Rulebook on the Performance of Depositary Activities for AIFs (Official Gazette 25/19, 139/20, 100/22, 155/25)

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

RULEBOOK ON THE PERFORMANCE OF DEPOSITARY ACTIVITIES FOR AIFs (“Official Gazette”, No. 25/19, 139/20, 100/22 and 155/25 – unofficial consolidated text)

I. GENERAL PROVISIONS

Article 1. (OG 155/25)
(1) This Rulebook prescribes:

1. the procedure, conditions and manner of selection and change of the depositary of an AIF with a public offer, and the documentation attached to the application for the issuance of approval;
2. the content of the application for the issuance of approval to the investment company for performing depositary activities for an AIF with a public offer, and the more detailed determination of conditions and criteria for assessing the conditions for performing depositary activities;
3. the additional content of the activity program for an investment company performing depositary activities for an AIF with a public offer;
4. the conditions for depositary managers;
5. the manner and deadlines by which the depositary informs HANFA about identified irregularities in the operations of the AIF Manager (UAIF);
6. the scope and content of the audit report on the performed audit of the fulfillment of depositary obligations;
7. the manner of handling by the UAIF and the depositary in cases of the obligation to change the depositary.

(2) The provisions of Delegated Regulation (EU) No 231/2013 of the Commission of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, financial leverage, transparency and supervision (OJ L 83, 22. 3. 2013) shall apply to the operations of the depositary.

II. PROCEDURE, CONDITIONS AND MANNER OF SELECTION AND CHANGE OF DEPOSITARY

Application for the issuance of approval for the selection of the depositary of an AIF with a public offer

Article 2. (OG 155/25)
(1) The UAIF shall submit a written application to HANFA for the issuance of approval for the selection or change of the depositary for the AIF with a public offer which it manages, containing:

1. for the depositary referred to in Article 186, paragraph 4, points 1 and 4 of the Act – the company name and seat of the depositary in the Republic of Croatia;
2. for the depositary referred to in Article 186, paragraph 4, points 2, 3 and 5 of the Act – the company name and seat of the parent company in a third country, and the company name and seat of the branch in the Republic of Croatia (head office and all other branches, if there are more);
3. the name and surname, OIB (Personal Identification Number), and level of education of the depositary manager;
4. contact details of the depositary;
5. the date of submission of the application;
6. the signature of persons authorized to represent the UAIF.

(2) In addition to the application referred to in paragraph 1 of this Article, the following must be attached:

1. the contract for performing depositary activities and the price list for performing depositary activities, if the price list does not form an integral part of the contract;
2. for the depositary referred to in Article 186, paragraph 4, points 1 and 4 of the Act – a copy of the extract from the court register;
3. for the depositary referred to in Article 186, paragraph 4, points 2, 3 and 5 of the Act – a copy of the extract from the court register for the branch, and a copy of the extract from the corresponding register of another Member State or third country for the parent company of the branch;
4. for the depositary referred to in Article 186, paragraph 4, point 1 and point 3 of the Act – a copy of the approval for work issued by the Croatian National Bank;
5. a declaration by the depositary that there are no legal impediments within the meaning of Article 193, paragraphs 3 and 4 of the Act;
6. confirmation by the depositary from which it follows that the depositary manager meets the conditions set out in Article 186, paragraph 7 of the Act and paragraph 3 of this Article regarding relevant experience;
7. evidence of compliance with organizational and technical requirements for performing depositary activities in accordance with the Act and Articles 4 and 5 of this Rulebook;
8. copies of the audit opinion on the financial statements of the depositary for the last three business years, in accordance with regulations governing financial statements, or shorter if the depositary has been operating for less than three years;
9. proof of payment of the fee and administrative charge;
10. additional documentation upon request by HANFA.

(3) Relevant experience referred to in Article 186, paragraph 7 of the Act means that the depositary manager must have completed a master’s degree in accordance with regulations governing scientific activities and higher education, as well as relevant professional qualifications, competence, and at least three years of experience in depositary activities or similar activities.

(4) The contract for performing depositary activities, in addition to the paper form, shall be submitted by the UAIF electronically, on an appropriate medium in a clear and readable format.

(5) All foreign documents referred to in paragraph 2 of this Article must be translated by an authorized court interpreter for the Croatian language, and the original or a certified copy of the approval for work referred to in paragraph 2, point 5 of this Article must also be authenticated in accordance with the law and international regulations (Apostille – Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents, of 5 October 1961).

