Common Position (EC) No 43/2000 of 17 July 2000 adopted by the Council, acting in accordance with the procedure referred to in Article 251 of the Treaty establishing the European Community, with a view to adopting a Directive of the European Parliament and of the Council on the reorganisation and winding up of credit institutions
Date: 2000-07-17
Institutions: Council of the European Union
Subjects: EU Member State, branch, credit institution, liquidation, management audit

20.10.2000

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Official Journal of the European Communities

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COMMON POSITION (EC) No 43/2000

adopted by the Council on 17 July 2000

with a view to adopting Directive 2000/.../EC of the European Parliament and of the Council of ...
on the reorganisation and winding up of credit institutions

(2000/C 300/02)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European Com-
munity, and in particular Article 47(2) thereof,

that, while they are in operation, a credit institution
and its branches form a single entity subject to the
supervision of the competent authorities of the State
where authorisation valid throughout the Community
was granted.

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the Economic and Social
Committee (2),

Having regard to the opinion of the European Monetary
Institute (3),

Acting in accordance with the procedure laid down in
Article 251 of the Treaty (4),

Whereas:

(1)

(2)

(3)

In accordance with the objectives of the Treaty, the
harmonious and balanced development of economic
activities throughout the Community should be pro-
moted through the elimination of any obstacles to the
freedom of establishment and the freedom to provide
services within the Community.

At the same time as those obstacles are eliminated,
consideration should be given to the situation which
might arise if a credit institution runs into difficulties,
particularly where that institution has branches in other
Member States.

This Directive forms part of the Community legislative
the
framework set up by Directive 2000/12/EC of
European
of
the Council
and
20 March 2000 relating to the taking up and pursuit of
the business of credit institutions (5). It follows therefrom

Parliament

of

(1) OJ C 356, 31.12.1985, p. 55. OJ C 36, 8.2.1998, p. 1.
(2) OJ C 263, 20.10.1986, p. 13.
(3) OJ C 332, 30.10.1998, p. 13.
(4) Opinion of the European Parliament of 13 March 1987 (OJ C 99,
13.4.1987, p. 211), confirmed on 2 December 1993 (OJ C 342,
20.12.1993, p. 30), Council Common Position of 17 July 2000
and Decision of the European Parliament of ... (not yet published
in the Official Journal).

(5) OJ L 126, 26.5.2000, p. 1. Directive as amended by Directive

(4)

(5)

(6)

(7)

It would be particularly undesirable to relinquish such
unity between an institution and its branches where it is
necessary to adopt reorganisation measures or open
winding-up proceedings.

The adoption of Directive 94/19/EC of the European
Parliament and of the Council of 30 May 1994 on
deposit-guarantee schemes (6), which introduced the
principle of compulsory membership by credit insti-
tutions of a guarantee scheme in their home Member
State, brings out even more clearly the need for mutual
recognition of reorganisation measures and winding-up
proceedings.

The administrative or judicial authorities of the home
Member State must have sole power to decide on and to
implement the reorganisation measures provided for in
the law and practices in force in that Member State.
Owing to the difficulty of harmonising Member States’
laws and practices, it is necessary to establish mutual
recognition by the Member States of the measures taken
by each of
them to restore to viability the credit
institutions which it has authorised.

is essential

to guarantee that

It
the reorganisation
measures adopted by the administrative or judicial
authorities of the home Member State and the measures
adopted by persons or bodies appointed by those
authorities to administer those reorganisation measures,
including measures involving the possibility of a suspen-
sion of payments, suspension of enforcement measures
or reduction of claims and any other measure which
could affect third parties’ existing rights, are effective in
all Member States.

2000/28/EC (OJ L ...).

(6) OJ L 135, 31.5.1994, p. 5.

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(8)

(9)

Certain measures, in particular those affecting the func-
tioning of the internal structure of credit institutions or
managers’ or shareholders’ rights, need not be covered
by this Directive to be effective in Member States in so
far as, pursuant to the rules of private international law,
the applicable law is that of the home State.

Certain measures, in particular those connected with the
continued fulfilment of conditions of authorisation, are
already the subject of mutual recognition pursuant to
Directive 2000/12/EC in so far as they do not affect the
rights of third parties existing before their adoption.

(10) Persons participating in the operation of the internal
structures of credit institutions as well as managers and
shareholders of such institutions, considered in those
capacities, are not to be regarded as third parties for the
purposes of this Directive.

(11)

It is necessary to notify third parties of the implemen-
tation of reorganisation measures in Member States
where branches are situated when such measures could
hinder the exercise of some of their rights.

(12) The principle of equal treatment between creditors, as
regards the opportunities open to them to take action,
requires the administrative or judicial authorities of the
home Member State to adopt such measures as are
necessary for the creditors in the host Member State to
be able to exercise their rights to take action within the
time limit laid down.

(13) There must be some coordination of the role of the
administrative or judicial authorities in reorganisation
measures and winding-up proceedings for branches
of credit institutions having head offices outside the
Community and situated in different Member States.

(14)

In the absence of reorganisation measures, or in the
event of such measures failing, the credit institutions in
difficulty must be wound up. Provision should be made
in such cases for mutual recognition of winding-up
proceedings and of their effects in the Community.

(15) The important role played by the competent authorities
of the home Member State before winding-up proceed-
ings are opened may continue during the process of
winding up so that these proceedings can be properly
carried out.

them by the law of the home Member State, except
where this Directive provides otherwise.

(17) The exemption concerning the effects of reorganisation
measures and winding-up proceedings on certain con-
tracts and rights is limited to those effects and does
not cover other questions concerning reorganisation
measures and winding-up proceedings such as the
lodging, verification, admission and ranking of claims
concerning those contracts and rights and the rules
governing the distribution of the proceeds of the realis-
ation of the assets, which are governed by the law of the
home Member State.

(18) Voluntary winding up is possible when a credit insti-
tution is solvent. The administrative or judicial auth-
orities of the home Member State may nevertheless,
where appropriate, decide on a reorganisation measure
or winding-up proceedings, even after voluntary winding
up has commenced.

(19) Withdrawal of authorisation to pursue the business of
banking is one of the consequences which winding up a
credit institution necessarily entails. Withdrawal should
not, however, prevent certain activities of the institution
from continuing in so far as is necessary or appropriate
for the purposes of winding up. Such a continuation of
activity may none the less be made subject by the home
Member State to the consent of, and supervision by, its
competent authorities.

(20) Provision of information to known creditors on an
individual basis is as essential as publication to enable
them, where necessary, to lodge their claims or submit
observations relating to their claims within the pre-
scribed time limits. This should take place without
discrimination against creditors domiciled in a Member
State other than the home Member State, based on their
place of residence or the nature of their claims. Creditors
must be kept regularly informed in an appropriate
manner throughout winding-up proceedings.

(21)

For the sole purpose of applying the provisions of this
Directive to reorganisation measures and winding-up
proceedings involving branches located in the Com-
munity of a credit institution of which the head office is
situated in a third country, the definitions of ‘home
Member State’, ‘competent authorities’ and ‘administrat-
ive or judicial authorities’ should be those of the Member
State in which the branch is located.

