Source: http://docplayer.net/11450022-Rules-the-central-securities-depository-of-poland-kdpw-chapter-i-general-provisions.html
Timestamp: 2018-04-21 20:17:28
Document Index: 432698379

Matched Legal Cases: ['Art. 48', 'Art. 48', 'Art. 5', 'Art. 68', 'Art. 70', 'Art. 68']

RULES. The Central Securities Depository of Poland (KDPW) CHAPTER I GENERAL PROVISIONS - PDF
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1 rules_ of The Central Securities Depository of Poland (KDPW) Valid as of 3 February, 2014 RULES Of The Central Securities Depository of Poland (KDPW) CHAPTER I GENERAL PROVISIONS 1 1. The Rules of the Central Securities Depository of Poland, henceforth referred to as the Rules, define the operating principles of the depository system. 2. The term depository system shall refer to the system organised, managed and supervised by Krajowy Depozyt Papierów Wartościowych S.A. (the Central Securities Depository of Poland) KDPW - to ensure the administration of a securities depository, the settlement of transactions in financial instruments trading, and the performance of issuers obligations for securities owners, as well as performing other activities related to trading in financial instruments defined in Art. 48 subpara. 1, items 1-6 of the Law on Trading in financial instruments The KDPW Management Board may pass resolutions on detailed matters that relate to the operation of the depository system, with the exception of matters regarding the rights and obligations of participants, which define the terms and conditions of obtaining and terminating participant status. 2. The resolutions referred to in subpara. 1 shall be made available to the interested participants immediately upon being passed. 3. The resolutions referred to in subpara. 1 shall come into force two weeks after their becoming available according to subpara. 2, unless they indicate a longer period before coming into force. 4. The provisions of subpara. 3 shall not apply to resolutions of the KDPW Management Board that relate to the entering into, amendments to, and termination of participation agreements with an individual participant, nor to resolutions which do not contain rules relating to the rights and obligations of
2 participants. Subject to the provisions of subpara. 2, these resolutions shall come into force upon being passed, unless the relevant resolution provides otherwise. 3 Whenever reference is made herein to the following terms: 1/ the Law on trading in financial instruments, this shall be understood to mean the Law on trading in financial instruments of 29 July, 2005 (Dziennik Ustaw Journal of Laws No. 183, item 1538, with later amendments), 2/ the Law on public offerings, this shall be understood to mean the Law on public offerings, conditions governing the introduction of financial instruments to organised trading, and public companies of 29 July 2005 (Dziennik Ustaw Journal of Laws No. 184, item 1539, with later amendments), 3/ the Exchange, this shall be understood to mean the Warsaw Stock Exchange, 4/ the Depository, this shall be understood to mean the securities depository as defined in Article 3 point 21 of the Law on trading in financial instruments, 5/ the Central Securities Depository of Poland, or KDPW, this shall be understood to mean the joint stock company known as Krajowy Depozyt Papierów Wartosciowych, 5a/KDPW_CCP, this shall be understood to mean the joint stock company known as KDPW_CCP, to which KDPW has transferred the performance of activities relating to the responsibilities described in Art. 48, subpara. 2 of the Law on Trading in Financial Instruments. 6/ securities, this shall be understood to mean securities as defined in Article 3 point 1a and b of the Law on Trading in Financial Instruments which: a/ meet at least one of the conditions of dematerialisation, as defined in Art. 5, subpara. 1 of the Law on Trading in Financial Instruments, or b/ were admitted to public trading admitted to public trading on the basis of the Law on the Public Trading in Securities of 21 August 1997 (Dziennik Ustaw 2005 Journal of Laws No. 111, item 937 with subsequent amendments), or c/ do not meet any of the conditions described in a/ or b/ above, however, are not in paper form on the basis of provisions of another act of law, other than the Law on Trading in Financial Instruments, or d/ do not meet any of the conditions described in a, b, or c above, however: - they were issued by an entity domiciled outside the Republic of Poland, - they are registered by a legal entity or other institution performing, outside the territory of the Republic of Poland, the role of central securities register, managing the relevant registration account for KDPW or another financial institution managing such an account, as described in of 40 subpara 6, and - these securities were purchased by a participant or its client through their exercise of their right to the free-of-payment, or for-payment acquisition or purchase of these securities and the right was directly connected with the ownership of securities registered in the depository. 7/ derivatives, this shall be understood to mean derivatives admitted to organised trading, 8/ derivatives market, this shall be understood to mean the organised trading system where transactions involving derivatives are executed,
3 9/ participant s cash account, this shall be understood to mean the following account indicated by a participant: a/ the bank account used for payments referred to in 48 subpara. 1, managed in a bank that, under an agreement with KDPW, agreed to have bank accounts managed by it debited or credited in respect of such payments on the basis of instructions issued by KDPW, if the holders of such accounts authorise KDPW to issue such instructions, or b/ in the case and within the scope referred to in Article 48 subpara. 4a - the bank account used for payments referred to in 48 subpara. 1, managed in TARGET2; 10/ settlement bank this shall be understood to mean the bank referred to in Point 9 item (a); 11/ derivatives account, this shall be understood to mean the account used to register derivatives, as defined in point 7/, 12/ clearing guarantee fund, this shall be understood to mean the clearing guarantee fund referred to in Article 65 subpara. 1 of the Law on trading in financial instruments, managed by KDPW_CCP. 13/ ATS guarantee fund, this shall be understood to mean the fund used to guarantee the correct clearing of transactions executed in a specific alternative trading system, managed by KDPW_CCP, as described in Art. 68 of the Law on Trading in financial instruments. 14/ settlement instruction, this shall be understood to mean an instruction to perform the activities, described in 47, subpara. 1, in the depository system. 3a 1. Provisions of these Rules that refer to securities shall apply respectively to financial instruments, which are not securities, 1/ admitted to trading in the regulated exchange or over-the-counter market, or being in the process of seeking admission to such trading, and 2/ admitted to trading in an alternative trading system, or being in the process of seeking admission to such trading. 2. In matters not regulated otherwise in the provisions of these Rules relating to derivatives accounts, the provisions of these Rules relating to securities accounts shall apply accordingly to derivatives accounts Whenever the provisions of the Rules refer to making a declaration or making available, or providing information by KDPW to a direct participant, or by a direct participant to KDPW, and these provisions do not define the form in which this should take place, this shall be understood to mean delivery to the intended party of the declaration, or information in electronic form on the basis of principles described in agreements signed between KDPW and direct participants, defining the ability to make declarations of will and to send information in electronic form, subject to the provisions of subparas. 2-5a. 2. The provisions of subpara. 1 shall not apply in relation to declarations and information sent by direct participants in connection with the exercise by entitled entities of rights from securities, described in 40 subpara. 6, including for the purposes of confirming the tax status of such entities, should these
