Cap. 370 ст. 10CAApproval of financial holding companies and mixed financial holding companies.

(1) Parent financial holding companies, parent mixed financial holding companies, EU parent financial holding companies and EU parent mixed financial holding companies, which are established in Malta or in another Member State or EEA State and which have an investment firm as a subsidiary, shall seek the approval or exemption, as the case may be, of the competent authority acting, as the consolidating supervisor, in accordance with this article. Other financial holding companies or mixed financial holding companies, established in Malta or in another Member State or EEA State and which have an investment firm as a subsidiary, shall seek the approval or exemption, as the case may be, of the competent authority, acting as the consolidating supervisor, in accordance with this article where they are required to comply with the CRD or the CRR on a sub-consolidated basis: Provided that in accordance with article 10D where the competent authority is not the consolidating supervisor, financial holding companies and mixed financial holding companies established in Malta and which have an investment firm as a subsidiary, shall seek the approval or exemption, as the case may be, of the consolidating supervisor determined in accordance with Article 111 of the CRD.

(2) For the purposes of seeking an approval or exemption, as the case may be, in terms of sub-article (1), financial holding companies and mixed financial holding companies referred to therein shall, where:

(a) the competent authority is not the consolidating supervisor but the financial holding company or the mixed financial holding company is established in Malta; or

(b) the financial holding company or the mixed financial holding company is established in a Member State or an EEA State other than Malta and the competent authority is the consolidating supervisor, provide the competent authority with the following information:

(a) the structural organisation of the group of which the financial holding company or the mixed financial holding company, as the case may be, forms part, with a clear indication of its subsidiaries and, where applicable, parent undertakings, and the location and type of activity undertaken by each of the entities within the group;

(b) information regarding the nomination of at least two persons effectively directing the financial holding company or mixed financial holding company, as the case may be, and compliance with the requirements on the qualification of directors set out in Investment Services Rules;

(c) the internal organisation and distribution of tasks within the group;

(d) any other information that may be necessary to carry out the assessments referred to in sub-articles (3) and

(4) as may be requested by the competent authority.

(3) All applications for an approval or exemption, as the case may be, in terms of this article shall be in such form and accompanied by such information and shall conform with any such requirements as may be established, from time to time, by Investment Services Rules.

(4) Approval may be granted to a financial holding company or a mixed financial holding company, as the case may be, pursuant to this article only where all of the following conditions are fulfilled:

(a) the internal arrangements and distribution of tasks within the group are adequate for the purpose of complying with the requirements imposed by this Act and any regulations made and Investment Services Rules issued thereunder transposing the CRD and by the CRR on a consolidated or sub-consolidated basis and, in particular, are effective to:

(i) coordinate all the subsidiaries of the financial holding company or mixed financial holding company, as the case may be, including, where necessary, through an adequate distribution of tasks among subsidiary institutions;

(ii) prevent or manage intra-group conflicts

(iii) enforce the group-wide policies set by the parent financial holding company or parent mixed financial holding company throughout the group;

(b) the structural organisation of the group of which the financial holding company or mixed financial holding company, as the case may be, is part does not obstruct or otherwise prevent the effective supervision of the subsidiary institutions or parent institutions as concerns the individual, the consolidated and, where appropriate the sub-consolidated obligations to which they are subject:

Provided that the assessment of this criterion shall take into account, in particular:

(i) the position of the financial holding company or the mixed financial holding company, as the case may be, in a multi-layered group;

(ii) the shareholding structure

(iii) the role of the financial holding company or mixed financial holding company, as the case may be, within the group;

(c) the requirements on the qualification of directors laid down in Investment Services Rules, are complied with.

(5) An exemption may be granted to a financial holding company or mixed financial holding company, as the case may be, pursuant to this article only where all of the following conditions are met:

(a) the financial holding company’s principal activity is to acquire holdings in subsidiaries or, in the case of a mixed financial holding company, its principal activity with respect to institutions or financial institutions is to acquire holdings in subsidiaries;

(b) the financial holding company or mixed financial holding company, as the case may be, has not been designated as a resolution entity in any of the group’s resolution groups in accordance with the resolution strategy determined by the relevant resolution authority pursuant to the BRRD;

(c) a subsidiary credit institution is designated as responsible to ensure the group’s compliance with prudential requirements on a consolidated basis and is given all the necessary means and legal authority to discharge those obligations in an effective manner;

(d) the financial holding company or mixed financial holding company, as the case may be, does not engage in taking management, operational or financial decisions affecting the group or its subsidiaries that are institutions or financial institutions;

(e) there is no impediment to the effective supervision of the group on a consolidated basis: Provided that where financial holding companies or mixed financial holding companies are exempted from approval in accordance with this sub-article, they shall not be excluded from the perimeter of consolidation as laid down in the provisions of this Act and any regulations made and Investment Services Rules issued thereunder transposing the CRD and in the CRR.

(6) Where the competent authority is the consolidating supervisor, it shall monitor compliance with the conditions referred to in sub-article (4) or, where applicable, sub-article (5) on an ongoing basis.

(7) (a) Financial holding companies and mixed financial holding companies shall provide the competent authority, where it is acting as the consolidating supervisor, with the information required to monitor on an ongoing basis the structural organisation of the group and compliance with the conditions referred to in sub-article (4).

