Royal Decree of 26 September 2005 on the Status of Liquidation Undertakings and Undertakings Assimilated to Liquidation Undertakings

Title

2005003725

26 SEPTEMBER 2005. - Royal Decree on the status of liquidation undertakings and undertakings assimilated to liquidation undertakings. (NOTE: Consultation of versions prior to 11-10-2005 and update as of 09-03-2011)

Source: Finances

Publication: 11 October 2005

Number: 2005003725

Page: 43507

Case Number: 2005-09-26/33

Entry into force: 11 October 2005

Erratum: Publication of 20 December 2005, number 2005003832, page 54417 image of the official publication

5 archived versions

22 implementing decrees

CHAPTER I. - Definitions.
Art. 1
CHAPTER II. - Authorization of Belgian law entities assimilated to liquidation undertakings.
Section 1. - Access to the activity of entities assimilated to liquidation undertakings.
Art. 2-5
Section 2. - Conditions for authorization of Belgian law entities assimilated to liquidation undertakings.
Art. 6-10, 10bis, 11
CHAPTER III. - Conditions for the exercise of the activity of liquidation undertakings and entities assimilated to liquidation undertakings, constituted under Belgian law.
Art. 12-20
CHAPTER IV. - Supervision of liquidation undertakings and entities assimilated to liquidation undertakings, constituted under Belgian law.
Art. 21-31
CHAPTER V. - Exceptional measures and sanctions against liquidation undertakings and entities assimilated to liquidation undertakings, constituted under Belgian law.
Art. 32-35
CHAPTER VI. - Entities assimilated to liquidation undertakings, operating as branches of foreign entities.
Art. 36
CHAPTER VII. - Final provisions.
Art. 37-41

Text

CHAPTER I. - Definitions.

Article 1. For the application of this decree, the following terms shall be understood as:
1° the law of 22 March 1993: the law of 22 March 1993 on the status and supervision of credit institutions; 2° the law of 2 August 2002: the law of 2 August 2002 on the supervision of the financial sector and financial services; 3° [1 FSMA]1: [1 the Financial Services and Markets Authority]1, referred to in Chapter III of the law of 2 August 2002; 4° liquidation undertakings: the liquidation undertakings referred to in Article 23, § 1, of the law of 2 August 2002, other than credit institutions established in Belgium; 5° entities assimilated to liquidation undertakings: the entities assimilated to liquidation undertakings, which have been designated by the King in application of Article 23, § 7, of the law of 2 August 2002.

(1)<AR 2011-03-03/01, art. 331, 006; In force: 01-04-2011>

CHAPTER II. - Authorization of Belgian law entities assimilated to liquidation undertakings.

Section 1. - Access to the activity of entities assimilated to liquidation undertakings.

Art. 2. Belgian law entities that are assimilated to liquidation undertakings and intend to exercise their activity in Belgium are required, before commencing their operations, to obtain authorization from the [1 FSMA]1, regardless of the other places where they exercise their activities.

(1)<AR 2011-03-03/01, art. 331, 006; In force: 01-04-2011>

Art. 3. The application for authorization must be accompanied by a business plan meeting the conditions set by the [1 FSMA]1, in which the type and volume of envisaged operations are indicated, as well as the organizational structure of the entity and its close links with other persons. Applicants must also transmit a financial plan for the next three years to the [1 FSMA]1. They must provide the [1 FSMA]1 with all information necessary to assess their application.

(1)<AR 2011-03-03/01, art. 331, 006; In force: 01-04-2011>

Art. 4. The [1 FSMA]1 grants the requested authorization to entities that meet the conditions set out in Section 2. It rules on the application within three months of the submission of a complete file and, at the latest, within nine months of the receipt of the application.
Decisions regarding authorization are notified to applicants within fifteen days by registered mail or with acknowledgment of receipt.
The [1 FSMA]1 may, for the purpose of sound and prudent management of the entity, attach conditions to the authorization regarding the exercise of certain of the planned activities.

(1)<AR 2011-03-03/01, art. 331, 006; In force: 01-04-2011>

Art. 5. The [1 FSMA]1 draws up a list of authorized entities pursuant to this chapter every year. This list and all modifications made to it during the year are published in the Belgian Official Journal.

(1)<AR 2011-03-03/01, art. 331, 006; In force: 01-04-2011>

Section 2. - Conditions for authorization of Belgian law entities assimilated to liquidation undertakings.

Art. 6. Belgian law entities assimilated to liquidation undertakings must be constituted as commercial companies, with the exception of the form of private limited liability company constituted by a single person.

Art. 7. Authorization is subject to the existence of a fully paid-up capital of at least EUR 2,500,000.

Art. 8. Authorization is subject to the communication to the [1 FSMA]1 of the identity of natural or legal persons who, directly or indirectly, hold in the capital of the entity assimilated to a liquidation undertaking a participation, conferring or not conferring voting rights, of at least 5 percent. The communication must include the indication of the proportions of capital and voting rights held by these persons. (The calculation of voting rights is established in accordance with the provisions of the law of 2 May 2007 on the publicity of major participations, as well as those of its implementing decrees.) <AR 2008-02-14/42, art. 31, 003; In force: 01-09-2008> Authorization is refused if the [1 FSMA]1 has reason to consider that the natural or legal persons referred to in the first paragraph do not possess the necessary qualities with regard to the need to guarantee sound and prudent management of the entity.

(1)<AR 2011-03-03/01, art. 331, 006; In force: 01-04-2011>

Art. 9. The effective management of entities assimilated to liquidation undertakings must be entrusted to at least two natural persons. These persons must possess the necessary professional integrity and adequate experience to exercise these functions.
Persons who fall into one of the cases defined by Articles 1 to 3, 3bis, §§ 1 and 3, and 3ter of the Royal Decree No. 22 of 24 October 1934 prohibiting certain convicted persons and bankrupts from exercising certain functions, professions or activities and conferring on the commercial courts the power to pronounce such prohibitions, may not exercise the functions of manager, director or executive, nor represent companies exercising such functions. The functions listed in the first paragraph may not be exercised either:
1° by persons who have been sentenced to a prison term of less than three months or to a fine for an offense provided for by the aforementioned Royal Decree No. 22 of 24 October 1934; 2° by persons who have been convicted of an offense:
a) under Articles 104 and 105 of the law of 22 March 1993; b) under Article 25 of the law of 22 April 2003 on public offers of securities; c) under Articles 31 to 35 of the provisions relating to private savings banks, coordinated on 23 June 1967; d) under Articles 13 to 16 of the law of 10 June 1964 on public calls for savings; e) under Articles 100 to 112ter of Title V of Book I of the Commercial Code or under Articles 75, 76, 78, 150, 175, 176, 213 and 214 of the law of 4 December 1990 on financial operations and financial markets; f) under Article 4 of Royal Decree No. 41 of 15 December 1934 protecting savings by regulating the sale on installments of lottery values; g) under Articles 18 to 23 of Royal Decree No. 43 of 15 December 1934 on the supervision of capitalization companies; h) under Articles 200 to 209 of the laws on commercial companies, coordinated on 30 November 1935; i) under Articles 67 to 72 of Royal Decree No. 225 of 7 January 1936 regulating mortgage loans and organizing the supervision of mortgage loan enterprises or under Article 34 of the law of 4 August 1992 on mortgage credit; j) under Articles 4 and 5 of Royal Decree No. 71 of 30 November 1939 on the peddling of securities and solicitation on securities and on goods and provisions; k) under Article 31 of Royal Decree No. 72 of 30 November 1939 regulating commodity and provision futures exchanges and markets, the profession of brokers and intermediaries dealing with these markets and the regime of the gaming exception; l) under Article 29 of the law of 9 July 1957 regulating installment sales and their financing or under Articles 101 and 102 of the law of 12 June 1991 on consumer credit; m) under Article 11 of Royal Decree No. 64 of 10 November 1967 organizing the status of portfolio companies; n) under Articles 53 to 57 of the law of 9 July 1975 on the supervision of insurance enterprises; o) under Articles 11, 15, § 4, and 18 of the law of 2 March 1989 on the publicity of major participations in listed companies and regulating public takeover bids; p) under Articles 148 and 149 of the law of 6 April 1995 on the status of investment firms and their supervision, intermediaries and investment advisors; q) under Articles 38 to 42 of the law of 2 August 2002. 3° by persons who have been convicted by a foreign court for offenses similar to those provided for in 1° and 2°; Article 2 of the aforementioned Royal Decree No. 22 of 24 October 1934 is applicable in these cases. The [1 FSMA]1 may authorize, in favor of the persons referred to in 2° and, for convictions provided for by this 2°, in 3° of the third paragraph of this article, derogations from the prohibitions referred to in that same third paragraph.