(16) Equal treatment of creditors requires that the credit
institution is wound up according to the principles of
unity and universality, which require the administrative
or judicial authorities of the home Member State to have
sole jurisdiction and their decisions to be recognised and
to be capable of producing in all the other Member
States, without any formality, the effects ascribed to

(22) Where a credit institution which has its head office
outside the Community possesses branches in more
than one Member State, each branch should receive
individual treatment in regard to the application of this
Directive. In such a case, the administrative or judicial
authorities and the competent authorities as well as the
administrators and liquidators should endeavour to
coordinate their activities.

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(23) Although it is important to follow the principle that the
law of the home Member State determines all the effects
of reorganisation measures or winding-up proceedings,
both procedural and substantive, it is also necessary to
bear in mind that those effects may conflict with the
rules normally applicable in the context of the economic
and financial activity of the credit institution in question
and its branches in other Member States. In some cases
reference to the law of another Member State represents
an unavoidable qualification of the principle that the law
of the home Member State is to apply.

(29) The confidence of third-party purchasers in the content
of the registers or accounts regarding certain assets
entered in those registers or accounts and by extension
of the purchasers of immovable property should be
safeguarded, even after winding-up proceedings have
been opened or a reorganisation measure adopted. The
only means of safeguarding that confidence is to make
the validity of the purchase subject to the law of the
place where the immovable asset is situated or of the
State under whose authority the register or account is
kept.

(24) That qualification is especially necessary to protect
employees having a contract of employment with a
credit institution, ensure the security of transactions in
respect of certain types of property and protect the
integrity of regulated markets functioning in accordance
with the law of a Member State on which financial
instruments are traded.

(25) Transactions carried out in the framework of a payment
covered by Direct-
system are
and settlement
ive 98/26/EC of the European Parliament and of the
Council of 19 May 1998 on settlement finality in pay-
ment and securities settlement systems (1).

(26) The adoption of this Directive does not call into question
the provisions of Directive 98/26/EC according to which
insolvency proceedings must not have any effect on the
enforceability of orders validly entered into a system, or
on collateral provided for a system.

(27) Some reorganisation measures or winding-up proceed-
ings involve the appointment of a person to administer
them. The recognition of his appointment and his
powers in all other Member States is therefore an
essential factor in the implementation of decisions taken
in the home Member State. However, the limits within
which he may exercise his powers when he acts outside
the home Member State should be specified.

(28) Creditors who have entered into contracts with a credit
institution before a reorganisation measure is adopted or
winding-up proceedings are opened should be protected
against provisions relating to voidness, voidability or
unenforceability laid down in the law of the home
Member State, where the beneficiary of the transaction
produces evidence that in the law applicable to that
transaction there is no available means of contesting the
act concerned in the case in point.

(1) OJ L 166, 11.6.1998, p. 45.

(30) The effects of reorganisation measures or winding-up
proceedings on a lawsuit pending are governed by the
law of the Member State in which the lawsuit is pending,
by way of exception to the application of the lex
concursus. The effects of those measures and procedures
on individual enforcement actions arising from such
lawsuits are governed by the legislation of the home
Member State,
in accordance with the general rule
established by this Directive.

(31) Provision should be made for the administrative or
judicial authorities in the home Member State to notify
immediately the competent authorities in the host
Member State of the adoption of any reorganisation
measure or the opening of any winding-up proceedings,
if possible before the adoption of the measure or the
immediately
opening of the proceedings, or,
afterwards.

if not,

(32) Professional secrecy as defined in Article 30 of Direct-
ive 2000/12/EC is an essential factor in all information
or consultation procedures. For that reason it should be
respected by all the administrative authorities taking
part in such procedures, whereas the judicial authorities
remain, in this respect, subject to the national provisions
relating to them,

HAVE ADOPTED THIS DIRECTIVE:

TITLE I

SCOPE AND DEFINITIONS

Article 1

Scope

1.
This Directive shall apply to credit institutions and their
branches set up in Member States other than those in which
they have their head offices, as defined in Article 1(1) and (3)
of Directive 2000/12/EC, subject to the conditions and exemp-
tions laid down in Article 2(3) of that Directive.

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The provisions of

2.
concerning the
branches of a credit institution having a head office outside
the Community shall apply only where that institution has
branches in at least two Member States of the Community.

this Directive

— ‘regulated market’ shall mean a regulated market within
the meaning of Article 1(13) of Directive 93/22/EEC,

— ‘instruments’ shall mean all the instruments referred to in

Section B of the Annex to Directive 93/22/EEC.

Article 2

Definitions

TITLE II

REORGANISATION MEASURES

For the purposes of this Directive:

A. Credit institutions having their head offices within the
Community

— ‘home Member State’ shall mean the Member State of
origin within the meaning of Article 1(6) of Direct-
ive 2000/12/EC,

Article 3

— ‘host Member State’ shall mean the host Member State
of Direct-

of Article 1(7)

the meaning

within
ive 2000/12/EC,

— ‘branch’ shall mean a branch within the meaning of

Article 1(3) of Directive 2000/12/EC,

— ‘competent authorities’ shall mean the competent auth-
orities within the meaning of Article 1(4) of Direct-
ive 2000/12/EC,

— ‘administrator’ shall mean any person or body appointed
by the administrative or judicial authorities whose task is
to administer reorganisation measures,

— ‘administrative or judicial authorities’ shall mean such
administrative or judicial authorities of the Member States
as are competent for the purposes of reorganisation
measures or winding-up proceedings,

— ‘reorganisation measures’ shall mean measures which are
intended to preserve or restore the financial situation of
a credit institution and which could affect third parties’
pre-existing rights,
including measures involving the
possibility of a suspension of payments, suspension of
enforcement measures or reduction of claims,

— ‘liquidator’ shall mean any person or body appointed by
the administrative or judicial authorities whose task is to
administer winding-up proceedings,

— ‘winding-up proceedings’ shall mean collective proceed-
ings opened and monitored by the administrative or
judicial authorities of a Member State with the aim of
realising assets under the supervision of those authorities,
including where the proceedings are terminated by a
composition or other, similar measure,

Adoption of reorganisation measures — applicable law

1.
The administrative or judicial authorities of the home
Member State shall alone be empowered to decide on the
implementation of one or more reorganisation measures in a
credit
including branches established in other
Member States.

institution,

2.
The reorganisation measures shall be applied in accord-
ance with the laws, regulations and procedures applicable in
the home Member State, unless otherwise provided in this
Directive.

They shall be fully effective in accordance with the legislation
of that Member State throughout the Community without any
further formalities, including as against third parties in other
Member States, even where the rules of the host Member State
applicable to them do not provide for such measures or make
their implementation subject to conditions which are not
fulfilled.

The reorganisation measures shall be effective throughout the
Community once they become effective in the Member State
where they have been taken.

Article 4

Information for the competent authorities of the host
Member State

The administrative or judicial authorities of the home Member
State shall without delay inform, by any available means, the
competent authorities of the host Member State of their
decision to adopt any reorganisation measure, including the
practical effects which such a measure may have, if possible
before it is adopted or otherwise immediately thereafter.
Information shall be communicated by the competent auth-
orities of the home Member State.

