S.I. No. 395/1992 - European Communities (Licensing and Supervision of Credit Institutions) Regulations, 1992

S.I. No. 395 of 1992.

EUROPEAN COMMUNITIES (LICENSING AND SUPERVISION OF CREDIT INSTITUTIONS) REGULATIONS, 1992.

Arrangement of Regulations

Regulation

1. Citation and commencement.

2. Interpretation.

3. Extent of application.

4. Control of credit institutions and solvency ratio.

5. Determination of qualifying holding.

6. Minimum capital requirement.

7. Requirement to notify identity of certain shareholders.

8. Consultation with competent authorities in other Member States.

9. Notification to Commission by Central Bank of third country subsidiaries.

10. Suspension of third country authorisations or approvals.

11. Restriction of application of certain authorisation requirements.

12. Prohibition of endowment capital requirements for Member States' branches.

13. Maintenance of own funds by credit institutions.

14. Acquisitions of shareholdings or other interests in credit institutions.

15. Holdings by credit institutions in other bodies corporate.

16. Management of credit institutions.

17. Exercise of certain functions by the Bank.

18. Investigations.

19. Non-disclosure of information.

20. Mutual recognition of provision of banking services.

21. Provisions relating to the establishment of a branch in another Member State.

22. Appeal to Court against refusal of Bank to transmit certain information under Regulation 21.

23. Provisions relating to the establishment in the State of a branch from another Member State.

24. Change in information provided under Regulation 21.

25. Existing branches.

26. Provision of services into another Member State.

27. Provisions as to non-compliance in the State.

28. Non-compliance in another Member State.

29. Direction by Bank to cease business.

30. Report to Commission.

31. Notification by credit institutions.

32. Notification by financial institutions.

33. Offences.

34. Provision of false information, etc.

35. Prosecution by Bank.

36. Offences by bodies corporate.

37. Continuation of contravention of Regulations.

38. Construction of licence holder in enactments.

39. Amendment of Central Bank Act, 1971.

SCHEDULE AND TITLE

S.I. No. 395 of 1992.

EUROPEAN COMMUNITIES (LICENSING AND SUPERVISION OF CREDIT INSTITUTIONS) REGULATIONS, 1992.

I, BERTIE AHERN, 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 Council Directive No. 89/646/EEC^(a) of 15 December 1989, hereby make the following Regulations:

^(a) O.J. No. L386 of 30 December 1989, page 1.

1 Citation and commencement.

1.

1. (1) These Regulations may be cited as the European Communities (Licensing and Supervision of Credit Institutions) Regulations, 1992.

• (2) These Regulations shall come into operation on the 1st day of January, 1993.

2 Interpretation.

2.

2. (1) In these Regulations, except where the context otherwise requires—

"authorisation", in relation to a credit institution, means an authorisation by the Bank to carry on the business of a credit institution in accordance with the provisions of any of the supervisory enactments, and references to authorised, in relation to such an institution, shall be construed accordingly;

"the Bank" means the Central Bank of Ireland;

"branch" includes one or more places of business in the same Member State;

"common control" in relation to a credit institution, has the same meaning as it has in section 21 (12) (inserted by section 38 of the Central Bank Act, 1989 ) of the Central Bank Act, 1971 , in relation to a licence holder;

"the Commission" means the Commission of the European Communities;

"Community" means the European Economic Community;

"competent authority"—

( a ) in relation to the State, means the Bank, and

( b ) in relation to any other Member State, means a body or bodies charged by law in the Member State with the supervision of credit institutions or, where the context requires, the supervision of other institutions providing one or more of the services set out in the Schedule;

"control" shall be construed in accordance with Regulation 4;

"Court" means the High Court;

"credit institution" means an undertaking, other than a credit union or friendly society, whose business it is to receive deposits or other repayable funds from the public and to grant credit on its own account;

"credit union" means a society which is registered as a credit union under the Industrial and Provident Societies Acts, 1893 to 1978, by virtue of the Credit Union Act, 1966 ;

"the Directive" means Council Directive No. 89/646/EEC of 15 December 1989^(a);

"ECU" means the European Currency Unit;

"fellow subsidiary" has the meaning it has in Regulation 8;

"financial institution" means any undertaking whose principal business is the acquisition of shareholdings or interests in other bodies corporate or the provision of financial services set out at reference numbers 2 to 12 of the Schedule, but does not include a credit institution or an undertaking engaged in life or non-life insurance;

"friendly society" means a society registered under the Friendly Societies Acts, 1896 to 1977;

"functions" includes powers and duties;

"holder", in relation to a licence, means the person to whom a licence is granted;

^(a)O.J. No. L386 of 30 December 1989, page 1.

"home Member State", in relation to an undertaking incorporated in or formed under the law of a Member State, means that Member State;

"initial capital" means paid-up share capital and reserves to which subparagraphs (1) and (2), respectively, of paragraph 1 of Article 2 of Council Directive No. 89/299/EEC of 17 April 1989^(b) relates;

"licence" means a licence for the time being in force granted under section 9 (as amended by the Central Bank Act, 1989 (No. 16 of 1989)) of the Central Bank Act, 1971 (No. 24 of 1971);

"Member State" means a Member State of the Community;

"own funds" means own funds as defined from time to time by the Bank in its licensing and supervisory standards;

"parent undertaking" has the meaning assigned to it by the European Communities (Companies: Group Accounts) Regulations, 1992 ( S.I. No. 201 of 1992 );

"qualifying holding" means—

( a ) a holding by a person, either on his own or in concert with another person, of 10 per cent. or more of the shares or of the voting rights attaching to shares in an undertaking, or

( b ) a shareholding or interest held by a person in an undertaking which either confers a right to appoint or remove one or more members of the board of directors or of the committee of management of the undertaking, however described, or otherwise allows that person to exercise a significant influence over the direction or management of the undertaking;

"solvency ratio" shall be construed in accordance with Regulation 4 of these Regulations;

^(b)O.J. No. L124 of 5 May 1989, page 16.

