Code, which govern the preparation of consolidated accounts " and, in the fifth paragraph, the words " in application of the Royal Decree of 6 March 1990 on consolidated accounts of companies as made applicable to insurance companies by the Royal Decree of 13 February 1996 on consolidated accounts of insurance and reinsurance companies " are deleted; 5° the current text is completed by a point 4, drafted as follows:
" 4. Calculation of the adjusted solvency margin by application of the method based on the deduction of requirements The CBFA may, under the same conditions as those prevailing for the use of the method referred to in point I.3, authorize the application of the method based on the deduction of requirements.
The adjusted solvency margin is, in this case, the difference between:
i) the sum of the elements that can be taken into consideration as constitutive elements of the solvency margin of the participating insurance undertaking, and ii) the sum

of the solvency requirement of the participating insurance undertaking, and
the proportional share of the solvency requirement of the linked insurance undertaking. ".
§ 2. In Annex V, point II, of the same Decree, the following modifications are made:
1° in the fourth paragraph, the words " to the provisions of the Royal Decree of 6 March 1990 on consolidated accounts of companies as made applicable to insurance and reinsurance companies by the Royal Decree of 13 February 1996 " are replaced by the words " to the provisions of the Companies Code and the Royal Decree of 30 January 2001 implementing the Companies Code, which govern the preparation of consolidated accounts "; 2° the seventh paragraph is replaced by the following paragraph:
" If this is not the case, the deduction and aggregation method as described in point I.3, or the method based on the deduction of requirements as described in point I.4, will, as the case may be, be applied. "; 3° the eighth paragraph is replaced by the following paragraph:
" Likewise, when it appears that the application of the consolidated accounting method poses significant practical problems, the CBFA may authorize or prescribe the application, either of the deduction and aggregation method as described in point I.3, or of the method based on the deduction of requirements as described in point I.4. "; 4° the current text is completed by the following paragraph:
" When a Belgian insurance company is a subsidiary of another insurance company, an insurance holding company, or a reinsurance company having its registered office in a third country, the CBFA may, by derogation from the preceding provisions, agree, by means of a cooperation agreement, either with the competent authority of the country in which the parent company has established its seat or with another appropriate foreign competent authority, that the latter will exercise complementary supervision, provided that this supervision is equivalent to that provided for by Directive 98/78/EC. In this case, compliance with the obligations must be confirmed to the CBFA at least once a year, within a period of four months from the closing of the financial year of the parent company, by the foreign competent authority. The declaration of compliance must be accompanied by the consolidated accounts of the parent company. The provisions of Article 77 of the Law of 2 August 2002 apply to the agreements referred to. "

Art. 29. § 1. The following modifications are made to Article 1 of the Royal Decree of 12 August 1994 on consolidated supervision of credit institutions:

1° point 2 is replaced by the following provision:
" 2° the Directive: Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 concerning the taking up and pursuit of the business of credit institutions; ";

2° point 3 is repealed;

3° point 7 is supplemented as follows:
" for the purposes of this Royal Decree, the following are assimilated to financial institutions: management companies for collective investment undertakings referred to in the Act on certain forms of collective portfolio management, liquidation bodies referred to in point 17 of Article 2 of the Act of 2 August 2002, as well as bodies whose activity consists of ensuring, in whole or in part, the operational management of services provided by such liquidation bodies ";

4° point 8 is replaced by the following provision:
" 8° financial company: a financial institution whose subsidiary companies are exclusively or mainly one or more credit institutions or financial institutions, at least one of these subsidiaries being a credit institution, and which is not a mixed financial company within the meaning of Article 49bis of the Act; ";

5° point 9 is replaced by the following provision:
" 9° mixed company: an undertaking other than a credit institution, a financial company or a mixed financial company within the meaning of Article 49bis of the Act, which exclusively or jointly with others controls one or more credit institutions; ";

6° the current text is supplemented as follows:
" 11° the Commission: the Banking, Finance and Insurance Commission. ".

§ 2. The following modifications are made to Article 2, § 3, of the same Royal Decree:

1° point 3 is supplemented by the following paragraph:
" For the purposes of paragraphs 1 and 2, it is considered irrebuttably as constituting a participation the fact of holding, directly or indirectly, share capital representing 20% or more of the voting rights or of the capital of an undertaking. ";

2° in point 4, first paragraph, the words " in Articles 13, 14 and 15 of the Royal Decree on consolidated accounts of undertakings " are replaced by the words " in Articles 107, 108 and 109 of the Royal Decree of 30 January 2001 implementing the Companies Code ", while in the second paragraph, the words " Article 13, first paragraph, 1° " are replaced by the words " Article 107, first paragraph, 1° " and the last paragraph is repealed;

3° the current text is supplemented by a point 5, drafted as follows:
" 5° For the purposes of Articles 3 and 4, insurance undertakings, reinsurance undertakings and insurance holding companies which are either subsidiaries or undertakings in which a participation is held, are included in the consolidated situation under the conditions set out below:
a) if the undertaking which is the parent undertaking or which holds the participation is at the head of a financial services group subject to supplementary supervision within the meaning of Article 49bis, and if the insurance undertaking, reinsurance undertaking and insurance holding company are included in the supplementary supervision of the group, the latter are excluded from the consolidated situation for the purposes of Articles 3 and 4; b) if the undertaking which is the parent undertaking or which holds the participation is not at the head of a financial services group within the meaning of Article 49bis, the insurance undertaking, reinsurance undertaking or insurance holding company is included in the consolidated situation:

for the verification of solvency ratios: the Commission may, in particular, permit or impose the use of one of the calculation methods provided for by the Royal Decree on financial services groups, taken in implementation of Article 49bis of the Act, or the application of the deduction rule provided for by the regulation on solvency, taken in implementation of Article 43 of the Act;
for the verification of risk concentration limitation standards. ";

§ 3. The heading of Chapter II of the same Royal Decree is replaced by the following heading: " Of parent undertakings which are credit institutions having their registered office in the European Economic Area ".

§ 4. Article 3 of the same Royal Decree is supplemented by the following paragraph:
" § 4. Belgian credit institutions which are subsidiaries of a credit institution having its registered office in another Member State of the European Economic Area or in which such a foreign establishment holds a participation, are subject, in a similar manner, to supervision exercised on the basis of the consolidated situation of the foreign credit institution, in accordance with the provisions of the Directive ".

§ 5. The heading of Chapter III of the same Royal Decree is replaced by the following heading: " Of parent undertakings which are financial companies having their registered office in the European Economic Area ".

