CELEX: 51993PC0363
Language: en
Date: 1993-07-28
Title: Proposal for a COUNCIL DIRECTIVE amending Council Directives 77/780/EEC and 89/646/EEC in the field of credit institutions, Council Directives 73/239/EEC and 92/49/EEC in the field of non-life insurance, Council Directives 79/267/EEC and 92/96/EEC in the field of life assurance, and Council Directive 93/22/EEC in the field of investment firms in order to reinforce prudential supervision

No C 229 / 10                             Official Journal of the European Communities                                  25 . 8 . 93
                                                                    II
                                                           (Preparatory Acts)
                                                      COMMISSION
              Proposal for a Council Directive amending Directives 77/780/EEC and 89/646/EEC in the
              field of credit institutions, 73 /239/EEC and 92/49/EEC in the field of non-life insurance,
              79/267/EEC and 92/96/EEC in the field of life assurance, and 93 /22/EEC in the field of
                                     investment firms in order to reinforce prudential supervision
                                                            (93 / C 229/07)
                                                    COM(93) 363 final — SYN 468
                                           (Submitted by the Commission on 28 July 1993)
 THE COUNCIL OF THE EUROPEAN COMMUNITIES ,                              Whereas the First Council Directive 79/267/EEC (5),
                                                                        and in particular as amended by the Third Council
                                                                        Directive 92 /96/EEC (6), on the coordination of laws,
                                                                        regulations and administrative provisions relating to     the
 Having regard to the Treaty establishing the European                  taking-up and pursuit of the business of direct           life
 Economic Community, and in particular the first and                    assurance lays down the authorization requirements        for
 third sentences of Article 57 (2) thereof,                             assurance undertakings in the field of direct             life
                                                                        assurance ;
 Having regard to the proposal from the Commission,
                                                                        Whereas Council Directive 93 /22 /EEC (7) on investment
                                                                        services in the securities field lays down the authori­
 In cooperation with the European Parliament,                           zation requirements for investment firms ;
 Having regard to the opinion of the Economic and                      Whereas the need for the reinforcement of competent
 Social Committee,                                                      authorities' powers entails amendment of the existing
                                                                        Directives in the sectors concerned ; whereas a binding
                                                                       Community Directive is the sole appropriate means of
                                                                       meeting this need ; whereas this measure restricts itself to
Wheras the First Council Directive 77 /780 / EEC (') and               the minimum required to achieve the desired objective
the Second Council Directive 89/646/EEC (2) on the                     and is accordingly proportional thereto ;
coordination of laws, regulations and administrative
provisions relating to the taking up and pursuit of the
business of credit institutions lay down the authorization
requirements for credit institutions ;                                 Whereas this Directive has been the subject of consul­
                                                                       tation with the Banking Advisory Committee, which was
                                                                       set up by Directive 77 / 780 / EEC, and the Insurance
                                                                       Committee which was set up by Council Directive
Whereas the First Council Directive 73 /239/EEC (3),                   91 /675 /EEC (8);
and in particular as amended by the Third Council
Directive 92 /49/EEC (4), on the coordination of laws ,
regulations and administrative provisions relating to the
taking up and pursuit of the business of direct insurance              Whereas the closing down of the Bank of Credit and
undertakings other than life assurance lay down the                    Commerce International (BCCI) and other events have
authorization requirements for insurance undertakings in               given rise to the need to strengthen the powers of the
the field of direct non-life insurance ;                               competent authorities for the supervision of credit
O   OJ No  L 322 , 17 . 12 . 1977, p. 30 .                             (5) OJ  No  L 63 , 13 . 3 . 1979, p. 1 .
o   OJ No  L 386,  30 . 12 . 1989, p. 1 .                              (6) OJ  No  L 360, 9 . 12 . 1992 , p. 1 .
(3) OJ No  L 228 , 16 . 8 . 1973 , p. 3 .                              O   OJ  No  L 141 , 11 . 6. 1993 , p. 27 .
