NEWSLETTER FINANCE AND CAPITAL MARKETS 1 st Quarter 2015 I New Legal Regime for the Undertakings for Collective Investment 2 II Legislation A. Banking Law: Institutional and Material B. Insurance law: Institutional and Material C. Securities and Capital Markets 3 5 6 III Relevant Court Decisions 7 NEWSLETTER I FINANCE AND CAPITAL MARKETS WWW.CUATRECASAS.COM NEWSLETTER I FINANCE AND CAPITAL MARKETS 2/8 NEWSLETTER FINANCE AND CAPITAL MARKETS I NEW LEGAL REGIME FOR THE UNDERTAKINGS FOR COLLECTIVE INVESTMENT On February 24, Law no. 16/2015 was published, approving the new legal regime for the undertakings for collective investment (“NRJOIC”), partially transposing into Portuguese Law Directive no. 2011/61/UE, of the European Parliament and of the Council, of June 8, 2011 (Directive no. 2011/61/UE), on alternative investment fund managers, and Directive no. 2013/14/UE, of the European Parliament and of the Council, of May 21, 2013 (Directive no. 2013/14/UE), on alternative investment funds managers in respect of over-reliance on credit ratings. Although the NRJOIC has entered into force on March 27, 2015, there is a transitional provision which grants the management companies a period of 3 months to take the necessary measures so as to comply with this new legal regime. One of the main innovations brought forth by the NRJOIC was the consolidation into a single document of the legal regime concerning the undertakings for collective investment in transferable securities and in property, thereby revoking the recent Decree-Law no. 63-A/2013, of May 10, on the legal regime of the undertakings for collective investment in transferable securities, and Decree-Law no. 60/2002, of March 20, regarding the legal regime for property collective investment undertakings. The legal regime for open-ended collective investment undertakings in property has suffered deep changes, being evident the legislator’s concern in ensuring that these collective investment undertakings are composed by more liquid assets, which is comprehensible given the liquidity issues these undertakings have faced in the recent past. In this regard, it should be noted the obligation to ensure a minimum investment allocation to income producing assets (such as rents), the inclusion of rules on notice of redemption and the setting of minimum investment periods. Aiming at an improvement in the governance of these undertakings for collective investment, the rules regarding the functions and responsibilities of the depositary have become increasingly detailed, namely the legal regime on the depositary’s responsibility towards the entity in charge of the management and the participants. Also in this domain, the NRJOIC expressly foresees the prohibition to subcontract investment management activities to the depositary or other entities whose interests may conflict with those of the managing entity or of the participants. In what concerns the valuation of assets, the NRJOIC demands that all collective investment undertakings implement the adequate procedures so as to correctly and WWW.CUATRECASAS.COM NEWSLETTER I FINANCE AND CAPITAL MARKETS 3/8 independently value the assets under management, resorting to internal and external assessors: If the valuation is to be performed internally by the entity in charge of the management, the department responsible for valuating must be functionally independent from the undertaking for collective investment’s management; If the valuation is to be performed externally, the assessor must be a natural or legal person, independent from the undertaking for collective investment, from the entity in charge of the management and from anyone else with close links to the collective investment undertakings or to the entity in charge of the management. The NRJOIC also implemented the European passport for the management and marketing of undertakings for alternative investment which are managed by managing bodies duly authorized under Directive no. 2011/61/UE and marketed exclusively before qualified investors. In this context, the European passport’s application was extended to the managing bodies from the European Union which market undertakings for alternative investment from third countries in the European Union, and to the managing bodies from third countries authorized in a Member State, which manage or market alternative investment undertakings in the European Union. Finally, it is still pending the publication by CMVM of the new regulation on the undertakings for collective investment, aiming to regulate a specific set of topics mentioned in the NRJOIC, which is expected to occur eminently, so as to allow the different agents involved to fully adapt to the already enforceable NRJOIC. II LEGISLATION A. Banking Law: Institutional and Material Law no. 16/2015 - Official Gazette no. 38, Series I of February 24, 2014 Partially transposes Directives no. 2011/61/EU and 2013/14/EU, thereby reviewing the legal regime applicable to collective investment schemes and amending not only the General Regime for Credit Institutions and Financial Companies but also the Securities Code. Law no. 23-A/2015 - Official Gazette no. 60, 1st Supplement, Series I of March 26, 2014 Transposes Directives no. 2014/49/EU, of the European Parliament and of the Council, of April 16, on deposit guarantee schemes, and no. 2014/59/EU, of the European Parliament and of the Council, of May 15, amending the General Regime for Credit Institutions and Financial Companies, the Organic Law of the Bank of Portugal, DecreeLaw no. 345/98, of November 9, the Securities Code, Decree-Law no. 199/2006, of October 25 and Law no. 63-A/2008, of November 24. WWW.CUATRECASAS.COM NEWSLETTER I FINANCE AND CAPITAL MARKETS 4/8 