FINANCE AND CAPITAL MARKETS NEWSLETTER 2 nd Quarter 2015 I Credit Financial Companies Legal Regime 2 II Legislation A. Banking Law: Institutional and Material B. Insurance law: Institutional and Material C. Securities and Capital Markets 3 5 5 III Relevant Court Decisions 6 NEWSLETTER I FINANCE AND CAPITAL MARKETS WWW.CUATRECASAS.COM NEWSLETTER I FINANCE AND CAPITAL MARKETS 2/7 FINANCE AND CAPITAL MARKETS NEWSLETTER I CREDIT FINANCIAL COMPANIES LEGAL REGIME Decree Law no. 100/2015, which has approved the legal regime applicable to credit financial companies and has adjusted the legal regimes applicable to investment companies, leasing companies, factoring companies and mutual guarantee companies, was published on June 2, 2015. Following the amendments introduced in the General Legal Regime applicable to Credit Institutions and Financial Companies (approved by Decree Law no. 198/92, of December 31, 1992) by Decree Law no. 157/2014, of October 24, 2014, the scope of the main attributions of financial companies has been enlarged and a new type of financial company has been created – the credit financial companies. In fact, Decree Law no. 157/2014, of October 24, 2014, whilst enabling financial companies to carry out activities that until then could only be carried out by banks – exception made to receiving deposits or any other reimbursable funds from the public, the rendering of payment services and the issue of electronic currency – has determined that, in Portugal, as already occurred in the majority of the Member States of the European Union, the granting of credit has ceased from being an exclusive attribution of credit institutions. Therefore, pursuant to the decree law published on June 2, 2015, credit financial companies are deemed as financial companies whose corporate purpose comprises the exercise of the transactions allowed to the banks, exception made to receiving deposits or any other reimbursable funds from the public, the rendering of payment services and the issue of electronic currency. The purpose of this framework is to reorganize under a common legal entity the undertaking of a series of financial activities developed, on a dispersed basis, by a number of financial companies that used to be qualified as credit institutions. On the other hand, Decree Law no. 100/2015 has determined that credit financial companies must always be incorporated as share companies (sociedade anónima) and include in their denomination the expression «sociedade financeira de crédito». Following the same logic and considering the resemblance of the activities carried out and the current legal qualification as types of financial companies, the piece of legislation under analysis sets forth that investment companies, leasing companies, factoring companies and mutual guarantee companies shall also be always incorporated as share companies (sociedades anónimas). Finally, following the recent amendment of article 349 of the Portuguese Companies Code (approved by Decree Law no. 262/86, of September 2, 1986) by decree Law no. 26/2015, of February 6, 2015 and notwithstanding the entry into force of new rules WWW.CUATRECASAS.COM NEWSLETTER I FINANCE AND CAPITAL MARKETS 3/7 applicable to the bond issues, Decree Law no. 100/2015 has established that regarding financial companies it is more appropriate to maintain the threshold applicable to bond issues of four times their own funds and, for said purposes, has adjusted the rules applicable to capital financial companies, investment companies, leasing companies, factoring companies and mutual guarantee companies accordingly. For the purposes of the abovementioned rules the “own funds” of the financial companies are deemed as the sum of paid-in share capital, deducting the own shares, the reserves, carried over results and adjustments in financial assets. II LEGISLATION A. Banking Law: Institutional and Material Decree-Law no. 100/2015 - Official Gazette no. 106/2015, Series I of June 2, 2015 Approves the legal regime of the credit financial institutions and amends the legal regimes of the investment companies, leasing companies, factoring companies and mutual guarantee companies. For a more detailed description of this piece of legislation, please see the opening text. Orientation (EU) no. 2015/510 of the European Central Bank of December 19, 2014 On the implementation of the Eurosystem monetary policy framework. Decision (EU) no. 2015/656 of the European Central Bank of February 4, 2015 On the conditions under which credit institutions are permitted to include interim or year-end profits in Common Equity Tier 1 capital in accordance with Article 26(2) of Regulation (EU) no. 575/2013 of the European Parliament and of the Council, of June 26 2013. Decision (EU) no. 2015/774 of the European Central Bank of March 4, 2015 On a secondary markets public sector asset purchase programme. 