(6) The documentation referred to in paragraphs 1 and 2 of this Article may be submitted by the UAIF to HANFA in the manner and in accordance with the Technical Instruction for the use of the WEB form entry service and submission of documentation in electronic form and the Instruction for filling out WEB forms for UAIFs.

(7) It shall be deemed that the UAIF has submitted the documentation referred to in paragraphs 1 and 2 of this Article at the moment when the documentation is recorded on the server for sending such documentation.

Conditions for performing depositary activities

Article 3. (OG 155/25)
Persons referred to in Article 186, paragraph 4 of the Act may perform depositary activities if they meet the organizational and technical conditions necessary to fulfill the duties of the depositary in accordance with the provisions of the Act and this Rulebook.

Organizational Conditions

Article 4. (OG 155/25)
(1) The depositary shall establish, apply and regularly update, assess and monitor, taking into account the type, scope and complexity of operations and the type of AIFs for which it performs depositary activities, effective and appropriate internal acts regulating:

1. the internal organizational structure of the unit performing depositary activities, and the mutual relationship and manner of communication, flow of information and data between that organizational unit and other parts of the depositary;
2. the job classification of the organizational unit performing depositary activities with individual job tasks, responsibilities and authorities;
3. the physical separation of the organizational unit performing depositary activities from other organizational units of the depositary;
4. the manner of performing depositary activities referred to in Article 189 of the Act;
5. the internal control system ensuring compliance with internal decisions and procedures;
6. the manner of ensuring the security, integrity and confidentiality of data, taking into account their type.

(2) The depositary referred to in Article 186, paragraph 3, points 4, 5 and 6 of the Act, in addition to the conditions referred to in paragraph 1 of this Article, must also meet the following requirements:

1. have the necessary infrastructure for storing the assets of the AIF for which it will perform depositary activities;
2. establish adequate administrative and accounting procedures, internal control mechanisms, effective risk assessment procedures, and effective monitoring and protection mechanisms for data processing systems, in connection with the performance of depositary activities;
3. establish and implement effective organizational and management systems for the purpose of taking all reasonable measures aimed at preventing conflicts of interest that may arise from the performance of depositary activities;
4. ensure the keeping of records for all services, activities and transactions performed as part of the performance of depositary activities;
5. take reasonable measures to ensure continuity and regularity in the performance of depositary activities using appropriate and proportional systems, resources and procedures;
6. depositary managers must have adequate knowledge, skills and experience related to the performance of depositary activities, so as to be able to understand the main risks arising from the performance of depositary activities.

(3) The depositary shall inform HANFA of any change in the depositary manager no later than within 7 days from the date of such change, in the manner prescribed by the provisions of Article 15 of this Rulebook.

Technical Conditions

Article 5. (OG 155/25)
The depositary shall be deemed to meet the technical conditions for performing depositary activities if it possesses at least:

1. an adequate network and information system;
2. software support for performing depositary activities;
3. established communication links for receiving instructions and general communication with clients via SWIFT, telefax, telephone and the internet;
4. established written procedures and processes for receiving client instructions for the disposal of financial instruments and monetary funds.

PART II. (A)
CONDITIONS FOR THE INVESTMENT COMPANY FOR PERFORMING DEPOSITARY ACTIVITIES FOR AIFs WITH A PUBLIC OFFER

Criteria for assessing the conditions of the investment company for performing depositary activities for AIFs with a public offer

Article 5.a
(1) The investment company must meet the conditions prescribed by Article 186.a, paragraph 3 and Article 186.d of the Act, and the conditions for performing depositary activities prescribed by this Rulebook.

(2) The depositary manager referred to in Article 186, paragraph 4, point 4 of the Act must meet the conditions set out in the Act and the conditions prescribed in Article 2, paragraph 3 of this Rulebook.

(3) When deciding on the application for the issuance of approval for the investment company to perform depositary activities, HANFA shall take into account all elements that may affect the assessment of whether the investment company meets the established conditions for performing depositary activities.