§ 6. The following modifications are made to Article 4 of the same Royal Decree:

1° in § 1, first paragraph, the words " whose parent undertaking is a financial company " are replaced by the words " whose parent undertaking is a financial company having its registered office in a Member State of the European Economic Area ";

2° in § 1, second paragraph, 1°, the second paragraph is replaced by the following paragraph:
" by solvency ratios, we mean the solvency ratios which define the own funds requirement relative to the volume of risks, excluding the requirement relating to the general solvency ratio and the requirement aiming at the coverage of fixed assets ";

3° in § 1, second paragraph, a 1°bis is inserted, drafted as follows:
" 1°bis the management, organization and internal control procedures for the consolidated group, as well as the influence exerted by the undertakings included in the consolidated situation on other undertakings ";

4° the text is supplemented by the following paragraphs:
" § 3. Notwithstanding the provisions of § 2, first paragraph, the Commission must be informed of the identity of the natural or legal persons who intend to acquire shares or parts, representative or not of the capital, conferring or not the right to vote, of a Belgian financial company so that they would hold, directly or indirectly, at least 5% of the capital or of the voting rights.
The provisions of Article 24 of the 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.
The provisions of Articles 19, 26, 27 and 28 of the Act apply by analogy. ";

§ 7. The following modifications are made to Article 5 of the same Royal Decree:

1° § 3, third paragraph, is replaced by the following paragraph:
" For the purposes of the provisions of § 2, 2°, and of paragraphs 1 and 2 of this paragraph, the Commission concludes agreements with the competent authorities concerned, in accordance with the provisions of Article 75, § 1, 4°, and Article 77, § 2, of the Act of 2 August 2002 ";

2° § 4 is repealed.

§ 8. In Article 6 of the same Royal Decree, § 2 is repealed and any reference made to § 2 in §§ 1 and 3 is removed.

§ 9. In Article 7, § 2, first paragraph, 1°, of the same Royal Decree, the words " Article 4, § 1, second paragraph, 2° " are replaced by the words " Article 4, § 1, second paragraph, 1°bis and 2° ".

§ 10. A Chapter IIIbis is inserted in the same Royal Decree, drafted as follows:
" Chapter IIIbis. Of parent undertakings having their registered office outside the European Economic Area

Article 7bis. § 1. Belgian credit institutions whose parent undertaking is a credit institution or a financial company having its registered office in a non-member State 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 according to the provisions of this Article.

§ 2. The Commission verifies whether the credit institutions referred to in § 1 are subject to supervision exercised by a competent authority of a non-member State 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, the Commission 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 guideline issued by the European Banking Committee in this matter in accordance with the provisions of the Directive. If, by analogous application of the provisions of Article 5, a competent authority other than the Commission is responsible for the consolidated supervision, the Commission may communicate its findings and its view on the equivalence referred to in the first paragraph to this other competent authority.

§ 3. If the procedure provided for in § 2 leads to the conclusion that there is no equivalent consolidated supervision, the Belgian credit institutions concerned are subject to consolidated supervision by analogous application of the provisions of Chapters II and III.

§ 4. By way of derogation from § 3, the Commission 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 envisaged by the Directive. The Commission may, in particular, require that credit institutions 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. The Commission, in its capacity as the competent authority responsible for consolidated supervision, notifies the other competent authorities concerned and the European Commission of any decision taken in application of this paragraph.

§ 5. For the purposes of the provisions of §§ 3 and 4, the Commission concludes the necessary agreements with the foreign competent authorities concerned, in accordance with the provisions of Article 75, § 1, 4°, and Article 77, § 2, of the Act of 2 August 2002 ".

§ 11. The following modifications are made to Article 8 of the same Royal Decree:

1° § 1 is supplemented by the following paragraph:
" The provision stated in Article 4, § 1, second paragraph, 2°, applies by analogy to operations carried out between the credit institution and the mixed company and its subsidiaries. ";

2° in § 2, the words " of agreements concluded between the Banking, Finance and Insurance Commission and the competent foreign authorities concerned " are replaced by the words " of agreements concluded between the Commission and the competent foreign authorities concerned in accordance with the provisions of Article 75, § 1, 4°, and Article 77, § 2, of the Act of 2 August 2002 ".

§ 12. An Article 8bis, drafted as follows, is inserted in Chapter IV of the same Royal Decree:
" Article 8bis.
Without prejudice to the obligations arising from the application of regulatory ratios on risk concentration, imposed in implementation of Article 43 of the Act, the Commission exercises general supervision over operations taking place between a Belgian credit institution, on the one hand, and its parent undertaking which is a mixed company and the other subsidiaries of the latter, on the other hand. Credit institutions must have adequate administrative and accounting organization, as well as risk management procedures and internal control devices appropriate to correctly identify, measure and monitor the operations referred to in the first paragraph. The Commission ensures that this is indeed the case. It may impose specific reporting obligations concerning the operations referred to in the first paragraph. If the nature and extent of the operations referred to in the first paragraph compromise the financial situation of the credit institution concerned, the Commission takes appropriate measures. Without prejudice to other possible measures, it may require that these operations be reduced. ";

§ 13. In Article 10, § 1, of the same Royal Decree, the words " Chapters II and III " are replaced by the words " Chapters II, III and IIIbis. ".

§ 14. In Article 11, 2°, of the same Royal Decree, the words " of collaboration agreements concluded by the Banking, Finance and Insurance Commission with the competent foreign authorities concerned " are replaced by the words " of collaboration agreements concluded by the Commission with the competent foreign authorities concerned in accordance with the provisions of Article 75, § 1, 4°, and Article 77, § 2, of the Act of 2 August 2002 ".

§ 15. Article 13, § 2, first paragraph, of the same Royal Decree is supplemented as follows:
" If the Commission does not carry out the verification itself, it may still be associated with it, if it deems necessary. ".

§ 16. Articles 14, 15, 16 and 17 of the same Royal Decree are repealed.

§ 17. In the same Royal Decree, the words " Banking, Finance and Insurance Commission " are replaced, except in Article 1, 11°, by the word " Commission " and the words " the European Community " are replaced by the words " the European Economic Area ".

CHAPTER II. - Final Provisions.

Art. 30. This Royal Decree enters into force on the day of its publication in the Belgian Monitor. The provisions of Title I and Title II, Chapter I, apply to undertakings subject to this Royal Decree from the financial year beginning, for these undertakings, in 2005.
(By way of derogation from the first paragraph, Belgian mixed financial companies must comply with the provisions of Article 15, § 1, third paragraph, by 1 January 2008 at the latest.) <AR 2007-10-29/33, art. 41, 002; In force: 08-11-2007>

Art. 31. Our Minister responsible for the Economy and Our Minister responsible for Finance are charged, each insofar as it concerns them, with the execution of this Royal Decree.
Given in Brussels, 21 November 2005.
ALBERT
By the King:
The Minister of Finance,
D. REYNDERS
The Minister of the Economy,
M. VERWILGHEN

ANNEX.

Art. N. SOLVENCY.

Regulated entities must hold, at the financial group level, own funds at least equal to the solvency requirements calculated at the group level. Own funds and solvency requirements are calculated using one of the methods defined in point 2, in application of the principles defined in points 3 and 4.

[1 The supervisory authority]1 defines, in its capacity as the competent authority responsible for the complementary supervision of a financial group, the method to be applied. It may authorize a combination of several of these methods. It consults beforehand with the other competent authorities concerned as well as with the financial group concerned regarding the method to be applied.