(1)<AR 2011-03-03/01, art. 331, 006; In force: 01-04-2011>

Art. 10.<AR 2007-10-29/33, art. 26, 002; In force: 08-11-2007> § 1. Entities assimilated to liquidation undertakings must have a management structure, administrative and accounting organization, control mechanisms and security in the field of information technology, and appropriate internal control suitable for the activities they exercise or intend to exercise. They take into account in this regard the nature, volume and complexity of these activities, as well as the risks associated with them. § 2. Entities assimilated to liquidation undertakings must have an adequate management structure, consisting in particular of the following elements: a coherent and transparent organizational structure, providing for adequate separation of functions; a device for assigning responsibilities that is well-defined, transparent and coherent; and adequate procedures for the identification, measurement, management, monitoring and internal reporting of significant risks incurred by the entity as a result of the activities it exercises or intends to exercise. [1 Entities assimilated to liquidation undertakings establish an audit committee within their statutory governing body. The audit committee is composed of non-executive members of the statutory governing body. At least one member of the audit committee is an independent member of the governing body within the meaning of Article 526ter of the Companies Code and is competent in accounting and audit matters. Furthermore, the members of the audit committee have collective competence in the field of the activities of the entity assimilated to a liquidation undertaking concerned and in accounting and audit matters. The annual report of the statutory governing body justifies the individual and collective competence of the members of the audit committee. Provided that an audit committee whose responsibilities extend to the entire group and meeting the requirements of this decree has been established, the [2 FSMA]2 may, with regard to entities assimilated to liquidation undertakings belonging to a financial services group that are subsidiaries or sub-subsidiaries of a credit institution or any other company subject to an equivalent legal and prudential supervision regime, grant derogations from the preceding provisions and set specific conditions for granting them. The [2 FSMA]2 makes its derogation policy public. The approved auditor:
a) confirms in writing each year to the audit committee his independence from the entity assimilated to a liquidation undertaking; b) communicates each year to the audit committee the additional services provided to the entity assimilated to a liquidation undertaking; c) examines with the audit committee the risks weighing on his independence and the safeguard measures taken to mitigate these risks, recorded by him.]1 § 3. Entities assimilated to liquidation undertakings must organize adequate internal control, the functioning of which is evaluated at least once a year. With regard to their administrative and accounting organization, they must organize an internal control system that provides a reasonable degree of certainty as to the reliability of the financial reporting process, so that the annual accounts comply with the accounting regulations in force. They take the necessary measures to be able to permanently have an adequate independent internal audit function. They develop an adequate integrity policy, which is regularly updated. They take the necessary measures to be able to permanently have an adequate independent compliance function, intended to ensure compliance by the entity, its directors, its senior management, its employees and its agents, with the legal rules relating to the integrity of the activity of an entity assimilated to a liquidation undertaking. They must have an adequate independent risk management function. § 4. The [2 FSMA]2 may specify what is meant by adequate management structure, adequate internal control, adequate independent internal audit function, adequate independent compliance function and adequate risk management function. § 5. Without prejudice to the powers vested in the statutory governing body regarding the determination of general policy, as provided for by the Companies Code, the persons responsible for the effective management of the entity assimilated to a liquidation undertaking, if applicable the management committee, take, under the supervision of the statutory governing body, the necessary measures to ensure compliance with the provisions of §§ 1, 2 and 3. [1 Without prejudice to the relevant provisions of this section and the legal missions of the statutory governing body, the audit committee is at least responsible for the following missions:
a) monitoring the process of preparing financial information; b) monitoring the effectiveness of the internal control and risk management systems of the entity assimilated to a liquidation undertaking; c) monitoring internal audit and its activities; d) monitoring the statutory audit of the annual and consolidated accounts, including monitoring the questions and recommendations formulated by the approved auditor; e) examining and monitoring the independence of the approved auditor, particularly with regard to the provision of complementary services to the controlled entity. The audit committee regularly reports to the statutory governing body on the exercise of its missions, at least when the latter establishes the annual and consolidated accounts and the periodic statements, respectively transmitted by the entity assimilated to a liquidation undertaking at the end of the financial year and at the end of the first half of the financial year. The [2 FSMA]2 may, by regulation adopted in accordance with Article 64 of the law of 2 August 2002, specify and complete on technical points the elements listed in the list reproduced above.]1 The statutory governing body of the entity assimilated to a liquidation undertaking must control at least once a year, if applicable through the audit committee, whether the entity complies with the provisions of §§ 1, 2 and 3 and the first paragraph of this section, and it takes note of the adequate measures taken. The persons responsible for effective management, if applicable the management committee, report at least once a year to the statutory governing body, to the [2 FSMA]2 and to the approved auditor on compliance with the provisions of the first paragraph of this section and on the adequate measures taken. These information are transmitted to the [2 FSMA]2 and to the approved auditor in the manner determined by the [2 FSMA]2. § 6. [1 The approved auditor reports to the statutory governing body, if applicable through the audit committee if such a committee has been established, on significant issues arising in the exercise of his mission of statutory audit of the accounts, and in particular on significant weaknesses in internal control with regard to the financial information process.]1 § 7. If there are close links between the entity assimilated to a liquidation undertaking and other natural or legal persons, these links may not hinder the exercise of individual or consolidated prudential supervision of the entity. If the entity assimilated to a liquidation undertaking has close links with a natural or legal person subject to the law of a State not a member of the European Economic Area, the legislative, regulatory and administrative provisions applicable to this person or their implementation may not hinder the exercise of individual or consolidated prudential supervision of the entity. § 8. Entities assimilated to liquidation undertakings ensure that they keep a record of any service provided and any
transaction carried out by them, in order to enable the [2 FSMA]2 to verify whether the entity complies with the requirements provided for by this decree and, in particular, whether it respects the obligations incumbent upon it with regard to the beneficiaries of its services. § 9. For the definition of the rules for applying the obligations referred to in this article, the regulations adopted by the [2 FSMA]2 in accordance with Article 64 of the law of 2 August 2002 are adopted on the advice of the National Bank of Belgium.

(1)<AR 2010-01-27/08, art. 1, 005; In force: 18-02-2010; see also art. 2> (2)<AR 2011-03-03/01, art. 331, 006; In force: 01-04-2011>

Art. 10bis.<inséré par AR 2007-10-29/33, art. 27; En vigueur : 08-11-2007>

§ 1. Entities assimilated to clearing organizations must put in place adequate policies and procedures to ensure compliance with the provisions of this decree by the entity, its directors, its senior management, its employees, and its agents.

§ 2. Entities assimilated to clearing organizations must take adequate organizational and administrative measures to prevent conflicts of interest arising between the entity, its directors, its senior management, its employees, and its agents, or any affiliated company, on the one hand, and its clients, on the other hand, or between its clients themselves, from harming the interests of the latter.

§ 3. Entities assimilated to clearing organizations must take adequate measures to ensure the continuity of their services and activities. They must provide for appropriate structural measures and contingency plans to be able to deal with any disruption to their functioning or any significant failure on the part of participants in the clearing system.

§ 4. When an entity assimilated to a clearing organization entrusts a third party with the performance of operational tasks essential to ensure the continuous and satisfactory provision of its services to its clients, it must take adequate measures to limit the operational risk associated with it.

The outsourcing referred to in the first paragraph may not be carried out in a manner that substantially impairs the adequacy of the entity's internal control procedures and prevents the [1 FSMA]1 from controlling whether the entity complies with its legal obligations.

§ 5. Entities assimilated to clearing organizations must keep a record of any service provided and any activity carried out, in order to enable the [1 FSMA]1 to verify whether the entity complies with the provisions of this decree and, in particular, whether it complies with its obligations towards its clients or potential clients.

§ 6. When an entity assimilated to a clearing organization holds financial instruments belonging to clients, it must take adequate measures to safeguard the rights of its clients in the event of the entity's insolvency. It must also take adequate measures to prevent the use for its own account of financial instruments belonging to clients, unless expressly consented to by said clients.

§ 7. The persons responsible for the senior management of the entity assimilated to a clearing organization, the management committee if applicable, must, under the supervision of the entity's legal governing body, take the necessary measures to ensure compliance with the provisions of §§ 1 to 6. The legal governing body must control at least once a year, if applicable through the audit committee, whether the entity complies with the provisions of the aforementioned paragraphs, and it must take note of the adequate measures taken.

The persons responsible for senior management, the management committee if applicable, must report at least once a year to the legal governing body, the [1 FSMA]1, and the approved auditor on compliance with the provisions of the first paragraph and on the adequate measures taken.