Application for the issuance of approval to the investment company for performing depositary activities for AIFs with a public offer

Article 5.b
(1) The investment company is obliged to submit an application to HANFA for the issuance of approval for performing depositary activities for AIFs with a public offer, which contains:

1. contact details of the investment company;
2. an extract from the court register for the investment company;
3. evidence of compliance with the conditions referred to in Article 186, paragraph 4 of the Act relating to the required share capital, regulatory capital and the type of services the investment company is authorized to perform in accordance with the provisions of the law governing the capital market;
4. evidence of compliance with conditions relating to additional organizational and technical requirements from Article 186.d of the Act and this Rulebook;
5. for the person of the depositary manager: name and surname, place of residence, nationality, OIB, and the following documents:
   a) curriculum vitae for the depositary manager with detailed data on education, professional development, data on knowledge, skills and work experience related to the performance of depositary activities; b) a certified copy of proof of completion of the appropriate level of education for the depositary manager; c) a document on the recognition of a foreign higher education qualification issued by the competent authority in the Republic of Croatia, where applicable; d) confirmation from the employer regarding the previous work experience of the depositary manager (company name, period of work, description of jobs and duties); e) a certificate of no criminal or misdemeanor proceedings issued by the competent authority of the Republic of Croatia, or for a foreign national, an extract/certificate from the competent authority of the state of which they are a national (not older than 3 months);
6. a description of organizational and technical conditions with the following content:
   a) a description of the infrastructure for storing the assets of the AIF for which it will perform depositary activities; b) a description of administrative and accounting procedures, a description of internal control mechanisms, risk assessment procedures, and a description of monitoring and protection mechanisms for data processing systems, all in connection with the performance of depositary activities; c) a description of organizational and management systems for the purpose of taking all reasonable measures aimed at preventing conflicts of interest that may arise from the performance of depositary activities; d) a description of the keeping of records for all services, activities and transactions intended to be performed as part of the performance of depositary activities; e) a description of measures to ensure continuity and regularity in the performance of depositary activities with a description of resources;
7. the activity program of the depositary with the prescribed content from Article 186.a, paragraph 6 of the Act and Article 5.c of this Rulebook;
8. a declaration of the investment company regarding the fulfillment of conditions prescribed by the law governing the capital market related to the performance of additional activities;
9. proof of payment of the fee;
10. additional documentation upon request by HANFA.

(2) Foreign documents referred to in paragraph 1 of this Article shall be submitted as prescribed in Article 2, paragraph 5 of this Rulebook.

(3) The application and documentation referred to in paragraph 1 of this Article may be submitted in the manner prescribed in Article 2, paragraphs 6 and 7 of this Rulebook.

Additional content of the activity program for the investment company performing depositary activities for AIFs with a public offer

Article 5.c
In addition to the mandatory content prescribed by Article 186.a, paragraph 6 of the Act, the activity program of the depositary referred to in Article 186, paragraph 4, point 4 of the Act must include the following:
– a description of planned activities on how the investment company will monitor the performance of delegated activities, where applicable; – a description of the planned method of storing documentation and keeping records of identified irregularities and/or illegality in the operations of the UAIF; – a description of the method of keeping or the mechanism for storing data on unit holders, their units, and payments and withdrawals, which the depositary is obliged to keep as business secrecy.

III. NOTIFICATION OF IDENTIFIED IRREGULARITIES AND/OR ILLEGALITY IN THE OPERATIONS OF THE UAIF

Article 6
(1) The depositary is obliged to prescribe and apply a procedure for handling cases when it identifies irregularities and/or illegality in the operations of the UAIF in the performance of activities referred to in Article 189 of the Act.

(2) Through the procedure referred to in paragraph 1 of this Article, the depositary shall provide for the storage of documentation and the keeping of records of identified irregularities and/or illegality in the operations of the UAIF, which shall contain the data referred to in paragraph 5 of this Article, as well as information on the manner and time when the irregularity and/or illegality was removed.

(3) The warning to the UAIF regarding identified irregularities and/or illegality referred to in Article 200, paragraph 2 of the Act must contain a deadline by which the depositary will inform HANFA about the identified irregularities and/or illegality.

(4) If the UAIF does not remove the identified irregularity and/or illegality within the given deadline, the depositary shall inform HANFA thereof without delay.

(5) The notification referred to in paragraph 4 of this Article shall be sent to HANFA in writing or electronically, and shall contain the following data:

1. the name of the AIF to which the identified irregularities relate;
2. a description of the identified irregularities/illegality, citing the provision of the Act, subordinate act, rules of the AIF and/or the prospectus of the AIF, contrary to which the action was taken;
3. the date of occurrence of the identified irregularity and/or illegality;
4. the date of identification of the irregularity and/or illegality;
5. where applicable, an estimate of any damage caused to investors in the AIF, or consequences that could occur for investors due to the illegality and/or irregularity;
6. the documentation on the basis of which the aforementioned irregularity/illegality was identified, or from which it follows that the aforementioned irregularity/illegality occurred.