"subsidiary undertaking" shall be construed in accordance with Regulation 4 of the European Communities (Companies: Group Accounts) Regulations, 1992, and, in relation to an undertaking incorporated in or formed under the law of another Member State, means any undertaking which is a subsidiary undertaking within the meaning of any rule or law in force in that State for the purposes of giving effect to Council Directive No. 83/349/EEC of 13 June 1983^(c);

"supervisory enactments" means the Central Bank Acts, 1942 to 1989, the Building Societies Act, 1989 (No. 17 of 1989), the Trustee Savings Banks Act, 1989 (No. 21 of 1989), the ACC Bank Act, 1992 (No. 6 of 1992), the ICC Bank Act, 1992 (No. 21 of 1992), or any other enactment relating to supervision by the Bank and for the time being in force;

"undertaking" has the same meaning as it has in Regulation 3 of the European Communities (Companies: Group Accounts) Regulations, 1992 ( S.I. No. 201 of 1992 ).

• (2) 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 it has in the Directive.

• (3) ( a ) A reference in these Regulations to a Regulation or a Schedule is to a Regulation of or Schedule to these Regulations unless it is indicated that a reference to some other enactment is intended.

( b ) A reference in these Regulations to a paragraph or subparagraph is to a paragraph or subparagraph of the provision in which the reference occurs, unless it is indicated that reference to some other provision is intended.

3 Extent of application.

3.

3. (1) These Regulations apply to all credit institutions other than those to which paragraphs 2 and 3 of Article 2 of the Directive relates.

• (2) These Regulations shall not apply to a branch of a credit institution authorised in a State that is not a Member State.

^(c)O.J. No. L193 of 18 July 1983, page 1.

4 Control of credit institutions and solvency ratio.

4.

4. For the purposes of these Regulations—

"control" includes any power, whether arising from a contract or agreement or otherwise, whereby one party can direct the affairs of another and a parent undertaking shall be deemed to control its subsidiaries;

"solvency ratio", in relation to credit institutions, means the solvency coefficient, calculated in accordance with Council Directive No. 89/647/EEC of 18 December 1989^(d), applied from time to time by the Bank to such institutions in its licensing and supervisory standards.

^(d)O.J. No. L386 of 30 December 1989, page 14.

5 Determination of qualifying holding.

5.

5. (1) In determining whether a person holds a qualifying holding in a credit institution, there shall be treated as held by that person any shares or rights in the credit institution which are held—

( a ) by another person on that person's behalf,

( b ) by an undertaking which is under the effective control of that person whether the shares or rights are held by that undertaking itself or by any other undertaking which is a subsidiary of the first mentioned undertaking or which is under the effective control of that undertaking,

( c ) by an undertaking in which that person holds 20 per cent. or more of the shares or of the voting rights,

( d ) by a partnership in which that person is a partner or by an undertaking of which that person is a director, or

( e ) by any person with whom that person has an agreement or arrangement with respect to the acquisition, holding or disposal of shares or interests in that credit institution or under which they undertake to act together in exercising their voting power in relation to that credit institution.

• (2) In this Regulation "shares" includes any interest in shares which are to be notified under section 77 of the Companies Act, 1990 , for the purposes of that Act, or shares in an undertaking which, if it were a company, would be so noticeable, but there shall be disregarded any interests that would be so disregarded for the purposes of section 78 of that Act, other than in accordance with section 78 (1) (g).

6 Minimum capital requirement.

6.

6. (1) The Bank shall not, after the commencement of these Regulations, grant an authorisation to an undertaking incorporated in the State unless the Bank is satisfied that the initial capital of the body corporate is not less than 5,000,000 ECU or such other sum, not being less than 5,000,000 ECU, as the Bank may from time to time prescribe.

• (2) Notwithstanding paragraph (1), section 17 (10) of the Building Societies Act, 1989 , is hereby amended in the definition of "the prescribed minimum" by the substitution of "an amount equivalent to 1,000,000 ECU at the time the authorisation is applied for by the society concerned" for "£250,000".

• (3) The Bank shall notify the Commission of the name of every credit institution authorised by it after the commencement of these Regulations whose minimum initial capital is less than 5,000,000 ECU.

7 Requirement to notify identify of certain shareholders.

7.

7. (1) Every applicant seeking an authorisation from the Bank shall notify the Bank of the identity of all persons having a qualifying holding in the applicant and of the size of the holding in question.

• (2) The Bank shall not grant an authorisation unless it is notified by the applicant in accordance with paragraph (1) and unless it is satisfied that every person to whom that paragraph relates is a fit and proper person whom it is reasonable to expect will exercise his shareholding and other rights in the applicant in the interest of the orderly and proper regulation of credit institutions in the State.

8 Consultation with competent authorities in other Member States.

8.

8. (1) The Bank shall consult the competent authority in another Member State before it grants an authorisation to a credit institution in any case in which that credit institution is a subsidiary or fellow subsidiary of a credit institution authorised in that other Member State or is under common control with one or more credit institutions authorised in that other Member State.

• (2) In these Regulations an undertaking shall be treated as a fellow subsidiary of another undertaking if both are subsidiaries of the same undertaking but neither is a subsidiary of the other undertaking.

