S.I. No. 267/1996:

SUPERVISION OF CREDIT INSTITUTIONS, STOCK EXCHANGE MEMBER FIRMS AND INVESTMENT BUSINESS FIRMS REGULATIONS, 1996

SUPERVISION OF CREDIT INSTITUTIONS, STOCK EXCHANGE MEMBER FIRMS AND INVESTMENT BUSINESS FIRMS REGULATIONS, 1996

I, Ruairí Quinn, Minister for Finance, in exercise of the powers conferred on me by section 3 of the European Communities Act, 1972 (No. 27 of 1972), and for the purpose of giving effect to Directive 95/26/EC of the European Parliament and of the Council¹, hereby make the following Regulations:

¹O.J. No. L168, 18.07.95.

1. (1) These Regulations may be cited as the Supervision of Credit Institutions, Stock Exchange Member Firms and Investment Business Firms Regulations, 1996.

(2) These Regulations shall come into operation on the 10th day of September, 1996.

2. (1) In these Regulations,

"authorisation", in the case of --

(a) an authorised member firm for the purposes of the Stock Exchange Act, 1995 (No. 9 of 1995), has the same meaning as in that Act,

(b) an authorised investment business firm for the purposes of the Investment Intermediaries Act, 1995 (No. 1 of 1995 ), has the same meaning as in that Act,

(c) a credit institution, has the same meaning as in the European Communities (Licensing and Supervision of Credit Institutions) Regulations, 1992 ( S.I. No. 395 of 1992 );

"authorised investment business firm" means an authorised investment business firm for the purposes of the Investment Intermediaries Act, 1995 , and to which Council Directive 93/22/EEC²;

²O.J. No. L141, 11.06.93.

"authorised member firm" means an authorised member firm for the purposes of the Stock Exchange Act, 1995 ;

"the Bank" means the Central Bank of Ireland;

"close links" means --

(a) an arrangement whereby two or more persons are linked by --

(i) "participation", which means the ownership, direct or by way of control, of 20 per cent. or more of the voting rights or capital of an undertaking, or

(ii) "control", which means the relationship between a parent undertaking and a subsidiary undertaking, in all the cases referred to in Article 1(1) and (2) of Directive 83/349/EEC³, or a similar relationship between any person and an undertaking and any subsidiary of a subsidiary shall also be considered a subsidiary of the parent undertaking which is at the head of those undertakings,

³O.J. No. L193, 18.07.83, Directive as last amended by Directive 90/605/EEC (O.J. No. L317,16.11.90).

and

(b) an arrangement whereby two or more persons are permanently linked to one and the same person by a control relationship.

"credit institution" means a credit institution within the meaning of Council Directives 77/780/EEC⁴ and 89/646/EEC⁵;

⁴O.J. No. L322, 17.12.77.

⁵ O.J. No. L386, 30.12.89.

"financial undertaking" means an authorised member firm or an authorised investment business firm or a credit institution;

"investment business firm" means an investment business firm for the purposes of the Investment Intermediaries Act, 1995 , and to which Council Directive 93/22/EEC applies;

"investment service" has the same meaning as it has in Council Directive 93/22/EEC;

"member firm" means a member firm for the purposes of the Stock Exchange Act, 1995 , and to which Council Directive 93/22/EEC applies;

"supervisory authority", in the case of --

(a) an authorised member firm, means the Bank,

(b) an authorised investment business firm, has the same meaning as in the Investment Intermediaries Act, 1995 ,

(c) a credit institution, means the Bank.

(3) A word or expression that is used in these Regulations and is also used in the Directive has, unless the contrary intention appears, the same meaning in these Regulations as in the Directive.

(4) In these Regulations unless otherwise indicated --

(a) a reference to a regulation is to a regulation of these Regulations, and

(b) a reference to a paragraph or subparagraph is to a paragraph or subparagraph of the regulation in which the reference occurs.