This information must be transmitted to the [1 FSMA]1 and the approved auditor in the manner determined by the [1 FSMA]1.

The approved auditor must, in good time, address to the legal governing body, if applicable through the audit committee, a report on the important issues arising in the exercise of its statutory control mission.

§ 8. For the definition of the implementing rules for the obligations referred to in this article, the regulations adopted by the [1 FSMA]1 in accordance with Article 64 of the Law of 2 August 2002 are adopted on the advice of the National Bank of Belgium.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 11. The central administration of an entity assimilated to a clearing organization must be located in Belgium.

CHAPITRE III. - Conditions for the exercise of the activity of clearing organizations and entities assimilated to clearing organizations, constituted under Belgian law.

Art. 12.Entities assimilated to clearing organizations must permanently satisfy the conditions set out in Article 6 and Articles 9 to 11.

The conditions set out in Article 6 and Articles 9 to 11 apply to clearing organizations as conditions for the exercise of their activity.

The [1 FSMA]1 must establish annually a list of clearing organizations subject to this chapter. This list and all amendments made to it during the year must be published in the Belgian Monitor.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 13.<Entities must satisfy, on a consolidated and non-consolidated basis, the solvency, liquidity, risk concentration, and other limitation norms that the [1 FSMA]1 may, on the advice of the National Bank of Belgium, establish by regulation adopted in accordance with Article 64 of the Law of 2 August 2002. The norms referred to in this paragraph may be of a quantitative or qualitative nature.> <AR 2007-10-29/33, art. 28, 1°, 002; En vigueur : 08-11-2007>

(Without prejudice to the provisions of the first paragraph, clearing organizations and entities assimilated to clearing organizations must have a policy regarding their capital needs that is appropriate to the activities they carry out or intend to carry out. The persons responsible for the senior management of such an entity, the management committee if applicable, must, under the supervision of the highest governing body, develop a policy that identifies and determines the entity's current and future capital needs, taking into account the nature, volume, and complexity of these activities, the associated risks, and the entity's risk management policy. The clearing organization and the entity assimilated to a clearing organization must regularly assess their capital needs policy and adapt this policy if necessary.

When the [1 FSMA]1 considers that the policy implemented by a clearing organization or an entity assimilated to a clearing organization regarding its capital needs does not respond to the entity's risk profile, it may, with regard to the objectives of this decree, impose solvency, liquidity, risk concentration, and risk position requirements that supplement those referred to in the first paragraph. It may, by regulation, establish the criteria and procedures it applies for this purpose.

The [1 FSMA]1 must determine, by regulation, the information that clearing organizations and entities assimilated to clearing organizations must publish regarding their solvency, liquidity, risk concentration, and other risk positions, as well as their capital needs policy. It also defines the terms and frequency of publication of this information. <AR 2007-10-29/33, art. 28, 2°, 002; En vigueur : 08-11-2007>

The capital of entities assimilated to clearing organizations may not, furthermore, fall below the amount of initial capital set in accordance with Article 7.

The capital of clearing organizations must, furthermore, amount to at least 2,500,000 EUR.

(The [1 FSMA]1 may, in special cases, authorize derogations from the provisions of the regulations adopted under this article.

For the definition of the implementing rules for the obligations referred to in this article, the regulations adopted by the [1 FSMA]1 in accordance with Article 64 of the Law of 2 August 2002 are adopted on the advice of the National Bank of Belgium.) <AR 2007-10-29/33, art. 28, 3°, 002; En vigueur : 08-11-2007>

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 14.§ 1. Without prejudice to Article 8 of this decree and the (Law of 2 May 2007 on the publicity of significant shareholdings), any natural or legal person who intends to acquire shares or parts, representing or not representing capital, conferring or not conferring voting rights, of a clearing organization or an entity assimilated to a clearing organization, such that they would hold, directly or indirectly, at least 5% of the capital or voting rights, must, beforehand, inform the [1 FSMA]1 of their acquisition project as well as the proportion of capital and voting rights corresponding to their holding. The same information must be given to the [1 FSMA]1 if a natural or legal person intends to increase the holding they hold such that the proportion of capital or voting rights they would hold should reach or exceed the thresholds of 10%, 15%, 20%, and so on in increments of five points. <AR 2008-02-14/42, art. 32, 003; En vigueur : 01-09-2008>

(The calculation of voting rights is established in accordance with the provisions of the aforementioned Law of 2 May 2007, as well as its implementing decrees.) <AR 2008-02-14/42, art. 32, 003; En vigueur : 01-09-2008>

§ 2. The [1 FSMA]1 may, within a period of three months from receipt of the information prescribed by § 1, first paragraph, oppose the realization of the acquisition if it has reason to believe that the natural or legal person who informed it does not possess the necessary qualities with regard to the need to guarantee sound and prudent management of the entity. In the absence of opposition, it may prescribe the period within which the acquisition must take place.

§ 3. Any natural or legal person who holds in a clearing organization or an entity assimilated to a clearing organization shareholder rights of a proportion equal to or greater than 5% of the capital or conferring at least 5% of the voting rights and who intends to alienate, directly or indirectly, all or part of these rights such that their holding crosses the thresholds referred to in § 1, first paragraph, must, at least one month before this alienation, communicate to the [1 FSMA]1 the proportion of capital as well as that of the voting rights on which the alienation bears, as well as those they will possess after this latter; they must inform the [1 FSMA]1 of the identity of the buyer or buyers when they know it.

§ 4. Clearing organizations and entities assimilated to clearing organizations must communicate to the [1 FSMA]1, as soon as they become aware of them, the acquisitions or disposals of their shares or parts that cross, upwards or downwards, one of the thresholds referred to in § 1, first paragraph.

Under the same conditions, they must communicate to the [1 FSMA]1, at least once a year, the identity of shareholders or partners who hold, directly or indirectly, shareholder rights representing at least 5% of the capital or conferring at least 5% of the voting rights, as well as the proportion of capital and voting rights thus held. They must also communicate to the [1 FSMA]1 the proportion of shares or parts as well as that of the voting rights associated with them, the acquisition or disposal of which is declared to them in accordance with (Article 515 of the Companies Code) in cases where the statutes do not prescribe their declaration to the [1 FSMA]1. <AR 2008-02-14/42, art. 32, 003; En vigueur : 01-09-2008>

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 15.§ 1. Without prejudice to Article 10, the directors, managers, or directors of a clearing organization or an entity assimilated to a clearing organization, and all persons who, under whatever name and in whatever capacity, participate in the administration or management of the entity, may, on behalf of or not on behalf of the entity, exercise mandates as director or manager or participate in the administration or management within a commercial company or commercial form, an enterprise of another form of Belgian or foreign law, or a Belgian or foreign public institution, having an industrial, commercial, or financial activity, under the conditions and within the limits provided for in this article.

§ 2. The external functions referred to in § 1 are governed by internal rules that the entity must adopt and enforce in order to pursue the following objectives:

1° to avoid that the exercise of these functions by persons participating in the senior management of the entity impairs the availability required for the exercise of this management;

2° to prevent the occurrence of conflicts of interest within the entity as well as the risks associated with the exercise of these functions, particularly regarding insider dealing;

3° to ensure adequate publicity of these functions.

(The [1 FSMA]1 establishes the terms of these obligations by regulation subject to the approval of the King.

If the [1 FSMA]1 fails to establish the regulation referred to in the previous paragraph or to modify it in the future, the King is authorized to adopt this regulation himself or to modify it.) <AR 2007-10-29/33, art. 29, 1°, 002; En vigueur : 08-11-2007>

§ 3. Social agents appointed on the presentation of the entity must be persons who participate in the senior management of the entity or persons designated by it.

Directors who do not participate in the senior management of the entity may not be directors of a company in which the entity holds a participation unless they do not participate in the day-to-day management of that company. This prohibition is not, however, applicable, for a limited period of 6 years, to directors appointed following the acquisition of a participation or the takeover of the activities of the company in which these same persons participate in the senior management.

Persons who participate in the senior management of the entity may not exercise a mandate involving participation in day-to-day management unless it is a company referred to (in Article 32, § 4, of the Law of 22 March 1993 or in Article 76, § 4, of the aforementioned Law of 6 April 1995, with which the entity has close links, a collective investment scheme in statutory form within the meaning of the Law of 20 July 2004 on certain forms of collective portfolio management,), a holding company in which such persons or their family hold, as part of the normal management of their assets, a significant interest, or a company in which these persons are the sole managers and whose activity is limited to management services for the aforementioned companies or to the activity of a holding company. <AR 2007-10-29/33, art. 29, 2°, 002; En vigueur : 08-11-2007>

§ 4. Entities must notify the [1 FSMA]1 without delay of the functions exercised outside the entity by the persons referred to in § 1 for the purpose of controlling compliance with the provisions provided for in this article.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 16.Mergers between clearing organizations, mergers between entities assimilated to clearing organizations, mergers between clearing organizations and entities assimilated to clearing organizations, and mergers between such entities and other financial institutions are subject to the authorization of the [1 FSMA]1.