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Article 5

Article 7

Information for the supervisory authorities of the home
Member State

Duty to inform known creditors and right to lodge claims

Where the administrative or judicial authorities of the host
Member State deem it necessary to implement within their
territory one or more reorganisation measures, they shall
inform the competent authorities of the home Member State
accordingly. Information shall be communicated by the host
Member State’s competent authorities.

Article 6

Publication

1. Where implementation of the reorganisation measures
decided on pursuant to Article 3(1) and (2) is likely to affect
the rights of third parties in a host Member State and where
an appeal may be brought in the home Member State against
the decision ordering the measure,
the administrative or
judicial authorities of the home Member State, the adminis-
trator or any person empowered to do so in the home Member
State shall publish an extract from the decision in the Official
the European Communities and in two national
Journal of
newspapers in each host Member State, in order, in particular,
to facilitate the exercise of the right of appeal in good time.

2.
The extract from the decision provided for in para-
graph 1 shall be forwarded at the earliest opportunity, by the
most appropriate route, to the Office for Official Publications
of
the European Communities and to the two national
newspapers in each host Member State.

3.
The Office for Official Publications of the European
Communities shall publish the extract at the latest within
12 days of its dispatch.

4.
The extract from the decision to be published shall
specify, in the official language or languages of the Member
States concerned, in particular the purpose and legal basis of
the time limits for lodging appeals,
the decision taken,
specifically a clearly understandable indication of the date of
expiry of the time limits, and the full address of the authorities
or court competent to hear an appeal.

5.
The reorganisation measures shall apply irrespective of
the measures prescribed in paragraphs 1 to 3 and shall be fully
effective as against creditors, unless the administrative or
judicial authorities of the home Member State or the law of
that State governing such measures provide otherwise.

1. Where the legislation of the home Member State requires
lodgement of a claim with a view to its recognition or provides
for compulsory notification of the measure to creditors who
have their domiciles, normal places of residence or head offices
in that State, the administrative or judicial authorities of the
home Member State or the administrator shall also inform
known creditors who have their domiciles, normal places of
residence or head offices in other Member States, in accordance
with the procedures laid down in Articles 14 and 17(1).

2. Where the legislation of the home Member State provides
for the right of creditors who have their domiciles, normal
places of residence or head offices in that State to lodge claims
or to submit observations concerning their claims, creditors
who have their domiciles, normal places of residence or head
offices in other Member States shall also have that right in
accordance with the procedures laid down in Articles 16
and 17(2).

B. Credit institutions having their head offices outside the
Community

Article 8

Branches of third country credit institutions

1.
The administrative or judicial authorities of the host
Member State of a branch of a credit institution having its
head office outside the Community shall without delay inform,
by any available means, the competent authorities of the other
host Member States in which the institution has set up
branches which are included on the list referred to in Article 11
of Directive 2000/12/EC and published each year in the Official
Journal of the European Communities, of their decision to adopt
any reorganisation measure,
including the practical effects
which that measure may have, if possible before it is adopted
Information shall be
or otherwise immediately thereafter.
communicated by the competent authorities of
the host
Member State whose administrative or judicial authorities
decide to apply the measure.

The administrative or judicial authorities referred to in

2.
paragraph 1 shall endeavour to coordinate their actions.

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TITLE III

WINDING-UP PROCEEDINGS

A. Credit institutions having their head offices within the
Community

Article 9

Opening of winding-up proceedings — Information to be
communicated to other competent authorities

The administrative or judicial authorities of the home
1.
Member State which are responsible for winding up shall alone
be empowered to decide on the opening of winding-up
proceedings concerning a credit institution, including branches
established in other Member States.

A decision to open winding-up proceedings taken by the
administrative or judicial authority of the home Member State
shall be recognised, without further formality, within the
territory of all other Member States and shall be effective there
when the decision is effective in the Member State in which
the proceedings are opened.

The administrative or judicial authorities of the home
2.
Member State shall without delay inform, by any available
means, the competent authorities of the host Member State of
their decision to open winding-up proceedings, including the
practical effects which such proceedings may have, if possible
before they open or otherwise immediately thereafter. Infor-
mation shall be communicated by the competent authorities
of the home Member State.

Article 10

Law applicable

1.
A credit institution shall be wound up in accordance
with the laws, regulations and procedures applicable in its
home Member State in so far as this Directive does not provide
otherwise.

The law of the home Member State shall determine in

2.
particular:

(a)

the goods subject to administration and the treatment of
goods acquired by the credit institution after the opening
of winding-up proceedings;

(b)

the respective powers of the credit institution and the
liquidator;

(c)

the conditions under which set-offs may be invoked;

(d)

the effects of winding-up proceedings on current con-
tracts to which the credit institution is party;

(e)

(f)

(g)

(h)

(i)

(j)

the effects of winding-up proceedings on proceedings
brought by individual creditors, with the exception of
lawsuits pending, as provided for in Article 25;

the claims which are to be lodged against the credit
institution and the treatment of claims arising after the
opening of winding-up proceedings;

the rules governing the lodging, verification and admis-
sion of claims;

the rules governing the distribution of the proceeds of
the realisation of assets, the ranking of claims and the
rights of creditors who have obtained partial satisfaction
after the opening of insolvency proceedings by virtue of
a right in rem or through a set-off;

the conditions for, and the effects of, the closure of
insolvency proceedings, in particular by composition;

creditors’ rights after the closure of winding-up proceed-
ings;

(k) who is to bear the costs and expenses incurred in the

winding-up proceedings;

(l)

the rules relating to the voidness, voidability or unen-
forceability of legal acts detrimental to all the creditors.

Article 11

Consultation of competent authorities before voluntary
winding up

1.
The competent authorities of the home Member State
shall be consulted in the most appropriate form before any
voluntary winding-up decision is taken by the governing
bodies of a credit institution.

2.
The voluntary winding up of a credit institution shall not
preclude the adoption of a reorganisation measure or the
opening of winding-up proceedings.

Article 12

Withdrawal of a credit institution’s authorisation

1. Where the opening of winding-up proceedings is decided
on in respect of a credit institution in the absence, or following
the failure, of reorganisation measures, the authorisation of
in
the institution shall be withdrawn in accordance with,
particular, the procedure laid down in Article 22(9) of Direct-
ive 2000/12/EC.

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2.
The withdrawal of authorisation provided for in para-
graph 1 shall not prevent the person or persons entrusted with
the winding up from carrying on some of the credit institution’s
activities in so far as that is necessary or appropriate for the
purposes of winding up.

The home Member State may provide that such activities shall
be carried on with the consent, and under the supervision, of
the competent authorities of that Member State.

Article 13

Publication

The liquidators or any administrative or judicial authority
shall announce the decision to open winding-up proceedings
through publication of an extract
from the winding-up
decision in the Official Journal of the European Communities and
at least two national newspapers in each of the host Member
States.