(b) Financial holding companies and mixed financial holding companies exempted in terms of sub-article (5) shall provide the competent authority, where it is acting as the consolidating supervisor, with the information required to monitor on an ongoing basis the structural organisation of the group and compliance with the conditions referred to in sub-article (5).

(c) The competent authority shall share the information received in terms of this sub-article with the European regulatory authority where the financial holding company or the mixed financial holding company, as the case may be, is established.

(8) Where the competent authority is the consolidating supervisor and has established that the conditions set out in sub-article

(5) are no longer met, the financial holding company or mixed financial holding company, as the case may be, shall seek approval in accordance with this article.

(9) For the purpose of taking decisions on the approval or the exemption from approval, as the case may be, referred to in sub-articles (4), (5) and (8) and, or in sub-articles (3), (4) or (7) of Article 21a of the CRD, where:

(i) the competent authority is not the consolidating supervisor but the financial holding company or the mixed financial holding company, as the case may be, is established in Malta; or

(ii) the financial holding company or the mixed financial holding company, as the case may be, is established in a Member State or an EEA State other than Malta and the competent authority is the consolidating supervisor, the competent authority shall work together with the European regulatory authority acting as the consolidating supervisor or with the European regulatory authority in the Member State or EEA State where the financial holding company or the mixed financial holding company is established, as the case may be, in full consultation.

(10) Where the competent authority is the consolidating supervisor, it shall prepare an assessment on the matters referred to in sub-articles (4), (5) and (8), as applicable, and shall forward that assessment to the European regulatory authority in the Member State or EEA State where the financial holding company or the mixed financial holding company is established, as the case may be.

(11) The competent authority, whether acting as the consolidating supervisor or whether it is in receipt of an assessment referred to in Article 21a(8) of the CRD from the European regulatory authority acting as the consolidating supervisor, shall do everything within its power to reach a joint decision on the approval or the exemption from approval, as the case may be, referred to in sub-articles (4), (5) and (8) and, or in sub-articles (3), (4) and (7) of Article 21a of the CRD, with the European regulatory authority in the Member State or EEA State where the financial holding company or the mixed financial holding company is established or with the European regulatory authority acting as the consolidating supervisor, as the case may be, within two months of receipt of that assessment:

Provided that the joint decision shall be duly documented and reasoned and where the competent authority is the consolidating supervisor, it shall communicate the joint decision to the financial holding company or the mixed financial holding company, as the case may be.

(12) In the event of a disagreement between the competent authority and the European regulatory authority acting as the consolidating supervisor or the European regulatory authority in the Member State or EEA State where the financial holding company or the mixed financial holding company is established, as the case may be, the competent authority shall refrain from taking the joint decision referred to in sub-article (11) and shall refer the matter to the EBA in accordance with Article 19 of Regulation (EU) No. 1093/2010. In such cases, the competent authority shall adopt a joint decision with the European regulatory authority acting as the consolidating supervisor or with the European regulatory authority in the Member State or EEA State where the financial holding company or the mixed financial holding company is established, as the case may be, in conformity with the decision of the EBA:

Provided that the matter shall not be referred to the EBA after the end of the two-month period referred to in sub-article (11) or after a joint decision has been reached.

(13) In the case of mixed financial holding companies, where the coordinator appointed in terms of Article 10 of Directive 2002/87/EC is neither the competent authority, nor the European regulatory authority acting as the consolidating supervisor, nor the European regulatory authority in the Member State or EEA State where the mixed financial holding company is established, the agreement of the said coordinator shall be required for the purposes of the decisions or joint decisions referred to in sub-articles (4), (5) and (8) and, or sub-articles (3), (4) and (7) of Article 21a of the CRD, as applicable. Where the agreement of the coordinator is required, the competent authority shall refer any disagreements to the relevant European Supervisory Authority, namely, to the EBA or the European Supervisory Authority (European Insurance and Occupational Pensions Authority) (EIOPA), established by Regulation (EU) No. 1094/2010, which shall take its decision within one month of receipt of the referral. Any decision taken in accordance with this paragraph shall be without prejudice to the obligations under Directive 2002/87/ EC or the Solvency II Directive.

(14) Where approval of a financial holding company or mixed financial holding company, as the case may be, pursuant to this article is refused and the competent authority is the consolidating supervisor, the competent authority shall notify the applicant of the decision and the reasons therefor within four months of receipt of the application, or where the application is incomplete, within four months of receipt of the complete information required for the decision. Refusal may be accompanied, where necessary, by any of the measures referred to in article 16AA:

Provided that a decision to grant or refuse approval shall, in any event, be taken within six months of receipt of the application.

(15) For the purposes of this article:

(a) the term "financial institution" means the same as the meaning assigned to it in point (26) of Article 4(1) of the CRR;

(b) the term "group" means a group as defined in point

(138) of Article 4(1) of the CRR;

(c) the term "institution" means an institution as defined in point (3) of Article 4(1) of the CRR;

(d) the term "investment firm" means an investment firm as defined in point (2) of Article 4(1) of the CRR;

(e) the term "parent undertaking" means a parent undertaking as defined in point (15) of Article 4(1) of the CRR;

(f) the term "resolution authority" means an authority designated by a Member State or an EEA State in accordance with Article 3 of the BRRD;

(g) the term "subsidiary" means a subsidiary as defined in point (16) of Article 4(1) of the CRR.

(16) The provisions of this article shall be without prejudice to the provisions of article 10.