For the application of this article, transfers of activity and transfers of the entire or part of the network are assimilated to mergers.

The [1 FSMA]1 may refuse authorization only within three months of the prior notification of the project made to it and for reasons relating to the sound and prudent management of the entity or entities concerned. If it does not intervene within the fixed period, authorization is deemed granted.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 17.Clearing organizations and entities assimilated to clearing organizations that plan to open a branch abroad must notify their intention to the [1 FSMA]1.

This notification must be accompanied by an activity program indicating, among other things, the categories of operations envisaged, the structure of the branch's organization, the foreign correspondence address, and the name of the branch's managers.

The [1 FSMA]1 may oppose the realization of the project by a reasoned decision based on the prejudicial repercussions of the opening of the branch on the organization, the financial situation, or the control of the entity.

The decision of the [1 FSMA]1 must be notified to the entity by registered letter with acknowledgment of receipt at the latest six weeks after receipt of the complete file including the information provided for in the second paragraph. If the [1 FSMA]1 has not notified a decision within this period, it is deemed not to oppose the entity's project.

An entity that has opened a branch abroad must inform the [1 FSMA]1, at least one month in advance, of any modifications affecting the information communicated under the second paragraph. The third and fourth paragraphs apply.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 18.The Royal Decree of 23 September 1992 on the annual accounts of credit institutions and the Royal Decree of 23 September 1992 on the consolidated accounts of credit institutions apply by analogy to clearing organizations and entities assimilated to clearing organizations.

The [1 FSMA]1 may, for certain categories of entities or in special cases, authorize derogations from the decrees referred to in the first paragraph.

Derogations granted to categories of entities are subject to the advice of the National Bank of Belgium.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 19.When the non-compliance by participants of a clearing organization with the rules of that organization is likely to have a negative impact on the latter's situation, the clearing organization must inform the [1 FSMA]1 without delay. The [1 FSMA]1 must advise the National Bank of Belgium and communicate to it adequate information useful for the exercise of its mission referred to in Article 23, § 3, of the Law of 2 August 2002.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 20.§ 1. Clearing organizations and entities assimilated to clearing organizations may not, unless authorized by the [1 FSMA]1, carry out activities other than the provision of services they provide as a clearing organization or an entity assimilated to a clearing organization, as well as activities that fall within the framework or direct extension of these services, or that constitute their accessory or complement. For sound and prudent management and adequate risk control, the [1 FSMA]1 may subject the provision of services other than those they provide as a clearing organization or an entity assimilated to a clearing organization to conditions.

§ 2. Clearing organizations and entities assimilated to clearing organizations may not, unless authorized by the [1 FSMA]1, hold participations in commercial companies or companies that have adopted a commercial form.

This prohibition does not apply to participations in companies carrying out all or part of the activities referred to in § 1, nor to participations in credit institutions, investment firms, or companies whose object consists primarily in holding participations in such companies.

For sound and prudent management and adequate risk control, the [1 FSMA]1 may subject the taking of participations to conditions.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

CHAPITRE IV. - Control of clearing organizations and entities assimilated to clearing organizations, constituted under Belgian law.

[Art. 20] [21]. Liquidation funds and entities assimilated to liquidation funds are, including with regard to their branches and their provision of services abroad, subject to the prudential supervision of the [1 FSMA]1.

(The [1 FSMA]1 evaluates in particular the adequacy of the management structure, the administrative and accounting organization, and the internal control, as provided for in Articles 10 and 10bis, of the entities referred to in the first paragraph, as well as the adequacy of the policy of these entities regarding their capital requirements, as provided for in Article 13, paragraph 2. It determines the frequency and extent of this evaluation, taking into account the importance of the entity's activities for the financial system, the nature, volume, and complexity of these activities, as well as the principle of proportionality. The evaluation is updated at least once a year.) <AR 2007-10-29/33, art. 30, 1°, 002; En vigueur : 08-11-2007>

Without prejudice to section 8 of chapter II of the law of 2 August 2002, the [1 FSMA]1 may request all information relating to the organization, operation, situation, and transactions of liquidation funds and entities assimilated to liquidation funds.

It may carry out on-site inspections and take note and copies, without moving, of any information held by the entity with a view to

1° verifying compliance with the legal and regulatory provisions relating to the status of liquidation funds and entities assimilated to liquidation funds, as well as the accuracy and sincerity of the accounting and annual accounts as well as the statements and other information transmitted to it by the entity;

2° verifying the adequacy of the management structures, the administrative and accounting organization, internal control, and the policy regarding the entity's capital requirements); <AR 2007-10-29/33, art. 30, 2°, 002; En vigueur : 08-11-2007>

3° ensuring that the management of the entity is sound and prudent and that its situation or transactions are not of a nature to jeopardize its liquidity, profitability, or solvency.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

[Art. 21] [22]. The [1 FSMA]1 is aware of the relations between the liquidation fund and a specific client or between the entity assimilated to a liquidation fund and a specific client only to the extent required for the supervision of the entity.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

[Art. 22] [23]. The [1 FSMA]1 may carry out, at the branches of liquidation funds and entities assimilated to liquidation funds of Belgian law established abroad, subject to prior information of the authorities of the State in question responsible for the supervision of the entities concerned, the inspections referred to in Article 21, paragraph 3, as well as any inspection with a view to collecting or verifying on-site information relating to the direction and management of the branch as well as all information likely to facilitate the supervision of the entity, especially in matters of liquidity, solvency, limitation of large risks, administrative and accounting organization, and internal control.

It may, for the same purposes, and after having notified the supervisory authorities referred to in the first paragraph, appoint an expert, whom it designates, to carry out the useful verifications and audits. The remuneration and expenses of the expert are borne by the entity.

It may, likewise, request these authorities to carry out the verifications and audits referred to in the first paragraph, which it specifies to them.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

[Art. 23] [24]. Entities assimilated to liquidation funds communicate without delay to the [1 FSMA]1 the information necessary for the permanent updating of their approval file. The [1 FSMA]1 may require liquidation funds to transmit to it a comparable file, permanently updated.

On the opinion of the National Bank of Belgium, the [1 FSMA]1 may, by means of a regulation adopted in accordance with Article 64 of the law of 2 August 2002, prescribe the periodic transmission, by liquidation funds and entities assimilated to liquidation funds, of numerical or descriptive information necessary to verify compliance with the provisions of this decree and the regulations adopted for its implementation, both on a consolidated and non-consolidated basis.

The [1 FSMA]1 may, in special cases, authorize derogations from the provisions of this article and the regulation adopted for its implementation.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

[Art. 24] [25].§ 1. Groups of liquidation funds and entities assimilated to liquidation funds are subject to consolidated supervision in accordance with the provisions of this article.

The supervision provided for by this article applies without prejudice to the supervision exercised on groups of undertakings comprising a credit institution or an investment firm in accordance with the law of 22 March 1993 or the law of 6 April 1995 cited above.

§ 2. For the application of this article,

1° the notions of "exclusive or joint control" and "consortium" are understood in the sense of their definition in the regulation relating to annual accounts and consolidated accounts, referred to in Article 18;

2° "financial company" means a financial institution within the meaning of the law of 22 March 1993 whose subsidiary undertakings are exclusively or mainly one or more credit institutions, investment firms, liquidation funds, entities assimilated to liquidation funds, or financial institutions, at least one of these subsidiaries being a credit institution, an investment firm, a liquidation fund, or an entity assimilated to a liquidation fund, and which is not a mixed financial company within the meaning of Article 49bis of the law of 22 March 1993, Article 95bis of the law of 6 April 1995 cited above, or Article 91octies decies of the law of 9 July 1975 relating to the supervision of insurance undertakings.

§ 3. When a liquidation fund or an entity assimilated to a liquidation fund is a parent undertaking, it is subject to the supervision of the [1 FSMA]1 on the consolidated basis of the group it constitutes with its Belgian and foreign subsidiaries.

