NEWSLETTER I FINANCE AND CAPITAL MARKETS
CONTENTS FINANCE AND CAPITAL MARKETS NEWSLETTERI 3RD QUARTER 2017 I NOTICE OF THE BANK OF PORTUGAL NO. 4/2017 II LEGISLATION
A. BANKING LAW: INSTITUTIONAL AND MATERIAL B. INSURANCE LAW: INSTITUTIONAL AND MATERIAL C. SECURITIES AND CAPITAL MARKETS III RELEVANT COURT DECISIONS
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FINANCE AND CAPITAL MARKETS NEWSLETTER
I NOTICE OF THE BANK OF PORTUGAL NO. 4/2017
By Notice No. 4/2017 ("Notice"), the Bank of Portugal specifies the procedures and criteria to be observed by the lenders (entities entitled to carry out, on a professional basis, the activity of credit granting in Portugal) whilst assessing the consumers' creditworthiness, not only in connection with the granting of housing credit, mortgage loans or equivalent agreements, governed by Decree-Law No. 74-A/2017, of June 23, but also in connection with consumer credit agreements governed by Decree-Law No. 133/2009, of June 2.
Only the so-called credit overrunning and the credit agreements designed to prevent or to regularize events of default (namely through refinancing or consolidation of other credit agreements, as well as through amendment of the terms and conditions of existing credit agreements) are excluded from the scope of the Notice.
Main features of the new legal regime
For the purpose of pursuing the goal of promoting a responsible granting of credit, the lending institutions must assess the consumers' creditworthiness, considering, among other elements that they deem relevant: a) the nature, amount and characteristics of the credit agreement; b) the consumer's age and professional situation; c) the income earned by the consumer; d) the consumer's regular expenses and e) fulfilment by the consumer of the obligations undertaken under other credit agreements.
As part of the creditworthiness assessment, the lending institutions may determine the consumer's regular income and expenses by estimate, on the basis of information which they consider sufficient, whenever the execution of a credit agreement or the increase of the total credit amount is concerned, provided that the amount at stake is equal to or less than the value equivalent to ten times the minimum monthly guaranteed remuneration.
In the assessment of the consumer's creditworthiness, the institutions must take into consideration any future circumstances that, being foreseeable, may have a negative impact on the consumers' overall level of indebtedness and on their capacity to fulfill the obligations arising from the credit agreement.
The lending institutions must expressly inform the consumer that failure to provide information or to deliver the requested documents, as well as the provision of false or outdated information, results in the credit not being granted, or, where appropriate, the total amount of the credit not being increased.
The lending institutions must create, on durable medium, individual processes for the consumers whose creditworthiness has been assessed. The individual processes must include
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all the relevant information for the consumer's creditworthiness assessment and include a description of the criteria used, the elements and documentation considered and their conclusion. The lending institutions must keep the individual processes for as long as the credit agreement remains in full force and effect and within a subsequent period of 5 years counting from the date of termination of said agreement.
The lending institutions are also obliged to prepare and implement internal procedures for the consumer's creditworthiness assessment which must specify, namely: i) the information and documents to be requested to the consumers; ii) the method and the criteria used in the consumer's creditworthiness assessment; iii) the organizational units with responsibility in the consumer's creditworthiness assessment process and iv) the procedures to be adopted by the employees involved in the process of credit granting in connection with the consumers' creditworthiness assessment.
Finally, it should be noted that the Notice enters into force on January 1, 2018, for the housing credit agreements, mortgage loan and equivalent agreements, and on July 1, 2018 for consumer's credit agreements.
A. Banking Law: Institutional and Material
Decree-Law No. 81-C/2017 Official Gazette No. 130/2017, 2nd Supplement, Series I July 7, 2017
In the exercise of the legislative authorization granted by Law No. 46-A/2017, July 5, approves the legal regime establishing the access and exercise requirements of the credit intermediary activity and of the provision of advisory services regarding credit agreements, partially transposing into Portuguese law the Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property.
Decree-Law No. 89/2017 - Official Gazette No. 145/2017, Series I of July 28, 2017
Disclosure of non-financial and diversity information by certain large undertakings and groups, transposing the Directive 2014/95/EU. The Decree-Law establishes that the issuers of shares admitted to trading on a regulated market of a Member State of the European Union, which are large companies, must present a description of the diversity policy implemented by the company regarding its administrative and supervisory bodies, namely, in terms of age, sex, background and professional qualifications, the goals of that diversity policy, the way in which it was implemented and the results in the reference period.
Law No. 69/2017 - Official Gazette No. 155/2017, Series I of August 11, 2017
Regulates the Debt Recovery funds, which constitute autonomous assets, belonging to a plurality of people, natural or legal, and which have as sole purpose the purchasing of credits
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held by non-qualified investors arising or related to the subscription of debt securities subject to Portuguese law, or traded in the Portuguese territory, though contingent or future, in order to enhance its recuperation and mitigate the losses suffered by the investors holding such securities, inclusive and continuously, since the date of the resolution measure applied to the credit institution concerned.