Article 14

Provision of information to known creditors

1. When winding-up proceedings are opened, the adminis-
trative or judicial authority of the home Member State or the
liquidator shall without delay individually inform known
creditors who have their domiciles, normal places of residence
or head offices in other Member States, except in cases where
the legislation of the home State does not require lodgement
of the claim with a view to its recognition.

That information, provided by the dispatch of a notice,
2.
shall
in particular deal with time limits, the penalties laid
down in regard to those time limits, the body or authority
empowered to accept the lodgement of claims or observations
relating to claims and the other measures laid down. Such a
notice shall also indicate whether creditors whose claims are
preferential or secured in rem need lodge their claims.

Article 15

Honouring of obligations

Where an obligation has been honoured for the benefit of a
credit institution which is not a legal person and which is the
subject of winding-up proceedings opened in another Member
State, when it should have been honoured for the benefit of
the liquidator in those proceedings, the person honouring the
obligation shall be deemed to have discharged it if he was
unaware of the opening of proceedings. Where such an
obligation is honoured before the publication provided for
in Article 13 has been effected, the person honouring the
obligation shall be presumed, in the absence of proof to the
contrary, to have been unaware of the opening of winding-up
proceedings; where the obligation is honoured after the
publication provided for in Article 13 has been effected, the
person honouring the obligation shall be presumed, in the
absence of proof to the contrary, to have been aware of the
opening of proceedings.

Article 16

Right to lodge claims

1.
Any creditor who has his domicile, normal place of
residence or head office in a Member State other than
including Member States’ public
the home Member State,
authorities, shall have the right to lodge claims or to submit
written observations relating to claims.

The claims of all creditors whose domiciles, normal
2.
places of residence or head offices are in Member States other
than the home Member State shall be treated in the same way
and accorded the same ranking as claims of an equivalent
nature which may be lodged by creditors having their domi-
ciles, normal places of residence, or head offices in the home
Member State.

3.
Except in cases where the law of the home Member State
provides for the submission of observations relating to claims,
a creditor shall send copies of supporting documents, if any,
and shall indicate the nature of the claim, the date on which it
arose and its amount, as well as whether he alleges preference,
security in rem or reservation of title in respect of the claim
and what assets are covered by his security.

Article 17

Languages

1.
The information provided for in Articles 13 and 14 shall
be provided in the official language or one of the official
languages of the home Member State. For that purpose a form
shall be used bearing,
languages of the
European Union, the heading ‘Invitation to lodge a claim. Time
limits to be observed’ or, where the law of the home Member
State provides for the submission of observations relating to
claims, the heading ‘Invitation to submit observations relating
to a claim. Time limits to be observed’.

in all the official

Any creditor who has his domicile, normal place of
2.
residence or head office in a Member State other than the
home Member State may lodge his claim or submit obser-
vations relating to his claim in the official language or one of
the official languages of that other Member State. In that event,
however, the lodgement of his claim (or the submission of
observations on his claim) shall bear the heading ‘Lodgement
of claim’ (or ‘Submission of observations relating to claims’) in
the official language or one of the official languages of the
home Member State. In addition, he may be required to
provide a translation into that language of the lodgement of
claim or submission of observations relating to claims.

Article 18

Regular provision of information to creditors

in an
Liquidators shall keep creditors regularly informed,
appropriate manner, particularly with regard to progress in
the winding up.

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B. Credit institutions the head offices of which are outside
the Community

Article 19

Branches of third country credit institutions

1.
The administrative or judicial authorities of the host
Member State of the branch of a credit institution the head
office of which is outside the Community shall without delay
inform, by any available means, the competent authorities of
the other host Member States in which the credit institution
has set up branches on the list referred to in Article 11 of
Directive 2000/12/EC and published each year in the Official
Journal of the European Communities, of their decision to open
winding-up proceedings, including the practical effects which
if possible before they open
these proceedings may have,
Information shall be
or otherwise immediately thereafter.
communicated by the competent authorities of
the first
abovementioned host Member State.

2.
Administrative or judicial authorities which decide to
open proceedings to wind up a branch of a credit institution
the head office of which is outside the Community shall
inform the competent authorities of the other host Member
States that winding-up proceedings have been opened and
authorisation withdrawn.

Information shall be communicated by the competent auth-
orities in the host Member State which has decided to open
the proceedings.

The administrative or judicial authorities referred to in

3.
paragraph 1 shall endeavour to coordinate their actions.

Any liquidators shall likewise endeavour to coordinate their
actions.

TITLE IV

PROVISIONS COMMON TO REORGANISATION MEASURES
AND WINDING-UP PROCEEDINGS

Article 20

Effects on certain contracts and rights

The effects of a reorganisation measure or the opening

1.
of winding-up proceedings on:

(a)

(b)

employment contracts and relationships shall be gover-
ned solely by the law of the Member State applicable to
the employment contract;

a contract conferring the right to make use of or acquire
immovable property shall be governed solely by the law
of the Member State within the territory of which the
immovable property is situated. That law shall determine
whether property is movable or immovable;

(c)

(d)

(e)

(f)

contractual netting agreements between the credit insti-
tution and its counterparty shall be governed solely
by the law of the Member State applicable to such
agreements;

repurchase agreements between the credit institution and
its counterparty shall be governed solely by the law of
the Member States applicable to such agreements subject
to point (f);

rights in respect of immovable property, a ship or an
aircraft subject to registration in a public register shall be
governed solely by the law of the Member State under
the authority of which the register is kept;

the enforcement of property rights in instruments or
other rights in such instruments the existence or transfer
of which presupposes their being recorded in a register,
an account or a centralised deposit system held or located
in a Member State shall be governed by the law of the
Member State where the register, account, or centralised
deposit system in which those rights are recorded, is held
or located;

(g) without prejudice to point (f), the transactions carried out
and procedures applicable in the context of a regulated
market shall be governed solely by the law of the Member
State applicable to that market;

(h)

subject to the provisions laid down in points (a) to (g),
the right in rem or reservation of title of a third party in
respect of tangible or intangible, movable or immovable
assets belonging to, or in the possession of, the credit
institution and all types of valuable security shall be
governed solely by the law applicable to that right,
reservation of title or valuable security.

2. Without prejudice to points (c), (d) and (g) of para-
the opening of winding-up proceedings or the
graph 1,
adoption of a reorganisation measure shall not affect the right
of a creditor, by operation of law, to set his claims off against
the claims of the credit institution where such a set-off is
permitted by the law of the Member State applicable to the
credit institution’s claim.

Article 21

Proof of liquidators’ appointment

1.
The administrator or liquidator’s appointment shall be
evidenced by a certified copy of the original decision appoint-
ing him or by any other certificate issued by the administrative
or judicial authority of the home Member State.

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A translation into the official language or one of the official
languages of the Member State within the territory of which
the administrator or liquidator wishes to act may be required.
No legalisation or other similar formality shall be required.

2.
Administrators and liquidators shall be entitled to exer-
cise within the territory of all the Member States all the powers
which they are entitled to exercise within the territory of the
home Member State. They may also appoint persons to assist
them in the course of
or, where appropriate, represent
the reorganisation measure or winding-up proceedings,
in
particular in host Member States and, specifically, in order to
help overcome any difficulties encountered by creditors in the
host Member State.