Calculation Methods

2.1. Method No. 1: Accounting Consolidation-Based Method

Own funds and solvency requirements at the group level are calculated based on the consolidated situation of the group as attested by consolidated annual or interim accounts. The consolidated situation of the group is the situation of the consolidated entity constituted by a consolidating company with other companies included in the consolidation scope. Without prejudice to the provisions of point 3.1, the consolidated situation is determined by the analogous application of sectoral regulations regarding group supervision as defined in Article 49 of the Banking Law, Chapter VIIbis of the Insurance Law, and Article 95 of the Law concerning Investment Firms.

The own fund elements at the group level are those recognized as own fund elements by the relevant sectoral regulation of the companies included in the consolidated situation.

The solvency requirement at the group level is equal to the sum of the solvency requirements imposed on each distinct financial sector represented within the group. Solvency requirements for each distinct financial sector are calculated according to the relevant sectoral regulation. For unregulated companies belonging to the financial sector that are not included in the aforementioned sectoral solvency requirement calculations, the calculation is performed according to a theoretical solvency requirement.

2.2. Method No. 2: Aggregation and Deduction-Based Method

Own funds and solvency requirements are calculated based on the annual or interim accounts of each of the companies in the group.

Own funds at the group level are equal to the sum of the own funds of each of the regulated or unregulated companies that, within the financial group, belong to the financial sector. The own fund elements of the group are those recognized as own fund elements by the relevant sectoral regulation of the concerned companies.

The solvency requirement at the group level is equal to the sum, on the one hand, of the solvency requirements for each of the regulated or unregulated companies that, within the financial group, belong to the financial sector (calculated according to the relevant sectoral regulation), and, on the other hand, of the book value of all holdings in companies within the group. For unregulated companies belonging to the financial sector that are not included in the aforementioned sectoral solvency requirement calculations, the calculation is performed according to a theoretical solvency requirement.

2.3. Method No. 3: Deduction of Requirements-Based Method

Own funds and solvency requirements are calculated based on the annual or interim accounts of each of the companies in the group.

The own funds taken into consideration are the own funds of the parent company or the company at the head of the financial group. The elements of these own funds are those recognized as own fund elements by the relevant sectoral regulation of the concerned company.

The solvency requirement is the sum, on the one hand, of the solvency requirement of the parent company or the company at the head of the group, and, on the other hand, either of the book value of all holdings of the aforementioned company in other companies within the group, or of the solvency requirements of these companies, if this figure is higher. For unregulated companies belonging to the financial sector, the calculation is performed according to a theoretical solvency requirement.

Common Principles for the Three Methods

3.1. By solvency requirements for companies belonging to the banking sector, it is meant the solvency requirements defined by [1 the supervisory authority]1 by regulation in execution of Article 43 of the Banking Law, with the exception of the general solvency ratio requirement and the requirement for covering immobilized assets.

By solvency requirements for companies belonging to the insurance sector, it is meant the solvency margin imposed by Articles 15 and 91nonies of the Insurance Law.

By solvency requirements for companies belonging to the investment services sector, it is meant the solvency requirements defined by [1 the supervisory authority]1 by regulation in execution of Article 90 of the Law concerning Investment Firms.

3.2. Deficits in own funds in subsidiaries (in the case of unregulated companies, the theoretical deficit is calculated based on the theoretical solvency requirement) are taken into consideration for the total amount.

By way of derogation, [1 the supervisory authority]1 may, in its capacity as the competent authority responsible for the complementary supervision of the group, authorize that the share of the deficit be taken into consideration, if it is clearly demonstrated to it that the liability of the parent company is proportionally limited to the part of the capital it holds in the concerned company, based on the liability that other shareholders bear in proportion to their contribution to the capital and based on their sufficient solvency.

If there are no capital links between the companies of a financial group, [1 the supervisory authority]1 determines, after consultation with the other competent authorities concerned, the share that must be taken into consideration for the calculation of the group's own funds. [1 The supervisory authority]1 takes into account in this regard the liability and risk to which the existing relationships between these companies may give rise.

3.3. When calculating own funds at the level of a financial group, any artificial creation of own funds within a financial group, such as the repeated consideration of the same own fund elements (multiple gearing) and the inadequate transformation of the nature of the means, shall be eliminated. To this end, the relevant principles of sectoral regulation shall apply by analogy.

3.4. The solvency requirements of companies in a financial group that belong to a specific financial sector must be covered by own fund elements as defined by the relevant sectoral regulation. Supplementary solvency requirements at the financial group level must be covered by own fund elements recognized in each of the sectoral regulations ("cross-sectoral own funds").

If sectoral regulation subjects the consideration of own fund instruments to limitations, these are applicable by analogy to the calculation of own funds at the financial group level.

When considering own fund elements at the financial group level, [1 the supervisory authority]1 takes into account any limitations on their availability and transferability between the different companies in the group, in light of the objectives of complementary group supervision in general and solvency provisions in particular.

The theoretical solvency requirement for an unregulated company in the financial sector is the solvency requirement to which such a company should comply under the relevant sectoral provisions if it were a regulated company in that specific financial sector. The solvency requirement of a mixed financial company is calculated in accordance with the sectoral regulation of the most important financial sector of the group.

Common Principles for Methods 2 and 3

Without prejudice to the provisions of point 3.1 regarding deficits in own funds in subsidiaries, the application of these methods takes into account the share that the parent company or the company holding a participation in another company of the financial group holds. By share, it is meant the part of the placed capital that is held directly or indirectly by this company.

(1)<AR 2013-11-12/04, art. 16, 006; In force: 29-11-2013>

Seen to be annexed to Our Royal Decree of 21 November 2005 organizing the complementary supervision of credit institutions, insurance undertakings, investment firms, and management companies of collective investment undertakings, forming part of a financial group, and modifying the Royal Decree of 22 February 1991 establishing the general regulation regarding the supervision of insurance undertakings and the Royal Decree of 12 August 1994 regarding consolidated supervision of credit institutions.

Given in Brussels, on 21 November 2005.
ALBERT
By the King:
The Minister of Finance,
D. REYNDERS
The Minister of the Economy,
M. VERWILGHEN.