3. (1) A supervisory authority shall not grant authorisation to a credit institution where --

(a) the existence of close links between the credit institution and other persons, or

(b) the laws, regulations or administrative provisions of a state which is not a Member State of the European Union governing one or more persons with which that credit institution has close links, or difficulties involved in their enforcement,

would prevent the effective exercise of its supervisory functions.

(2) A supervisory authority shall not grant authorisation to a member firm or to an investment business firm to provide investment services where --

(a) the existence of close links between the member firm or investment business firm and other persons, or

(b) the laws, regulations or administrative provisions of a state which is not a Member State of the European Union governing one or more persons with which that member firm or investment business firm has close links, or difficulties involved in their enforcement,

would prevent the effective exercise of its supervisory functions.

4. (1) A supervisory authority shall revoke the authorisation of a credit institution where --

(a) the existence of close links between the credit institution and other persons, or

(b) the laws, regulations or administrative provisions of a state which is not a Member State of the European Union governing one or more persons with which such credit institution has close links, or difficulties involved in their enforcement,

would prevent the effective exercise of its supervisory functions and such revocation of authorisation shall constitute a withdrawal of authorisation for the purposes of Council Directive 95/26/EC.

(2) The supervisory authority shall revoke the authorisation of an authorised member firm or an authorised investment business firm to provide investment services where --

(a) the existence of close links between the authorised member firm or authorised investment business firm and other persons, or

(b) the laws, regulations or administrative provisions of a state which is not a Member State of the European Union governing one or more persons with which that authorised member firm or authorised investment business firm has close links, or difficulties involved in their enforcement,

would prevent the effective exercise of its supervisory functions and such revocation of authorisation shall constitute a withdrawal of authorisation for the purposes of Council Directive 95/26/EC.

5. A credit institution authorised by the Bank shall have its registered office and its head office in the State.

6. A supervisory authority shall require the financial undertakings which it supervises to provide it with the information which it requires in order to establish the existence and degree of close links between that financial undertaking and other persons and any other information which the supervisory authority may from time to time require in order to carry out its functions under regulations 3 and 4.

7. The auditor of a financial undertaking shall communicate to the relevant supervisory authority any fact or decision concerning that financial undertaking of which the auditor becomes aware while conducting an audit of that financial undertaking which --

(a) is liable to constitute a material breach of the laws, regulations or administrative provisions which lay down the conditions under which the financial undertaking was authorised or any laws, regulations or administrative provisions which specifically govern pursuit of the activities of financial undertakings or of any condition or requirement imposed by the supervisory authority on that financial undertaking, or

(b) is liable to affect the continuous functioning of the financial undertaking, or

(c) is liable to lead to a refusal by the auditor to certify the accounts of the financial undertaking or to the expression of reservations by the auditor.

8. The auditor referred to in regulation 7 shall communicate to the relevant supervisory authority any facts or decisions of which that auditor becomes aware while conducting an audit of an undertaking where it is established that there are close links resulting from a control relationship with the financial undertaking for which the auditor conducts an audit.

9. Any communication by an auditor under regulation 7 or 8 shall not constitute a breach of any restriction on disclosure of information imposed by contract or by any legislative, regulatory or administrative provision and shall not involve the auditor in liability of any kind.

10. A financial undertaking may appeal to the High Court against a decision made by a supervisory authority under any of the provisions of these Regulations and that Court may confirm, vary or set aside any decision so made.

Given under my Official Seal, this 9th day of September, 1996.

RUAIRÍ QUINN

Minister for Finance

EXPLANATORY NOTE

These Regulations implement the mandatory requirements of Directive 95/26/EC in respect of credit institutions, member firms of the Stock Exchange and investment business firms. The Regulations provide that supervisory authorities of the above institutions shall refuse authorisation to conduct investment business in certain circumstances. The Regulations impose certain obligations on the auditors of credit institutions, Stock Exchange member firms and investment business firms.