3.
In exercising his powers, an administrator or liquidator
shall comply with the law of the Member States within the
territory of which he wishes to take action, in particular with
regard to procedures for the realisation of assets and the
provision of information to employees. Those powers may
not include the use of force or the right to rule on legal
proceedings or disputes.

Article 22

Registration in a public register

1.
The administrator, liquidator or any administrative or
judicial authority of the home Member State may request that
a reorganisation measure or the decision to open winding-up
proceedings be registered in the land register, the trade register
and any other public register kept in the other Member States.

A Member State may, however, prescribe mandatory regis-
tration. In that event, the person or authority referred to in the
preceding subparagraph shall take all the measures necessary
to ensure such registration.

The costs of registration shall be regarded as costs and

2.
expenses incurred in the proceedings.

Article 23

Detrimental acts

— that law does not allow any means of challenging that act

in the case in point.

2. Where a reorganisation measure decided on by a judicial
authority provides for rules relating to the voidness, voidability
or unenforceability of legal acts detrimental to the creditors as
a whole performed before adoption of the measure, Article 3(2)
shall not apply in the cases provided for in paragraph 1 of this
Article.

Article 24

Protection of third parties

Where, by an act concluded after the adoption of a reorgan-
isation measure or the opening of winding-up proceedings, a
credit institution disposes, for consideration, of:

— an immovable asset,

— a ship or an aircraft subject to registration in a public

register, or

— instruments or rights in such instruments the existence
or transfer of which presupposes their being recorded in
a register, an account or a centralised deposit system held
or located in a Member State,

the validity of that act shall be governed by the law of the
Member State within the territory of which the immovable
asset is situated or under the authority of which that register,
account or deposit system is kept.

Article 25

Lawsuits pending

The effects of reorganisation measures or winding-up proceed-
ings on a pending lawsuit concerning an asset or a right of
which the credit institution has been divested shall be governed
solely by the law of the Member State in which the lawsuit is
pending.

Article 26

Professional secrecy

1.
Article 10 shall not apply as regards the rules relating to
legal acts
the voidness, voidability or unenforceability of
detrimental to the creditors as a whole, where the beneficiary
of these acts provides proof that:

— the act detrimental to the creditors as a whole is subject
to the law of a Member State other than the home
Member State, and

All persons required to receive or divulge information in
connection with the information or consultation procedures
laid down in Articles 4, 5, 8, 9, 11 and 19 shall be bound by
professional secrecy, in accordance with the rules and con-
ditions laid down in Article 30 of Directive 2000/12/EC, with
the exception of any judicial authorities to which existing
national provisions apply.

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TITLE V

FINAL PROVISIONS

Article 27

Implementation

1. Member States shall bring into force the laws, regulations
and administrative provisions necessary to comply with this
Directive on ... (*). They shall forthwith inform the Commission
thereof.

National provisions adopted in application of this Directive
shall apply only to reorganisation measures or winding-up
proceedings adopted or opened after the date referred to in the
first subparagraph. Measures adopted or proceedings opened
before that date shall continue to be governed by the law that
was applicable to them at the time of adoption or opening.

2. When Member States adopt these measures, they shall
contain a reference to this Directive or shall be accompanied
by such reference on the occasion of their official publication.
The methods of making such reference shall be laid down by
Member States.

3. Member States shall communicate to the Commission
the texts of the main provisions of national law which they
adopt in the field governed by this Directive.

Article 28

Entry into force

This Directive shall enter into force on the day of
publication.

its

Article 29

Addressees

This Directive is addressed to the Member States.

Done at ...

For the European Parliament

For the Council

The President

The President

(*) Three years after publication in the Official Journal of the European

Communities.

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STATEMENT OF THE COUNCIL’S REASONS

I.

INTRODUCTION

On 9 January 1986 the Commission forwarded to the Council a proposal for a Directive based on
Article 47(2) (1) of the EC Treaty.

The European Parliament delivered its opinion at first reading on 13 March 1987 (2). The Economic
and Social Committee delivered its opinion on 2 July 1986. Following these opinions the
Commission submitted an amended proposal on 11 January 1988. The European Monetary Institute
gave its opinion on 12 June 1996.

On 17 July 2000, the Council adopted its Common Position pursuant to Article 251 of the Treaty.

The title of the Common Position has been adapted to take account of the adoption of Directive
94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit guarantee
schemes (3).

II. OBJECTIVES

In order to guarantee equal treatment of creditors and the smooth functioning of the reorganisation
and the winding-up of credit institutions within the European Union, the Directive aims to ensure
that:

— the administrative and judicial authorities of the home Member State have sole power to adopt
and to implement reorganisation measures and winding-up proceedings according to the law
and practices in force in that Member State, except where the Directive provides otherwise, and

— the rights of creditors domiciled in Member States other than the home Member State are

safeguarded.

The Directive does not aim at harmonising national legislation but at ensuring mutual recognition
of Member States’ reorganisation measures and winding-up proceedings as well as the necessary
cooperation.

In order to achieve these aims, the Common Position amends and gives a more explicit formulation
of some provisions compared to the Commission proposal. It further introduces some new
provisions, largely based on Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency
proceedings (4), hereinafter referred to as the Insolvency Regulation. This has been done in order to
ensure consistency in Community legislation and, where appropriate, to align the specific rules on
insolvency issues in the banking sector with the rules on similar issues in the Insolvency Regulation
which applies generally within the European Union. These provisions are aimed at enhancing the
objectives set out above and primarily concern the protection of the position of creditors domiciled
in a Member State other than the home Member State of the credit institution in winding-up
proceedings, the definition of the powers and obligations of the administrator/liquidator and the
introduction of provisions enhancing legal certainty by laying down which law will be applicable in
certain specific cases, e.g. concerning immovable property.

(1) Then Article 57(2).
(2) Opinion confirmed 27 October 1999, (OJ C 154, 5.6.2000).
(3) OJ L 135, 31.5.1994, pp. 5 to 14.
(4) OJ L 160, 30.6.2000, p. 1.

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III. ANALYSIS OF THE COMMON POSITION

A.

GENERAL REMARKS

The Common Position takes into account the adoption of:

— second Council Directive of 15 December 1989 on the coordination of laws, regulations
and administrative provisions relating to the taking up and the pursuit of the business of
credit institutions and amending Directive 77/780/EEC (1),

— Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on

deposit guarantee schemes,

— Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on

settlement finality in payment and securities settlement systems (2),

— Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings,

— Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000
relating to the taking up and pursuit of the business of credit institutions (3) which
represents a codification of a number of Directives concerning credit institutions, in
particular Directive 77/780/EEC (the First Banking Directive) and Directive 89/646/EEC
(the Second Banking Directive). As a result all cross-references to provisions in the
Directives concerned have been adapted to refer to the codified text.

