Riga, 20 March 2009 Regulations No. 37
(Min. No. 10; p 4)
List of Information Required for the Notification of Acquisition or Increasing of a Qualifying Holding in a Credit Institution, Insurance Undertaking, Reinsurance Undertaking, Regulated Market Organizer, Investment Management Companies, Latvian Central Depository or Investment Firm
Issued in accodance with
Section 29 (1) and (2) of the Credit Institution Law,
Article 26 (1) and (2) of Law on Insurance Companies and Supervision Thereof,
Article 32 (1) and (2) Reinsurance Law and
Article 9 (1) and (2) of the Law on the Financial Instruments Market
1. General Provisions
1. "List of Information Required for the Notification of Acquisition or Increasing of a Qualifying Holding in a Credit Institution, Insurance Undertaking, Reinsurance Undertaking, Regulated Market Organizer, Latvian Central Depository or Investment Firm" shall be binding on a person or several persons acting in concert based on agreement (hereinafter – the person) who intends to acquire a direct or indirect qualifying holding in a credit institution, insurance undertaking, reinsurance undertaking, regulated market organizer, Latvian Central Depository or investment firm (hereinafter all the above together referred to as - the financial institution) or increase a qualifying holding in the financial institution, which amounts to or exceeds 20, 33 or 50 per cent of share capital of the financial institution or the number of voting rights or part of total number (hereinafter – the shares), or provided that the financial institution becomes a subsidiary company of that person (hereinafter – the acquisition or increasing of a qualifying holding).
2. These Regulations determine information that the person shall include into the notification of the acquisition or increasing of a qualifying holding in the financial institution.
2. Information on the Acquisition or Increasing of a Qualifying Holding
3. Prior to the acquisition or increasing of a qualifying holding the person shall submit to the Financial and Capital Market Commission (hereinafter – the Commission) the notification that contains information determining:
3.1. a financial institution in which the person intends to acquire or increase a qualifying holding;
3.2. the aim of the acquisition or increasing of a qualifying holding (e.g., strategic investment, portfolio management, and others);
3.3. the number and type of shares (ordinary, preferential or personnel shares) in the financial institution owned by the person before the acquisition or increasing a qualifying holding and after that, as well as the number of shares in the whole share capital of the financial institution (as a percentage, lats or euro) and proportional breakdown of voting rights if different from the proportion of share capital;
3.4. data on other persons with whom the person acts in concert regarding the acquisition or increasing of a qualifying holding in the financial institution, as well as further activities of financial institution.
3. Information on the Person Intending to Acquire or Increase a Qualifying Holding in the Financial Institution
3.1. Information on the Natural Person
4. If a natural person intends to acquire or increase a qualifying holding in the financial institution, in addition to the information referred to in Clause 3 of these Regulations the person shall add to the notification:
4.1. a copy of the document identifying the person (for residents – a copy of the page of certifying document which contains a personal number and photograph; for non-residents – a copy of the page of the document valid for immigration into the Republic of Latvia which contains the given name, surname, personal number or if none attributed, date of birth, issuing authority) and address of permanent residence;
4.2. information on the person’s administrative penalty and criminal record and information regarding penalties imposed on the commercial company ever controlled by the person or where the person has ever been a member of council or board and whether an administrative case has been initiated or criminal proceedings started, as well as information whether the person has ever been employed by a commercial company that had gone into liquidation or was deprived of rights to be engaged in commercial activities;
4.3. information as to whether the assessments performed by authorities of non-financial sector have been made, indicating the authority and the decision taken;
4.4. information on the person’s financial stability indicating sources of income, assets and liabilities, pledges, sureties and other information attesting to the financial position, including copies of income statements for last three years verified by the State Revenue Service, copies of agreements, excerpts of banking accounts and other documents verifying the person’s financial stability;
4.5. information on the ratings of commercial companies controlled by the person;
4.6. information on professional activities of the person, adding professional biography (CV) signed by the person;
4.7. information on the person’s relationships with the financial institution in which the person intends to acquire or increase a qualifying holding, including with current shareholders of that financial institution (hereinafter – owners) and persons entitled to exercise voting rights in that financial institution or its council or board members;
4.8. information on commercial companies controlled by the person, or where the person is a member of council or board, and commercial companies where the person holds a qualifying holding;
4.9. any information on the person that may be regarded as an obstacle for the acquisition or increasing a qualifying holding in the financial institution;
4.10. in case of a trust that already exists or would result from the acquisition or increasing a qualifying holding in the financial institution:
4.10.1. identification of the authorised person under the terms of trust pursuant to Clauses 4.1 or 5.1 of these Regulations;
4.10.2. identification of other persons who are beneficiaries pursuant to Clauses 4.1 or 5.1 of these Regulations.