(4) OJ No  L 228 , 11 . 8 . 1992 , p. 1 .                              (8) OJ  No  L 374, 31 . 12 . 1991 , p. 32
 ---pagebreak--- 25 . 8 . 93                                 Official Journal of the European Communities                               No C 229/ 11
institutions in the Member States ; whereas it is desirable           office is located in a different country than its registered
to adopt similar measures in the whole financial services             office ; whereas for this reason the head office of a credit
sector, including the competent authorities for the super­             institution, insurance undertaking or investment firm
vision of insurance undertakings and investment firms ;               must be located in the same country as that of the
                                                                      registered office ; whereas Directive 93 /22 /EEC already
                                                                       lays down this requirement for investment firms ;
Whereas         Directives    77 / 7 80 / EEC ,    89 /646 /EEC ,
73 / 239 / EEC , as amended by Directives 92 / 49 / EEC ,
79/267/EEC, as amended by Directives 92 /96/EEC and                   Whereas         Directives    89/646 / EEC ,      92 / 49 /EEC,
93 / 22 /EEC ('the Directives') lay down the conditions                92/96/EEC and 93 /22/EEC already provide for a
which must be fulfilled before Member States' competent                restricted list of bodies to whom information may be
authorities may grant authorization for the taking-up of              passed on by the competent authorities ; whereas in order
business ; whereas these conditions do not include the                to maintain confidentiality the list of recipients of infor­
requirement that where a credit institution, insurance                 mation should remain narrowly limited ; whereas,
undertaking or investment firms belongs to a group, the                however, in the light of the BCCI affair and other events
group structure must be sufficiently transparent in order              it is considered desirable to include in that narrow list
to allow effective supervision ;                                       certain bodies which play a key role when investigations
                                                                       into a credit institution, an insurance undertaking or an
                                                                       investment firm might be necessary in order to support
Whereas        the   Directives    should     therefore    require     the supervisory objectives ;
applications for authorization to contain sufficiently
detailed information to allow the competent authorities
to assess whether effective supervision can be exercised
in practice ;                                                         Whereas         Directives    89/646/EEC,         92 / 49 / EEC ,
                                                                       92 /96 / EEC and 93 /22 /EEC give provisions for the
                                                                       exchange of confidential information between the
                                                                       competent authorities and persons responsible for
Whereas          Directives     89 / 646/EEC,        92 /49 /EEC ,     carrying out statutory audits of the accounts of credit
92 /96/EEC and 93 / 22 / EEC already provide for infor­                institutions , insurance undertakings and investment
mation on the identity of shareholders or similar persons              firms ; whereas , due to auditors' access to material
and of the amount of the holdings to be submitted to the               essential to credit institutions', insurance undertakings'
competent authorities and that these competent auth­                   and investment firms' fulfilment of their obligations , and
orities shall refuse authorization under circumstances                 in the interest of protecting the depositors , policyholders
which       do    not   ensure    the     sound    and    prudent      and investors , the auditors should be obliged to pass on
management ;                                                           certain relevant information to the competent auth­
                                                                      orities ; whereas this obligation should only be triggered
                                                                      by a narrowly defined set of circumstances ;
Whereas , in the case of existing credit institutions ,
insurance undertakings and investment firms it should be
made clear that any material change of the conditions
                                                                      Whereas in the case of a credit institution, insurance
under which the comptent authorities have granted a
licence should be communicated to these authorities for               undertaking or investment firm with branches operating
reconsideration in order to reassess their fulfilment with            in more than one country, or which is part of a group of
the regard to the objectives of the authorization ;                   credit institutions, insurance undertakings or investment
whereas the Directives already empower the competent                  firms which is established in more than one country, it is
authorities      to   withdraw     an     authorization    if  the     desirable to have a single auditor for the organization
conditions under which the authorization was granted                   and coordination of the seperate audits wherever
are no longer fulfilled ; whereas in the case that a group            possible ; whereas it is however not appropriate to lay this
to which an existing credit institution , insurance under­             down as an obligation in this Directive ;
taking or investment firm belongs is transformed in such
a way that its financial, legal or decision-making
structure, or its administrative organization lacks trans­
parency so that it can no longer be supervised effectively,           Whereas it is desirable that the competent authorities
the present measures would give the necessary powers to               have the right to veto the appointment or reappointment
the supervisory authorities to withdraw the authorization             of persons responsible for carrying out the statutory
granted as an ultimate sanction ;                                      audits of accounts , for example if they have failed to
                                                                      cooperate with the competent authorities or if they have
                                                                      otherwise performed unsatisfactorily from those auth­
                                                                      orities' point of view ; whereas in view of the present
Whereas effective supervision of a credit institution,                situation of Member States' laws and regulations
insurance undertaking or investment firm could be                     concerning the relationship between competent auth­
hampered if the competent authorities can not maintain                orities , auditors and shareholders , it is not appropriate to
effective contact with the management because its head                provide for this in this Directive,
 ---pagebreak---  No C 229 / 12                               Official Journal of the European Communities                                      25 . 8 . 93
 HAS ADOPTED THIS DIRECTIVE :                                               group must be provided including sufficient details on
                                                                            the structure of the group and proposed relationships
                                 Article 1                                  between the financial undertaking and the other
                                                                            entities of the group to allow the competent auth­
                                Definition                                  orities to assess whether the financial undertaking can
 — To Article 1 of Directive 77 / 7 80 / EEC, a new fifth
                                                                            be supervised effectively.'