Credit institutions and insurance undertakings were both exempted from the Insolvency
Regulation on account of the specific regulation of these sectors. These two sectors have a
number of similar legislative features (home Member State regulation, authorisation require-
ment, etc.). The amended proposal for a Directive of the European Parliament and of the
Council on the reorganisation and winding up of insurance undertakings (4) has been examined
by the Council over the same period as the current proposal for the reorganisation and winding
up of credit institutions and, where the specific conditions in each sector made this possible,
similar solutions have been chosen.

Following the adoption of Directive 94/19/EC of the European Parliament and of the Council
of 30 May 1994 on deposit guarantee schemes the title of the Directive was amended, see
above, and Title IV in the Commission proposal was deleted and replaced by a new Title IV
concerning provisions common to reorganisation measures and winding-up proceedings.

B.

TITLE 1 — SCOPE AND DEFINITIONS

The drafting of Article 1, which defines the scope of the Directive, is unchanged from the
amended Commission proposal except for a more specific reference to the exemptions in
Directive 2000/12/EC. The European Parliament’s proposed amendment to Article 1 of the
Commission proposal is thus included in the Common Position.

Articles 2 and 16 of the amended Commission proposal relating to the annexes which listed
the measures and proceedings covered by the Directive, have been deleted. The Council
finds that the definitions of ‘reorganisation measure’, ‘winding-up proceedings’, ‘competent
authorities’ and ‘administrative and judicial authorities’ set out in Article 2 of the Common
Position are sufficient to determine the scope of the Directive. This solution further avoids the
legally and technically difficult question of how to incorporate future changes in national law
into the Directive. The amendment to Article 2 of the Commission proposal and new Article 2a
as well as new Article 15a on winding-up proceedings, proposed by the European Parliament
are therefore not included in the Common Position, except for the fact that winding-up
proceedings are now defined.

(1) Directive 89/646/EEC (OJ L 386, 30.12.1989, pp. 1 to 13).
(2) OJ L 166, 11.6.1998, pp. 45 to 50.
(3) OJ L 126, 26.5.2000, p. 1.
(4) OJ C 253, 6.10.1989, p. 3.

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Article 2 of the Common Position (Article 3 of the amended Commission proposal) has been
amended and now includes definitions of a number of additional terms in order to set out
more clearly the terms used in the Directive.

The definitions of ‘home Member State’, ‘host Member State’ and ‘competent authorities’ now
correspond to the definitions of these terms in current legislation. A definition of ‘branch’ has
been added in line with current legislation.

In order to avoid confusion over the authorities referred to in the Directive a definition of
‘administrative and judicial authorities’, meaning those responsible for the purposes of the
reorganisation measures or winding-up proceedings as opposed to those responsible for the
supervision of credit institutions, has been added. Since these definitions cover authorities
responsible for both reorganisation measures and winding-up proceedings the Common
Position includes the substance of the amendment proposed by the European Parliament to
Article 3 of the Commission proposal.

‘Reorganisation measures’ and ‘winding-up proceedings’ have been defined to take account of
the deletion of the annexes, see above. The definition of ‘reorganisation measures’ now includes
a key element in these measures, namely that they could affect third parties’ pre-existing rights,
and recitals 8 to 10 further set out the reasons behind this definition. The definition of
‘winding-up proceedings’ includes a point based on the Insolvency Regulation, namely that the
term includes proceedings terminated by a composition or other analogous measure. Since the
definitions cover both reorganisation measures and winding-up proceedings the Common
Position includes part of the substance of new Article 2a proposed by the European Parliament
and included in Article 2 of the amended Commission proposal, where a definition of winding-
up proceedings, not defined in the original Commission proposal, was set out.

Definitions of ‘administrator’ and ‘liquidator’ have been added, in line with the Directive on the
reorganisation and winding up of insurance undertakings, with a view to defining the scope of
Articles referring to these functions.

The definitions of ‘regulated market’ and ‘instruments’ have been inserted with a view to
defining the scope of Article 20 relating to the law applicable in certain specific cases.

C.

TITLE II — REORGANISATION MEASURES

Article 3 (Article 4 of the amended Commission proposal) is the key article of the Directive as
regards reorganisation measures. The Common Position maintains, with slightly different
drafting, paragraphs 1 and 2 of the Commission proposal, which lay down the principle of
universal application of measures decided by the home Member State. In order not to weaken
the principle of supervision by the home Member State authorities the Council has deleted
paragraph 3, which left open the possibility of a host Member State applying reorganisation
measures to a branch only.

The obligation to inform the authorities of the host Member State set out in Article 4 (Article 5
of the amended Commission proposal) is maintained in the Common Position with some
minor changes. The Common Position makes it clear on which authorities the obligation falls
and sets out more explicitly the information which must be communicated. In line with the
principle of home Member State control, the Council has chosen not to maintain the obligation
for the home Member State to consult the authorities of the host Member State on the effects
of a reorganisation measure. The Common Position follows the European Parliament’s
proposed amendment to Article 5, since it does not include the exception to the information
obligation proposed by the Commission. In allowing for the adoption of measures without
prior information in urgent cases, the Common Position takes account of the spirit of Article 6a
concerning urgent cases proposed by the European Parliament.

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The obligation to inform the authorities of the home Member State set out in Article 5
(Article 6 of the Commission proposal) is maintained with some minor changes aimed at
making the text clearer. As in Article 3, the Council has chosen not to maintain the second
subparagraph, which left open the possibility of a host Member State applying reorganisation
measures to a branch.

Article 6 concerning publication maintains Article 7 of the amended Commission proposal
with some minor changes. The reference to shareholders has been deleted for the reasons set
out in recital 8. In the light of Article 7 of the Common Position, see next paragraph, the
Council has not found it necessary to maintain paragraph 2 of the Commission proposal
concerning individual notification of creditors. In line with Article 3 the regulation of the
deadline for appeal has to be done in national law. The Common Position makes publication
mandatory and thus incorporates the amendment proposed by the European Parliament
relating to Article 7 of the Commission proposal, which was only partly included in the
amended Commission proposal.

Article 7 introduces specific provisions on the duty to inform known creditors and the right to
lodge claims in order to protect the rights of creditors domiciled in Member States other than
the home Member State of the credit institution. These provisions are aligned on similar
provisions relating to winding-up proceedings, which again are aligned on similar provisions
in the Insolvency Regulation, as noted later.

Since there is no coordination in Community law of provisions applicable to branches of third
country credit institutions, the Council has chosen to limit Article 8 concerning such branches
to a requirement for the administrative and judicial authorities to inform the authorities in
other Member States where the same credit institution has branches and to endeavour to
coordinate their actions. Since an administrator is not always appointed Article 8 does not
impose any obligation on administrators to coordinate their actions, in contrast with the case
for liquidators in winding-up proceedings, as noted later. Information must be transmitted
under the same conditions as information to host Member States of branches of Community
credit institutions, set out in Article 4.

Following the deletion of the annexes, Article 9 of the amended Commission proposal has
been deleted. Article 10 of the amended Commission proposal is considered superfluous in the
light of Article 3 of the Common Position.

D.

