Relevant amendments on the Capital Markets sector

The new enactments significantly amend and supplement the current Capital Market legal framework.

  1. Amendments contained in Law No. 29

Law No. 29 amends the applicable rules of conduct and prudential rules, and it alters the regulatory framework governing Asset Management Companies („AMC”) and regulated Depositaries (“Depositaries”).

The most important provisions contained in Law no. 29 include:

(i) Amendments to the rules of conduct and prudential rules

  • AMCs, investment companies, and Depositaries must establish, implement, and maintain certain effective and transparent procedures for reporting by their employees any breaches of provisions contained within the legal framework, including a designation of specific means of communicating this information.
  • An AMC may manage activities related to collective investments in transferable securities (“UCITS”) and may also manage individual investment portfolios, including those held by pension funds, under the mandates granted by the investors, if these portfolios include one or several financial instruments.
  • An AMC must establish and implement certain special remuneration policies and practices for their employees that perform activities that determine the risk of the respective AMC or the UCITS managed by the respective AMC, including persons that hold an upper management position within the AMC.
  • The envisaged remuneration policies and practices implemented by the AMC must observe certain express principles and guidelines; e.g., the remuneration policies must promote the business strategy and promote solid and effective management of the AMC, and the remuneration policies must be approved by the management body of the
  • Significant AMCs based on their size or the size of the UCITS managed by the AMC must appoint a remuneration committee to independently analyses the remuneration policies, practices, and benefits offered by the AMC and to assess the ancillary risk.

(ii) Amendments regarding Depositaries

  • The depositary activity may be performed by the National Bank of Romania, a Romanian based credit institution, a Romanian branch of an E.U. based credit institution, or any other legal entity duly authorised by the Financial Supervisory Authority (“FSA”) to perform depositary activities in accord with the applicable legal provisions.
  • The Depositary must ensure that the cash flows of the UCITS are properly monitored and that all payments have been registered by the investors upon the subscription of participation titles of UCITS and that all the cash amounts involving UCITS have been registered within cash accounts opened with the Depositary.
  • The assets of the UCITS will be provided as security to the Depositary, which in turn must provide to the AMC or the investment companies an inventory of the assets of the
  • The responsibility for preserving the assets of the UCITS may be delegated to other third parties if the third-party has the required specialised structures and policies provided required by law.
  • The Depositary must provide to the FSA, if requested by the FSA, any information obtained by the Depositary during its mandate about the management of the UCITS assets that could be relevant for the FSA to perform its duties.
  1. Amendments provided under Law No. 24

The legal provisions governing payment operations for financial instruments admitted or to be admitted to trading on a regulated market and the issuers of such financial instruments, public offers of securities, and operations on market abuse were repealed from the Capital Market Law and are presently regulated under Law No. 24.

 

Law No. 24 and Law No. 29 were published in the Official Gazette, Part I, No. 213 entered into force on 01 April 2017 and respectively on 28 April 2017.  On 29 March 2017 were published with the Official Gazette, the Law no. 29/2017 (“Law No. 29”) regarding the amendment of the Government Emergency Ordinance No. 32/2012 relating to the undertakings for collective investments in transferable securities and on the investment management companies and on the amendment of the Law No. 297/2004 (“Capital Market Law”) on the capital market and also the Law no. 24/2017 (“Law No. 24”) regarding the issuers of financial instruments and market operations.

2016 - All rights reserved Stratulat Albulescu - Attorneys at law