Law No. 83/2017 - Official Gazette No. 159/2017, Series I of August 18, 2017
Establishes preventive and repressive measures for the fight against money laundering and terrorism financing whilst partially transposing into Portuguese law the Directive 2015/849/EU of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, as well as the Council Directive 2016/2258/EU of 6 December 2016 amending the Directive 2011/16/EU, with regard to the access to anti-money-laundering information by tax authorities. It also establishes the national measures required to the effective implementation of Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on information accompanying transfers of funds and amends the Portuguese Penal Code and the Portuguese Industrial Property Code. This decree revoked Law No. 25/2008, of June 5, establishing, therefore, a new anti-money laundering and terrorism financing legal framework.
Law No. 89/2017 - Official Gazette No. 160/2017, 1st Supplement, Series I of August 21, 2017
Approves the Legal Regime of the Central Register of Beneficial Ownership, provided for in Law no. 83/2017, of August 18, transposing into Portuguese law Chapter III of the Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.
Decree-Law No. 107/2017 - Official Gazette No. 167/2017, Series I of August 30, 2017
Establishes the rules applicable to the transparency and to comparability of fees charged to consumers by payment bank accounts hold by them, to the switching of payment account, and to cross-border account-opening by consumers. The Decree Law transposes into Portuguese Law the Directive 2014/92/EU on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features.
On July 5, the Commission issued Guidelines about the methodology for reporting non-financial information. It is available for consultation on OJEU C215/1, pursuant to Article 2 of Directive 2014/95/EU of the European Parliament and of the Council, of 22 October 2017, on disclosure of non-financial and diversity information by certain large undertakings and groups. The communication has been prepared in order to help companies concerned disclose non-financial information in a relevant, useful, consistent and more comparable manner. This documented was published in OJEU C 215/1.
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Commission Delegated Regulation (EU) 2017/1230, of 31 May 2017, OJEU L177, dated July 8, 2017
The present Regulation supplements Regulation (EU) No. 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards further specifying the additional objective criteria for the application of a preferential liquidity outflow or inflow rate for cross-border undrawn credit or liquidity facilities within a group or an institutional protection scheme.
Commission Implementing Regulation (EU) 2017/1443, of 29 June 2017, OJEU L 213, dated August 17, 2007
The present Regulation amends Implementing Regulation (EU) No. 680/2014 laying down implementing technical standards with regards to supervisory reporting of institutions according to Regulation (EU) No 575/2013 of the European Parliament and of the Council.
European Central Bank
Decision (EU) 2017/1198 of the European Central Bank, of 27 June 2017, OJEU L 172, dated July 5, 2017
This present Decision requires national competent authorities to provide the funding plans of certain significant and less significant credit institutions to the ECB, and lays down procedures concerning the submission to the ECB of such funding plans.
Decision (EU) 2017/1493 of the European Central Bank, of 3 August 2017, OJEU L 216, dated August 22, 2017
The present Decision amends Decision ECB/2014/29 on the provision to the European Central Bank of supervisory data reported to the national competent authorities by the supervised entities pursuant to Commission Implementing Regulation (EU) No 680/2014 (ECB/2017/23).
Regulation (EU) 2017/1538 of the European Central Bank, of 25 August 2017, OJEU L 240, dated September 19, 2017
The present Regulation amends Regulation (EU) 2015/534 on reporting of supervisory financial information (ECB/2017/25).
Regulation (EU) 2017/1539 of the European Central Bank, of 25 August 2017, OJEU L 240, dated September 19, 2017
The present Regulation lays down the date of application of Regulation (EU) 2017/1538 amending Regulation (EU) 2015/534 on reporting of supervisory financial information (ECB/2017/25) to less significant supervised entities which are subject to national accounting frameworks (ECB/2017/26).
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Bank of Portugal Notices
Notice No. 5/2017 - Portuguese Official Gazette No. 184/2017, Series II, dated September 22, 2017 which will enter into force on January 1, 2018 The present Notice establishes the rules to be observed by lenders in the definition of the remuneration policy of employees involved in the elaboration, commercialization and granting of credit agreements, as well as the rules to be observed by the lenders within the duty to assist the consumer and regarding information applicable to lenders during the credit agreements period.
Notice No. 4/2017 - Portuguese Official Gazette No. 184/2017, Series II, dated September 22, 2017 which will enter into force on January 1, 2018 Establishes procedures and criteria to be observed in the consumers' creditworthiness assessment by the credit providers.
Notice No. 3/2017 - Portuguese Official Gazette No. 126/2017, Series II, dated July 3, 2017 which has entered into force on July 4, 2017 Amends Article 14(2) and Article 18(5) of Notice No. 5/2013, of December 18, which regulated the conditions, mechanisms and procedures set forth by Law No. 25/2008, of June 5, in connection with the provision of financial services subject to the supervision of the Bank of Portugal.
Bank of Portugal Instructions
Instruction No. 14/2017, which has entered into force on October 1, 2017, publishes the maximum rates in credit agreements for consumers governed by Decree-Law No 133/2009, of June 2, applicable in the fourth quarter of 2017.
Instruction No. 9/2017, which has entered into force on July 4, 2017, identifies and sets out the requirements applicable to procedures for proving the identifying elements set forth by Article 18(5)(c) of Notice No. 5/2013, of December 18, in opening accounts through the use of means of distance communication.