      indent,
                                                                       3 . — To Article 8 ( 1 ) of Directive 73 / 239 /EEC, as
 — to Article 1 of Directive 92 / 49 /EEC, a new letter (1),                     amended by Directive 92 / 49 / EEC , and
 — to Article 1 of Directive 92 /96/EEC, a new letter
                                                                            — to Article 8 ( 1 ) of Directive 79 / 267 / EEC, as
      (m), and                                                                   amended by Directive 92 / 96 / EEC ,
 — to Article 1 of Directive 93 / 22 /EEC, a new number
       15 ,                                                                 a new paragraph 1 (a) shall be added which reads as
                                                                            follows :
 shall be added which reads as follows :
                                                                            '(a) Where an insurance undertaking is part of a
      ' "group" means a situation where two or more                                group the competent authorities shall satisfy
      undertakings are linked directly or indirectly by way                        themselves that the structure of the group and in
      of :
                                                                                   particular the proposed relationships between the
      (a) "participation" which shall mean the ownership,                          insurance undertaking and other entities in the
             direct or indirect, of 20 % or more of the voting                     group are such as to enable the insurance under­
             rights or capital of an undertaking ; or                              taking to be supervised effectively. The insurance
                                                                                   undertaking concerned shall provide information
      (b) "control" which shall mean the relationship                              about the structural organization of the group
             between a parent undertaking and a subsidiary,                        including sufficient details on the structure of the
             as    defined     in    Article  1    of    Directive                 group and proposed relationships between the
             83 / 349 / EEC (x), or a similar relationship                         insurance undertaking and the other entities of
             between any natural or legal person and an                            the group .'
             undertaking
                                                                       4 . (a) — To Article 3 of Directive 77/7 80 /EEC , and
      0) OJ No L 193 , 18 . 7 . 1983 , p. 1 .'                                  — to Article 3 of Directive 93 /22 /EEC,
                                Article 2                                        a new paragraph 8 shall be added which reads as
                                                                                 follows :
                           Group structures
1 . — To Article 3 (2) of Directive 77 /780 / EEC , a                            ' 8 . Member States shall require that a financial
           fourth indent, and                                                   undertaking shall notify to the competent auth­
                                                                                orities :
    — to Article 3 (3) of Directive 92 / 22 / EEC , a third
           indent,                                                              — when it becomes part of a group,
     shall be added which reads as follows :
                                                                                — when the structure of the group to which it
     '— where a financial undertaking is part of a group,                             belongs changes ;
            the competent authorities must satisfy themselves
            that the structure of the group and in particular                   under these circumstances paragraph 4 applies.'
            the proposed relationships between the financial
            undertaking and other entities in the group are                (b) — To Article 8 of Directive 73/239/EEC, as
            such as to enable the financial undertaking to be                         amended by Directive 92 / 49 / EEC, and
            supervised effectively.'
                                                                                — to Article 8 of Directive 79 /267/EEC, as
2 . — To Article 3 (4) of Directive 77 / 780 / EEC, after                             amended by Directive 92 /96/EEC,
          the first sentence, and
                                                                                a new paragraph 5 shall be added which reads as
    — to Article 3 (4) of Directive 93 / 22 /EEC , after the                    follows :
         first sentence,
    the following sentence shall be added which reads as                        '5 . Member States shall require that a financial
    follows :                                                                   undertaking shall notify to the competent auth­
                                                                                orities :
    'Where a financial undertaking is part of a group,
    information about the structural organization of the                        — when it becomes part of a group,
 ---pagebreak--- 25 . 8 . 93                              Official Journal of the European Communities                              No C 229 / 13
          — when the structure of the group to which it                           gations of shareholders and of members of
              belongs changes ;                                                   the administrative , managerial and super­
                                                                                  visory bodies of companies, and to take-over
           under these circumstances paragraph          1  (a)                    bids and the persons appointed by such
           applies .'                                                             responsible bodies to carry out specific tasks .'
                             Article 3                              2 . — To Article 12 (5) of Directive 77 /780 / EEC , as .