Preamble

ALBERT II, King of the Belgians,
To all, present and future, Greetings.
Having regard to Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms belonging to a financial conglomerate, and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council; Having regard to Directive 2005/1/EC of the European Parliament and of the Council of 9 March 2005 amending Council Directives 73/239/EEC, 85/611/EEC, 91/675/EEC, 92/49/EEC and 93/6/EEC as well as Directives 94/19/EC, 98/78/EC, 2000/12/EC, 2001/34/EC, 2002/83/EC and 2002/87/EC, in order to organize according to a new structure the committees competent in matters of financial services; Having regard to the Law of 9 July 1975 regarding the supervision of insurance undertakings, in particular Article 91octies decies, inserted by the Law of 20 June 2005; Having regard to the Law of 22 March 1993 regarding the status and supervision of credit institutions, in particular Article 49bis, inserted by the Law of 20 June 2005; Having regard to the Law of 6 April 1995 regarding the status of investment firms and their supervision, intermediaries and investment advisors, in particular Article 95bis, inserted by the Law of 20 June 2005; Having regard to the Royal Decree of 22 February 1991 establishing the general regulation regarding the supervision of insurance undertakings and the Royal Decree of 12 August 1994 regarding consolidated supervision of credit institutions; Having regard to Opinion No. 38.687/2/V of the Council of State, given on 23 August 2005, in application of Article 84, § 1, paragraph 1, 1°, of the coordinated laws on the Council of State; On the proposal of Our Minister of the Economy and Our Minister of Finance, We have decreed and decree:

List of Amendments

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

Articles modified:
1; 2; 3; 8; 9; 10; 11; 12; 14; 15; 16; 17; 18; 19; 20; 21; 22; 24; 25; 26; 27; N; 1; 3; 13; 15; 17; 20; 25

Royal Decree of 27-09-2009 published on 15-10-2009

Articles modified:
TITLE; 1; 15; 16; 20; 27

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

Articles modified:
1; 12; 16

Royal Decree of 14-02-2008 published on 04-03-2008

Article modified: 14

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

Articles modified:
15; 30

Report to the King

REPORT TO THE KING

Sire,

European Parliament and Council Directive 2002/87/EC of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms belonging to a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council imposes on the Member States of the European Economic Area the obligation to exercise supplementary supervision on credit institutions, insurance undertakings, investment firms and collective investment scheme management companies (hereinafter referred to as 'regulated entities') that are part of a financial conglomerate, and modifies various other points of the European directives relating to the status and supervision of credit institutions, insurance undertakings and investment firms.

The Law of 20 June 2005 amending the Law of 9 July 1975 on the supervision of insurance undertakings, the Law of 22 March 1993 on the status and supervision of credit institutions, the Law of 6 April 1995 on the status of investment firms and their supervision, intermediaries and investment advisors, and the Law of 20 July 2004 on certain forms of collective portfolio management, and containing various other provisions, transposed into Belgian law the basic principles of Directive 2002/87/EC. This law introduces into the Law of 9 July 1975 a new Article 91octiesdecies, into the Law of 22 March 1993 a new Article 49bis, and into the Law of 6 April 1995 a new Article 95bis, articles which define the basic principles of supplementary supervision, exercised at the group level, of insurance undertakings, credit institutions, investment firms and collective investment scheme management companies, and which empower the King to specify the technical details of this supervision. The Law of 20 June 2005 also modifies in various respects the Law of 9 July 1975, the Law of 22 March 1993, the Law of 6 April 1995, as well as the Law of 20 July 2004 on certain forms of collective portfolio management.

This draft Royal Decree completes the transposition into Belgian law of the aforementioned Directive 2002/87/EC. The draft pursues a dual objective. It ensures, first, the implementation of Article 91octiesdecies of the Law of 9 July 1975, Article 49bis of the Law of 22 March 1993, and Article 95bis of the Law of 6 April 1995. It subsequently amends the Royal Decree of 22 February 1991 laying down the general regulations relating to the supervision of insurance undertakings, as well as the Royal Decree of 12 August 1994 relating to consolidated supervision of credit institutions. These decrees govern the supervision exercised at the group level on, respectively, insurance undertakings forming part of an insurance group (in execution of Article 91ter of the Law of 9 July 1975) and credit institutions forming part of a banking group (in execution of Article 49 of the Law of 22 March 1993).

The Government has taken into account various observations made by the Council of State in its opinion on the draft decree. The cases where the Government has not followed this advice are explained below in the commentary on the articles.

As pointed out in the explanatory statement of the Law of 20 June 2005, the introduction of the obligation to exercise supplementary supervision on regulated entities forming part of a financial services group is a major innovation in financial legislation. It complements the consolidated basis control and sectoral supervision exercised at the group level. Consolidation in the financial sector has, in recent years, led to the creation of what are called financial conglomerates, namely groups that exercise their activities in different branches of the financial sector - the banking sector, the insurance sector, the investment services sector, and 'asset management'. The need has arisen to extend the prudential supervision of regulated entities to the conglomerate of which they are part. A global supervision of the group is necessary to obtain a more complete and accurate image of the financial solidity of the group of which the regulated entities are part, as well as the solvency of the latter, the relationships between the regulated entities and other companies forming part of the group, the risk management and internal control concerning the various risks incurred at the group level, as well as the interactions between these risks (cf. the danger for regulated entities of having to suffer the negative repercussions of financial difficulties encountered by other important companies in the group, known as 'contagion risk'), the shareholding and management of the group. The tendency of financial groups to shift the decision-making power of regulated entities to the unregulated holding company at the head of the group further underscores the need to put in place a global supervision of the group.

In Belgium, the former Banking and Financial Commission (CBFA) and the former Insurance Control Office have endeavored to fill this gap by concluding bilateral agreements with several financial groups. Thus, there already exists in Belgium the beginning of prudential supervision covering financial services groups.

Commentary on the Articles

TITLE I. - Supplementary supervision of credit institutions, insurance undertakings, investment firms, and collective investment scheme management companies, forming part of a financial services group

CHAPTER I. - Definitions

Identification of financial services groups

Articles 1 and 2

Articles 1 and 2 define several concepts which are of essential importance for the application of Title I of the Decree. These articles transpose Articles 2 and 3 of Directive 2002/87/EC.

A key concept of the draft Decree is the notion of "financial services group". A financial services group is defined by reference to the notions of "group", "financial sector", and "regulated entity". The notion of "group" is defined based on the accounting concepts of parent company, subsidiary, participation, and consortium, as defined in the sectoral legislation (Article 1, 11°). The notion of "group" is defined in a broad sense and includes both vertical and horizontal structures of the group. The financial sector is defined as the banking sector, the insurance sector, or the investment services sector (Article 1, 8°). The draft Decree determines the companies that are part of each of these sectors. Collective investment scheme management companies are part, according to the nature of the group to which they belong, of the banking sector or the investment services sector. A regulated entity is either a credit institution, an insurance undertaking, an investment firm, or a collective investment scheme management company (Article 1, 7°). To be considered a "financial services group", the group in question must include at least one regulated entity (other than a collective investment scheme management company), its activities must be exercised primarily in the financial sector, and its activities in the banking and investment services sectors, on the one hand, and in the insurance sector, on the other, must be significant (Article 1, 12°).