4 declarations, or information be intended for further transmission by KDPW to the relevant entity, described in 40 subpara. 6, in a form other than electronic means. 3. Sending declarations and information in the course of relations between KDPW and entities applying for a participation agreement, as well as in the course of relations between KDPW and its participants that are: 1/ direct participants, 2/ in accordance with the obligations described in 23 or 30a, 3/ in connection with amendments to or termination of the participation agreement, 4/ in connection with the updating of documents provided by a participant in order to conclude or amend a participation agreement, 5/ in connection with imposing disciplinary, or order measures, and 4/ in connection with the participation status of issuer, will require the delivery to the addressee of the original document containing the declaration or information, or an appropriately certified copy, subject to the provisions of subpara. 5 and 5a. 4. The KDPW Management Board may, by means of a Resolution, define other instances where the submission of declarations, or information should take place according to the rules described in subpara In relations between KDPW and participants, documents containing a declaration, or information, described in subpara. 3 or 4 may be sent via facsimile or electronic mail through the internet. However, until the moment when the document is received in the manner described in subpara. 3, only actions requiring an urgent response should be performed on the basis of the contents of a message sent via facsimile, or electronic mail. No action should be performed when a facsimile, or electronic mail transfer has been damaged in such a way as to render its contents impossible to determine. 5a. In instances described in these Rules, or in a Resolution of the KDPW Management Board, in relations between KDPW and participants with the status of issuer, the transfer of declarations or information as part of that participation type shall take place using electronic means, using the KDPW website and using means described in a Resolution of the KDPW Management Board, securing the contents of the declaration or information to prevent access by third parties. If, however, the declaration or the information cannot be transmitted in this manner, in particular for technical reasons, then they should be sent according to the principles described in subpara. 3, subject to the provisions of subpara An appropriately certified copy of a document shall mean: 1/ For official documents: a copy certified officially or notarised, stating it is true to the original, 2/ For private documents: a notarised copy stating it conforms to the original, while for documents containing personal declarations by the entity submitting the copy of the document, a copy certified as being true to the original according to the corporate representation rules of that entity will also be required. 7. The declarations and information described in subparas. 3 and 4 shall be sent by KDPW to the address indicated in the documents submitted by the participant to KDPW. In the event that the declaration or information cannot be delivered to the participant at this address, this shall be understood to mean that on the day that KDPW has received information that such a delivery was not possible, all consequences pertaining to the delivery to the participant of the declaration or information by KDPW, have taken place.
5 4a 1. Should the declaration or information sent by electronic means be specifically formatted or have a predefined structure, KDPW shall designate the necessary format or structure of such a declaration or information on the KDPW website. KDPW shall inform participants about each change of the relevant requirements at least two weeks prior to its introduction. 1. If, under the agreements referred to in 4 subpara. 1, declaration or information should or could be sent over the electronic network SWIFT (Society for Worldwide Interbank Financial Telecommunication), KDPW shall, on its website, define the kind (types) of messages supported by the network which can be used for this purpose by participants or by KDPW Whenever a number of days are specified, the number shall exclude all official holidays, specified in the applicable regulations, and Saturdays, subject to subparas. 1a and 2. 1a. The provisions of subpara. 1 shall not apply when calculating the deadline, described in If so required by the depository system, the KDPW Management Board may, by way of resolution, specify additional days that shall be excluded when calculating deadlines, and specify days from among those referred to in subpara. 1 that shall be included in the deadline calculation. KDPW shall notify its participants of every such case at least one month in advance. 3. In instances where the Rules impose a duty to perform an activity, or give an undertaking dependent on the performance of an activity, and do not specify in days, weeks or otherwise when that activity is to be carried out, the activity should be performed immediately after the event, which requires such activity to be carried out has taken place Subject to the provisions of the second sentence of subpara. 3, and the provisions of subpara. 4, the market value of securities traded in an organised market shall be calculated using the following methodology: 1/the market value of securities traded exclusively in a single organised market shall be calculated according to their price in that market, determined as the reference price; 2/ if on a given date the price determined as the reference price has not been calculated in the organised market where the trading of securities, described in point 1, is performed, then the market value of those securities shall be calculated using the last such reference price determined prior to that date; 3/the market value of securities traded in more than one organised market shall be calculated according to their price in the market that has been assigned with a higher priority than the priority assigned to the remaining markets, and this price shall be determined as the reference price. 4/ if on a given date in an organised market determined according to the principles described in point 3, the price determined as the reference price has not been calculated, the market value of the securities described in point 3 shall be calculated on the basis of such a reference price calculated on that date in another organised market in which these securities are traded, and if such a price was calculated on that date in more than one market, the reference price shall be calculated on the basis of the price in that market that has been assigned with a higher priority than the priority assigned to the remaining markets;