B. Insurance Law: Institutional and Material
Commission Delegated Regulation (EU) 2017/653, of 8 March 2017, L 210, dated August 15, 2017
The present Regulation supplements Regulation (EU) No. 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurancebased investment products (PRIIPs), by laying down regulatory technical standards with regard to the presentation, content, review and revision of key information documents and the conditions for fulfilling the requirement to provide such documents.
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On July 7, the Commission issued Guidelines on the application of Regulation (EU) No. 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurance-based investment products (PRIIPs). This Communication seeks to further facilitate the implementation of, and the compliance with, Regulation. This documented was published in OJEU C 218/11.
ASF Regulation No. 5/2017-R, August 18, 2017
Establishes the quarterly indexes of capital for the updating of the insurance policies of the "Fire and elements of nature", starting or maturing in the fourth quarter of 2017.
C. Securities and Capital Markets
Rectification Statement No. 22/2017 - Official Gazette No. 164/2017, Series I of August 25, 2017 Presidency of the Council of Ministers - General Secretariat
Amends the Decree-Law No. 77/2017, of June 30, creating measures to stimulate the capital market, in order to diversify the companies' sources of funding, published in the Official Gazette, 1st Supplement, No. 125, June 30, 2017.
Law No. 104/2017 - Official Gazette No. 167/2017, Series I of August 30, 2017
Partially transposes into Portuguese Law the Directive 2014/91/EU of the European Parliament and of the Council of 23 July 2014, on depositary functions, remuneration policies and sanctions, amending the Portuguese Securities Code and General Regime of the Collective Investment Undertakings.
Decree-Law No. 123/2017 - Official Gazette No. 185/2017, Series I of September 25, 2017
Establishes the regime for converting bearer securities into registered securities, pursuant to Law No. 15/2017, of May 3.
Law No. 62/2017 - Official Gazette No. 147/2017, Series I of August 1, 2017
Establishes the legal regime applicable in order to a balanced representation of women and men in the administrative and supervisory bodies of public state owned enterprises and listed companies.
Implementing Decree No. 8/2017 - Official Gazette No. 166/2017, Series I of August 29, 2017
Regulates the indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds, ensuring the implementation of Regulation (EU) No. 2016/2011, appointing, for this purpose, the competent authorities for the supervision of the managers of significant benchmarks and of the supervised entities which are contributors of input data or benchmarks users.
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III RELEVANT COURT DECISIONS
Lisbon Court of Appeal Decision of July 13, 2017 (Court Suit No. 22343/16.1)
The present proceeding addressed the counting of the statute of limitation of the insured's right to the insured sum. The Court considered Article 306 of the Portuguese Civil Code, which makes the counting of the statute of limitation depend on the possibility of exercising the right, and Article 121(2) of the Legal Regime of Insurance Contract, approved by Decree-Law no. 72/2008, April 16, which establishes as rule for the commencement of the counting of this period, the acknowledgement of the right by the relevant holder.
The Court hold that, as the knowledge of a right and the possibility of its exercise do not have to necessarily coincide, it is in the article of the Portuguese Civil Code that we find the general rule on this matter, since the rationale behind this institute consists in penalizing the holder for their inertia in the exercise of a right, in the interest of the legal certainty in the definition of situations. Accordingly, the court sustained that it is only possible to start counting the statute of limitation period when the conditions for prosecuting the debtor are verified.
Therefore, if an insurer reports to the insured that, until the submission of a certain medical examination and its subsequent decision, it is not in breach of the obligation arising from the insurance contract, the insurer is thereby recognizing the unenforceability of the obligation. Consequently, the statute of limitation period may only start to be counted from the date of receipt of the letter with the result of the insured's medical examinations.
Evora Court of Appeal Decision of September 14, 2017 (Court Suit No. 2829/16.9)
In this proceeding, it has been discussed whether in connection with a divorce procedure it would be possible to waive the banking secrecy for the purposes of an interim enforcement procedure of enrollment. Once the necessary steps have been taken for enforcing the enrollment procedure related to the bank accounts, the requested elements were not provided because they were covered by banking secrecy, according to Article 78 of Decree-Law no. 298/72, of December 31 (General Regime of Credit Institutions and Financial Companies), and because none of the exceptions established in Article 79 of the same decree were deemed as applicable.
The Court held that the banking secrecy's right is not an absolute right, and may, as a consequence, be waived wherever there is a relevant interest to attend, namely, the necessity to safeguard the right of access to justice and to judicial protection. Thus, in the concrete case, the applicant intended to define the patrimony of the married couple, in order to protect the individual patrimony and/or the assets belonging jointly to both spouses. The Court considered that the risk of a damage, serious and difficult to repair, could only be mitigated by this assessment of the assets comprised within the patrimony of the married couple and that therefore, said reason was sufficient to mitigate and prejudice the banking secrecy duty. Based on the above, the Court concluded that the exceptional measure of breaching of banking
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secrecy was justified, since, in the situation at stake, the interest in cooperating for discovering the truth should prevail.
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