A group is irrebuttably deemed to exercise its activities primarily in the financial sector if the company at the head of the group is a regulated entity. This principle aligns with the provisions of financial legislation limiting the taking of participations by regulated entities outside the financial sector. If the company at the head of the group is not a regulated entity, the threshold provided for in Article 2, § 2, is applied to determine whether the group exercises its activities primarily in the financial sector. To determine whether the activities exercised by a group in the various financial sectors are significant, the thresholds provided for in Article 2, § 3, are applied. The Decree defines two thresholds, applicable in a non-cumulative manner: a "micro-economic" threshold (Article 2, § 3, first paragraph, a)) and a "macro-economic" threshold (Article 2, § 3, first paragraph, b)). The latter threshold aims to include among financial services groups those groups that, although exercising primarily their activities - based on the micro-economic threshold - in a single financial sector, are nevertheless - due to their absolute size - so significant from a systemic perspective that it is advisable to include them as well, in the interest of adequate supervision, within the scope of legislation relating to financial services groups.

In accordance with Article 2, §§ 3, 4, and 5, the CBFA may, under certain conditions, in consultation with other competent authorities, derogate from the thresholds and parameters defined in Article 2, §§ 2 and 3, as well as from their methods of application.

The Council of State observes in this regard that Article 2, § 4, first paragraph, b), of the draft Decree does not fully transpose Article 3, paragraph 4, first paragraph, b), of Directive 2002/87/EC, in that it does not provide for the scenario in which the competent authorities decide not to consider as a financial conglomerate a group that nevertheless exceeds the thresholds, due to the fact that this situation has not persisted for three consecutive years. According to the Government's reading, Article 3, paragraph 4, first paragraph, b), of the directive refers to the scenario in which a group does not meet, at the reporting date, the fixed thresholds and could therefore no longer be considered a financial conglomerate, whereas it had exceeded these thresholds during the previous three years: in such a scenario, the authorities may decide, either to consider the group nonetheless as a financial conglomerate, "in order to avoid abrupt changes in regime", for example estimating that the non-compliance with the thresholds is attributable to events that occurred only once, or to not consider the group as a financial conglomerate, estimating instead that it no longer meets the thresholds for reasons related to a "significant change in the structure of the group" and that this non-compliance therefore has a lasting character. The draft Decree is in perfect conformity with the directive in this regard.

Other key concepts important for the application of Title I of the draft Decree are the notions of "mixed financial holding company" and "concerned competent authorities" (Article 1, 13° and 15°). These two notions do not require particular commentary.

This draft Royal Decree repeats several of the definitions set out in the aforementioned Articles 91octiesdecies, 49bis, and 95bis. In its opinion, the Council of State observes in this regard that the Decree must conform to and refer to the aforementioned legal definitions, and not reproduce them, estimating indeed that such a procedure is likely to mislead regarding the legal nature of the provisions in question. The Government, when drawing up the draft Royal Decree, deliberately chose to include a number of definitions in it. As it had already stated in the draft report to the King, the Government indeed considers that, given the technicality and complexity of the matter regulated by this Decree, it is appropriate to include these definitions in it, so that the Royal Decree constitutes an independent text, which will contribute to its readability and, consequently, to the correct application of its provisions. This approach also responds to a request from the professional associations consulted on the project. It has, moreover, already been followed in the past (for example, for the Royal Decree of 12 August 1994 relating to consolidated supervision of credit institutions). The Government has applied this approach with caution, ensuring, if necessary, that the text of the Decree is in total conformity with the legal provisions.

Article 3

Article 3 determines the procedure to be followed to identify a financial services group holding participations in a Belgian regulated entity. It also defines the procedure according to which the concerned group is informed of its identification as a financial services group and the designation of the authority responsible for the supplementary supervision of the group, as well as the procedure for informing the concerned competent authorities.

This article transposes Article 4 of Directive 2002/87/EC.

CHAPTER II. - Object and modalities of the supplementary supervision of the group

Section I. - Scope of application

Articles 4 to 7

The draft Royal Decree makes a distinction between financial services groups that have at their head a regulated entity subject to the law of a Member State of the European Economic Area (EEA) (Article 4), financial services groups that have at their head a mixed financial holding company subject to the law of a Member State of the EEA (Article 5), financial services groups that have at their head an entity subject to the law of a non-EEA Member State (Article 6), and, finally, other financial services groups (Article 7). This distinction is in accordance with Article 5 of Directive 2002/87/EC. These articles determine the provisions of the Decree applicable to each of these groups.

Article 8

Article 8 provides that when a financial services group itself forms part of another financial services group headed by an entity constituted under the law of a Member State of the EEA, this sub-group may, under certain conditions, be exempted in whole or in part from the supplementary supervision of the group.

Section II. - Parent companies subject to a Member State of the European Economic Area

Articles 9 to 16 of the draft Decree define the object and modalities of the supplementary supervision of regulated entities that are part of a financial services group headed by a regulated entity or a mixed financial holding company, constituted under the law of a Member State of the European Economic Area.

These entities are subject to requirements regarding solvency (Article 9), risk concentration (Article 10), intragroup transactions (Article 11), reporting to the competent supervisory authority (Article 12), and risk management procedures and internal control mechanisms (Article 13). The draft Royal Decree further introduces requirements concerning the shareholding of a mixed financial holding company (Article 14), the management of a mixed financial holding company (Article 15), and the designation of an approved auditor with a mixed financial holding company (Article 16). Articles 9 to 16 of the draft transpose Articles 6 to 9, and 13, of Directive 2002/87/EC.

Article 9

This article establishes quantitative and qualitative solvency requirements at the group level. The quantitative requirements are calculated according to one of the methods defined in Annex I of the Decree. The CBFA determines the applicable method, after consulting with the other concerned competent authorities and with the financial services group in question. The qualitative requirements concern the adequacy of the management procedures and internal control mechanisms put in place to ensure monitoring of the solvency situation, in accordance with the provisions of Article 13. Article 9 also provides that companies, with prior authorization from the CBFA, may be excluded from the supplementary supervision of the group regarding solvency, for the same reason that they may not be included in the sectoral supervision of the group. The provisions of the sectoral regulation on this matter apply mutatis mutandis, provided that the financial services group, as a whole, meets the conditions provided.

The Council of State asserts in its opinion that Article 9, § 2, of the draft differs from Article 6, paragraphs 3 and 5, of the directive without providing explanations for this in the report to the King. The Government observes that the draft Decree is, in substance, in conformity with the directive. The list of entities to be included in the supplementary supervision, contained in Article 6, paragraph 3, of the directive, is transposed in its entirety into Article 9, § 2, first paragraph, of the draft Decree, which refers to the group entities belonging to the financial sector as defined in Article 1, 8°, of the draft Decree. The cases referred to in Article 6, paragraph 5, of the directive, in which the competent authority responsible for supplementary supervision may decide not to include certain entities in the group supervision, are also included in the draft Decree: given that these cases are already provided for the application of the sectoral supervision of the group, Article 9, § 2, second paragraph, of the Decree provides that the entities concerned may be excluded from the supplementary supervision of the group for reasons analogous to those, under sectoral regulation, that may motivate their exclusion from the sectoral supervision of the group. It is therefore clearly specified in the Decree that the sectoral supervision of the group and the supplementary supervision of financial services groups are governed, on this point, by analogous rules.