6 5/ if on a given date the price determined as the reference price has not been calculated on any of the organised markets where the trading of securities, described in point 1, is performed, then the market value shall be calculated on the basis of the last reference price from that market where this reference price was calculated at the latest time, and should this condition be met in more than one organised market, then the reference price shall be calculated on the basis of the last such reference price from the market that has been assigned with a higher priority than the priority assigned to the remaining markets. 2. Priorities assigned to individual organised markets and prices determined as reference prices for the purposes of calculating the market value of securities are described in Appendix 2 of the Rules herein. 3. The market value of securities, whose price has been determined as the reference price and defined as a percentage, shall be equal to the product of their current nominal value multiplied by the price calculated according to the provisions of subpara. 1, increased by the value of cumulated interest calculated on the date that their market price has been calculated, unless the entity managing the organised market or the issuer directly or indirectly delivers KDPW_CCP information indicating this value. However, it shall be assumed that the market value of securities on a date not being a trading date or a session date on any organised market in which these securities are traded, shall be equal to the market value calculated on the last trading date or a session date in such a market. 4. If on a given date, in connection with a change in the nominal value of securities, whose price, determined as the reference price, is not defined as a percentage, an exchange operation was performed in KDPW where these securities were exchanged for securities with a new nominal value, their market value on that date shall be calculated according to the price determined as the reference price in accordance with the principles of subpara. 1 and 2; for the purposes of calculating this value, this price shall be multiplied by the product, where the numerator is the new nominal value and the denominator is the previous nominal value. 5. the market value of securities not traded in any organised market shall be calculated according to the following principles: 1/ the market value of Treasury bills shall be calculated according to rules applied by the National Bank of Poland when determining the market value of Treasury bills that are used as loans executed within the securities registration system managed by the National Bank of Poland, as well as used as collateral for these loans; 2/ the market value of securities which have been excluded from trading in an organised market, or whose trading in such a market has been terminated for other reasons, shall be calculated according to the principles described in subparas. 1-4, subject to the provision that if these securities were traded in more than one organised market and their exclusion from trading in these markets took place at different dates, their market value shall be calculated on the basis of the last price from the market where trading was terminated last, which shall then be the reference price. 3/ for subscription rights, which are not included in the provisions of point 2 above, the market value shall be deemed to be zero. 4/ the market value of other securities shall be calculated, respectively, according to their issue price, or according to their average issue prices weighted by the number of securities registered in the depository in separate issues; if the issue price cannot be determined, then their nominal value is used for the calculation. 6. If the market value of the securities, calculated according to the principles described in subparas. 1-5 is expressed in a foreign currency, this value shall be converted into Polish currency by applying the current average foreign exchange rate published by the National Bank of Poland.
7 7. For the purposes of applying the provisions of subpara. 1-5, it shall be assumed that an organised market is a regulated market or an alternative trading system, on condition that these are managed by an entity or entities being parties to an agreement, described in 7 subpara. 1, concluded with KDPW and being in force on the date that the market value of the securities is to be calculated, as well as the electronic Treasury securities market managed by BondSpot S.A. on the basis of an agreement with the Minister of Finance Conditions that need to be met by a stock exchange operator, an over-the-counter market operator, or an alternative trading system operator in connection with the settlement of transactions executed on markets operated by those entities, shall be defined in agreements concluded between those operators and KDPW. 2. The conditions that need to be met by an entity entitled to clear transactions executed in trading in financial instruments, which is not a direct participant, in connection with the delivery by that entity of settlement instructions to KDPW, settlement instructions referred to in 51, point 2, shall be defined in the agreement concluded by that entity with KDPW. 7a The KDPW Management Board may discontinue the application of certain provisions of instruments issued on the basis of these Rules and, with the approval of the KDPW Supervisory Board, of certain provisions of these Rules regulating the operation of the depository system, with respect to securities issued outside the territory of the Republic of Poland, or with respect to the issuer of such securities, where such provisions cannot be applied due to the applicable provisions of foreign law or procedures applied by the entity referred to in 40, subpara. 6, which manages specific registration accounts for KDPW, on which these securities have been registered. 7b Where performing an operation in the depository system, including performing settlement, described in 50, or the management of corporate actions for those entitled to rights in securities, requires an amount expressed in a foreign currency to be converted to Polish currency, or vice versa, such conversion shall be made using the current average exchange rate published by the National Bank of Poland. 7c 1. KDPW shall not be obliged to provide compensation for damage or harm resulting in loss of any gains, which a party would have been able to obtain had the damage or harm been avoided, unless the damage or harm was intentional, or the result of negligence on the part of KDPW. 2. KDPW shall not be liable for any damage or harm caused to participants as a result of any action, or failure to perform, or for any other events or legal consequences in relation to: 1/ entities, described in 40, subpara. 6, which manage registration accounts for KDPW, on which securities are registered that are at the same time registered in the Depository, or, 2/ indirect intermediaries, where the entities described in 40, subpara. 6 keep or through which they register such securities,