TITLE III — WINDING-UP PROCEEDINGS

Article 9 (Article 11(1) and (3) of the amended Commission proposal) maintains the key
principle of universality set out in Article 11 of the amended Commission proposal, but in a
modified form. The text is now aligned on the corresponding text concerning reorganisation
measures, Articles 3 and 4 of the Common Position; it highlights the principle of universality
and, in order to ensure consistency within the Directive, introduces the same information
procedure as for reorganisation measures.

Article 10(1) underlines the principle of universality laid down in Article 11(2) of the amended
Commission proposal. Since Article 10 makes no reference to the application of the convention
on bankruptcy, now the Insolvency Regulation, as was the case in the original Commission
proposal the Common Position includes the amendment proposed by the European Parliament
to Article 11 of the Commission proposal and taken over by the Commission in its amended
proposal. Paragraph 2 has been added in order to illustrate the scope of the universality
principle laid down in paragraph 1, in line with the drafting of Article 4(2) of the Insolvency
Regulation, by giving a list of examples of what is determined by the law of the home Member
State.

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Article 11 relating to voluntary winding up maintains Article 12 of the amended Commission
proposal with some drafting amendments aimed at making the text more clear. Paragraph 2 in
the Common Position simply states that voluntary winding up shall not preclude reorganisation
measures or winding-up proceedings. The provisions relating to such measures and proceedings
are stipulated elsewhere in the Directive and the competent authorities of the home Member
State may always, where appropriate, decide on a reorganisation measure or winding up
proceedings, even after voluntary winding up has commenced.

Article 12 (Article 13 of the Commission proposal) introduces drafting changes and other
changes which follow from the principle of home Member State control. Paragraph 3 has been
deleted since the rules for authorisation are laid down in Directive 2000/12/EC.

Article 13 on publication corresponds to Article 14(3) of the amended Commission proposal
and has been aligned on the publication requirement for reorganisation measures in Article 6(1).
In including this provision the Common Position incorporates the amendment proposed by
the European Parliament relating to Article 14 of the Commission proposal which was accepted
by the Commission in its amended proposal. Article 14(1) of the Commission proposal has
been deleted in the light of Article 9(1) and 10 of the Common Position. The powers of the
liquidator are regulated in Article 21(2) of the Common Position, and Article 14(2) which dealt
with this subject has been deleted in consequence.

Articles 14, 15, 16 and 17 have all been added in the light of the adoption of the Insolvency
Regulation, as explained in the general observations on the Common Position, in order to
supplement the Directive in respect of aspects which were not regulated in the Commission
proposal.

Article 14 on information to creditors is aligned on Article 40 of the Insolvency Regulation
and lays down provisions on the obligation to inform known creditors and the content of the
information to be provided. The objective is to safeguard the position of creditors domiciled in
Member States other than that of the home Member State of the insolvent credit institution.

Article 15 on the honouring of obligations is aligned on Article 24 of the Insolvency
Regulation. Despite the provisions on publication, the situation may arise where a debtor of
the insolvent credit institution honours an obligation for the benefit of the credit institution
when it should have been honoured for the benefit of the liquidator, and Article 15 aims at
protecting the debtor who acts in good faith. However, the provision covers only the rare case
where an obligation has been honoured for the benefit of a credit institution which is a physical
person or a partnership of physical persons, since the danger of a credit institution accepting a
payment in bad faith and without informing the liquidator is supposed to be present only in
such a case.

Article 16 lays down two fundamental principles for the winding-up procedure. Paragraph 1,
which is aligned on Article 39 of the Insolvency Regulation, stipulates that all creditors,
including public authorities in other Member States, have the right to produce their claim. The
expression ‘lodge claims or submit written observations relating to claims’ has been chosen
since national law in some Member States does not require the lodging of a claim but only
observations relating to claims. Paragraph 2 underlines an essential principle of the concept of
universality, namely that the claims of all creditors shall be treated in the same way and
accorded the same ranking as home Member State creditors. Paragraph 3, which is aligned on
Article 41 of the Insolvency Regulation, regulates the contents of a claim presented by a
creditor domiciled in another Member State.

Article 17, which is aligned on Article 42 of the Insolvency Regulation, regulates the language
regime applicable to the lodgement of claims. The basic rule is that the language of the home
Member State applies. The key words ‘Invitation to lodge a claim/submit observations relating
to a claim. Time limits to be observed’ must, however, be indicated in all the official languages
of the Union. For a creditor domiciled in another Member State the basic rule is the right to
lodge a claim in the language or one of the languages of that State, although a translation may
be required, with only the key words ‘Lodgement of claims/Submission of observations relating
to claims’ in the language of the home Member State.

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With a view to ensuring the rights of the creditors in the course of the proceedings a new
provision, Article 18, has been introduced obliging the liquidators to keep the creditors
informed with regard to the progress of the winding-up procedure.

Since branches of third country credit institutions are not regulated at Community level the
Council has decided, as was also the case in Article 8 on reorganisation measures, to limit
Article 19, Article 15 of the amended Commission proposal, to information and coordination
requirements. Paragraph 1 regulates the information to be given to the authorities in other host
Member States before the opening of winding-up proceedings and is aligned on the
corresponding information procedure in Article 8(1). The ex post information requirement,
found in Article 15(3) of the Commission proposal, is set out in paragraph 2, which imposes
an additional information requirement when winding-up proceedings have been opened and
authorisation withdrawn. The procedure for communicating this information is aligned on
paragraph 1. Paragraph 3 is aligned on Article 8(2), and imposes, in addition, an obligation for
the liquidators to coordinate their actions since the work of the liquidators may be as important
as that of the authorities.

Article 16 of the amended Commission proposal has been deleted following the deletion of the
Annexes, see above.

E.

TITLE IV — PROVISIONS COMMON TO REORGANISATION MEASURES AND WINDING-UP
PROCEEDINGS

This title is a new feature in comparison with the Commission proposal. As already described,
in order to achieve the aims of the Directive and to ensure legal consistency in Community
legislation, the Council has deemed it appropriate to introduce some additional provisions to a
large extent based on the Insolvency Regulation. The majority of these supplementary
provisions are set out in Title IV, which groups provisions common to reorganisation measures
and winding-up proceedings.

Article 20 contains provisions on the effects of the measures and proceedings on certain
contracts and rights. This Article derogates from the basic principle of the application of the
law of the home Member States set out in Articles 3 and 10. The overall objective of this Article
to ensure legal certainty in particular cases where it is thought that the importance or the
special nature of the contract justifies the derogation from the principle of universality.

The first derogation, set out in paragraph 1(a), relates to employment contracts and relationships
which shall be governed solely by the law of the Member State applicable to the employment
is
contract. This provision, which is aligned on Article 10 of the Insolvency Regulation,
introduced to protect employees of a branch of the credit institution in a host Member State
against the risk of seeing their contract suddenly subjected to the law of another Member State.