Commission Delegated Regulation (EU) no. 2015/62 of October 10, 2014 Amending Regulation (EU) no. 575/2013 of the European Parliament and of the Council, of October 10, with regard to the leverage ratio. Recommendation of the European Central Bank of January 28, 2015 (ECB/2015/2) Recommendation of the European Central Bank (“ECB”) of January 28, 2015, on dividend distribution policies. Bank of Portugal Instructions Instruction no. 26/2014, which has entered into force on January 1, 2015, sets forth the maximum interest rates applicable during the first quarter of 2015 to credit agreements entered into with consumers, pursuant to Decree-Law no. 133/2009, of June 2, 2009. Instruction no. 28/2014, which has entered into force on December 23, 2014, imposes compliance with the guidelines published by the European Banking Authority (“EBA”) on July 27, 2014, regarding the disclosure of encumbered and unencumbered assets. Instruction no. 29/2014, which has entered into force on December 23, 2014, imposes to the Credit Institutions compliance with Recommendation B from the European Systemic Risk Board, of December 20, 2012, regarding the management of the risk of asset’s encumbrance by institutions. Instruction no. 30/2014, which has entered into force on January 1, 2015, sets at 0,015% the contributory rate used to calculate the contributions of participating institutions to the Mutual Agricultural Credit Guarantee Fund in 2015, and, in 50% the percentage of eligibility of subordinated loans from the mutual agricultural credit banks financially assisted by the Fund. Instruction no. 31/2014, which has entered into force on January 1, 2015, determines that the participating credit institutions cannot replace their annual contribution to the Deposit Guarantee Fund with irrevocable payment commitments. Instruction no. 32/2014, which has entered into force on January 1, 2015, sets at 0,005% the contributory rate used to calculate the contributions of each institution, as well as the minimum contribution for the Deposit Guarantee Fund to be realized by the participating institutions (4.000,00 euros) in the year 2015. Instruction no. 33/2014, which has entered into force on January 1, 2015, sets at 0.015% the base rate for the calculation of the periodic contributions to the Resolution Fund in the year of 2015. WWW.CUATRECASAS.COM NEWSLETTER I FINANCE AND CAPITAL MARKETS 5/8 Instruction no. 34/2014, which has entered into force on January 15, 2015, amends Instruction no. 6/2013, published in the Official Bulletin no. 4, of April 15, 2013, introducing the new concept of “tier 1 own funds”. Instruction no. 1/2015, which has entered into force on February 16, 2015, amends Instruction no. 3/2009, published in the Official Bulletin no. 2, of February 16, 2009 which regulates the Interbank Clearing System (SICOI). Bank of Portugal Circular Letters Circular Letter no. 113/2014/DSC, of December 22, 2014, published on January 15, 2015, requests information through the completion of tables, regarding mortgage loan contracts and related loan contracts in force on 31 December 2014. Circular Letter no. 1/2015/DET, of January 14, 2015, published on February 16, 2015, discloses the names of the companies that comply with the requirements set forth for carrying out the activity of recirculation of euro bills and coins. Circular Letter no. 1/2015/DSP, of February 26, 2015, published on March 16, 2015, informs that the European Banking Authority has published in March 2014 guidelines on the notional discount rate applicable to the variable component of the remuneration of directors and employees with relevant functions in credit institution, which shall be taken into account for the purposes of article 115-F (6) of the General Regime for Credit Institutions and Financial Companies. Circular Letter no. 2/2015/DSP, of March 2, 2015, published on March 16, 2015, reinforces the importance of compliance with the rules of assessment and selection of the members of the corporate bodies and key professionals, clarifying some aspects. B. Insurance Law: Institutional and Material Decree-Law no. 1/2015 - Official Gazette no. 3, Series I of January 6, 2015 Changes the name of the Portuguese insurance supervisory authority from “Instituto de Seguros de Portugal” to “Autoridade de Supervisão de Seguros e Fundos de Pensões” (“ASF”) and approves the relevant by-laws, in compliance with the framework law applicable to regulatory and supervisory authorities approved by Law no. 67/2013, of August 28, 2013. Commission Delegated Regulation (EU) no. 2015/35, of October 10, 2014 Supplementing Directive no. 2009/138/EC of the European Parliament and of the Council, of November 25, 2009, on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II). WWW.CUATRECASAS.COM NEWSLETTER I FINANCE AND CAPITAL MARKETS 6/8 EIOPA Opinion on Sales via the Internet of Insurance and Pension products On January 28, 2015, the European Insurance and Occupational Pensions Authority (“EIOPA”) issued an Opinion addressed to the National Competent Authorities (“NCAs”) represented in EIOPA’s Board of Supervisors. These NCAs are thereby invited to increase their level of awareness of and monitoring of the market with regard to the use of the Internet as a distribution channel. EIOPA – Consultation Paper on a Report on Good Practices on Individual Transfers of Supplementary Occupational Pension Rights On January 30, 2015, EIOPA released a Public Consultation Paper on the above mentioned Report. All comments shall be filed until April 10, 2015. EIOPA - Technical Advice on Conflicts of Interest in Direct and Intermediated Sales of Insurance-Based Investment Products On January 30, 2015, EIOPA provided a technical advice containing the