8 unless KDPW for reasons of intent, or gross negligence, has caused such damage or harm to occur. In the latter case, KDPW shall be liable for the damage or harm to the extent that it is the natural consequence of its wrongful actions, or negligence, subject to the provisions of subpara If in the event of the occurrence of damage or harm, described in subpara. 2, KDPW shall receive compensation from the entity described in 40, subpara. 6, or from another source, this compensation will be apportioned between participants, on a pro-rata basis according to the level of their loss as a result of the damage or harm. If the event or legal consequences, referred to in subpara. 2, shall also lead to losses affecting the assets of KDPW, the aforementioned compensation shall also be used to reimburse those losses, while maintaining the pro-rata principle described in the previous sentence. 4. KDPW may, in cooperation with the participant, or participants who suffered the damage or harm described in subpara. 2, take steps aimed at restitution for the damage or harm from the entity described in 40, subpara. 6, if these steps are justified in the light of circumstances in a given case and participants who apply for such action agree to cover all costs and expenses incurred in the process. 7d 1. In instances where the damage or harm, described in 7c subpara. 2, for which KDPW is not liable, consists of a permanent inability to access securities registered on accounts managed in KDPW for participants, or consists of a permanent inability to access cash owed to or transferred by participants, and there is no method available for determining with certainty which entity was the owner, or which is entity owed securities or cash that cannot be accessed, in particular because beneficial owners cannot be identified at the level of the intermediary, or intermediaries, described in 7c subpara. 2, then the following principles shall apply where appropriate: 1/ it shall be agreed that the damage or harm consisting of the permanent inability to access securities assigned a given code has been suffered by all participants on whose accounts the securities assigned the given code were registered in KDPW, on a pro-rata basis in relation to the balances on the accounts of those participants at the end of the day, on which KDPW determined the information on the existence and scale of the damage or harm; in such instances, KDPW shall immediately inform direct participants, as well as the regulated market operator, or alternative trading system operator for those securities, about having accepted information about the damage or harm, and shall cease processing settlement involving the transfer of securities assigned with this code from accounts, or onto the accounts of KDPW managed by the entity described in 40, subpara. 6, until such a time that a specific reduction in the number of securities assigned with this code can be carried out on the accounts managed for participants; 2/ it shall be agreed that the damage or harm consisting of the permanent inability to access cash transferred by participants has been suffered by each of those participants, on a pro-rata basis to the cash amounts they transferred; 3/ it shall be agreed that the damage or harm consisting of the permanent inability to access cash owed to participants for a specific purpose has been suffered by each of those participants, on a pro-rata basis to the cash amounts they are owed; 2. A permanent inability to access securities or cash, described in subpara. 1 shall mean a lack of access resulting from the loss, unauthorised use, destruction, void status, cancellation, forgery, expropriation, confiscation relating to securities, or cash, or for other reasons, when circumstances reflect that the inability to access the securities or cash is not of a temporary nature. 3. In instances described in subpara1, point 1, the reduction of the number of securities on the accounts
9 managed for participants shall be carried out as the final operation on the day that KDPW determined the information on the existence and scale of the damage or harm. 7e 1. KDPW shall not be obliged to enter into any agreements or establish any other legal relations with foreign tax authorities or other foreign administration bodies, and neither shall it be obliged to disclose any information to such authorities or bodies unless such disclosure is required under the law applicable in the Republic of Poland. 2. KDPW shall not have any liability for any loss caused by any action or negligence of authorities or bodies referred to in subpara. 1 or any remedies applied by them including unfavourable rules of taxation on income or assets resulting from KDPW not entering into an agreement or not establishing other legal relations with such authorities or bodies or resulting from non-disclosure of information to such authorities or bodies by KDPW unless the law applicable in the Republic of Poland requires KDPW in the given case to disclose specific information to such authorities or bodies. CHAPTER II PARTICIPATION IN KDPW 8 The following entities may become participants in the depository system on the basis of a participation agreement: 1/ entities entitled to keep securities accounts and omnibus securities accounts, 2/entities that do not keep securities accounts or omnibus securities accounts but are entitled to carry out brokerage activities, including foreign investment companies, where their participation aims to interact with KDPW within the scope of the activities referred to in 1 subpara. 2 of these Rules, 3/ other financial institutions, in particular, banks, insurance companies, pension fund corporations and trust fund corporations, if they invest funds in the securities market using their own account, 4/ entities for which omnibus securities accounts may be kept, referred to in Article 8a subpara. 2 of the Law on trading in financial instruments, 5/ corporate entities or other organisational units domiciled outside the territory of the Republic of Poland, subject to the provisions of 16, which: a/ perform activities relating to the central registration of securities but are not authorised to hold omnibus securities accounts, or b/ perform activities relating to the clearing of transactions executed as part of securities trading, 6/ entities operating a clearing house or a settlement institution for transactions executed as part of
10 trading in financial instruments, 7/ issuers of securities On the basis of a participation agreement, entities described in 8, points 1-3 and 5 may become a direct or indirect participant. The entities described in 8 points 4 and 6 may only become direct participants. 1a. In relation to securities registered on depository accounts managed by settlement agents, the entities described in 8, Point 1 may only become indirect participants. 2. A direct participant interacts independently with KDPW and with other participants, subject to the provisions of subpara An indirect participant interacts with KDPW and with other participants by using a direct participant as intermediary. 4. In instances defined herein, a direct participant may use another direct participant as intermediary. 10 The participation agreement shall indicate the activities that need to be performed by the participant in the depository system, in particular by specifying the type or types of participant status granted to the participant as part of the types of activities performed by that participant in the financial markets, according to the classification contained in 11 subparas The types of participant status available to direct participants performing brokerage activities, subject to the provisions of subpara. 2 and 3, are defined as follows: 1/ Brokerage Office: for participants that perform brokerage activities through the execution of securities purchase or sale orders on behalf of clients and keep securities accounts on behalf of clients, or omnibus securities accounts; 2/ Brokerage Office-own account: for participants that as part of their brokerage activities, purchases and sells securities on their own account and manages securities accounts for their own securities; 3/ Depositor-Brokerage Office: for participants who do not keep securities accounts as part of their brokerage activities, however, perform activities involving the execution of securities purchase or sale orders on behalf of clients, or perform other activities where KDPW manages the securities account for their own securities; 4/ Repealed 5/ Repealed 6/ Repealed 7/ Lead Manager: for participants who, as part of their brokerage activities, keep a register of owners holding pre-defined securities purchased on the primary market or in an initial public offering, or