The consolidated supervision covers the financial situation, the conditions provided for in Article 20, the management, organization, and (internal control procedures referred to in Articles 10 and 10bis of the consolidated group), and the influence exerted by the undertakings included in the consolidation on other undertakings. <AR 2007-10-29/33, art. 31, 1°, 002; En vigueur : 08-11-2007>

(The standards and obligations provided for in Article 13, paragraphs 1 to 4, may be imposed on the basis of the consolidated situation of the liquidation fund or the entity assimilated to a liquidation fund and its subsidiaries. The provisions of Article 13, paragraphs 5 and 6, apply in this case by analogy.) <AR 2007-10-29/33, art. 31, 2°, 002; En vigueur : 08-11-2007>

For the purposes of consolidated supervision, liquidation funds and entities assimilated to liquidation funds periodically communicate a consolidated financial statement to the [1 FSMA]1 and the National Bank of Belgium. The [1 FSMA]1 determines, on the opinion of the National Bank of Belgium, the rules for drawing up this statement and in particular the rules relating to the consolidation perimeter, the methods of inclusion in the consolidation, and the frequency of communication of these statements.

When it deems it necessary for prudential supervision, the [1 FSMA]1 may require that companies which are not subsidiaries but in which the liquidation fund or the entity assimilated to a liquidation fund holds a participation or has another capital link be included in the consolidation.

The [1 FSMA]1 may prescribe or require that the liquidation funds or entities assimilated to liquidation funds concerned, their subsidiaries, as well as the other undertakings included in the consolidation, communicate to it all useful information for the exercise of consolidated supervision. The [1 FSMA]1 may, for the purposes of this control, carry out or have carried out, at the expense of the entities concerned, by approved auditors or, if necessary, by foreign experts approved by it for this purpose, the on-site verification, in all undertakings included in the consolidation, of the information received within the framework of consolidated supervision. The [1 FSMA]1 carries out or has carried out a verification with an undertaking established abroad only after having notified the supervisory authority of the State in question and unless that authority carries out this verification itself or allows an auditor or expert to do so. (If the [1 FSMA]1 does not carry out the verification itself, it may nevertheless be associated with it, if it deems it desirable.) <AR 2007-10-29/33, art. 31, 3°, 002; En vigueur : 08-11-2007>

Consolidated supervision does not entail individual supervision by the [1 FSMA]1 of the undertakings included in the consolidation.

Consolidated supervision does not prejudice the individual supervision of liquidation funds or entities assimilated to liquidation funds included in the consolidation. However, the implications of consolidated supervision may be taken into account to determine the content and modalities of the individual supervision of liquidation funds or entities assimilated to liquidation funds or the sub-consolidated supervision of such an entity which is a subsidiary of another liquidation fund or entity assimilated to a liquidation fund.

§ 4. When a liquidation fund or an entity assimilated to a liquidation fund forms a consortium with one or more other undertakings, it is subject to consolidated supervision encompassing the undertakings forming the consortium as well as their subsidiaries.

The provisions of § 3 are applicable.

§ 5. Any liquidation fund or entity assimilated to a liquidation fund whose parent undertaking is a financial company, Belgian or foreign, (belonging to a Member State of the European Economic Area,) is subject to supervision on the basis of the consolidated financial situation of the financial company. This supervision covers the matters referred to in the second and third paragraphs of § 3. <AR 2007-10-29/33, art. 31, 4°, 002; En vigueur : 08-11-2007>

(Any liquidation fund or entity assimilated to a liquidation fund whose parent undertaking is a financial company not belonging to a Member State of the European Economic Area, is subject to supervision on the basis of the consolidated financial situation of the financial company.) <AR 2007-10-29/33, art. 31, 5°, 002; En vigueur : 08-11-2007>

§ 6. Undertakings that control, exclusively or jointly with others, a liquidation fund or an entity assimilated to a liquidation fund, as well as the subsidiaries of these undertakings, are required, if these undertakings and their subsidiaries do not fall within the scope of §§ 2, 3, and 4 concerning consolidated supervision or within the scope of Article 49bis of the law of 22 March 1993, Article 95bis of the law of 6 April 1995 cited above, or Article 91octies decies of the law of 9 July 1975 relating to the supervision of insurance undertakings, to communicate to the [1 FSMA]1 and competent foreign authorities the information and details useful for the exercise of the supervision of the liquidation fund or entity assimilated to a liquidation fund that these undertakings control.

Such an obligation to communicate information is also applicable to undertakings that, although being subsidiaries of a liquidation fund or entity assimilated to a liquidation fund or a financial company, are not included in the consolidated supervision. When the subsidiary in question is a liquidation fund or an entity assimilated to a liquidation fund, the [1 FSMA]1 or the competent foreign authority for the supervision of said subsidiary may require that the parent undertaking communicate the information and details required as useful for the exercise of the supervision of said subsidiary.

§ 7. The Royal Decree of 12 August 1994 relating to the consolidated supervision of credit institutions applies by analogy to liquidation funds and entities assimilated to liquidation funds.

§ 8. The [1 FSMA]1 may, in special cases, authorize derogations from the application of this article or the decrees and regulations mentioned in this article.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

[Art. 25] [26]. The functions of (statutory auditor) provided for by the Companies Code cannot be entrusted, in liquidation funds and entities assimilated to liquidation funds, to one or more approved auditors or to one or more approved audit firms approved by the [1 FSMA]1 in accordance with Article 52 of the law of 22 March 1993.

Article 141, 2°, of the Companies Code is not applicable to liquidation funds nor to entities assimilated to liquidation funds.

Liquidation funds and entities assimilated to liquidation funds may designate (alternate auditors) who exercise the functions of (statutory auditor) in the event of a long-term impediment of the holder. The provisions of this article and Article 27 are applicable to these alternates. <AR 2007-10-29/33, art. 32, 2°, 002; En vigueur : 08-11-2007>

The (statutory auditors) designated in accordance with this article certify the consolidated annual accounts of liquidation funds and entities assimilated to liquidation funds. <AR 2007-10-29/33, art. 32, 2°, 002; En vigueur : 08-11-2007>

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

[Art. 26] [27]. Approved audit firms exercise (the functions of statutory auditor) provided for in Article 26 through an approved auditor whom they designate and in accordance with Article 33, § 2, of the law of 22 July 1953. The provisions of this decree and the decrees adopted for its implementation relating to the appointment, functions, obligations, and (prohibitions of statutory auditors) as well as the sanctions, other than criminal, applicable to them, apply both to audit firms and to the approved auditors who represent them. <AR 2007-10-29/33, art. 33, 002; En vigueur : 08-11-2007>

An approved audit firm may designate an alternate representative among its members meeting the conditions for designation.

[Art. 27] [28]. The Institute of Business Auditors informs the [1 FSMA]1 of the opening of any disciplinary proceedings against an approved auditor or an approved audit firm for misconduct committed in the exercise of its functions with a liquidation fund or an entity assimilated to a liquidation fund as well as of any disciplinary measure taken against an approved auditor or an approved audit firm and its reasons.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

[Art. 28] [29].(The appointment of statutory auditors and alternate auditors) with liquidation funds and entities assimilated to liquidation funds is subject to the prior agreement of the [1 FSMA]1. This agreement must be obtained by the corporate body that proposes the appointment. In the event of the appointment of an approved audit firm, the agreement covers both the firm and its representative. <AR 2007-10-29/33, art. 34, 002; En vigueur : 08-11-2007>

The same agreement is required for the renewal of the mandate.

When, by virtue of the law, (the appointment of the statutory auditor) is made by the president of the commercial court or the court of appeal, they make their choice from a list of approved auditors who have the agreement of the [1 FSMA]1. <AR 2007-10-29/33, art. 34, 002; En vigueur : 08-11-2007>

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

[Art. 29] [30]. The [1 FSMA]1 may, at any time, revoke, by a decision motivated by reasons relating to their status or to the exercise of their functions as an approved auditor or approved audit firm, as provided for by or pursuant to this decree, the agreement given, in accordance with Article 29, to (a statutory auditor, an alternate auditor), an approved audit firm, or a representative or alternate representative of such a firm. This revocation terminates the functions of the auditor. <AR 2007-10-29/33, art. 35, 002; En vigueur : 08-11-2007>

In the event of resignation (of a statutory auditor), the [1 FSMA]1 and the liquidation fund or the entity assimilated to a liquidation fund are previously informed, as well as of the reasons for the resignation. <AR 2007-10-29/33, art. 35, 002; En vigueur : 08-11-2007>

The approval regulation referred to in Article 52 of the law of 22 March 1993 governs the procedure.