9 Notification to Commission by Central Bank of third country subsidiaries.

9.

9. (1) The Bank shall notify the Commission as soon as is reasonably practicable of any authorisations issued by it after these Regulations come into operation to a subsidiary of any undertaking incorporated in a state that is not a Member State.

• (2) The Bank shall notify the Commission, as soon as is reasonably practicable after it becomes so aware, of the identity of any credit institution authorised by it which, after these Regulations come into operation, becomes a subsidiary of an undertaking incorporated in a state that is not a Member State.

• (3) The Bank shall, when notifying the Commission in accordance with paragraph (1) or (2), provide the Commission with such details in its possession as to the corporate structure of the group of undertakings of which the credit institution concerned is a subsidiary.

• (4) The Bank shall inform the Commission of any general difficulties of which it is aware that have been encountered by a credit institution authorised by it in seeking to carry on business in a state that is not a Member State and the Bank shall supply the Minister for Finance with that information.

10 Suspension of third country authorisations or approvals.

10.

10. (1) Subject to paragraph (2), whenever there is in force, or continued in force, a Community measure to which the second indent of paragraph 4 of Article 9 of the Directive relates, the Bank shall not, otherwise than in accordance with that measure—

( a ) issue an authorisation to a credit institution which is a subsidiary of an undertaking referred to in Regulation 9 (1), or

( b ) approve the acquisition by such an undertaking of any shareholding, right or other interest in a credit institution whether required by the undertaking itself or in concert with other parties, or by another person acting on that undertaking's behalf or by, or in concert with, another person under the control of that undertaking.

• (2) Paragraph (1) shall not apply to an application for authorisation by a subsidiary of a credit institution authorised in a Member State or to the acquisition of shareholdings, rights or other interests in a credit institution by a credit institution authorised in a Member State or by any of its subsidiaries.

• (3) The Bank shall supply the information to the Commission specified in paragraph 5 of Article 9 of the Directive, if requested by the Commission in accordance with that Article.

11 Restriction of application of certain authorisation requirements.

11.

11. (1) Any provision of the supervisory enactments or any other enactment which has the effect of requiring a credit institution to seek or to hold an authorisation from the Bank to establish or carry on business in the State shall not apply to a branch of such a credit institution if the credit institution is authorised to so carry out such business in another Member State and the authorisation is in accordance with the Directive:

Provided that Regulation 20 (2) shall apply to every such branch established in the State.

• (2) Article 5 of Council Directive No. 77/780/EEC of 12 December 1977^(e), shall apply to every credit institution to which these Regulations apply, and the Bank may, in accordance with that Article, require for purposes of clarification that the name of the credit institution be accompanied, where used by the credit institution, by such explanatory particulars as the Bank may specify in writing and the credit institution shall comply with every such requirement.

^(e)O.J. No. L322 of 17 December 1977, page 30.

12 Prohibition of endowment capital requirements for Member States' branches.

12.

12. The Bank shall not require a branch in the State of a credit institution incorporated in another Member State to maintain in the State a specified amount of funds to represent the initial endowment capital of the branch.

13 Maintenance of own funds by credit institutions.

13.

13. (1) Subject to the following paragraphs of this Regulation, every credit institution authorised by the Bank shall maintain an amount of own funds at least equivalent to the amount of initial capital required under paragraph (1) or (2), as the case may be, of Regulation 6 or, in the case of a credit institution authorised before the commencement of these Regulations which does not meet those amounts upon such commencement, an amount at least equivalent to the maximum amount of own funds attained by the credit institution concerned at any time after the 30th day of December, 1989.

• (2) Where a credit institution which was authorised before the commencement of these Regulations is subsequently taken over by or comes under the common control of any other person or undertaking, the own funds of that credit institution shall comply with the minimum amounts required for initial capital under paragraph (1) or (2), as the case may be, of Regulation 6.

• (3) The Bank may exempt a credit institution from the application of paragraph (2) of this Regulation where it is satisfied that such exemption is necessary for the orderly and proper regulation of credit institutions in the State, but any such exemption shall be subject to such conditions which are consistent with paragraph 4 of Article 10 of the Directive as the Bank sees fit to impose.

• (4) ( a ) Where the own funds of a credit institution fall below the amounts otherwise required by these Regulations, the Bank may exempt the institution from those requirements for a specified period in order for the institution to rectify the situation or to make arrangements, with the consent of the Bank, for the orderly cessation of deposit-taking and, where appropriate, the winding-up of its affairs.

( b ) The Bank may extend a period to which subparagraph (a) relates for such longer period as it sees fit and this latter period shall have effect for the purposes of that subparagraph.

14 Acquisitions of shareholdings or other interests in credit institutions.

14.

14. (1) Without prejudice to the provisions of Chapter VI of Part II (which relates to acquiring transactions) of the Central Bank Act, 1989 , this Regulation shall apply to all acquisitions of shares or other interests by any person in a credit institution authorised by the Bank.

• (2) Any person who proposes to acquire a qualifying holding in a credit institution shall notify the Bank in advance of the proposed acquisition and shall supply such details of the proposal as the Bank may specify.

• (3) Any person with a qualifying holding in a credit institution shall notify the Bank, in such form as the Bank may require, of every proposal to increase the size of his holding such that the holding would reach or exceed 20 per cent., 33 per cent. or 50 per cent. of the shares, or of the voting rights attaching to shares, in the credit institution or, in the case of a person that is a body corporate, if the person proposes to acquire any shares or interest in the credit institution which would make that institution its subsidiary.