11 keep a register described in Article 6 subpara. 1 of the Law on trading in financial instruments; 8/ Representative (settlement agent): for participants, who: a/ as part of an agreement with another participant, who is an indirect participant in the given scope, represents that indirect participant in the scope of transaction settlement and the performance of other operations by KDPW on behalf of that indirect participant or on behalf of those entities entitled to securities registered on securities accounts or omnibus securities accounts managed by that participant, or b/ as part of an agreement with an entity that is not a participant, gives consent that its depository account managed in KDPW may be used to perform the settlement of transactions executed by that entity and maintains a securities account for that entity, 2. The types of participant status available to direct participants performing custody or brokerage activities, that includes managing securities accounts or omnibus securities accounts, however that does not include the execution in the Republic of Poland of securities purchase or sale orders on behalf of clients, are defined as follows: 1/ Custodian: for participants who manage securities accounts for clients, or omnibus securities accounts; 2/ Custodian-own account: for participants who keep securities accounts for their own securities; 3/ Repealed 4/ Lead Manager: for participants who, keep a register of owners holding pre-defined securities purchased on the primary market or in an initial public offering, or keep a register described in Article 6 subpara. 1 of the Law on trading in financial instruments; 5/ Representative (settlement agent): for participants, who: a/ as part of an agreement with another participant, who is an indirect participant in the given scope, represents that indirect participant in the scope of transaction settlement and the performance of other operations by KDPW on behalf of that indirect participant or on behalf of those entities entitled to securities registered on securities accounts or omnibus securities accounts managed by that participant, or b/ as part of an agreement with an entity that is not a participant, gives consent that its depository account managed in KDPW may be used to perform the settlement of transactions executed by that entity and maintains a securities account for that entity, 6/ Repealed 3. The type of participant status available to direct participants holding an omnibus securities account kept in KDPW and performing, outside the territory of the Republic of Poland, activities relating to registration for other entities of securities registered in such account shall be Foreign Custodian. 3a. The type of participation status available to direct participants acting as settlement agent, which following the conclusion of an agreement with another indirect or direct participant manage for that participant a depository account, or represent them within the scope of the registration of transaction settlement positions performed by a settlement agent on dedicated registration
12 accounts separated for this purpose and managed by KDPW, is settlement agent. For positions registered on such separate registration accounts, participants managing securities accounts or omnibus securities accounts linked to these accounts, may only enter into relations with KDPW through a direct participant holding this type of participation status. 4. The types of participant status available to direct participants performing activities other than those described in subparas. 1, 2 3 and 3a, who entrust KDPW with the management of securities accounts for their own securities, including if this takes place in relation to their management of a clearing house, or to the execution by a bank of securities purchase or sale orders on behalf of clients on the basis of Art. 70, subpara. 2, point 1 of the Law on Trading in Financial Instruments, is Depositor; 5. The type of participant status available to entities issuing securities registered in the depository is that of issuer. 11a 1. Granting more than one entity the participation type of Representative, where the represented entity is to be the same direct participant, first requires the represented indirect participant to indicate to KDPW which of the entities is to act as principal clearing member in this respect. This indication may only be changed by at least prior two-weeks notice sent to KDPW by the indirect participant. The indication shall cease to be valid at the moment that the participation of the entity being indicated itself ceases within a given type of participation status, however, if this should still leave more than one entity representing the same indirect participant, cessation of participation in this respect cannot take place prior to a new indication of an entity by the indirect participant. 2. In cases where there is more than one entity with the participation type of Representative, where the represented entity is to be the same indirect participant, then in order to determine which of them is the representative of the direct participant for the settlement of specific transactions, shall take place according to the contents of the settlement instructions delivered to KDPW relating to those transactions, and in the event that these instructions do not indicate the designated representative in this scope, then it shall be deemed that the designated representative will be the entity indicated according to the principles of subpara. 1 as principal representative. 3. Where the represented entity is to be the same indirect participant, in cases where the participation type of Representative is to be, or has been granted to a single entity, however, in the scope of various types of activities performed by that entity, determined according to the provisions of 11 subpara. 1-4, the provisions of subparas 1 and 2 shall apply accordingly. 4. For the participation type of Representative, relating to transactions executed in the market involving financial instruments that are not derivatives by the same entity that is not a participant, there cannot exist different participants, or even the same participant, but rather within different types of activities performed by that participant, determined according to the provisions of 11 subpara A direct participant which does not keep securities accounts and has not signed an agreement referred to in 4 subpara. 1 with KDPW may operate in the depository system via another direct participant which