Articles 10 and 11

These articles establish qualitative standards concerning, respectively, risk concentration at the level of a financial services group and intragroup transactions between entities forming part of a financial services group and persons linked by close links to these entities. Articles 1, 16° and 17°, 10, § 1, and 11, § 1, define what is meant by "intragroup transactions" and "risk concentration", further specifying the points requiring particular attention for supervision. The requirements concern the identification by management of significant positions and risks, as well as their monitoring through the implementation of adequate risk management procedures and internal control mechanisms in accordance with the provisions of Article 13, and also concern reporting to the CBFA.

Like the provisions of Directive 2002/87/EC, the draft Royal Decree does not provide for quantitative limits. No majority has emerged within the European Union in favor of introducing such limits at the level of financial conglomerates, due in particular to the differences that currently exist in this regard between the legislation applicable to banks and that applicable to insurance companies. The draft Decree, however, provides that the CBFA may impose limitation standards regarding risk concentration and intragroup transactions, or take other equivalent control measures, and may decide to apply, by analogy, to financial services groups the sectoral provisions on this matter. Given that many financial services groups have subsidiaries in several countries, the draft provides that the CBFA must, on this subject, consult beforehand with the other concerned competent authorities.

Article 12

This article regulates the modalities of reporting that must allow monitoring compliance with the requirements defined in Articles 9, 10, and 11.

Regarding frequency, Directive 2002/87/EC provides that reporting must be carried out at least once a year. The Government considers that a single annual report is not sufficient to allow the supervisory authority to adequately monitor the financial services group. Furthermore, the European directives applicable to credit institutions and investment firms, as well as the bilateral agreements concluded between the CBFA and certain financial services groups, provide for semi-annual reporting. This is why the draft provides that reporting must be carried out at least twice a year.

Given the principle that the Royal Decree does not establish a prudential status for mixed financial holding companies, the draft provides that reporting may be carried out by a regulated entity of the group, designated for this purpose.

Article 13

This article imposes on the financial services group the obligation to have, at the group level, appropriate risk management procedures and internal control mechanisms, as well as adequate administrative and accounting organization.

Supervisory authorities increasingly attach importance to the presence of adequate risk management structures and appropriate internal control mechanisms within regulated entities. These structures and mechanisms constitute an essential pillar of the solvency regulations that will apply in the future to credit institutions, investment firms, and insurance undertakings (cf. the so-called "CAD III" and "Solvency II" projects of the European Union). The increasing number of companies within financial groups and the tendency to shift the decision-making power of regulated entities to the holding company at the head of the group, which is not subject to prudential standards as high as those of regulated entities, strengthens the need to provide, in prudential regulation, explicit provisions concerning the requirement for adequate organizational and decision-making structures and procedures at the group level.

Article 14

This article imposes the obligation to notify the CBFA in advance of any modification of the shareholding of a Belgian mixed financial holding company when this modification leads to the crossing of a determined threshold. The CBFA may, under certain conditions, oppose this modification and, if necessary, take adequate measures. This provision is analogous to that provided for by sectoral regulation regarding the shareholding of regulated undertakings.

Directive 2002/87/EC does not provide explicit provisions in this matter. The Council considered that the European directives currently governing the status of credit institutions, investment firms and insurance undertakings contain sufficient provisions concerning the adequacy of shareholding, since these directives deal with both direct and indirect holdings in regulated undertakings. However, it appeared that Member States do not all interpret the notion of 'indirect holding' in the same way. In Belgium too, the interpretation of this notion was, until now, different depending on whether it concerned banking legislation or insurance legislation. For reasons of legal certainty, the Government considers that an explicit provision concerning the adequacy of the shareholding of a mixed financial holding company is indicated.

Article 15
This article imposes the obligation, for Belgian mixed financial holding companies, to have a polycephalic management body, which possesses the necessary honorability and adequate experience. This obligation is analogous to that applicable to the management of regulated undertakings. By analogy, the possibility of constituting a management committee, the regime of incompatibilities and the prohibition to grant credits (see Articles 26, 27 and 28 of the Banking Act) are also applicable to the management of a mixed financial holding company. This extension is motivated by the trend, mentioned above, to shift decision-making power within financial services groups.

Article 16
This article imposes the obligation, in Belgian mixed financial holding companies, to entrust the functions of auditor to one or more auditors approved by the CBFA for the exercise of the functions of statutory auditor at credit institutions, investment firms or insurance undertakings. The board of auditors must be composed in such a way that approvals for the exercise of these functions in the three sectors are represented therein in principle.

Given that the supplementary supervision of financial services groups constitutes the extension of the prudential supervision of regulated undertakings forming part of the group, the draft decree opts for a regime that directly joins that provided for by the Banking Act for the audit control of credit institutions, by the law concerning investment firms for the audit control of investment firms and by the Insurance Act for the audit control of insurance undertakings. Its collaboration in prudential supervision requires that the auditor has solid knowledge of the financial sectors concerned and of the financial legislation applicable in the areas covered.

The mission of a statutory auditor appointed at a mixed financial holding company is defined in a manner analogous to that of a statutory auditor at sectoral holding companies and at regulated undertakings. This means that his mission consists in verifying whether the financial statements communicated to the CBFA are correct and whether the organizational structures and control procedures present the required characteristics.

Articles 14, 15 and 16
The obligations imposed by Articles 14, 15 and 16 regarding the shareholding and management of Belgian mixed financial holding companies as well as the appointment of an auditor at such companies, do not mean that these companies are thereby subject to a prudential status, as is the case for regulated undertakings.

In its opinion, the Council of State notes that, as indicated in the Report to the King, several provisions concerning Belgian mixed financial holding companies are not based on any provision of the directive, which moreover provides that the exercise of supplementary supervision does not imply in any way exercising individual supervision on mixed financial holding companies. The Council of State therefore questions the legal basis in domestic law of these provisions. The Government wishes to emphasize in this regard that national legislation can, in this matter, be stricter than the directive, and that Article 91octies decies of the Insurance Act, Article 49bis of the Banking Act and Article 95bis of the Law concerning investment firms, articles which were inserted into the relevant laws by the Law of 20 June 2005, notably provide that supplementary supervision includes the control of shareholding as well as the control of the adequacy of the effective management of the mixed financial holding company, and that the King may define and complete the modalities of the supplementary supervision of the group, and in particular specify which other provisions of the law are applicable to mixed financial holding companies.

Section III. - Parent undertakings subject to the law of a State not a member of the European Economic Area
Article 17
This article regulates the supplementary supervision of Belgian regulated undertakings that are part of a financial services group headed by an undertaking subject to the law of a State not a member of the European Economic Area. It provides that such undertakings must also be subject to adequate supplementary supervision at the group level. To this end, it is necessary to examine whether the supplementary supervision of the group exercised by a competent authority of a State not a member of the European Economic Area is equivalent to the group supervision within the meaning of Articles 4 and 5 of this decree. If there is no equivalent supervision, the supplementary supervision of the group must be exercised by the CBFA or by another competent authority of a Member State of the EEA. Article 17 determines the procedure to be followed to carry out this examination. In order to ensure consistency of the decision-making process applied in different Member States to evaluate the equivalence of regulation and supervisory practices in third countries, the procedure provides for the intervention of the European Committee of Financial Conglomerates, operating under the presidency of the European Commission. Article 17 of the draft transposes Article 18 of Directive 2002/87/EC.