• (4) ( a ) A person shall not acquire a qualifying holding, or increase the size of the qualifying holding, in circumstances described in paragraph (2) or (3) unless either—

• (i) a period of three months has elapsed since the date of notification, or

• (ii) the Bank has notified the person that it will not object to the proposed acquisition or increase,

whichever event first occurs.

( b ) The Bank may make any notification by it to the person concerned under this paragraph conditional on the acquisition or increase being made within a period of time specified by the Bank in writing.

• (5) Where the person to whom paragraphs (1) to (4) relates proposes to acquire 50 per cent. or more of the shares or voting rights attaching to shares in a credit institution, or, where, if the person is a body corporate, it proposes to acquire any interest in a credit institution which would make it a subsidiary of that person and the person concerned is either—

( a ) a credit institution authorised in another Member State, or

( b ) the parent undertaking of a credit institution authorised in another Member State, or

( c ) otherwise controls a credit institution authorised in any other Member State, the Bank shall consult the competent authorities of the Member State concerned before communicating its decision under paragraph (4).

• (6) Any person who holds a qualifying holding in a credit institution shall notify the Bank in advance of any proposed disposal by him, or by another person acting on his behalf, of any shares or interest in a credit institution such that after the proposed disposal the proportion of the shares or of the total voting rights attaching to shares in the credit institution held by him would no longer be a qualifying holding or would fall below any of the following percentages of the shares or voting rights, that is to say, 20 per cent., 33 per cent. or 50 per cent. or such that, in the case of a person that is a body corporate, the credit institution would no longer be a subsidiary of that person.

• (7) Every person to whom paragraph (6) applies shall inform the Bank of the resultant size of his holding in the shares of, or of the voting rights attaching to shares in, the credit institution concerned after the proposed disposal has been effected.

• (8) A credit institution shall inform the Bank, as soon as may be after it has become aware, of all acquisitions or disposals of shares, or of the voting rights attaching to shares, in that credit institution where such an acquisition or disposal would, to the best of the credit institution's knowledge and belief, be noticeable by any person under paragraph (7).

• (9) A credit institution shall provide to the bank once in each financial year, or at such other times as the Bank may direct, full particulars of the names of shareholders or members possessing a qualifying holding and of the size of such holdings, in such manner and in such form as the Bank may direct.

• (10) Where the Bank has reason to believe that a person who has a qualifying holding in the shares of, or voting rights attaching to shares in, a credit institution is exercising an influence on the direction of the affairs of a credit institution which is, or is likely to be, detrimental to the prudent and sound management of that credit institution, it shall, subject to paragraph (11), notify the person that it so believes and direct the person in writing to take specified measures to bring such an influence to an end within a specified period of time.

• (11) Before issuing a direction to a person under paragraph (10), the Bank shall notify the person of its intention to so issue the direction and shall give the person an opportunity to make such representations on the matter as he may wish to make within such time limit as is specified by the Bank in the notification.

• (12) A person to whom a direction has been issued under paragraph (10) may apply to the Court in a summary manner within one month, or such longer period as the Court considers just and equitable in the circumstances, of the issuing of the direction for an order to have the direction set aside and the Court may grant such an order.

• (13) Where the Bank is of the opinion that a direction under paragraph (10) has not been complied with by the person concerned, or has not been complied with within the specified period of time, the Bank may, without prejudice to any other functions of the Bank, do any one or more of the following that is to say:

( a ) issue a direction to a credit institution under section 28 of the Central Bank Act, 1989 , and for that purpose the references in that section to "holder of a licence" and "holder" shall be construed as a reference to a credit institution within the meaning of these Regulations and the references to "banking business" and "banking" shall be construed as a reference to the taking of deposits or granting of credit by a credit institution within the meaning aforesaid;

( b ) apply to the Court in a summary manner—

• (i) for an injunction prohibiting the person concerned from issuing directions to directors or to any manager, secretary, officer or staff of, or persons engaged by, the credit institution and prohibiting any director, manager, secretary, officer or any other person acting on behalf of the credit institution from seeking directions from, or consulting, the person concerned, or from acting on such directions without the consent of the Bank,

• (ii) to suspend the exercise by the person concerned of any interest in or voting rights attaching to shares held by that person in the credit institution concerned,

• (iii) for an order from the Court requiring the person concerned to dispose of some or all of his shareholding, interests or rights in the credit institution within a period specified by the Court, or

• (iv) for such other order as the Court considers appropriate.

• (14) Where the Court is satisfied, because of the nature or the circumstances of the case or otherwise in the interests of justice, that it is desirable, the whole or any part of proceedings before it under this Regulation may be heard otherwise than in public.

• (15) A person who fails to notify the Bank as required by paragraph (2), (3) or (6) shall be guilty of an offence.

• (16) If the Bank opposes a proposed acquisition by a person of shares or interests in a credit institution, or a person has failed to notify the Bank as required by paragraphs (2) and (3), any purported acquisition of shares by that person in the credit institution shall be invalid and—

( a ) title to any shares or other interest concerned shall not pass, and

( b ) any consequential purported exercise of powers shall be void.

• (17) The Bank may carry out such inquiries and obtain such information about a proposed acquisition or disposal of shares, voting rights or other interests in a credit institution by a person as it considers necessary for the purpose of these Regulations.

• (18) ( a ) A person shall not impede, whether by an act of commission or omission, the Bank's enquiries under this Regulation, or provide false or misleading information.

( b ) A person who contravenes subparagraph (a) shall be guilty of an offence.