13 is a party to such agreement, hereinafter account operator. 2. A direct participant may appoint an account operator by providing KDPW with a relevant written declaration to which the participant should attach: 1/ a power of attorney granted to the account operator to submit and receive on behalf of the direct participant, in relations with KDPW and other participants, declarations of will on matters relating to its participation in the depository system where such declarations may, or should be made in electronic form, in particular to submit and revoke instructions which, once executed, cause an omnibus securities account or a securities account managed in KDPW for the principal to be credited or debited or the participant s cash account relevant to the principal to be credited or debited. 2/ a document containing authorisation for the account operator to submit and receive, on behalf of and with binding effect to the direct participant, declarations other than declarations of will which may or should be sent in electronic form. Appointment of an account operator shall require the written consent of the participant to perform such function giving in writing to KDPW. 3. If an account operator is appointed, declarations of will and other information submitted in electronic form: 1/ shall be submitted or provided by the direct participant only via the account operator if addressed to KDPW or to another participant or participants, 2/ shall be submitted or provided by other participants and KDPW only to the account operator if addressed to the direct participant which appointed the account operator. 4. An account operator may also provide, on behalf of the direct participant which appointed the account operator, information other than referred to in subpara. 3, as well as documents in form other than electronic form. However, the option for the account operator to submit, on behalf of the direct participant, declarations of will within a broader scope than referred to in subparas. 1 and 3 shall be explicitly indicated in the content of the power of attorney referred to in subpara. 2, first sentence, point Upon the delivery of a declaration of will or other information addressed to the direct participant to the account operator appointed by the direct participant in the manner defined in the agreement signed with it, referred to in 4 subpara. 1, it shall have the effect of delivery of such declaration or information to the direct participant provided for by regulations or the provisions of these Rules. 6. An account operator shall immediately provide the direct participant which appointed the account operator, in the manner agreed with it, with the content of declarations of will or information addressed to the participant which the account operator receives according to subpara. 3 point KDPW and participants shall not be required to verify in any way any information or documents provided by the account operator and designated as originating from the direct participant which appointed the account operator. The direct participant shall consider such information and documents as originating from itself. 8. Revocation of the power of attorney referred to in subpara. 2, first sentence, point 1 and the authorisation referred to in subpara. 2, first sentence, point 2 shall be effective to KDPW and other participants no earlier than the second day following the day on which the direct participant which is the principal informs KDPW thereof in a written declaration. 9. Revocation of the consent referred to in subpara. 2, second sentence by the account operator shall result in discontinuation of its performance of this function for the direct participant. This shall be effective
14 no earlier than the second day following the day on which the account operator provides KDPW with a relevant written declaration. 10. The provisions of subpara. 7 shall not apply to declarations of will submitted by an account operator on behalf of a direct participant on the basis of the power of attorney referred to in subpara. 2, first sentence, point Repealed 14 Repealed 15 Repealed 15a Repealed 16 Institutions domiciled abroad, which perform activities relating to the central registration of securities or clearing of securities transactions, which are not subject to supervision by the appropriate body supervising financial institutions in European Union member countries, European Economic Area agreement signatory countries, or OECD member countries, may also become participants, on condition that they obtain the consent of the Polish Financial Supervision Authority. The provisions of the Rules shall apply in matters arising from the participation of such institutions in the depository system provided that the participation agreement with the particular institution, concluded with the approval of the KDPW Supervisory Board, does not contain any special provisions Any civil disputes concerning proprietary interests arising between participants, or between a participant and KDPW, in connection with participation in the depository system, shall be submitted to arbitration by the court of arbitration at KDPW. 2. Relationships between KDPW and participants under participation agreements shall be governed by the laws of the Republic of Poland.
15 18 1. The participation agreement shall be concluded two weeks after the submission of the relevant application to KDPW if the institution or body submitting the application fulfils the participation requirements specified by the law and by these Rules, and the application and supplementary appended documentation meet the formal requirements specified herein. The participation agreement may be concluded prior to the date defined in the previous sentence. 1a. In circumstances where the submitted application, or documents appended to it require completion, or amendment, the deadline described in subpara. 1 shall start on the day on which the entity seeking to conclude a participation agreement performed the relevant completion or amendment. In such cases, KDPW shall prepare information about the scope of the necessary completion or amendments within two weeks of the day of receipt of the application, and shall without delay send this information to the entity applying for participation. 2. The provisions of subparas. 1 and 1a shall apply accordingly to amendments to participation agreements Applications for a participation agreement, relating to participation in a scope other than that set out in 11 subpara. 5, should contain the following: 1/ the type of participant status being applied for; 2/ an indication, according to the classification defined in 11 subparas. 1-4, of the type of activities the applicant intends to perform as participant within the depository system and the type or types of participant status being applied for as part of the performance of these activities, and in addition, if the participation type of representative or settlement agent have been selected, to indicate, respectively, the participant or the entity that is not a participant, for whom the applicant intends to act within this scope; 3/ an indication of the entity or entities that will perform the activities of representative for the applicant, as well as the scope of related responsibilities if the applicant applies for indirect participant status; 2. If the applicant is seeking to obtain direct participation, the application should contain a declaration stating that the applicant has understood the rules presented on the KDPW website relating to sending and receiving declarations and information in electronic form, applied in relations between KDPW and direct participants, and has understood the terms and conditions which need to be met by that applicant according to the provisions of 24 subpara The provisions of subpara. 2 shall not apply to an applicant seeking to obtain participation in a scope relating to holding an omnibus securities account or a securities account kept in KDPW and intending to operate in the depository system via an account operator. In that case, the application should contain a declaration concerning appointment of a specific direct participant as the applicant s account operator. 4. If the applicant is seeking to obtain the type of participant status of Foreign Custodian, the application should contain a declaration stating that the applicant is familiar with the provisions of Articles 3, 4a and 30b of the Personal Income Tax Law of 26 July 1991 (Dziennik Ustaw - Journal of Laws from 2010, No. 51, item 307, as amended) and is aware that natural persons who are payers of the personal income tax are obliged to provide Polish tax authorities with tax returns indicating the amount of gain (loss) earned by them in the tax year from sale of securities for a price and exercise of rights from securities referred to in