In the absence (of an alternate auditor) or an alternate representative of an approved audit firm, the liquidation fund or entity assimilated to a liquidation fund or the approved audit firm provides, in respect of Article 29, for replacement within two months. <AR 2007-10-29/33, art. 35, 002; En vigueur : 08-11-2007>

The proposal for revocation of the mandates of (statutory auditors in liquidation funds) or entities assimilated to liquidation funds, as regulated by Articles 135 and 136 of the Companies Code, is submitted to the opinion of the [1 FSMA]1. This opinion is communicated to the general meeting. <AR 2007-10-29/33, art. 35, 002; En vigueur : 08-11-2007>

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 31. The statutory auditors collaborate in the supervision exercised by the [1 FSMA]1, under their personal and exclusive responsibility and in accordance with this article, with the professional rules and the instructions of the [1 FSMA]1. To this end: <AR 2007-10-29/33, art. 36, 1°, 002; En vigueur : 08-11-2007> 1° (they assess the internal control measures adopted by the liquidation undertakings and the undertakings treated as liquidation undertakings in accordance with Articles 10, § 3, first paragraph, and 10bis, §§ 2, 3 and 4, and they communicate their conclusions to the [1 FSMA]1;)

<AR 2007-10-29/33, art. 36, 2°, 002; En vigueur : 08-11-2007> 2° [1 they report to the [1 FSMA]1 on:
a) the results of the limited review of the periodic statements transmitted by the liquidation undertakings and the undertakings treated as liquidation undertakings to the [1 FSMA]1 at the end of the first half of the financial year, confirming that they are not aware of facts that would appear that these periodic statements have not, in all significant respects, been drawn up in accordance with the current instructions of the [1 FSMA]1. They further confirm that the periodic statements adopted at the end of the half-year are, as far as accounting data is concerned, in all significant respects, in accordance with the accounting records and inventories, in the sense that they are complete, i.e. that they mention all the data appearing in the accounting records and inventories on the basis of which they are drawn up, and that they are correct, i.e. that they correspond exactly with the accounting records and inventories on the basis of which they are drawn up; they also confirm that they are not aware of facts that would appear that the periodic statements adopted at the end of the half-year have not been drawn up by applying the recognition and valuation rules that governed the preparation of the annual accounts relating to the last financial year; the [1 FSMA]1 may specify which periodic statements are concerned in this case; b) the results of the audit of the periodic statements transmitted by the liquidation undertakings and the undertakings treated as liquidation undertakings to the [1 FSMA]1 at the end of the financial year, confirming that these periodic statements have, in all significant respects, been drawn up in accordance with the current instructions of the [1 FSMA]1. They further confirm that the periodic statements adopted at the end of the financial year are, as far as accounting data is concerned, in all significant respects, in accordance with the accounting records and inventories, in the sense that they are complete, i.e. that they mention all the data appearing in the accounting records and inventories on the basis of which they are drawn up, and that they are correct, i.e. that they correspond exactly with the accounting records and inventories on the basis of which they are drawn up; they also confirm that the periodic statements adopted at the end of the financial year have been drawn up by applying the recognition and valuation rules governing the preparation of the annual accounts; the [1 FSMA]1 may specify which periodic statements are concerned in this case;]1 3° (they provide the [1 FSMA]1, at its request, with special reports on the organisation, activities and financial structure of the liquidation undertaking or the undertaking treated as a liquidation undertaking, the costs of which are borne by the undertaking in question;)

<AR 2007-10-29/33, art. 36, 4°, 002; En vigueur : 08-11-2007> 4° in the context of their missions with the liquidation undertaking or the undertaking treated as a liquidation undertaking or in the context of an audit mission with an enterprise linked to the undertaking, they report to the [1 FSMA]1 on their own initiative as soon as they observe:
a) decisions, facts or developments that influence or may influence significantly the situation of the undertaking from the financial perspective or from the perspective of its administrative and accounting organisation or its internal control; b) decisions or facts that are likely to constitute violations of the Companies Code, the statutes or the laws, decrees and regulations relating to the legal status of liquidation undertakings and undertakings treated as liquidation undertakings; c) other decisions or facts that are likely to result in a refusal to certify the accounts or the issuance of reservations.

No civil, criminal or disciplinary action may be brought nor any professional sanction imposed against the approved auditors who have acted in good faith to provide information referred to in point 4° of the first paragraph.

The approved auditors communicate to the management of the liquidation undertaking or the undertaking treated as a liquidation undertaking the reports they address to the [1 FSMA]1 in accordance with the first paragraph, 3°. These communications are subject to the secrecy organised by Article 74 of the Law of 2 August 2002. They transmit to the [1 FSMA]1 a copy of the communications they address to these management bodies which concern matters likely to interest the supervision exercised by it.

The approved auditors and approved audit firms may carry out the verifications and expertise falling within their functions at the foreign branches of the undertaking they supervise.

They may be entrusted by the [1 FSMA]1, at the request of the National Bank of Belgium or the European Central Bank, to confirm that the information that the undertakings are required to communicate to these authorities is complete, correct and drawn up in accordance with the rules applicable to them.

(1)<AR 2009-03-23/07, art. 5, 004; En vigueur : 02-05-2009> (2)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

CHAPTER V. - Exceptional measures and sanctions regarding liquidation undertakings and undertakings treated as liquidation undertakings, constituted under Belgian law.

Art. 32. The [1 FSMA]1 cancels by decision notified by registered letter with acknowledgment of receipt, the authorization of undertakings treated as liquidation undertakings which have not commenced their activities within twelve months of the authorization, which renounce the authorization, which have been declared bankrupt or which have ceased to exercise their activities.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 33.§ 1. When the [1 FSMA]1 finds that a liquidation undertaking or an undertaking treated as a liquidation undertaking does not operate in conformity with the provisions of the laws, decrees and regulations relating to the legal status of liquidation undertakings and undertakings treated as liquidation undertakings, that its management or financial situation is likely to jeopardize the proper fulfillment of its commitments or does not offer sufficient guarantees in terms of solvency, liquidity or profitability, or that its management structures, its administrative or accounting organisation or its internal control present serious shortcomings, it sets the deadline within which the situation observed must be remedied.

If, at the end of this deadline, the situation has not been remedied, the [1 FSMA]1 may:
1° suspend for the duration it determines the direct or indirect exercise of all or part of the undertaking's activity or prohibit this exercise.
The members of the administrative and management bodies and the persons in charge of management who perform acts or take decisions in violation of the suspension are jointly and severally liable for the damage resulting therefrom for the undertaking or third parties.
If the [1 FSMA]1 has published the suspension in the Belgian Official Gazette, the acts and decisions taken contrary to it are null and void.
The [1 FSMA]1 may, likewise, order a liquidation undertaking to cede partnership rights it holds in accordance with Article 20, § 2.
(1°bis impose, in matters of solvency, liquidity, risk concentration and other limitations, more stringent requirements than those provided for in Article 13.) <AR 2007-10-29/33, art. 37, 002; En vigueur : 08-11-2007> 2° order the replacement of the administrators or managers of the undertaking within a deadline it determines and, in the event of failure to replace them within this deadline, substitute one or more interim administrators or managers for all the administrative and management bodies of the undertaking, who have, alone or collectively depending on the case, the powers of the persons replaced. The [1 FSMA]1 publishes its decision in the Belgian Official Gazette. The remuneration of the interim administrator or managers is fixed by the [1 FSMA]1 and borne by the undertaking. The [1 FSMA]1 may, at any time, replace the interim administrator or managers, either ex officio or at the request of a majority of shareholders or partners when they justify that the management of the interested parties no longer offers the necessary guarantees. 3° in the case of an undertaking treated as a liquidation undertaking: revoke the authorization.

§ 2. The decisions of the [1 FSMA]1 referred to in § 1 take effect with regard to the undertaking from the date of their notification to it by registered letter with acknowledgment of receipt and, with regard to third parties, from the date of their publication in accordance with the provisions of § 1.

§ 3. § 1, first paragraph and second paragraph, 1°, and § 2 are applicable in the case where the [1 FSMA]1 has knowledge of the fact that an undertaking has put in place a particular mechanism with the aim or effect of facilitating tax fraud by third parties.

§ 4. § 1, first paragraph, and § 2 are not applicable in the case of cancellation of the authorization of an undertaking treated as a liquidation undertaking which has been declared bankrupt.

§ 5. This article does not prejudice the powers of the [1 FSMA]1 defined by section 8 of chapter II of the Law of 2 August 2002.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 34. Undertakings treated as liquidation undertakings whose authorization has been cancelled or revoked pursuant to this Decree remain subject to this Decree until the liquidation of their commitments towards the beneficiaries of their services, unless the [1 FSMA]1 exempts them from certain provisions.