15 Holdings by credit institutions in other bodies corporate.

15.

15. (1) Subject to paragraphs (4) and (5), a credit institution authorised by the bank shall not invest an amount representing more than 15 per cent. of its own funds in the acquisition of a qualifying holding in any one relevant body corporate and the total amount of all such qualifying holdings in all relevant bodies corporate shall not exceed the equivalent of 60 per cent. of the own funds of the institution.

• (2) In determining whether a particular shareholding in a relevant body corporate represents a qualifying holding for the purposes of the application of this Regulation, there shall be disregarded any shares held by a credit institution on one or more of the following grounds:

( a ) on a temporary basis during a financial rescue or reorganisation of the relevant body corporate concerned;

( b ) on behalf of another person;

( c ) on a temporary basis with a view to re-sale;

( d ) as part of a bona fide underwriting of a share issue.

• (3) A credit institution which at the date of entry into force of these Regulations does not comply with the requirements of paragraph (1), shall do so by such date as may be specified by the Bank, which date shall not be later than the 1st day of January, 2003.

• (4) Where the Bank has reason to believe that a credit institution has exceeded the limits otherwise required by this Regulation, it may in writing require the credit institution to which this Regulation applies to increase the amount of its own funds, to dispose of specified shareholdings in a relevant body corporate or to take other measures specified by the Bank to meet the limits, and the credit institution shall comply with that requirement as soon as may be.

• (5) The Bank may, by a notice in writing to one or more credit institutions, cease to apply the provisions of paragraph (1) where the supervisory procedure specified in paragraph 8 of Article 12 of the Directive is applied by the Bank in the case of the credit institution or credit institutions concerned.

• (6) The Bank may prescribe rules and standards for the application of this Regulation to credit institutions either generally or in particular.

• (7) In this Regulation "relevant body corporate" does not include a body corporate which is a credit institution, or a financial institution or, unless the Bank otherwise directs, an undertaking which is duly authorised by any State to carry on life insurance or non-life insurance.

16 Management of credit institutions.

16.

16. (1) Every credit institution authorised by the Bank shall manage its business in accordance with sound administrative and accounting principles and shall put in place and maintain internal control and reporting arrangements and procedures to ensure that the business is so managed.

• (2) The Bank may direct a credit institution in writing to furnish to it, within a specified period, such information in relation to the arrangements and procedures referred to in paragraph (1) as the Bank may require and the credit institution shall comply with that direction.

17 Exercise of certain functions by the Bank.

17.

17. (1) In exercising any function assigned to it by these Regulations, or by the supervisory enactments, the Bank shall, where necessary, and to such extent as the Bank considers it reasonable, collaborate with any competent authority in another Member State exercising similar functions in that state to those assigned to the Bank under these Regulations or the supervisory enactments.

• (2) Nothing in these Regulations shall affect the responsibility of the Bank under the Central Bank Acts, 1942 to 1989, or under any other enactment in respect of any of the following matters:

( a ) the supervision, in co-operation with the relevant competent authorities in another Member State, of the liquidity of branches in the State of credit institutions not authorised by the Bank;

( b ) the implementation of monetary policies by the Bank;

( c ) unless otherwise required by a Community Directive, the supervision of certain financial risks in accordance with Article 14.3 of the Directive.

18 Investigations.

18.

18. (1) The Bank may carry out an inspection or investigation of the business of a credit institution authorised in another Member State at the place or places of business of that institution in the State but only for the purposes of the Bank carrying out the functions described in Regulation 17 (2).

• (2) The competent authority in another Member State authorised in that Member State to supervise credit institutions may, having notified the Bank, inspect or investigate the business of a credit institution supervised by that authority which has a place of business in the State at that place of business for the purpose of verifying any information provided to that authority by virtue of paragraph (1) of Article 7 of Directive 77/780/EEC of 12 December 1977 in any one of the following manners:

( a ) by inspection of the credit institution, at that place of business or otherwise, by the authority concerned,

( b ) by inspection of the credit institution, at that place of business or otherwise, by a person authorised in that behalf by that authority concerned, or

( c ) by a request from the authority concerned to the Bank to carry out the inspection on its behalf of the credit institution at the place of business or otherwise.

• (3) The provisions of sections 17 and 18 (inserted by sections 36 and 37, respectively, of the Central Bank Act, 1989) of the Central Bank Act, 1971 , shall apply to a credit institution to which this Regulation applies and to any investigation carried out by the Bank under this Regulation notwithstanding that the credit institution concerned is not the holder of a licence and, for the purposes of this Regulation, the references to statutory functions of the Bank in the said sections 17 and 18 shall be construed as references to the functions conferred on the Bank by this Regulation.

19 Non-disclosure of information.

19.

19. (1) The provisions as to non-disclosure contained in section 16 (1) of the Central Bank Act, 1989 , and section 44 (1) of the Building Societies Act, 1989 , shall not apply to any disclosure made by the Bank—

( a ) in civil proceedings, of information concerning a credit institution which is being compulsorily would up:

Provided that this shall not authorise the disclosure of information concerning the business of any undertaking which, to the knowledge of the Bank, may be, or have been, concerned in attempts to rescue the credit institution at any stage;

( b ) to the liquidator or examiner of a credit institution in relation to that credit institution;

( c ) to the auditor of a credit institution or a financial institution supervised by the Bank in relation to that supervision;

( d ) to the liquidator of a credit institution in connection with the administration of any scheme established by law for the protection of depositors with a credit institution or to a body established by law in any Member State which is charged with the administration of any such scheme;

( e ) to a Department of State, having functions under or by virtue of any enactment relating to the orderly and proper regulation of credit institutions, financial institutions, insurance undertakings and financial intermediaries, in respect of those functions.