(6) The notification referred to in paragraph 4 of this Article may be submitted by the depositary in the manner and in accordance with the Technical Instruction for the use of the WEB form entry service and submission of documentation in electronic form and the Instruction for filling out WEB forms for depositaries.

(7) It shall be deemed that the depositary has submitted the documentation referred to in paragraph 4 of this Article at the moment when the documentation is recorded on the server for sending such documentation.

IV. HANDLING BY THE UAIF AND DEPOSITARY IN CASES OF OBLIGATION TO CHANGE THE DEPOSITARY OF THE AIF

Article 7
(1) When the circumstances referred to in Article 207, paragraph 1 of the Act occur, or when the Agency orders the UAIF to change the depositary of the AIF with a private offer by decision based on Article 207, paragraph 2 of the Act, the UAIF is obliged within 30 days from the occurrence of the circumstances referred to in Article 207, paragraph 1 of the Act, or from receipt of the Agency’s decision referred to in Article 207, paragraph 2 of the Act, to conclude a contract with another depositary and inform the Agency in accordance with the provisions of the Act.

(2) When the approval for the selection of the depositary of the AIF with a public offer ceases to be valid, or when the approval for the selection of the depositary of the AIF with a public offer is revoked from the UAIF based on Article 207.a of the Act, the UAIF is obliged within 30 days from the cessation of validity or revocation of the approval for the selection of the depositary to conclude a contract with another depositary and submit an application for the issuance of the corresponding approval to the Agency in accordance with the provisions of the Act and this Rulebook.

(3) The depositary that was performing depositary activities for the AIF is obliged to continue providing depositary services for all activities provided for in the contract and/or the Act, for the continuation of which:
– there are no legal impediments, depending on which of the reasons for which the UAIF is obliged to conclude a contract with a new depositary from Article 207 of the Act, or which of the reasons for the revocation of approval for the selection of the depositary from Article 207.a of the Act applies in the specific case; – there are no circumstances indicating that the continuation of performing such activities would endanger the interests of the AIF or investors, depending on which of the reasons for which the UAIF is obliged to conclude a contract with a new depositary from Article 207 of the Act, or which of the reasons for the revocation of approval for the selection of the depositary from Article 207.a of the Act applies in the specific case (for example, the interests of the AIF could be endangered by holding the fund’s monetary funds on accounts opened at a depositary against which compulsory liquidation proceedings have been initiated).

(4) The depositary that was performing depositary activities for the AIF is obliged to continue providing services referred to in paragraph 3 of this Article until:
– the expiration of the deadline from paragraphs 1 and 2 of this Article, if the UAIF does not conclude a contract with another depositary and/or does not submit an application for the issuance of the corresponding approval to the Agency, or – the expiration of the deadline from Article 207.a, paragraph 5 of the Act or the day of issuance of the Agency’s approval for the selection of the new depositary, if such approval is issued before the expiration of the deadline from Article 207.a, paragraph 5 of the Act.

(5) The contract for performing depositary activities referred to in Article 186, paragraph 1 of the Act regulates, among other things, the scope and manner of performing activities referred to in paragraph 3 of this Article and liability for damage in the event that the depositary fails to fulfill the obligation to continue providing services referred to in paragraph 3 within the deadlines from paragraph 4 of this Article.

(6) If the depositary fails to fulfill the obligation to continue providing services referred to in paragraph 3 of this Article, or if it cannot provide them to the extent necessary to ensure the continuity of the AIF’s operations, its legal compliance and the protection of investors, the UAIF is obliged to consider whether it is necessary to suspend the issuance and redemption of units of the AIF without legal personality to protect investors, in which case Article 9, paragraph 1 of this Rulebook shall apply.

Article 8
When the circumstance referred to in Article 7 of this Rulebook occurs, the depositary is obliged to transfer all assets of the AIF for storage and administration to another depositary with whom the UAIF has concluded a contract, immediately upon concluding the same, and must also hand over the account books, records and all other documents and materials essential for the operations of the AIF for which it performed depositary activities up to that point, in written or electronic form, depending on the manner of keeping the aforementioned data.