This article is not applicable in the case of cancellation of the authorization of an undertaking treated as a liquidation undertaking which has been declared bankrupt.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 35. Without prejudice to sections 8 and 9 of chapter II of the Law of 2 August 2002, are, in application of Article 41, 2°, of the Law of 2 August 2002, punishable by imprisonment from one month to one year and a fine of 50 euros to 10,000 euros or by one of these penalties only:
1° those who, knowingly, refrain from making the declarations provided for in Article 14, §§ 1, 3 and 4, or who override the opposition referred to in Article 14, § 2; 2° the administrators, managers or directors and other persons referred to in Article 15 who contravene the provisions of this article; 3° liquidation undertakings, undertakings treated as liquidation undertakings, as well as their administrators, managers or directors, who contravene Articles 16, 20, § 2, 25, § 2, first paragraph, and sixth paragraph, and § 6, first and second paragraphs, and 26, first paragraph; 4° liquidation undertakings, undertakings treated as liquidation undertakings, as well as their administrators, managers or directors, who open a foreign branch without having carried out the notifications provided for by Article 17 or who do not comply with Article 17; 5° liquidation undertakings, undertakings treated as liquidation undertakings, as well as their administrators, managers or directors, who contravene the decrees or regulations referred to in Articles 13, 18, 24, second paragraph, 25, § 3, fourth paragraph, second sentence, and § 7, and 29; 6° liquidation undertakings, undertakings treated as liquidation undertakings, as well as their administrators, managers or directors, who do not comply with Articles 19, 24 and 38; 7° those who perform acts or operations contrary to a suspension decision taken in accordance with Article 33, § 1, second paragraph, 1°; 8° those who, (as statutory auditors), approved auditors or independent experts, have certified, approved or confirmed the accounts, annual accounts or consolidated accounts of liquidation undertakings or undertakings treated as liquidation undertakings, or periodic statements or any other information, while the provisions of the laws, decrees and regulations relating to the legal status of liquidation undertakings and undertakings treated as liquidation undertakings have not been respected, either knowing that they had not been respected, or by failing to exercise normal diligence to ensure that they had been respected; <AR 2007-10-29/33, art. 38, 002; En vigueur : 08-11-2007> 9° those who contravene Article 9, paragraphs 2 and 3; 10° liquidation undertakings, undertakings treated as liquidation undertakings, as well as their administrators, managers or directors, who do not respect the provisions of Article 37 or the decree referred to in Article 37.

CHAPTER VI. - Undertakings treated as liquidation undertakings, operating as branches of foreign undertakings.

Art. 36. Chapters II to V are applicable to undertakings treated as liquidation undertakings that operate in Belgium as branches of foreign undertakings.

The undertakings referred to in the first paragraph must additionally demonstrate that the following conditions are met:
1° they are subject in their State of origin to a supervision regime deemed adequate by the [1 FSMA]1; 2° the possibilities for exchange of information between the [1 FSMA]1 and the competent authorities or other relevant bodies of the State under whose law they fall do not hinder the exercise of adequate supervision within the meaning of this Decree.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

CHAPTER VII. - Final provisions.

Art. 37. Until the entry into force of the provisions adopted in application of Article 13 of this Decree, the rules provided for by the implementing decree of Article 43 of the Law of 22 March 1993 are applicable to liquidation undertakings and undertakings treated as liquidation undertakings, both on a consolidated and non-consolidated basis.

Furthermore, liquidation undertakings and undertakings treated as liquidation undertakings have, on a non-consolidated basis, sufficient available or readily mobilizable short-term liquidity or sufficient collateral to guarantee the continuity of their activities for a period of at least six months, unless the undertaking concerned demonstrates that a shorter period is justified in view of the risks incurred.

The [1 FSMA]1 may, in special cases, authorize derogations from the provisions of this article. Derogations from the second paragraph are authorized only after consultation with the National Bank of Belgium.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 38. Until the entry into force of the provisions adopted in application of Articles 24 and 25, § 3, of this Decree, liquidation undertakings and undertakings treated as liquidation undertakings transmit to the [1 FSMA]1 every month, in the form and within the deadline it determines, an accounting statement both on a consolidated and non-consolidated basis. They transmit to the [1 FSMA]1 every quarter, in the form and within the deadline it determines, a detailed overview of the services provided, including numerical and descriptive information. They transmit to the [1 FSMA]1 the management reports relevant for prudential supervision and, where applicable, the audit committee reports relevant for supervision.

(The effective management of the liquidation undertaking or the undertaking treated as a liquidation undertaking, the management committee if applicable, declares to the [1 FSMA]1 that the aforementioned periodic statements transmitted to it by the undertaking at the end of the first half of the financial year and at the end of the financial year are in accordance with the accounting records and inventories. It is required for this purpose that the periodic 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 effective management confirms that it has done what is necessary for the aforementioned statements to be drawn up in accordance with the current instructions of the [1 FSMA]1, as well as by applying the recognition and valuation rules governing the preparation of the annual accounts, or, as regards periodic statements that do not relate to the end of the financial year, by applying the recognition and valuation rules that governed the preparation of the annual accounts relating to the last financial year.) <AR 2007-10-29/33, art. 39, 002; En vigueur : 08-11-2007>

The [1 FSMA]1 may, in special cases, authorize derogations from the provisions of this article.

(1)<AR 2011-03-03/01, art. 331, 006; En vigueur : 01-04-2011>

Art. 39. Existing liquidation undertakings and undertakings treated as liquidation undertakings that are subject to this Decree must comply with the provisions of this Decree within a period of 6 months.

Art. 40. This Decree enters into force on the day of its publication in the Belgian Official Gazette.

Art. 41. Our Deputy Prime Minister and Minister of Finance is charged with the execution of this Decree.

Given at Brussels, on 26 September 2005.

ALBERT

By the King:

The Deputy Prime Minister and Minister of Finance,

D. REYNDERS.

Aanhef

ALBERT II, King of the Belgians,
To all, present and future, Greeting.

Having regard to the Law of 2 August 2002 on the supervision of the financial sector and financial services, in particular Article 23, as amended by the Law of 15 December 2004, and Article 41, 2°;

Having regard to the opinion of the Banking, Finance and Insurance Commission, given on 22 February 2005;

Having regard to the opinion of the National Bank of Belgium, given on 7 March 2005;

Having regard to the opinion of the European Central Bank, given on 15 April 2005;

Having regard to opinion 38.137/2 of the Council of State, given on 7 March 2005, in application of Article 84, § 1, first paragraph, 1°, of the coordinated laws on the Council of State;

On the proposal of our Deputy Prime Minister and Minister of Finance,

We have decreed and decree:

Wijziging(en)

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

Articles modified:
1; 2; 3; 4; 5; 8; 9; 10; 10bis; 12; 13; 14; 15; 16; 17; 18; 19; 20; 21; 22; 23; 24; 25; 26; 28; 29; 30; 31; 32; 33; 34; 36; 37; 38

Royal Decree of 27-01-2010 published on 08-02-2010

Article modified: 10

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

Article modified: 31

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

Articles modified:
8; 14

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

Articles modified:
10; 10BIS; 13; 15; 21; 25; 26; 27; 29; 30; 31; 33; 35; 38

Verslag aan de Koning

REPORT TO THE KING

Sire,

Article 23 of the Law of 2 August 2002 on the supervision of the financial sector and financial services regulates the status of organizations that provide clearing services to regulated markets for financial instruments. By "clearing" ("settlement"), is meant the settlement, where applicable after netting, of transactions on financial instruments, by the transfer of these instruments and, where applicable, of funds, from one account to another (see for this purpose the definition of clearing organization set out in Article 2, 17°, of the Law of 2 August 2002).

In light of the restructuring and consolidation movements undertaken in the transaction processing services sector, the Law of 15 December 2004 on financial collateral and containing various fiscal provisions regarding agreements constituting real security interests and loans involving financial instruments, has supplemented these rules. This law provides in particular that the prudential control exercised by the Banking, Finance and Insurance Commission (CBFA) on clearing organizations, as well as the oversight exercised by the National Bank of Belgium (NBB) on clearing systems managed by such organizations, now cover organizations whose activity consists of ensuring the operational management of services provided by clearing organizations. These are organizations that perform, for clearing organizations, material and intellectual tasks of substantial and critical importance to ensure the provision of clearing services in a continuous and satisfactory manner. These organizations, which will be designated by name by Your Majesty, pursuant to § 7 of Article 23 cited above, are subject mutatis mutandis to the regime provided for clearing organizations. They are hereinafter referred to as "organizations assimilated to clearing organizations." The individual designation of the concerned organizations, as prescribed by law, meets the concern expressed by the European Central Bank (ECB) in its opinion on this decree, namely that only organizations performing tasks of substantial and critical importance for clearing organizations are covered.