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. Commission Delegated Regulation (EU) no. 2015/923 of March 11, 2015 Amending Commission Delegated Regulation (EU) no. 241/2014 of January 7, 2014, supplementing Regulation (EU) no. 575/2013 of the European Parliament and of the Council, of June 26, 2013, with regard to regulatory technical standards for own funds requirements for institutions. Regulation (EU) no. 2015/760 of the European Parliament and of the Council, of April 29, 2015 WWW.CUATRECASAS.COM NEWSLETTER I FINANCE AND CAPITAL MARKETS 4/7 This Regulation lays down uniform rules on the authorization, investment policies and operating conditions of EU alternative investment funds (EU “AIFs”) or compartments of EU AIFs that are marketed in the Union as European long-term investment funds (“ELTIFs”). Regulation (EU) no. 2015/847 of the European Parliament and of the Council, of May 20, 2015 Regarding information accompanying transfers of funds and repealing Regulation (EC) no. 1781/2006 of November 15, 2006. Joint Committee Report on Risks and Vulnerabilities in the EU Financial System On May 5, 2015, the Joint Committee of European Supervisory Authorities issued a joint report on the risks and vulnerabilities in the European Union financial system, highlighting that in the last six months these risks have not changed, but have rather increased. This report is available at www.eba.europa.eu. Bank of Portugal Instructions Instruction no. 2/2015, which has entered into force on April 1, 2015, sets forth the maximum interest rates applicable during the second quarter of 2015 to credit agreements entered into with consumers, pursuant to Decree-Law no. 133/2009, of June 2. Instruction no. 3/2015, which has entered into force on May 1, 2015, establishes uniform rules for the implementation of the Eurosystem’s single monetary policy. Instruction no. 4/2015, which has entered into force on June 3, 2015, imposes the sending of information relating to natural persons, per institution, who are remunerated EUR 1 million or more per financial year. Instruction no. 5/2015, which has entered into force on June 3, 2015, requests the sending of all information elements regarding the remunerations of all the employees and regarding the identified employees. Instruction no. 6/2015, which has entered into force on June 22, 2015, amends Instruction no. 54/2012, published in the Official Bulletin no. 1, of January 15, 2013, which regulated TARGET2-PT. Instruction no. 10/2014, which has entered into force on June 29, 2015, characterizes and regulates the Guarantee Asset Management and Operations System (COLMS). Bank of Portugal Circular Letters Circular Letter no. 26/2015/DSC, of March 30, 2015, published on April 15, 2015, transmits the Bank of Portugal’s understanding regarding the repercussion of the WWW.CUATRECASAS.COM NEWSLETTER I FINANCE AND CAPITAL MARKETS 5/7 possible evolution of the Euribor interest rates to negative values in credit and financing agreements entered into with clients. Circular Letter no. 3/2015/DET, of April 8, 2015, published on April 15, 2015, making available a service for the dissemination of information regarding situations of loss, theft, falsification, counterfeiting and illegal usage of personal identification documents. Revokes Circular Letter no. 29/2009/DET, of October 8, 2009. B. Insurance Law: Institutional and Material EIOPA - Opinion on the preparation for Internal Model applications On April 14, 2015, the European Insurance and Occupational Pensions Authority (“EIOPA”) issued an Opinion addressed to the National Competent Authorities represented in EIOPA’s Board of Supervisors. This Opinion concerns the preparation to the application to use an Internal Model for the calculation of the Solvency Capital Requirement. EIOPA – Financial Stability Report of May 2015 On May 29, 2015, the EIOPA published its Financial Stability Report of May 2015, mentioning that the risks identified in the previous Report, dated of December 2014, remain broadly unchanged. ASF Regulation no. 2/2015-R, of June 4, 