Legal Focus Monthly Newsletter Expert Opinion December 2014 Banking and Finance Law Romanian branches of credit institutions from other Member States subject to certain new conditions on regular statistical financial and accounting reports The new regulation aimed to ensure the appropriate conditions for the application of the FINREP reporting framework at the individual level by Romanian credit institutions, but also ensuring comparability of statistical financial and accounting reporting information by Romanian branches of credit Capital Markets Miruna Suciu Partner Material legislative amendments concerning capital markets The Government of Romania adopted a new legislative document bringing forth material amendments to the relevant laws governing capital markets, in order to carry on the economic and financial reforms in view of maintaining the economic stability, in the context of the current worldwide financial crisis and in an attempt to appropriately improve the relevant legal frame work. Thus, a significant amendment brought about by the new legislative document consists in the change of the majority conditions in the case of forfeiting the right of preference following an increase of the share capital by contribution in cash or in kind. In the case of increases of share capital by contribution in cash, forfeiture of the shareholders’ right of preference to underwrite the new shares needs to be decided in the Extraordinary General Meeting of Shareholders, with the attendance of shareholders representing at least 3/4 of the underwritten share capital, and with the vote of shareholders holding at least 2/3 of the voting rights. At the same time, share institutions from other Member States with similar information reported by the credit institutions. The guidelines amended by Order no. 10/2014 of the National Bank of Romania envisaged the international standards for financial reporting, applicable to credit institutions for purposes of prudential supervision. Thus, in preparing the new order, several key issues were taken into account: correlation of the FINREP reporting frame at individual level with the consolidated level reporting as provided under Regulation (EU) no. 680/2014, by taking over the amendment to the FINREP reporting frame at consolidated level, approved by EBA in July 2014; update of the statistical financial and accounting information reporting frame, applicable to the Romanian branches of credit institutions from other Member States, according to the amendments made to the FINREP reporting frame, at an individual level; update of the harmonization with the chart of accounts for reports, in accordance with the amendments made to the accounting regulation frame in force; including provisions referring to the electronic submission of reports; and amendment of the format of forms F20.04 - F20.07 in the FINREP financial statements at an individual level and the correlations within such forms, with a view to simplifying the subsequent submission of such reports, as hard copies. Order no. 10/2014 of the National Bank of Romania amends Order no. 5/2014 approving the Guidelines for the preparation of regular reports containing I 2 capital increases by contributions in kind need to be statistical financial and accounting information, applicable to the Romanian approved by the extraordinary general meeting of branches of credit institutions from other Member States and Order no. 6/2014 representing at least 3/4 of the underwritten share an individual level. shareholders, with the attendance of shareholders capital, and with the vote of shareholders approving the Guidelines for the preparation of FINREP financial statements at representing at least 2/3 of the voting rights. The Order was published in Official Another significant amendment refers to the raise of 16 December 2014 and shall come the holding thresholds in market operators. No Gazette of Romania no. 914 of into force starting with the regular shareholder of a market operator may hold, directly reports, more specifically the act in concert, more than 20% of the overall voting individual level prepared for the market operator, an operation that would trigger a for certain provisions expressly or jointly with the individuals/entities with which they rights. Any purchase or alienation of shares in a holding of more or decrease below the above- mentioned threshold, needs to be notified to the market operator. The purchase of shares in the market operator in excess of the 20% threshold shall also be previously subject to the approval of the Romanian Financial Supervisory Authority (A.S.F.), while the alienation of shares in excess of such threshold has to be notified to A.S.F., as well. At the same time, the provisions of the new legislative document stipulate the supplementation of the category of securities by also enclosing under this category the State bonds with a due date shorter than 12 months, negotiable on the market. Furthermore, it simplifies the corporate activity in the field of capital markets in respect of the shareholder’s representation in the General Meetings of Shareholders, representation which may also take place through individuals other than the shareholders, in accordance with a limited or general power of attorney. Among the significant amendments, there are also the provisions relating to the initial capital of a S.S.I.F. (Financial Intermediary Company), in particular harmonization of the relevant provisions in this field with those of the European law, more specifically with the provisions of Regulation (EU) no. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) no. 648/2012. The new legislative document was published in Official Gazette of Romania no. 964 of 30 December 2014 and came into effect on 9 January 2015. For further details, please see Emergency Ordinance no. 90/2014 amending and supplementing Law no. 297/2004 on capital markets. FINREP financial statements at an date of 31 January 2015, except stipulated in the new regulation, which became effective upon the publication date. Credit institutions - subject to obligations relating to prudential requirements The National Bank of Romania issued a new Regulation supplementing Regulation no. 5/2013 of the National Bank of Romania on prudential requirements for credit institutions. The main amendments refer to the provision on new obligations incumbent upon credit institutions: the obligation to set up risk management policies, procedures and inspections to ensure that risks associated with the management of securities and encumbrances over assets are appropriately identified, monitored and tackled; such policies shall take into consideration the business model of each credit institution, the Member States where it operates, the specificity of financial markets and the macro-economic context; in order to have in place the necessary capacity to identify all the significant types of liquidity risk concentrations, credit institutions shall have a good understanding of the financing structure and of the asset structure and be aware of all the primary factors influencing them over the time, including commitments outside the balance sheet or vulnerabilities deriving from the financing and asset structure; credit institutions operating in several countries and in several currencies shall have access to various financing sources in each currency in which the credit institution holds significant positions; in order to determine the level of liquidity risk concentration, credit institutions shall use quantitative indicators to fill in the qualitative assessments of liquidity risk concentrations; or credit institutions shall include, in their contingency plans, strategies to take into consideration the contingent encumbrance generated by relevant crisis situations, such as a downgrading of the credit institution’s rating, depreciation of garnished assets and increases of margin requirements. I 3 Regulation no. 5/2014 was published in Official Gazette of Romania no. 963 of 30 December 2014 and came into effect upon its publication. Labor and Social Security Employers faced with a new minimum gross base salary at a national level Starting with 1 January 2015, the minimum gross base salary at a national level has been increased, from RON 900, to RON 975, for a normal working period of 168.667 hours, in average, per month in 2015, meaning RON 5.781/hour. The provisions of the Government Decision are mandatory for all companies, setting forth base salaries below the level stipulated above amounting to a misdemeanor, which may be punished by fine between RON 1,000 and RON 2,000. The companies whose employees have a gross base salary below RON 975 have the obligation to implement the amendments brought by the Government Decision. The new legislative document was published in Official Gazette of Romania no. 902 of 11 December 2014. For more details, please see Government Decision no. 1091/2014 setting forth the minimum gross base salary at a national level, guaranteed for payment. Aviation, Shipping and Transportation Ratification of the Protocol on the protection of the marine environment of the Black Sea against pollution originating from sources and activities on shore The purpose of the protocol consists in maximizing the prevention, control and removal of pollution originating from sources and activities on shore in view of maintaining a proper ecologic condition of the Black Sea, also including marine and coastline ecosystems. The protocol shall apply to: ● emissions of polluting substances originating from punctual and diffuse sources on shore, which may entail a quantifiable negative effect on the marine environment or the coastline of the Black Sea; ● intake of polluting substances transported through the air into the marine environment of the Black Sea from sources originating on shore; ● activities which could directly or indirectly affect the marine environment or coastline of the Black Sea. Law no. 158/2014 was published in Official Gazette of Romania no. 894 of 9 December 2014 and became effective three days after its publication date. For more details, please see Law no. 158/2014 ratifying the Protocol on the protection of the marine environment of the Black Sea against pollution originating from sources and activities on shore. Approving the National Quality Control Program in the field of civil aviation security – PNCC - SECA The national quality control program in the field of civil aviation security (PNCC - SECA) aims to monitor the accurate and efficient fulfillment of the security requirements in relation to civil aviation and to determine the level of compliance with the provisions of Regulation no. 300/2008 of the European Parliament and of the Council of 11 March 2008 on common rules in the field of civil aviation security and repealing Regulation (EC) no. 2320/2002. Among the operators and entities subject to quality control, there are: air carriers, civil airports in Romania, technical entities for ground operation, aircraft maintenance and repair, having duties relating to aircraft protection, etc. I 4 The competent authority in the field of civil aviation security at a national level shall coordinate and monitor the implementation of PNCC - SECA. Order no. 1613/2014 was published in Official Gazette of Romania no. 915 of 16 December 2014 and came into effect on 1 January 2015. For more details, please see Order no. 1613/2014 approving the National Quality Control Program in the field of civil aviation security – PNCC – SECA. Bucharest Headquarters 43 Aviatorilor Blvd. 1st District, Code 011853 Bucharest, Romania Cluj Office 18-20 Calea Dorobantilor, 6th floor Code 400117 Cluj-Napoca, Romania Tel: (40-21) 202.59.00; (40-31) 423.29.00 Fax: (40-21) 223.39.57 / 223.04.95 Email: [email protected] Website: www.musat.ro Tel: (40-264) 40.38.08; (40-21) 202.59.99 Fax: (40-264) 40.38.09 Email: [email protected] Website: www.musat.ro This report is a summary of recently published legislative acts, which we deem important for our clients and friends, and for the Romanian business environment in general. The report does not provide legal advice with regard to particular aspects. Should you require additional information and/or comments with regard to the legislative acts or to specific legal matters, please contact us. Luminiţa Popa [email protected] tel: (40-21) 202.59.12 Anca Buta Muşat [email protected] tel: (40-21) 202.59.09