3.2. Information on the Legal Person
5. If a legal person intends to acquire or increase a qualifying holding in the financial institution, in addition to the information referred to in Clause 3 of these Regulations the person shall include in the notification:
5.1. non-residents only – a copy of registration certificate or any other identification document (confirming registration) valid in respective Member State or a foreign state;
5.2. information on the type of commercial activities;
5.3. information on the owners of the person, until information on the owners (beneficiaries) is obtained – natural persons, copies of identifying documents of all of the owners (natural, legal and other persons) of that person. If the person or its owner is a public joint stock, information shall be provided only on the owners of the public joint stock company who hold qualifying holdings in it;
5.4. information on the members of the person’s council and board;
5.5. information on penalties imposed on the person, and administrative penalty and criminal record of its council and board members as well as information regarding penalties imposed on the commercial company being in the same group with the person and whether an administrative case has been initiated or criminal proceedings started against them, as well as whether they had ever been deprived of rights to be engaged in commercial activities, and whether the members of the person’s council and board have held positions or headed structural units in commercial companies that had gone into liquidation;
5.6. information as to whether the assessments performed by authorities of non-financial sector have been made, indicating the authority and the decision taken;
5.7 information on the person’s relationships with the financial institution in which the person intends to acquire or increase a qualifying holding, including with the existing owners of that financial institution, and persons entitled to exercise voting rights in that financial institution or its council or board members;
5.8. in case the person is part of a group as a subsidiary company of commercial company or a parent company of commercial company, detailed organisational scheme of the group’s corporate structure and information on the owners’ holdings and types of activities, identifying commercial companies which are subject to financial supervision;
5.9. copies of audited annual reports for last three business years (commercial companies of the Republic of Latvia are exempted from provision of such information, if their annual reports are submitted to the State Revenue Service);
5.10. information on the credit rating granted to the person as well as the overall rating of the group;
5.11. information on any interests or activities of the person that may result in conflict of interest with the financial institution;
5.12. in case of a trust that already exists or would result from the acquisition or increasing a qualifying holding in the financial institution:
5.12.1. identification of the authorised person under the terms of trust pursuant to Clauses 4.1 or 5.1 of these Regulations;
5.12.2. identification of other persons who are beneficiaries pursuant to Clauses 4.1 or 5.1 of these Regulations.
4. Information on the Sources of Financing the Acquisition or Increasing a Qualifying Holding
6. Providing information on the sources of financing (income sources), in addition to the information required in Clauses 3, 4 or 5 of these Regulations the person shall include in the notification:
6.1. information on the financial resources which are used or will be used for the acquisition or increasing a qualifying holding, submitting documents that verify origin of the mentioned financial resources, and a notification (confirmation) signed by the person regarding the origin of the financial resources, including a mechanism for attracting the financial resources;
6.2. information on the person’s liabilities, specifying the amount of liabilities, terms and their maturity, as well as sureties and guarantees;
6.3. information on the person or financial institution’s assets, which are to be sold in the short term (conditions of sale, price appraisal and other details characterising the transaction) and will be used for the acquisition or increasing the qualifying holding.