16 Article 3 point 1 item (b) of the Law on trading in financial instruments, and that the provisions of the Personal Income Tax Law of 26 July 1991 impose the obligation on such taxpayers to pay income tax on such gain The application for a participant agreement, described in 19 subpara. 1, shall include: 1/ a copy of the company statute, or articles of association and a valid copy or excerpts from the relevant company register; 2/ a copy of their brokerage licence or licences to conduct other activities related to securities trading or registration, if such licences are required by separate legal regulations, while for foreign investment companies conducting brokerage activities on the territory of the Republic of Poland an additional declaration showing that conditions have arisen to allow them to begin performing brokerage activities in the territory of the Republic of Poland, defined in Article 117(3), second sentence, of the Law on trading in financial instruments, or a document from the Polish Financial Supervision Authority (KNF), or a department of the Polish Financial Supervision Authority, confirming that the Authority has received from the appropriate foreign supervisory body notification on the intention to begin performing brokerage activities in the Republic of Poland by that foreign investment company, indicating the date when this notification was received, 3/ cards with specimen signatures of the applicant s authorised representatives, as well as copies of power-of-attorney documents in instances where the right to represent the applicant by those persons submitting a specimen signature on the specimen signature card does not derive from the documents specified in point 1; 4/ cards with specimen signatures of persons authorised to make and receive declarations from KDPW on behalf of the applicant, these declarations not being declarations of intent; 5/ an information card containing addresses for deliveries as well as a list of staff employed in posts involving securities trading-related activities, that includes their positions, telephone/facsimile numbers as well as addresses; 6/ a declaration giving consent to arbitration by the arbitration court at KDPW, 7/ a declaration indicating the number or numbers of bank accounts managed in the settlement bank and, in the case and within the scope referred to in Article 48 subpara. 4a, managed in TARGET2, used to process payments referred to in Article 48 subpara. 1 connected to the applicant s participation in the depository system. 2. Applicants for participation status as entities keeping securities accounts or omnibus securities accounts, shall also include the following: 1/ a document containing a description of the principles and methods of managing a securities registry by the applicant, including rules for making entries on securities accounts or omnibus securities accounts, as well as containing an internal plan of registration accounts, 2/ a document containing the principles the applicant has adopted for maintaining the continuity and safety of operations related to securities registration, including operations related to making entries by the applicant on securities accounts and omnibus securities accounts 3/ a list of persons to be employed by the applicant to mange securities accounting registration,
17 containing a description of their qualifications and current experience in this field, or containing other information confirming that these persons have the required knowledge of the principles for performing this securities accounting and of practical experience of the same. 2a. The provisions of subpara. 2 shall apply respectively to applicants seeking the participation type of settlement agent for direct or indirect participants, whereas the documents presented, as described in subpara. 2, Points 1 and 2 should relate to the registration of securities on depository accounts, which are to be managed within the scope of this participation type. This applicant shall also include the general rules of the settlement agent system they are managing, as described in Art. 68b, subpara. 3 of the Law on Trading in Financial Instruments, as well as a document confirming their approval by the Polish Financial Supervision Authority. Repealed 3a. The acceptance of the application for the conclusion of a participation agreement for the participation type of settlement agent for an indirect or direct participant is conditional on KDPW receiving a written declaration from that participant, confirming the conclusion of an agreement with the applicant, where this agreement provides for the applicant managing a depository account for the participant on condition of receipt by the applicant of the status of participant in the depository system in that participation type, as well as containing unconditional authorisation for the applicant to send instructions resulting in entries to be made on separate registration accounts, described in 11, subpara. 3a and managed for participants, and to receive statements relating to these accounts. 3b. In the event of the termination of the agreement concluded between the indirect or direct participant, and the participant with the participation type of settlement agent, on the basis of which the latter participant manages a depository account for the indirect or direct participant, or in the event of the termination of the participation agreement concluded with a participant with the participation type of settlement agent for an indirect or direct participant, depending on which of these events takes place first, the indirect or direct participant shall be obliged immediately to ensure the transfer of the securities registered on separate registration accounts, described in 11, subpara. 3a, onto other registration accounts managed for that participant in KDPW. In the event that this obligation is not fulfilled by the participant, this transfer may be performed by KDPW. Repealed 5. The documents referred to in subpara. 2 points 1 and 2, should contain information, whose scope is defined in a resolution of the KDPW Management Board, and should be signed according to the applicant s representation rules. 6. In instances where the information contained in the documents described in subpara. 2 points 1, 2 and 3 give rise to uncertainty as to whether the applicant is able to ensure the safe and secure management of a securities registry, as set out in the appropriate regulations, KDPW shall inform the applicant of this fact. In such circumstances, the participation agreement, in as far as it relates to the provisions of subpara. 2, may be concluded with the applicant following the appropriate amendments being made to those documents by the applicant and their being resent to KDPW, or following clarification by the participant of the uncertainties in another manner, in particular by means of a written declaration sent to KDPW. 21 Rights arising from the participation agreement, which relate to participation types for direct participants, may only be transferred to another direct participant.