Article 9
(1) To protect investors, in the case referred to in Articles 207 and 207.a of the Act, and exceptionally from Article 162, paragraphs 1, 2 and 4 of the Act, the UAIF may, without the consent of the depositary, suspend the issuance and redemption of units of the AIF without legal personality until:
– the expiration of the deadline from Article 7, paragraphs 1 and 2 of this Rulebook, if the UAIF does not conclude a contract with another depositary and/or does not submit an application for the issuance of the corresponding approval to the Agency, or – the expiration of the deadline from Article 207.a, paragraph 5 of the Act or the day of issuance of the Agency’s approval for the selection of the new depositary, if such approval is issued before the expiration of the deadline from Article 207.a, paragraph 5 of the Act.

(2) The UAIF is obliged to inform the Agency, the competent authorities of the home Member State of the AIF, and the competent authorities of all states in which units of the AIF are traded, of the suspension referred to in paragraph 1 of this Article without delay.

(3) The UAIF is obliged to notify the sub-depositary of the suspension of issuance and redemption of units of the AIF without legal personality in the case referred to in Article 8 of this Rulebook.

V. SCOPE AND CONTENT OF THE AUDIT REPORT ON THE AUDIT OF THE FULFILLMENT OF DEPOSITARY OBLIGATIONS

Article 10
The fulfillment of depositary obligations shall be audited once a year by an authorized auditor of an audit firm that audits the annual financial statements of the depositary.

Article 11
For the purposes of this Rulebook, the audit of the fulfillment of depositary obligations is a procedure for checking and assessing:

1. the adequacy of the performance of depositary obligations and duties;
2. the adequacy of the policies, procedures and other internal acts of the depositary regulating the duties and obligations of the depositary;
3. the conduct of the depositary in accordance with Article 6 of this Rulebook.

Article 12
(1) Based on the performed audit, the audit firm prepares a report on the performed audit of the fulfillment of depositary obligations.

(2) The audit report on the fulfillment of depositary obligations shall be prepared in accordance with the Act and regulations adopted on the basis of the Act, regulations governing accounting and auditing, and the rules of the audit profession.

Article 13
(1) The audit report referred to in Article 12 of this Rulebook must contain:

1. an assessment of the adequacy of the performance of depositary obligations and duties based on the assessment of:
   a. compliance with organizational requirements related to the duties and obligations of the depositary; b. policies, procedures and other internal acts of the depositary relating to the duties and obligations of the depositary;
   c. the implementation of adopted policies, procedures and other internal acts;
2. an opinion on the conduct of the depositary in accordance with Article 6 of this Rulebook;
3. a list of deficiencies identified during the audit review of the areas referred to in Article 11 of this Rulebook;
4. observations regarding the fulfillment of auditor recommendations from previous years.

(2) The audit report shall be prepared and signed by the authorized auditor in their own name and the responsible person of the audit firm on behalf of the audit firm.

Article 14
The depositary is obliged to submit the audit report referred to in Article 12 of this Rulebook to HANFA no later than within four months after the end of the business year for which the report is prepared, in the manner prescribed by the provisions of Article 15 of this Rulebook.

Article 15
(1) The depositary is obliged to submit to HANFA the documentation referred to in Article 4, paragraph 2 and Article 14 of this Rulebook in the manner and in accordance with the Technical Instruction for the use of the WEB form entry service and submission of documentation in electronic form and the Instruction for filling out WEB forms for the depositary.

(2) It shall be deemed that the depositary has submitted the documentation referred to in Article 4, paragraph 2 and Article 14 of this Rulebook at the moment when the documentation is recorded on the server for sending such documentation.

(3) In justified cases of technical impossibility of submission or submission that was not properly executed (e.g., system failure, inability to read received documentation, etc.) in the manner prescribed by paragraph 1 of this Article, the depositary is obliged to submit the documentation in written form, directly or by mail, for the purpose of timely reporting. The depositary is obliged to submit the documentation in the manner prescribed by paragraph 1 of this Article as soon as the reasons for such impossibility cease, and no later than within 8 days from the cessation of the circumstances that caused the technical impossibility of such submission.

(4) HANFA may, if necessary, request the depositary to submit certain documentation prescribed by this Rulebook in the original or a certified copy, regardless of the electronic submission already performed.

VI. FINAL PROVISIONS

Article 16
(1) This Rulebook shall enter into force on the eighth day from the date of publication in the “Official Gazette”.

(2) Upon the entry into force of this Rulebook, the Rulebook on the Performance of Depositary Activities for AIFs (“Official Gazette” No. 10/14, 140/14 and 41/17) shall cease to be valid.

(3) Proceedings initiated before the entry into force of this Rulebook shall be completed in accordance with the provisions of the regulations that were in force until the entry into force of this Rulebook.

Transitional and Final Provisions