• (2) In the case of subparagraphs (b), (c) and (d) of paragraph (1), a disclosure shall only be made to a person if the Bank is satisfied that person has obligations in regard to professional secrecy or non-disclosure of information corresponding to obligations imposed on certain persons by section 16 of the Central Bank Act, 1989 , or section 44 of the Building Societies Act, 1989 .

• (3) Where the Bank obtains information from—

( a ) a competent authority in another Member State in regard to a credit institution, or from a person in the State charged by law with the supervision of deposit-taking undertakings, financial institutions or insurance undertakings, or the administration of a scheme established by law for the protection of depositors with a credit institution, or

( b ) an inspection to which Article 15 of the Directive relates,

it shall not disclose that information in the circumstances referred to in paragraph 7 of Article 12 of Directive 77/780/EEC of 12 December 1977 without the consent of that competent authority or person or the competent authority of the Member State in which the inspection took place, unless required by a court in connection with any criminal proceedings.

20 Mutual recognition of provision of banking services.

20.

20. (1)A credit institution authorised and supervised by the competent authority of another Member State may carry on business within the State by establishing a branch or any other means in any one or more of the activities set out in the Schedule provided that the undertaking or provision of these activities is in accordance with the authorisation of the credit institution in that Member State and the requirements of these Regulations are complied with in full.

• (2) A credit institution referred to in paragraph (1) shall, in so far as its operations or proposed operations within the State are concerned, comply with all relevant requirements of these Regulations and with the provisions of any enactment relating to the activities set out in the Schedule.

• (3) A financial institution which is a subsidiary of a credit institution, or which is a jointly owned subsidiary of two or more credit institutions, may carry on business in any Member State by establishing a branch or any other means if, but only if, the following conditions are fulfilled—

( a ) the memorandum and articles of association of the financial institution expressly permit it to undertake any one or more of the activities set out at reference numbers 2 to 12 of the Schedule;

( b ) each parent undertaking of the financial institution is authorised as a credit institution in the Member State of incorporation of the financial institution;

( c ) the financial institution carries on the activities in question in the Member State in which it is incorporated;

( d ) the parent undertaking or the parent undertakings together, as the case may be, of the financial institution hold at least 90 per cent. of the voting rights attaching to the shares in the financial institution;

( e ) each parent undertaking of the financial institution provides a written declaration, with the consent of the competent authority of the Member State in which the parent undertaking is authorised, to the effect that the parent undertaking, or the parent undertakings jointly and severally, guarantee the liabilities of the financial institution in every case;

( f ) the parent undertaking or the parent undertakings together, as the case may be, of the financial institution satisfy the competent authority of the Member State referred to in subparagraph (e) that it or they are in a position to, and will, ensure that the financial institution is run on a sound and prudent basis;

( g ) the financial institution is supervised on a consolidated basis by the competent authority in the Member State in which the parent undertaking or parent undertakings are authorised as a credit institution or credit institutions, as the case may be, and such supervision is carried out in that Member State in accordance with provisions giving effect to the Directive and to any other act of the Community relating to the taking up and pursuit of the business of credit institutions and for the time being in force; and

( h ) the notification and other requirements of these Regulations are complied with.

• (4) The financial institution shall provide the Bank with a certificate issued by the competent authority of the Member State in which each parent undertaking is authorised, attesting to and verifying that the conditions set out in paragraph (3) are being complied with in full by each parent undertaking and the financial institution concerned.

• (5) The provisions of paragraph (1) shall cease to apply to a financial institution referred to in paragraph (3) immediately upon any of the conditions set out in that paragraph ceasing to be complied with by any parent undertaking or financial institution concerned and, in the event of that happening, the Bank may direct—

( a ) the financial institution to cease, within a specified period of time, undertaking in the State any one or more of the activities referred to in the Schedule, or

( b ) that the provision in the State of any one or more of those activities shall be subject to such conditions and requirements as the Bank may set out in writing, which, in the opinion of the Bank are in the interests of the orderly and proper regulation of financial services or financial markets in the State or in the interests, generally, of the public good,

and the financial institution shall comply with any such direction.

• (6) The Bank may, for the purposes of these Regulations and for the purpose of the mutual recognition of the provision of banking services in the Community and in such form and containing such particulars as the Bank may decide, certify to the competent authority in another Member State that a credit institution authorised by it, or a financial institution to which paragraph (3) applies, carries on one or more of the activities set out in the Schedule.

• (7) The Bank shall ensure that each financial institution incorporated in the State to which paragraph (3) applies shall, where appropriate, be supervised in accordance with Regulations 6, 7, 13, 16, 17 (1), 18 and 19 as if the financial institution concerned were a credit institution to which those Regulations apply.

21 Provisions relating to the establishment of a branch in another Member State.

21.

21. (1) A credit institution authorised by the Bank which proposes to establish a branch in another Member State shall notify the Bank in advance of establishing the branch and shall provide the following information:

( a ) the name of the Member State in which the branch is to be situated;

( b ) a scheme setting out—

• (i) the proposed programme of operations of the branch,

• (ii) the business to be engaged in, and

• (iii) the manner in which the activities of the branch will be organised,

together with such other matters as the Bank may require to be set out in the scheme;

( c ) the names of the persons who will be responsible for the management of the branch, and

( d ) the address in the Member State in which the branch is to be so situated and at which the Bank may serve a notice to obtain such documents as it requires concerning the operations of the credit institution in that Member State.

