Newsletter February 2019
Ordinance No. 50 of 2015 on capital adequacy, the liquidity of investment intermediaries and the supervision of their compliance (hereinafter referred to as the Ordinance) were changed at the beginning of February. The purpose of the legislative changes is to harmonize the Ordinance with the new Markets in Financial Instruments Act – MFIA (in force as of 16.02.2018). The Ordinance rescinds the criteria that the investment intermediary should meet in order to be considered relevant in view of the size, internal organization, nature, scope and complexity of its activities. These criteria are already regulated in the MFIA, and the Ordinance specifies the additional requirements for the significant investment intermediaries.
Under the new Art. (3a) of the Ordinance, where the company holds property rights over immovable property there are the following requirements:
1. The value of these rights shall not exceed 20 per cent of the required minimum amount of the capital referred to in Art. 10 MFIA;
2. These rights shall be directly related to the activities and services under Art. 6, para. 2 and 3 of the MFIA.
Art. 8 of the Ordinance was abrogated, which has so far regulated the development of internal recovery plans in the event of a significant deterioration in the financial position of the investment intermediary. This matter is at present regulated in the MFIA.
The next major change concerns the order for issuance of permits and approvals under the terms of the Ordinance, MFIA (in relation to prudential supervision) and Regulation (EU) No 575/2013. For the issuance of such permits and approvals, an application shall be filed to the Financial Supervision Commission, respectively to the Deputy Chairperson, to whom shall be evidenced the compliance with the relevant requirements. Following the amendment of the Ordinance, it is established that if the submitted data or documents are incomplete or irregular or additional information or evidence of the correctness of the data is required, the Deputy Chairperson shall send the applicant a notice of the incompleteness or discrepancies found or of the requested additional information and documents and determines a time limit for their removal, which may not be shorter than 20 working days and longer than 30 working days. The Financial Supervision Commission, further to a proposal from the Deputy Chairperson, shall rule on the application within 14 days of its receipt unless another deadline is specified and when additional data and documents have been requested – as of the date of their receipt. The applicant shall be notified in writing of the decision taken within 3 days of its issuance.
The changes to the Ordinance also affect the policy for the payment of the variable remuneration of the employees of the investment intermediary. The stipulated conditions for the payment of such remuneration may be disregarded if the total amount of the annual variable remuneration of the person concerned does not exceed BGN 30,000 and does not exceed 30 per cent of the total annual permanent remuneration and in case the requirements of Art. 24 of the Ordinance are respected.