18 22 1. Applications for a participation agreement relating to the participant status referred to in 11 subpara. 5, submitted by issuers of securities should specify that the correct participation status is that of issuer. 2. Along with their application, subject to the provisions of subpara. 3, issuers shall submit a copy of the Articles of Association (Statute), or other legal document describing the issuer s corporate structure and organisation, a copy or excerpts from the relevant register, cards with specimen signatures and copies of power-of-attorney documents, referred to in 20 subpara. 1 point 3, as well as the declaration referred to in 20 subpara. 1 point In instances described in 40, subpara. 6, a copy or excerpt from the relevant official or court register, where the issuer is obliged to be entered in such a register, a copy of the company statute or other such document defining the structure and nature of the issuer s company, as well as the declaration referred to 20, subpara. 1 item 6 should all be submitted with the application The KDPW Management Board may require, by way of resolution, that a participant provide information necessary to assess whether or not it meets the requirements of participation. 2. Participants shall be obliged to notify KDPW without delay of any changes in the information contained in the documents provided by the participant together with the application for concluding a participation agreement and of any events, which may bear a negative impact on the performance of responsibilities arising from participation in the depository system. 3. Participants managing securities accounts or omnibus securities accounts, shall in addition be obliged to update the content of the documents, described in 20, subpara. 2 point 1 and 2, according to changes in the principles of registering securities defined in the appropriate regulations, or introduced on the basis of those regulations by a resolution of the KDPW Management Board; participants shall be further obliged to provide KDPW with updated versions of those documents in every case where changes will require their update, without delay following the day of the introduction of these changes, not later however than 10 days from that day. The provisions of the previous sentence shall apply accordingly in instances where the contents of the document, described in 20, subpara 2, point 1 or 2, which was submitted to KDPW, has become invalid for other reasons. 4. The provisions of subpara. 3 shall apply accordingly to participants with the participation type of settlement agent for indirect and direct participants Direct participants shall meet the appropriate material and technical requirements or, if they do not keep securities accounts, have an appointed account operator. Repealed 3. Meeting the appropriate material and technical requirements shall mean the participant maintaining technical and technological equipment, which ensures the participant is able to connect with the IT system of KDPW used to manage the depository system, ensuring that documents can be safely sent to and received from that system in electronic form. 4. Meeting the appropriate material and technical requirements by a participant managing securities
19 accounts or omnibus securities accounts shall in addition mean maintaining technical and technological equipment, which ensures at minimum that entries may be made in these securities accounts, that information on these entries may be processed and archived, and that the contents of documents, on the basis of which the entries were made, may be reproduced, while meeting the appropriate requirements arising from the provisions of the Law on Trading in financial instruments, as well as executive instruments derived from this legislation, and arising from the rules and resolutions of the KDPW Management Board issued on the basis of the legislation. 5. The requirement to meet the material and technical requirements, as described in subpara. 4, shall also apply to direct participants managing depository accounts with the participation type of settlement agent for indirect and direct participants, as well as applying for indirect participants managing securities accounts or omnibus securities accounts. 25 [Repealed] 26 [Repealed] 27 [Repealed] 27a [Repealed] 28 [Repealed] 29 [Repealed] 30 [Repealed] 30a 1. Participants shall be obliged to provide KDPW with information indicating those sale transactions executed by them without a client order, or those whose details do not correspond to a correct client order, where when these transactions are cleared, it leads to a temporary divergence between the balances on the registration accounts managed for the participant by KDPW, and the balances on the corresponding securities accounts or omnibus securities accounts, as well as information indicating how such discrepancies are to be corrected. 2. The information referred to in subpara. 1 shall be provided to KDPW on a monthly basis, not later than
20 five days prior to the end of the month for which the information has been prepared. 31 [Repealed] 32 [Repealed] Participants keeping securities accounts or omnibus securities accounts, as well as participants acting as settlement agents for a direct or indirect participant, shall be obliged to employ persons who have obtained the title of securities registration specialist having taken the appropriate examinations. 2. The number of specialists employed by a participant should be adequate for the extent and nature of its activities. The relevant requirements, as well as examination procedures, are described in provisions issued on the basis of these Rules. 33a 1. Direct participants keeping securities accounts or omnibus securities accounts shall be obliged at least once every calendar year to take part in tests as part of the System for Maintaining Business Continuity, organised by KDPW. Other direct participants may take part in such tests. 2. The System for Maintaining Business Continuity shall mean technical and organisational processes created in KDPW in order to maintain operational continuity, or the fastest possible recovery of the key business processes performed by the depository system, in the event that these are disrupted as a result of the inability to use the IT processing systems located in the main National Depository site, or as a result of this site being unavailable for processing. 3. KDPW shall inform direct participants of the date or dates of the tests of the System for Maintaining Business Continuity in a given calendar year, with at least one month s advance notice. CHAPTER III ADMINISTRATION OF THE SECURITIES DEPOSITORY SECTION 1 REGISTRATION PRINCIPLES The administration of the securities depository by KDPW shall mean defining the rules of securities registration, including rules according to which entries on securities accounts or omnibus securities accounts managed by participants should be carried out, as well as performing other activities related to securities registration. 2. Participants managing securities accounts or omnibus securities accounts, as well as participants with