• (2) Subject to paragraph (5), the Bank shall transmit the information referred to in paragraph (1) to the competent authority of the Member State concerned not later than three months after the receipt of the information required under paragraph (1) from the credit institution concerned and shall inform that credit institution that it has so transmitted the information.

• (3) The Bank shall also transmit to the competent authority in the Member State concerned a statement setting out the amount of the own funds and the level of the solvency ratio of the credit institution in question and providing details of the legal provisions in force in the State concerning any scheme for the protection of depositors in the said Member State.

• (4) Paragraphs (1), (2) and (3) shall apply to a financial institution, to which Regulation 20 (3) applies, which proposes to establish a branch in another Member State except that, in the case of paragraph (3), the statement shall, in lieu of stating the information required to be transmitted under that paragraph, contain a statement giving details of the own funds of the financial institution and of the solvency ratio or ratios of each parent undertaking of the financial institution concerned.

• (5) The Bank shall refuse to transmit the information referred to in paragraphs (2), (3) and (4) to the competent authority of another Member State in any case in which the Bank is of the opinion that the credit institution or financial institution concerned does not possess sufficient financial resources or adequate managerial capacity to carry on business in that other Member State.

• (6) Where the Bank exercises its functions under paragraph (5), it shall inform the credit institution or financial institution concerned in writing of the reasons for the refusal within three months of receipt from the institution of all of the information required under paragraph (1).

22 Appeal to Court against refusal of Bank to transmit certain information under Regulation 21.

22.

22. (1) Where under Regulation 21 the Bank informs the credit institution or financial institution, as the case may be, that it refuses to transmit the relevant information to the competent authority of the Member State concerned, the institution may appeal to the Court in a summary manner within one month, or such longer period as the Court considers just and equitable in the circumstances, of the refusal, against the refusal by the Bank.

• (2) Where the Court allows the appeal, it shall direct the Bank to transmit the information to the competent authority in the Member State concerned within such period of time as the Court may specify.

• (3) The Court may make such other order as it sees fit directing the applicant to supply specified information to the Bank for the purposes of Regulation 21 or to comply with a requirement of the Bank in relation to the information to be provided to the Bank under that Regulation.

• (4) In relation to an appeal to the Court under this Regulation, the Court may make such order, if any, as to costs as it considers appropriate.

• (5) Where the Court is satisfied, because of the nature or the circumstances of the case or otherwise in the interest of justice, that it is desirable, the whole or any part of proceedings under this Regulation may be heard otherwise than in public.

23 Provisions relating to the establishment in the State of a branch from another Member State.

23.

23. (1) Where the Bank receives the information which corresponds to information referred to in Regulation 21 from the competent authority of another Member State and which relates to a proposal by a credit institution authorised in that other Member State or a financial institution in that other Member State to which Regulation 20 (3) applies, the Bank shall within two months of the receipt of the information, if it considers it necessary to do so, inform the institution of any or all of the enactments and regulatory provisions applying to the conduct of banking business or of the proposed operations of the branch in the State.

• (2) The credit institution or financial institution concerned may establish the branch and commence operations—

( a ) as soon as it is informed by the Bank under paragraph (1) of the matters to which that paragraph relates, or

( b ) on the expiry of the two month period referred to in that paragraph,

whichever event first occurs.

24 Change in information provided under Regulation 21.

24.

24. (1) Where a credit institution or financial institution which has provided information under Regulation 21 proposes to alter any of the information to which subparagraph (b), (c) or (d) of paragraph (1) of Regulation 21 relates, it shall notify the Bank in writing in advance of making the alterations.

• (2) Where—

( a ) a credit institution or financial institution to which Regulation 23 applies proposes to alter any of the information to which subparagraph (b), (c) or (d) of paragraph (1) of Regulation 21 relates, or,

( b ) in the case of such a credit institution, there is to be a material change in the legislative provisions in the Member State in which it is authorised affecting the protection of depositors within that Member State,

the credit institution or financial institution, as the case may be, shall, in the case of subparagraph (a), notify both the competent authority in its home Member State and the Bank and, in the case of subparagraph (b), notify the Bank accordingly.

• (3) Any notification required by this Regulation shall be made in writing by the institution concerned at least one month before the proposed changes are made.

• (4) Where the Bank is of the opinion that a proposed change to which this Regulation relates is being made for reasons of immediate urgency or results from circumstances beyond the control of the institution concerned, it may dispense with compliance by the institution with paragraph (3) and instead require that the notification to which that paragraph relates be given within a specified period after the change is made.

25 Existing branches.

25.

25. (1) A credit institution incorporated in or formed under the law of another Member State which immediately before the commencement of these Regulations—

( a ) is authorised to act as a credit institution by the competent authorities in its home Member State, and

( b ) has established in the State a branch,

shall be treated for all purposes of these Regulations as if the requirements of these Regulations had been complied with in relation to its establishment of the branch.

• (2) A credit institution incorporated in the State which, immediately before the commencement of these Regulations—

( a ) has a subsisting authorisation from the Bank, and

( b ) has established in another Member State a branch,

shall be treated for the purposes of these Regulations as if the requirements of these Regulations had been complied with in relation to its establishment of the branch.

26 Provision of services into another Member State.

26.

26. (1) Where a credit institution established in the State which is authorised by the bank, or a financial institution in the State to which Regulation 20 (3) applies, proposes to carry on business in another Member State in any of the categories of activities set out in the Schedule other than by means of establishing a branch in that Member State, it shall notify the Bank of the name of that Member State and of the activities in the Schedule which it is proposed to carry out in that Member State.