2015 Setting forth the indexes to consider in the fire and natural disasters insurance agreements beginning or terminating in the 3rd quarter of 2015. C. Securities and Capital Markets Law no. 55/2015 - Official Gazette no. 120, Series I of June 23, 2015 Fifth amendment to Law no. 5/2002, of January 11, which implemented measures aiming to combat organized and financial-economical crime, so as to include all criminal offenses related to terrorism. Law no. 62/2015 - Official Gazette no. 121, Series I of June 24, 2015 Sixth amendment to Law no. 25/2008, of June 5, which implemented measures aiming for the prevention and suppression of illicitly originated benefits from money laundering and of the financing of terrorism. Joint Understanding by the CMVM and Banco de Portugal, of June 2, 2015 Regarding the authorization and registry requests sent from the entities that manage alternative investment undertakings, clarifying the application of Law no. 16/2015, of February 24, 2015. Directive (EU) no. 2015/849 of the European Parliament and of the Council of May 20, 2015 WWW.CUATRECASAS.COM NEWSLETTER I FINANCE AND CAPITAL MARKETS 6/7 On the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) no. 648/2012 of the European Parliament and of the Council of July 4, 2012, and repealing Directive 2005/60/EC of the European Parliament and of the Council of October 26, 2005, and Commission Directive 2006/70/EC of August 1, 2006. Joint-Committee Report on Securitization On May 12, 2015, the Joint Committee of the three European Supervisory Authorities (“ESAs”) published a report detailing its findings and recommendations regarding the disclosure requirements and obligations relating to due diligence, supervisory reporting and retention rules in existing EU law on Structured Finance Instruments (“SFIs”). This report is available at www.esma.europa.eu. III RELEVANT COURT DECISIONS Lisbon Court of Appeal, Decision of April 28, 2015, Procedure no. 540/11.6 The Court considered that there is an abnormal change in circumstances if the party, given the lack of information provided by the Bank, entered into the agreement foreseeing only a one-off decline in the 3M Euribor Rate given the usual fluctuations of the market, and not foreseeing a prolonged and sharp decline of said rate arising from a persistent international crisis. Coimbra Court of Appeal, Decision of May 5, 2015, Procedure no. 70/13.1 The Court has decided that an objection of limitation by the defendant Bank, in what regards the Author’s claim for restitution of capital applied in commercial paper of a (now broke) company formerly belonging to the same business group as the Bank shall not be considered has an abuse of rights, as venire contra factum proprium, since it does not manifestly exceed the limits imposed by good faith, if it has only been ascertained that, in an undetermined date, the defendant Bank transmitted to the Author that there was in course a restructuring, but that reimbursement was still guaranteed. Lisbon Court of Appeal, Decision of May 7, 2015, Procedure no. 1911/13.9 The Court considered that the repayment guarantee for which Fundo de Garantia de Depósitos is responsible shall only include the banking deposits, which under all legal and contractual conditions must be restituted by the credit institution and that consist in monetary liabilities available in an account, and the funds represented by bank certificates of deposit issued by the credit institution, in other words, the banking deposits in the narrow sense, thereby excluding credit balances or credits arising from any investment operations – article 154 and following of the General Regime for Credit Institutions and Financial Companies. Supreme Court of Justice, Decision of May 14, 2015, Procedure no. 1520/04.3 In this decision the Court decided to unify jurisprudence in what regards the demand for payment of default interest, stating the following: “If the author fails to demand default interest in the application initiating procedures, or in an ulterior document amplifying WWW.CUATRECASAS.COM NEWSLETTER I FINANCE AND CAPITAL MARKETS 7/7 said application, the Court may not condemn the defendant in the payment of said default interest.”. 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. (351) 21 355 3800 I Fax (351) 21 353 2362 email@example.com I www.cuatrecasas.com PORTO Avenida da Boavista, 3265 – 5.1 I 4100-137 Porto I Portugal Tel. 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