conclusion EIOPA has taken on its findings and the recommended policy options which should be the basis for the delegated acts to be adopted by the Commission with regard to the identification of conflicts of interest arising in the course of the distribution of insurance based investment products, and appropriate measures to manage these conflicts of interest. ASF Regulation no. 1/2015-R, of January 15, 2015 Setting forth the indexes to consider in the fire and natural disasters insurance agreements beginning or terminating in the 2nd quarter of 2015. C. Securities and Capital Markets Law no. 18/2015 - Official Gazette no. 44, Series I of March 4, 2015 Partially transposes Directives no. 2011/61/EU of the European Parliament and of the Council, of June 8, 2011 and 2013/14/EU of the European Parliament and of the Council, of May 21, 2013, which ensure the execution in Portugal of the Regulations (EU) no. 345/2013 and 346/2013, of the European Parliament and of the Council, of April 17, 2013 and reviews the legal regime applicable to the venture capital investment activity. Decree-Law no. 5/2015 - Official Gazette no. 5, Series I of January 8, 2015 Approves the by-laws of the Portuguese Securities Commission (“CMVM”), in compliance with the framework law applicable to regulatory and supervisory authorities approved by Law no. 67/2013, of August 28, 2013. Commission Delegated Regulation (EU) no. 2015/1 of September 30, 2014 Supplementing Regulation (EC) no. 1060/2009 of the European Parliament and of the Council, of September 19, 2009, with regard to regulatory technical standards for the periodic reporting on fees charged by credit rating agencies for the purpose of ongoing supervision by the European Securities and Markets Authority. WWW.CUATRECASAS.COM NEWSLETTER I FINANCE AND CAPITAL MARKETS 7/8 Commission Delegated Regulation (EU) no. 2015/2 of September 30, 2014 Supplementing Regulation (EC) no. 1060/2009 of the European Parliament and of the Council, of September 19, 2009, with regard to regulatory technical standards for the presentation of the information that credit rating agencies make available to the European Securities and Markets Authority. Commission Delegated Regulation (EU) no. 2015/97 of October 17, 2014 Correcting Delegated Regulation (EU) no. 918/2012, of July 5, 2012, as regards the notification of significant net short positions in sovereign debt. Commission Delegated Regulation (EU) no. 2015/514 of December 18, 2014 On the information to be provided by competent authorities to the European Securities and Markets Authority pursuant to Article 67(3) of Directive no. 2011/61/EU of the European Parliament and of the Council, of June 8, 2011. Commission Implementing Regulation (EU) no. 2015/79 of December 18, 2014 Amending Implementing Regulation (EU) no. 680/2014 of the Comission, of April 16, 2014, laying down implementing technical standards with regard to supervisory reporting of institutions according to Regulation (EU) no. 575/2013 of the European Parliament and of the Council, of June 26, 2013, as regards asset encumbrance, single data point model and validation rules. Decision (EU) no. 2015/5 of the European Central Bank of November 19, 2014 (ECB/2014/45) On the implementation of the asset-backed securities purchase programme. Portuguese Securities Commission (“CMVM”) Regulations CMVM Regulation no. 1/2015. Official Gazette no. 63/2015, Series II of March 31, 2015 Regulates the provisions set forth in the Central Counterparties Legal Regime, notably those regarding the filing of authorization requests, information requirements applicable to the disclosure of qualified shareholdings, appointment of members of the management and supervisory bodies and the financial information to be reported to CMVM and to be disclosed to the public, currently inscribed in CMVM Regulation no. 4/2007 (Market, Systems and Services Managing Entities). III RELEVANT COURT DECISIONS Supreme Court of Justice, Decision of January 29, 2015, Procedure no. 531/11.7 The circumstance of an interest rate swap being legally foreseen does not preclude its contents, as agreed between the parties, from being in breach with public order principles, notably considering that the law does not govern every single aspect of these agreements which are therefore subject to the parties’ autonomy. WWW.CUATRECASAS.COM NEWSLETTER I FINANCE AND CAPITAL MARKETS 8/8 Coimbra Court of Appeal, Decision of February 10, 2015, Procedure no. 487/09 Has decided that the insurer should no longer be deemed responsible for compensating the Motor Guarantee Fund for the expenses incurred in connection with a motor vehicle accident whenever the agreement under analysis has been rendered null and void due to misrepresentations by the policyholder. Porto Court of Appeal, Decision of March 2, 2015, Procedure no. 1099/12.2 The Court has considered that the supply of false information by the financial intermediary to the investor regarding a guarantee of reimbursement of the capital invested in commercial paper is a violation of the financial intermediary’s duties of loyalty and good-faith before the investor. Court of Justice of the European Union, Decision of March 11, 2015, Procedure no. C-628/13 The Court has considered that, in order to prevent the abuse of privileged information, said information ought to be disclosed to the public, even if its holder is unaware of the effective impact that said information may have on the price of the financial instruments. CONTACT CUATRECASAS, GONÇALVES PEREIRA & ASSOCIADOS, RL Sociedade de Advogados de Responsabilidade Limitada LISBOA Praça Marquês de Pombal, 2 (e 1-8º) I 1250-160 Lisboa I Portugal Tel. 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