In its opinion, the Council of State asserts that Article 17, paragraph 2, poorly translates the provision set out in Article 18, paragraph 1, of the directive, which provides that the verification is carried out by the competent authority that would play the role of coordinator if the criteria set out in Article 10, paragraph 2, were to apply. The Government observes that the provision referred to in the directive is transposed in Article 17, paragraph 2, second paragraph, of the draft decree.

The Council of State also argues that Article 17, paragraph 4, omits to empower the CBFA, when it falls to it to assume the role of coordinator, to apply other methods that have been approved by another coordinator. The Government observes that this possibility cannot arise, since Article 10, paragraph 1, of the directive - transposed in Article 19 of the decree - provides that "in order to ensure adequate supplementary supervision (...), a single coordinator (...) is designated among the competent authorities (...)".

Section IV. - Other financial groups
Article 18
This article provides that the competent authorities concerned may, under certain conditions, decide to apply to regulated undertakings that do not form part of a financial services group within the meaning of Article 1, point 12°, one or more provisions of this decree relating to the supplementary supervision of the group. It is necessary for this purpose that the group operates both in the insurance sector and in the banking sector and the investment services sector and that the activities carried out in these sectors are significant within the meaning of Article 2, paragraph 3. This supplementary supervision must meet the objectives of the supplementary supervision of the group, in other words fill a gap if only sectoral supervision of the group is applied. Article 18 of the draft transposes Article 5(4) of Directive 2002/87/EC.

Section V. - Competent authority responsible for supplementary supervision
Article 19
This article sets out the rules governing the designation of the supervisory authority responsible for the supplementary supervision of a financial services group. These rules are in accordance with the provisions of Article 10 of Directive 2002/87/EC.

The Council of State asserts in its opinion that Article 19, paragraph 3, point 1°, does not regulate the hypothesis provided for in Article 10, paragraph 2, b), ii), of the directive, in which several regulated entities having their registered office in the European Economic Area have the same mixed financial holding company as their parent undertaking and one or more of these entities have been authorized in the Member State where this company has its registered office. The Government observes that this hypothesis referred to by the directive is provided for in Article 19, paragraph 3, point 1°, of the draft decree: when, for a given financial services group, both the mixed financial holding company and a regulated subsidiary are established in the same Member State, the competent authority of that Member State is designated as coordinator, whether or not the mixed financial holding company still has regulated subsidiaries in other Member States.

Article 20
This article defines the tasks and powers assigned to the competent authority responsible for the supplementary supervision of the group. These tasks and powers relate primarily to supervision regarding the financial services group. Their definition is broad. They do not, however, replace the tasks and responsibilities that fall, under sectoral legislation, to the authority responsible for individual control and sectoral supervision, at the group level, of regulated undertakings. This article transposes Article 11 of Directive 2002/87/EC.

CHAPTER III. - Communication of information, on-site verification, cooperation and exchange of information between competent authorities
Articles 21 to 26
The supervision of financial services groups can only be organized effectively if it encounters no obstacles at the level of communication of information between the companies forming part of the group, nor at the level of the exchange of information and cooperation between the supervisory authorities concerned and the verification by them of the information transmitted. Articles 21 to 26 of the draft transpose Articles 12, 14 and 15 of Directive 2002/87/EC.

Article 21
This article subjects companies that are part of a financial services group to a general obligation to communicate information to the CBFA as the authority responsible for the supplementary supervision of the group, and grants a right of oversight to statutory auditors for the exercise of their functions.

Article 22
This article imposes on Belgian companies the obligation, under certain conditions, to communicate information to a foreign competent authority responsible for the supplementary supervision of the group. This provision constitutes the corollary of the obligation for foreign companies to communicate information to the CBFA.

Article 23
This provision is in accordance with that of Article 14 of Directive 2002/87/EC, according to which Member States must take the necessary measures to remove legal obstacles likely to hinder the communication of information by the companies and establishments concerned.

By objections derived from private law, we refer here to objections arising from the contractual duty of discretion of the companies concerned.

Article 24
This article regulates the procedure to be followed to carry out on-site verification of information transmitted in the framework of the supplementary supervision of the group. The procedure is analogous to the current procedures provided for by sectoral legislation. One can nevertheless note a new element: within the European Economic Area, the competent authority responsible for the supplementary supervision of the group may request to be associated with the verification carried out at a foreign company.

Article 25
This article regulates cooperation, including the exchange of information, between Belgian and foreign authorities responsible for the control of credit institutions, insurance undertakings and investment firms that are part of a financial services group. Directive 2002/87/EC provides that Member States may authorize their authorities to exchange the information necessary for the exercise of the supplementary supervision of the group, as well as the information obtained in the framework of supplementary supervision and necessary for sectoral supervision. A distinction is made in this regard between essential information and useful information. Article 25 of this decree implements in particular Article 12 of the directive, in terms of collaboration between authorities belonging to Member States of the EEA, and joins for the rest Article 19 of the directive regarding collaboration with third countries.

Cooperation between authorities is of particular importance in the field of supervision of financial services groups, due to the systemic risks that such groups may present. In Belgium, the main financial groups are 'financial services groups' that present this systemic dimension. For these groups, close collaboration - including an exchange of information - between the CBFA and the NBB is of crucial importance, particularly in crisis situations. Article 117, paragraph 3, of the Law of 2 August 2002 recognizes this need for collaboration explicitly and provides that issues of common interest to the CBFA and the NBB are examined within the Financial Stability Committee (which is composed of the members of the respective management committees of the two institutions). Issues considered to be of common interest include, in particular, the stability of the financial system as a whole and the coordination of crisis management.

Article 26
This article is residual compared to the other provisions of the decree concerning cooperation agreements between authorities. It must be combined with the provision set out in Chapter 3, Section 6, of the Law of 2 August 2002, which governs cooperation agreements between authorities.

CHAPTER IV. - Administrative measures and sanctions
Article 27
This article transposes Article 16 of Directive 2002/87/EC.

TITLE II. - Other provisions
CHAPTER I. - Provisions modifying the Royal Decree of 22 February 1991 laying down the General Regulation on the control of insurance undertakings and the Royal Decree of 12 August 1994 relating to the consolidated supervision of credit institutions
Preliminary remark
The introduction of prudential regulation for regulated undertakings forming part of a financial services group requires, among other measures, to also adapt the sectoral regulations applicable to these undertakings, regarding their status on a social basis and on a sectoral basis of the group. Directive 2002/87/EC modifies in this regard the directives relating to banks, insurance and investment services on various points. The adaptations aim to guarantee equal treatment of regulated undertakings, whether they form part of a financial services group or of a group operating mainly in a specific financial sector ("level playing field"). It should be noted that differences have arisen over time in the respective statuses of credit institutions, investment firms and insurance undertakings, even if the underlying prudential concern is identical. The Royal Decree aims to eliminate some of these differences, particularly regarding sectoral supervision of the group (the other modifying provisions of Directive 2002/87/EC were transposed by the aforementioned Law of 20 June 2005).