5. Information Required Depending on the Level of Shareholding to be Acquired
5.1. Information Required in Case of a Change in Control in the Financial Institution
7. If any changes take place in the control in the financial institution as a result of the acquisition or increasing a qualifying holding, in addition to information referred to in Clauses 3, 4, 5 and 6 of these Regulations a business plan shall be submitted that contains information as follows:
7.1. strategic development plan, which specifies:
7.1.1. aims of acquiring or increasing a qualifying holding and a plan for attaining the plan;
7.1.2. three-year financial goals (return on equity, profitability and earnings per share, and others);
7.1.3. the main synergies in the financial institution;
7.1.4. possible redirection of the activities, products, targeted customers and structure of resources;
7.1.5. economic rationale for the inclusion and integration of the financial institution in the group structure of the acquirer, including description of main synergies of the merger of commercial companies, as well as the policies specifying mutual intra-group transactions;
7.2. a forecast of three-year financial ratios (individual and consolidated reports), including:
7.2.1. a forecast balance and profit and loss account;
7.2.2. a forecast of performance ratios;
7.2.3. information on the acceptable risk exposure (credit risk, market risk, operational risk etc.);
7.2.4. a forecast of provisional intra-group operations;
7.3. an impact of the acquisition or increasing of a qualifying holding on the corporate governance and overall organizational structure of the financial institution, including an impact on:
7.3.1.the composition and duties of the board, as well as on main committees created by decision-making bodies (management, risk, audit and other committees);
7.3.2. administrative and accounting procedures and internal control, indicating the main changes in the procedures and systems related to accounting and internal control (including anti-money laundering), including the appointment of key duties;
7.3.3. strategy and organisation of IT management, indicating the main changes in the regulations and policies for the IT systems development, maintenance, outsourcing, continuity management and security;
7.3.4. the policies governing subcontracting and outsourcing (related areas, selection of service providers) and the respective rights and duties of the principal contractual parties (e.g., audit arrangements, quality of expected services).
5.2. Information Required Without a Change in Control in the Financial Institution
8. If no changes in control in the financial institution take place because of the acquisition or increasing of a qualifying holding, in addition to information referred to in Clauses 3, 4, 5 and 6 of these Regulations the person shall provide the following information and documentation:
8.1. where a qualifying holding to be acquired in the financial institution remains under 20 percent, a strategic document shall be submitted including the following information:
8.1.1. the action plan of the person concerning the acquisition or increasing a qualifying holding, including information regarding:
8.1.1.1. any intention of the person to increase, reduce or maintain the level of the shareholding in the foreseeable future;
8.1.1.2. an indication of the person’s intention towards the financial institution as regards whether or not the person intends to act as an active minority shareholder, as well as rationale for such activity;
8.1.2. information on the ability and willingness of the person to support the financial institution with additional own funds for the development of its activities or in case of financial difficulties;
8.2. where the person acquires or increases a qualifying holding in the financial institution between 20 percent and 50 percent, in addition to information referred to in Clause 8.1 of these Regulations the person shall provide the following information:
8.2.1. details on the influence that the person intends to exercise on the financial position (including dividend policy), the strategic development and allocation of resources of the financial institution;
8.2.2. the person’s intentions in the medium-term towards the financial institution, including information referred to in Clause 7.1 of these Regulations.
9. The Commission shall be entitled to request the person to provide information referred to in Clause 8.2 of these Regulations also in cases where a qualifying holding to be acquired remains under 20 percent, if such shareholding is considered as equal to the influence referred to in Clause 8.2 of these Regulations.
6. Conditions for Exemptions from Information Provision
10. Where the documents to be submitted mentioned in these Regulations are already at the Commission’s disposal and no changes are made to the information covered, the relevant documents shall not be submitted repeatedly and the notification to be submitted to the Commission shall contain an indication that the relevant documents have been submitted to the Commission and no changes have been made to the information since the moment of its submission to the Commission.
11. If a financial institution of Member State intends to acquire or increase a qualifying holding in the financial institution, it shall not provide information referred to in Clauses 5 and 6 of these Regulations.
Chairwoman
Financial and Capital Market Commission I. Krūmane
THIS DOCUMENT IS SIGNED ELECTRONICALLY WITH A
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