The second derogation set out in paragraph 1(b), which is aligned on Article 8 of the Insolvency
Regulation, regulates contracts relating to immovable property. In all Member States such
contracts are subject to special regulation both to protect the contracting parties and to protect
the general interests of the Member State where they are situated. The Council has therefore
found it appropriate to derogate from the principle of universality and to stipulate that both a
contract conferring the right to make use of immovable property, typically a rental contract,
and a contract conferring the right to acquire immovable property situated within a Member
State, are governed by the law of that Member State. To avoid any doubt which may arise since
the rules on exactly what constitutes immovable property may vary between Member States, it
is laid down that the law of the Member State where the property is situated shall determine
whether a property is movable or immovable.

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Paragraphs 1(c) and (d) concern contractual netting agreements (agreements to set off positive
and negative balances) between a credit institution and its counter party and repurchase
agreements (an agreement between a seller and a buyer of securities where the seller agrees to
repurchase the securities at an agreed price) respectively. In both cases the law of the Member
State applicable to the agreement applies. Such agreements are commonly used on the financial
markets and the Council considers that the special function of such contracts requires a
derogation from the principle of universal application of home Member State law in order to
protect the functioning of the financial markets and to ensure legal certainty for the contracting
parties.

Paragraph 1(e) concerns rights subject to registration in a public register which shall be
governed solely by the law of the Member State under the authority of which the register is
kept. This provision, which is based, but not totally aligned, on Article 11 of the Insolvency
Regulation, is introduced in order to avoid a conflict with national systems of registration for
immovable property, ships or aircrafts when the law of the home Member State contains
provisions which may be incompatible with the law of the register.

Paragraph 1(f) concerns rights in securities, whether dematerialised or not, which are recorded
in a register or in an account or held in a centralised deposit system in a Member State. This
provision aims at protecting the rights in these securities against the potential negative effects
of reorganisation measures or insolvency proceedings opened according to the law of a
Member State which is different from the law of the Member State where the register, account
or deposit system is held. In parallel with point (e) the impact of the reorganisation measure or
insolvency proceedings against a credit institution on rights in securities held by the insolvent
institution shall be determined solely by the law of the Member State where the account, the
register or the centralised deposit system in which the relevant rights are recorded, is held or
located.

Regarding transactions carried out on a regulated market (a stock exchange) as defined in
Article 2, paragraph 1(g) stipulates, in line with Article 9 of the Insolvency Regulation, that
independently of point (f) the effects of the reorganisation measure or the opening of insolvency
proceedings shall be governed solely by the law of the Member State applicable to that market.
The aim of this provision is to ensure the functioning of these markets and protect the balance
maintained by the law applicable to the market from the potentially disruptive effects of the
application of reorganisation measures or insolvency proceedings opened according to another
legal system, which could have a negative impact far beyond the insolvent institution and its
contracting parties.

A similar provision has been introduced in paragraph 1(h) concerning rights in rem and
reservations of title in respect of assets belonging to the insolvent credit institution, which shall
be governed solely by the law applicable to that right. This rule is based, though not aligned,
on Articles 5 and 7 of the Insolvency Regulation. Rights in rem are not defined since it is not
the aim of the Directive to introduce any harmonisation of this concept.

Paragraph 2 concerning set-off stipulates, in line with Article 6 of the Insolvency Regulation,
that the right of a creditor to set off a claim is not affected by the reorganisation measure or
the insolvency proceedings when such set-off is permitted by the law of the Member State
applicable to the credit institutions claim, regardless of whether such set-off is permitted by the
home Member State law or not.

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Article 21(1) is aligned on Article 19 of the Insolvency Regulation. It sets out the formal
requirements concerning the proof of the administrator’s or liquidator’s appointment in order
to avoid any doubt on the subject. Paragraphs 2 and 3 are aligned on Article 18(1) and (3) of
the Insolvency Regulation and set out the powers of the administrator/liquidator. In accordance
with the principle of application of home Member State law the administrator/liquidator may
exercise in all Member States the powers he could exercise in the home Member State. Since
there is no possibility of secondary proceedings and since it is possible that the insolvent
institution may have substantial commitments in one or more particular host Member States,
paragraph 2 stipulates that the liquidator/administrator may appoint persons to assist them in
order to help overcome any difficulties encountered by creditors in particular host Member
States. Since the Directive does not aim at extending the executive or judicial powers of the
home Member State paragraph 3 makes it clear that the administrator/liquidator must respect
the law of the Member State within which he wishes to take action and that his powers do not
include the use of force or the right to rule on legal proceedings or disputes.

Article 22 also aims at clarifying the powers of the liquidator/administrator. The principle of
universal application of reorganisation measures and winding-up proceedings without further
formalities are set out in Articles 3 and 9. However, specific registers play an important role in
ensuring transparency and legal certainty in many Member States and it is therefore stipulated,
in line with Articles 22 and 23 of the Insolvency Regulation, that the administrator/liquidator
has the power to request the entry of the measure or the proceedings in the appropriate
registers in other Member States.

Article 23(1) concerning detrimental acts is aligned on Article 13 of the Insolvency Regulation.
It derogates from the principle of universal application of the home Member State law for
winding-up proceedings in a specific case, namely where an act, for example a contract, would
have been void according to the home State law, but where the other contracting party had
entered into it in the belief that the contract could not be invalidated. The aim of the provision
is to protect the just expectations of the contracting party in this case. For reorganisation
measures paragraph 2 stipulates that the principle of universal application set out in Article 3(2)
of the Common Position shall not apply in similar circumstances.

Article 24 is aligned on Article 14 of the Insolvency Regulation. It concerns acts, for example
contracts, entered into by the insolvent credit institution after the adoption of a reorganisation
measure or the opening of insolvency proceedings. It is motivated by the same aims as those
underlying Article 20(1)(b), (e) and (f), in particular the need to ensure legal certainty for the
contracting parties and public confidence in the registers or deposit systems concerned.

Article 25 on the effects on pending lawsuits is aligned on Article 15 of the Insolvency
Regulation. It makes it clear that while the law of the home Member State regulates the
enforcement proceedings of individual creditors in accordance with Articles 3(2), 9 and 10 it is
the law of the Member State where the lawsuit is pending which governs the question of the
effects of reorganisation measures or winding-up proceedings on a lawsuit pending concerning
assets or rights of which the insolvent credit institution has been divested.

Article 26 on professional secrecy is introduced to bring this Directive into line with the
requirements in Directive 2000/12/EC and to harmonise professional secrecy requirements for
all aspects of banking regulation. The judicial authorities remain subject to existing national
provisions applicable to them.

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F.

FINAL PROVISIONS

The provisions on implementation and entry into force have been adapted to current practices
in Community legislation.

G.

RECITALS

The recitals have been adapted and new recitals introduced to explain the changes set out
above. The amendments to the recitals proposed by the European Parliament are redundant
following the adoption of Directive 94/19/EC on deposit guarantee schemes and the Insolvency
Regulation and are therefore not included in the Common Position.

IV. CONCLUSION

The Council considers that all the amendments made to the amended Commission proposal are
fully in line with the objectives of the proposed Directive. The main part of the amendments
proposed by the European Parliament has been included in the Common Position. All the changes
made and the new provisions aligned on the Insolvency Regulation which have been introduced
serve to enhance the objectives of the Directive and to ensure legal consistency in Community
legislation.