Article 28
This article modifies the Royal Decree of 22 February 1991 laying down the General Regulation on the control of insurance undertakings.

The modifications that call for comment concern:

the introduction of a third method, called the 'deduction-based requirements method', for the calculation of the adjusted solvency margin of insurance undertakings forming part of an insurance group (Article 28, paragraphs 1, point 1° and 5°, and 2, point 2° and 3°); this method is introduced to meet the needs of prudential control; it is in accordance with Directive 98/78/EC of 27 October 1998 on the supplementary supervision of insurance undertakings forming part of an insurance group, Annex I, point 3;
the addition of new elements to be deducted for the calculation of the adjusted solvency margin of insurance undertakings forming part of an insurance group (Article 28, paragraph 1, point 3°); the draft decree does not give an enumeration of the elements to be deducted, but refers to that given in Article 15bis, paragraph 4, of the Insurance Act; the comment on this article applies mutatis mutandis; this provision transposes Article 28(1) of Directive 2002/87/EC;
the possibility for the CBFA to conclude, under certain conditions, with a competent authority of a State not a member of the European Economic Area, an agreement providing that the latter exercises the supplementary supervision of the adjusted solvency margin when it concerns an insurance group whose parent undertaking is not subject to the European Economic Area and whose subsidiary is a Belgian insurance undertaking (Article 28, paragraph 2, point 4°); this provision actually clarifies the current rules and is in accordance with the ratio legis of Annexes I and II of Directive 98/78/EC.

The other modifications do not call for comment and are in accordance with European law.

Article 29
This article modifies the Royal Decree of 12 August 1994 relating to the consolidated supervision of credit institutions.

The modifications that call for comment concern:

the taking into account of collective investment management companies, via their assimilation to financial establishments, in the consolidated supervision of credit institutions (Article 29, paragraph 1, point 3°); this modifying provision transposes Article 30 of Directive 2002/87/EC which imposes on Member States the obligation to take measures so that these companies, pending subsequent harmonization of European regulation, are included either in the consolidated supervision of credit institutions and investment firms, or in the supplementary supervision of insurance undertakings forming part of an insurance group; this provision is in accordance with Article 3, paragraph 1, point 5°, second paragraph, of the Banking Act (see the comment on this article);
the adaptation of the definition of "participation" to ensure its conformity with Article 1(11) of Directive 2002/87/EC: it is considered, irrebuttably, as constituting a participation the fact of holding directly or indirectly social rights representing 20% or more of voting rights or capital (Article 29, paragraph 2, point 1°);
the adaptation of the rules relating to the inclusion of subsidiaries that are insurance undertakings in the consolidated supervision of credit institutions (Article 29, paragraph 2, points 2° and 3°); the current rules set out in Article 2, paragraph 3, of the Royal Decree of 12 August 1994 had been introduced as a transitional regime, pending the introduction in European and Belgian legislation of adequate supervision of so-called bancassurance groups (see, in the Report to the King preceding the Royal Decree, the comment on Article 2); by introducing in the Banking Act an Article 49bis governing the supplementary supervision of credit institutions forming part of a financial services group, the Law of 20 June 2005 establishes adequate regulation for such bancassurance groups and necessitates adapting the Royal Decree of 12 August 1994 accordingly;
the new rules are stated as follows:
the group in question is a financial services group: insurance undertakings included in the supplementary supervision of the group under Article 49bis do not fall within the scope of the sectoral supervision (consolidated supervision) of credit institutions;
the group is not a financial services group: insurance undertakings fall within the scope of the sectoral supervision of credit institutions (consolidated supervision) for the verification of solvency ratios and for the verification of risk concentration limitation standards; for the verification of the solvency ratio, the CBFA may permit or impose either the application of the so-called deduction rule or the use of one of the methods provided for the calculation of solvency requirements for financial services groups;
regarding Belgian financial companies: the obligation to notify changes in shareholding, the obligation to have a multi-headed management possessing useful and adequate experience, and the possibility for the CBFA to take appropriate measures (Article 29, § 6, 4°); Article 49, § 4, of the Banking Law confers upon the King the power to make provisions of the law applicable to financial companies; given the rules concerning the shareholding and management of mixed financial companies, it appears appropriate to establish identical requirements for financial companies: the commentary on Articles 14 and 15 of this Royal Decree, which deals with this issue, applies mutatis mutandis to the provisions introduced by Article 29, § 6, 4°; these provisions transpose Article 29 (8) of Directive 2002/87/EC;
the rules concerning credit institutions whose parent company has its registered office in a State not a member of the European Economic Area (Article 29, § 10); they are identical to those concerning financial services groups headed by a company whose registered office is established in a State not a member of the European Economic Area: the commentary on Article 17 of this Royal Decree applies mutatis mutandis to the provisions introduced by Article 29, § 10; these provisions transpose Article 29 (11) of Directive 2002/87/EC;
a strengthening of the control of intragroup operations between a Belgian credit institution and its parent company, which is a mixed financial company, and the subsidiaries of the latter, with the possibility for the Commission to take measures if these operations are likely to compromise the financial situation of the credit institution (Article 29, § 12); this provision transposes Article 29 (9) of Directive 2002/87/EC;
the possibility for the CBFA to be associated with verifications carried out in another Member State of the European Economic Area (Article 29, § 15, 1°); this provision transposes Article 29 (10) of Directive 2002/87/EC.

The provisions introduced by Article 29, § 4, and § 6, 2° and 3°, aim to provide clarification. These provisions and the other modifying provisions do not call for commentary and are in conformity with European law.

I have the honor to be,
Sire,
Your Majesty's, most respectful and most faithful servant, The Minister of Finance, D. REYNDERS The Minister of the Economy, M. VERWILGHEN

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Council of State

Royal Decree of 21 November 2005 on the supplementary supervision of credit institutions, insurance undertakings, investment firms and collective investment management companies belonging to a financial conglomerate

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TITLE I. - The supplementary supervision of credit institutions, insurance undertakings, [1 reinsurance undertakings,]1 investment firms and collective investment management companies, belonging to a financial conglomerate.

§ 6. If [1 the supervisory authority]1 is not the authority responsible for the supplementary supervision of the group, it operates, for the application of this Article, in close collaboration with said authority responsible for the supplementary supervision of the group.

§ 3. If [2 the supervisory authority]2 is not the authority responsible for the supplementary supervision of the group, it operates, for the application of this Article, in close collaboration with said authority responsible for the supplementary supervision of the group.

If, in application of the first paragraph, it is decided to carry out supplementary group supervision, the provisions of Article 3, § 2, apply by analogy.

Preamble

List of Amendments

Report to the King

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