                                                                             amended by Article 16 of Directive 89 / 646 / EEC ,
                 Head office and registered office                           and
— To Article 3 (2) of Directive 77 / 780 /EEC,                          — to Article 25 ( 5) (b) of Directive 93 /22 / EEC ,
— to Article 6 (a) of Directive 73 / 239/EEC, as
                                                                        a new fifth indent shall be added which reads as
      amended by Directive 92 / 49 / EEC , and                          follows :
— to Article 6 (a) of Directive 79 /267 / EEC , as
      amended by Directive 92 /96 / EEC ,                               '— departments of central banks or other bodies
                                                                              responsible for the oversight of payment systems.'
the following indent shall be added which reads :
                                                                   3 . To Article 12 ( 5) of Directive 77 /780 / EEC , as
    '— the head office of the financial undertaking must                amended by Article 16 of Directive 89 /646/EEC, a
         be in the same Member State as its registered                  new paragraph 8 shall be added which reads as
         office and that in which the authorization is being            follows :
         requested .'
                                                                        £ 8 . This Article shall not prevent the competent
                             Article 4                                  authorities from communicating the information
                                                                        referred to in paragraphs 1 to 4 to a clearing house or
                      Exchange of information                           other similar body recognized under national law for
                                                                        the provision of clearing or settlement services to one
1 . — Article 12 ( 5) of Directive 77 / 780 / EEC, as                   of its markets if they consider that it is necessary to
         amended by Article 16 of Directive 89 /646/EEC ,               communicate the information in order to ensure the
                                                                        proper functioning of those bodies in relation to
     — Article 16 (5) of Directive 92 /49/EEC,                          defaults or potential defaults on the market. The
                                                                        information received shall be subject to the conditions
     — Article 15 (5) of Directive 92 /96 / EEC , and                   of professional secrecy imposed in paragraph 1 . The
                                                                        Member States shall, however, ensure that infor­
     — Article 25 (5) (b) of Directive 93 /22 / EEC,                    mation received under paragraph 2 may never be
                                                                        disclosed in the cases referred to in this paragraph
     shall be amended as follows :
                                                                        except with the express consent of the competent
                                                                        authorities which disclosed the information .'
     (a) the second indent shall read :
                                                                                                Article 5
          '— bodies involved in the liquidation and bank­
               ruptcy of the financial undertaking and in                             Role of statutory auditors
               other similar procedures and the authorities
               competent to supervise such bodies,';               — To Article 12 of Directive 77 /780 /EEC, as amended
                                                                         by Article 16 of Directive 89 / 646 /EEC , a new
     (b) the third indent shall read :                                   paragraph 9 ,
          '— persons responsible for carrying out statutory        — to Article 16 of Directive 92 / 49 / EEC and Article 15
               audits of the accounts of the financial under­            of Directive 92/96/EEC a new paragraph 7, and
               taking and the authorities which are
               responsible for the approval of statutory
               auditors,';                                         — to Article 25 of Directive 93 /22 / EEC, a new
                                                                         paragraph 10 ,
     (c) a new fourth indent shall be added which reads :
                                                                   shall be added which reads as follows :
         '— bodies responsible for the detection and
               investigation of breaches of company law, in              'The Member States shall provide that any person
              particular laws relating to the rights and obli­           responsible for carrying out statutory audits of the
 ---pagebreak--- No C 229 / 14                         Official Journal of the European Communities                                  25 . 8 . 93
    accounts of the financial undertaking shall have the        These provisions shall enter into force no later than 31
    duty to report immediately to the competent auth­           December 1995 . The Member States shall forthwith
    orities for prudential supervision if in the course of      inform the Commission thereof.
    this work, he becomes aware of facts which are likely
    to lead to a serious qualification or refusal of the                                   Article 7
    certificate of audit ; endanger the existence of the
    financial undertaking ; or gravely impair its devel­        Whenever the words 'financial undertaking' are used in
    opment or imperil the protection of clients, or which       the Directive they shall be replaced by :
    indicate that the principles of sound management            — 'credit     institution'  when    this Directive   amends
    have been seriously violated .'                                 Directives 77 / 780 / EEC and 89 /646 / EEC ,
                                                                — 'insurance undertaking' when this Directive amends
                                                                    Directives 73 / 239 / EEC , 92 /49 /EEC , 79 / 267 / EEC
                          Article 6                                 and 92 / 96 / EEC ,
                     Final provisions                           — 'investment firm' when           this  Directive   amends
                                                                    Directive 93 / 22 / EEC .
No later than 1 July 1995 Member States shall adopt the                                    Article 8
laws, regulations and administrative provisions necessary
for them to comply with this Directive .                        This Directive is addressed to the Member States .