On 11 March 2015 the Financial Supervisory Authority (“FSA”) Norm regulating the approval of mutual funds for the management of certain agricultural activity risks (“Norm 5/2015”) was published in the Official Gazette.
Mutual funds established in accordance with the provisions of Norm 5/2015 (“Funds”) must have the sole goal of insuring the affiliated members against economic losses caused by certain events, such as: adverse climatic events, animal diseases, plant diseases or environmental incidents.
Funds must be established and registered as associations and will conduct their activity based on their own constitutive deeds. Each Fund must have a 5 member Board of Directors, which will empower an Executive Committee to undertake the daily activities of the Fund. The Executive Committee must be chaired by a general manager whose mandate cannot exceed 4 years.
The members of the Fund’s Executive Committee and the General Manager must be approved by the FSA. In assessing eligibility of persons appointed to these positions, the FSA will examine appointees’ (i) reputation, (ii) criminal record, (iii) involvement in certain insolvency matters, and (iv) education.
Prior to commencing operation, the Fund must be approved by the FSA through a two stage process: (i) preliminary approval of the Fund, followed by its registration within the Register of Associations and Foundations; and (ii) final approval of the Fund. The approval requests for each stage must be accompanied by certain supporting documents (e.g. formal application, constitutive deed of the Fund, statute of the Fund, details with respect to the actuary of the Fund, certain declarations prepared in accordance with the annexes to Norm 5/2015, etc.). The assessment carried out by the FSA will take up to 30 business days for each stage.
Outsourcing of Fund activities is permitted; Funds must notify the FSA of their intention to outsource activities and submit the proper supporting documents (e.g. resolution regarding the outsourcing, the grounds sustaining the resolution, description of the activity to be outsourced, draft of the envisaged outsourcing contract, etc.).
Please note, Norm 5/2015 addresses approval of Funds; Funds must also comply with numerous other applicable legal provisions governing other aspects (e.g. Government Emergency Ordinance no. 64/2013 regarding the establishment, approval and registration of mutual funds for the management of certain agricultural activity risks, in view of providing financial compensations to the members for losses determined by the occurrence of adverse climatic events, animal diseases, plant diseases or environmental incidents; Council Regulation (EC) No. 73/2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No. 1290/2005, (EC) No. 247/2006, (EC) No. 378/2007 and repealing Regulation (EC) No. 1782/2003; Regulation (EU) No. 1305/2013 of the European Parliament and of the Council on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No. 1698/2005; etc.).