In execution of Article 23 cited above, as amended by the Law of 15 December 2004 cited above, the decree submitted to Your approval aims to specify the rules regarding the prudential control exercised by the CBFA on clearing organizations and organizations assimilated to clearing organizations.

The decree takes into account the opinions formulated by the ECB and the Council of State. It follows, in particular, the observation of the latter that it is indicated to state in the text of the decree itself, and not by reference to other legislation, the rules applicable to clearing organizations and organizations assimilated thereto.

The clearing organizations covered by the provisions of the decree fall into the following two categories:

organizations approved as central securities depositories pursuant to Royal Decree No. 62 coordinated on the deposit of fungible financial instruments and the clearing of operations on these instruments;
organizations designated by the King to ensure the clearing of transactions on dematerialized securities pursuant to Article 468 of the Companies Code.

Credit institutions established in Belgium, even if approved as central securities depositories and thus exercising the activity of a clearing organization, do not fall within the scope of application of the decree.

The decree does not further govern clearing organizations, referred to in Article 22 of the Law of 2 August 2002, which ensure the clearing ("clearing") of transactions on financial instruments.

It should be noted here that the decree does not prejudice the powers of the NBB regarding oversight of clearing systems.

It should also be recalled that there are currently no Community directives providing harmonized rules for clearing services. In this regard, it is noted that, in its opinion on this decree, the ECB expresses favor for the adoption of national regulation concerning the control of non-banking clearing organizations, pending initiatives at the Community level.

The decree first regulates the conditions and procedure for the approval of organizations assimilated to clearing organizations. Indeed, Article 23, § 7, of the Law of 2 August 2002 stipulates that organizations ensuring operational management activities for clearing organizations must first obtain approval from the CBFA. The law does not provide for such an approval obligation for clearing organizations. The absence of an approval obligation for clearing organizations is due to the fact that they will already hold an approval as a central securities depository, granted by Royal Decree. Clearing organizations, on the other hand, are subject to permanent prudential control by the CBFA regarding the legal and regulatory conditions applicable to their activity.
The approval conditions for organizations assimilated to clearing organizations are largely inspired by the rules applicable to credit institutions subject to the prudential control of the CBFA. In its opinion on this decree, the ECB clearly expresses support for the approach followed. The decree thus draws on relevant provisions of the Law of 22 March 1993 on the status and control of credit institutions. The approval conditions provide in particular for control of the necessary qualities of directors and significant shareholders. Reference is made, in this regard, to the preparatory works of the aforementioned Law of 22 March 1993 (Parl. Doc., Senate, 1992-1993, 616-1).

The amount of the minimum initial capital corresponds to the initial capital requirement imposed on investment firms acting as depositaries for certain institutional investors. The amount is determined taking into account the different nature and scope of services that may be provided to clearing organizations. The provision on minimum initial capital does not detract from the possibility for the CBFA to verify whether there is a reasonable relationship between the amount of initial capital and the risks associated with the envisaged activities. If this is not the case, the CBFA may refuse approval, given the need to guarantee sound and prudent management of the organization concerned. It should also be recalled that the provision on initial capital must be read in conjunction with Article 13, which defines the own funds obligations to be respected continuously.

The approval conditions set out in Article 10 are further inspired by the most recent provisions of European law concerning the prudential control of credit institutions and investment firms. They include requirements regarding "compliance" obligations incumbent upon organizations (Article 10, § 2). Standards are also established regarding the outsourcing ("outsourcing") of operational functions (Article 10, § 5) and good management practices regarding business continuity ("business continuity") (Article 10, § 4), similar to the provisions of European Directive 2004/39/EC concerning markets in financial instruments.

Article 10, § 6, is directly inspired by the proposals recently formulated by the European Commission for a directive on the adequacy of own funds of credit institutions and investment firms. These provisions aim to ensure that organizations subject to the provisions of the decree have mechanisms for identifying, managing, controlling, and reporting (potential) risks they incur. Given the nature of their activity, they must in particular put in place measures and procedures to manage operational risk, i.e., the risk of losses resulting from inadequacy or failure attributable to procedures, persons, or systems, or to external events, including legal risk ("legal risk"). Article 10, § 7, sets forth a number of basic principles regarding good "corporate governance."

The organizational principles provided by the decree may be specified by regulation taken by the CBFA, which regulation will be submitted to Your approval pursuant to Article 64 of the Law of 2 August 2002. The advantage of this method is that it allows flexible response to market developments and the adoption of new control standards at the international level.
The decree subsequently defines a series of specific conditions regarding the exercise of activity, which apply to both clearing organizations and organizations assimilated to clearing organizations, constituted under Belgian law.

Both types of organizations must, first of all, permanently satisfy the approval conditions fixed by the decree.

The decree also contains rules regarding the own funds that clearing organizations and organizations assimilated to clearing organizations must possess. Pending a CBFA regulation specifically addressing their case, both types of organizations are required - pursuant to Article 37 of the decree - to comply with the CBFA Regulation of 5 December 1995 on the own funds of credit institutions. This transitional regime regarding solvency obligations applies to the organization concerned both on a solo and consolidated basis.

Pending a definitive regime, clearing organizations and organizations assimilated to clearing organizations must also possess, on a non-consolidated basis, sufficient available or mobilizable short-term liquidity or sufficient collateral to guarantee the continuity of their activities for a period of at least six months, unless the organization concerned demonstrates and justifies that the nature and level of (potential) risks it incurs justify a shorter period. The CBFA will judge whether a shorter period allows for sound management and risk control.

Given the specific nature of the liquidity standard, the CBFA will authorize derogations from this standard only after consulting the NBB.

These regulatory provisions do not prejudice any contractual regimes that, similar to protocols in the banking sector (see Parl. Doc., Senate, 1992-1993, 616-1, pp. 8-12), may concern specific commitments of significant shareholders of the organizations concerned.

Financial ratios that may be fixed by regulation may cover aspects comparable to those dealt with by decrees on own funds that the CBFA may adopt regarding credit institutions.

The power of derogation, in special cases, granted to the CBFA aims to prevent that a strict or immediate application of certain rules actually prevents achieving the overall objectives of the regulation, including a risk-based approach, or dealing with transitional difficulties.

The application of banking accounting rules, as prescribed by the decree, means in particular that the international standards issued by the International Accounting Standards Board for the preparation of consolidated accounts will be applied, as soon as these standards become applicable to credit institutions for the preparation of consolidated accounts.

Furthermore, organizations covered by the decree may only develop activities other than clearing services and activities extending from these services with the approval of the CBFA.

Chapters IV and V deal with the control exercised by the CBFA on clearing organizations and organizations assimilated to clearing organizations, constituted under Belgian law. Without prejudice to the powers of the CBFA determined by the Law of 2 August 2002, the decree specifies the control instruments available to the CBFA, as well as exceptional measures and sanctions it may take. These may go, for organizations assimilated to clearing organizations, up to the revocation of approval.

The control exercised by the CBFA on the organizations covered by the decree will be both on a solo and consolidated basis. The rules regarding control on a consolidated basis are inspired by the rules provided by the Law of 22 March 1993. The modalities of control exercised at the group level, as defined in execution of the banking law, are declared applicable, it being understood that "credit institutions" should be read as "clearing organizations/organizations assimilated to clearing organizations" (see Royal Decree of 12 August 1994 on consolidated basis control of credit institutions). This means that when a clearing organization (or an organization assimilated to a clearing organization) is a parent company, it will be subject to consolidated basis control for the entire entity it constitutes with its Belgian or foreign subsidiaries. Consolidated control covers the consolidated financial situation, including the compliance of group solvency with banking standards, management, organization, and internal control procedures for the consolidated whole, as well as the influence exerted by companies included in the consolidated situation on third-party companies. If the group concerned includes a credit institution, the rules provided by this decree must be combined with those applicable to credit institutions.

For reminder, consolidated basis control does not entail individual control by the CBFA of companies included in the consolidated control that are not subject to a prudential status.

In a number of cases (such as for the control of foreign branches), the decree provides that the CBFA collaborates with foreign authorities responsible for the control of clearing organizations or organizations assimilated to such organizations. However, this is merely an option because, as the ECB rightly observes in its opinion, these categories of organizations are not subject to control in all EEA member states.

Finally, Chapter VI of the decree regulates the case of organizations assimilated to clearing organizations operating as branches established in Belgium of foreign organizations. These are branches, designated by name by Your Majesty, which are not branches of credit institutions. They are subject to provisions similar to those provided by Chapters II to V for Belgian organizations exercising the same activities.

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

Title

Table of Contents

Text

Aanhef

Wijziging(en)

Verslag aan de Koning

Lineage: No known changes