• (2) The notification referred to in paragraph (1) shall not be required if, at the commencement of these Regulations, the credit institution or financial institution concerned already carries on any business in the Member State concerned by means of the provision of services in that Member State.

• (3) The notification referred to in paragraph (1) shall be required on the first occasion only on which the credit institution or financial institution proposes to carry on a particular activity set out in the Schedule.

• (4) The Bank shall, within one month of receipt of the notification, forward it to the competent authority of the other Member State specified in the notification.

• (5) Nothing in this Regulation shall—

( a ) be taken as authorising a financial institution to which Regulation 20 (3) applies to carry on the business of accepting deposits inside or outside the State, or

( b ) remove any existing requirements on a credit institution to seek the permission of the Bank under any supervisory enactment to carry on business outside the State either generally or in respect of any particular class or classes of activities.

27 Provisions as to non-compliance in the State.

27.

27. (1) Where the Bank has reason to believe that either—

( a ) a credit institution authorised in another Member State, or

( b ) a financial institution to which Regulation 20 (3) relates,

(hereafter in this Regulation referred to as "the institution") is not complying with the requirements of these Regulations, it shall, subject to paragraph (2), inform the institution accordingly and shall in writing direct the institution to comply immediately with those requirements.

• (2) Before issuing a direction to an institution under paragraph (1), the Bank shall notify the institution of its intention to so issue the direction and shall give the person an opportunity to make such representations on the matter as he may wish to make within such time limit as is specified by the Bank in the notification.

• (3) If the institution fails to comply with a direction of the Bank under paragraph (1), the Bank shall notify the competent authority in the Member State in which the institution is authorised.

• (4) Where the Bank is satisfied that, notwithstanding the provisions of paragraphs (1) and (3), the institution has not complied with the direction of the Bank, it may, having informed the competent authority in the Member State in which the credit institution is authorised, direct the institution concerned to take any one or more of the following measures, that is to say, to cease—

( a ) accepting deposits within the State or making loans to persons within the State, or

( b ) undertaking in the State, or providing to persons in the State, any one or more of the activities or services set out in the Schedule.

• (5) The Bank may apply to the Court in a summary manner for an order confirming the direction given by the Bank under the preceding paragraph.

• (6) The Court may grant an order under this Regulation subject to such conditions as the Court may decide.

• (7) An institution to which a direction has been issued under paragraph (1) may apply to the Court in a summary manner within one month, or such longer period as the Court considers just and equitable in the circumstances, of the issue of the direction for an order to have the direction set aside and the Court may grant such an order.

• (8) The Court may amend, suspend or revoke an order previously made under this Regulation either at its own motion or at the request of the Bank or any interested party.

• (9) Where the Court is satisfied, because of the nature or the circumstances of the case or otherwise in the interests of justice, that it is desirable, the whole or any part of proceedings before it under this Regulation may be heard otherwise than in public.

28 Non-compliance in another Member State.

28.

28. Where the Bank receives a notice from the competent authority in another Member State for the purposes of the implementation of paragraph 3 of Article 21 of the Directive that either—

( a ) a credit institution authorised by the Bank, or

( b ) a financial institution to which regulation 20 (3) relates,

(hereafter in this Regulation referred to as "the institution") is not complying with a requirement of that other competent authority, the Bank shall take such measures as it considers appropriate to require the institution to comply with the requirement and shall advise that other competent authority of those measures.

29 Direction by Bank to cease business.

29.

29. (1) Where, in the case of either—

( a ) a credit institution authorised in another Member State, or

( b ) a financial institution to which Regulation 20 (3) relates,

(hereafter in this Regulation referred to as "the institution") the Bank considers that it is necessary, in the interests of depositors or in the interest of the proper and orderly regulation of financial markets in the State, or where the institution has had its authorisation withdrawn, revoked or suspended, in whole or in part, by the competent authority in that other Member State, the Bank may dispense with the requirements of Regulation 27 in relation to the notification of the institution concerned, and the competent authority in the other Member State and the Bank may forthwith direct the institution to take such measures as the Bank may specify including the cessation of either or both the taking of deposits and the provision of services in the State and, where the institution has a branch in the State, the orderly winding-up of the business of that branch by the Court.

• (2) The Bank may apply to the Court in a summary manner for an order confirming a direction given by the Bank under paragraph (1).

• (3) ( a ) An institution to which a direction has been issued under paragraph (1) may apply to the Court in a summary manner within one month, or such longer period as the Court considers just and equitable in the circumstances, of the issue of the direction for an order to have the direction set aside and the Court may grant such an order.

( b ) The Court may amend, suspend or revoke an order previously made under this Regulation either at its own motion or at the request of the Bank or any interested party.

• (4) The Bank shall, as soon as may be, inform the Commission and the competent authorities of the Member State in which the institution is authorised of the measures taken under paragraph (1).

• (5) Where the Commission issues a direction, as provided for under paragraph 7 of Article 21 of the Directive, that the measures in question should be amended, suspended or terminated, the Bank shall comply with that direction and shall, where appropriate, apply to the Court in a summary manner for an order amending, suspending or terminating those measures accordingly.

• (6) Where the Court is satisfied, because of the nature or the circumstances of the case or otherwise in the interests of justice, that it is desirable, the whole or any part of proceedings before it under this Regulation may be heard otherwise than in public.

30 Report to Commission.

30.

30. The Bank shall notify the Commission, as soon as may be thereafter, of each case in which the Bank has refused to transmit a notice in accordance with Regulation 21 (5) or in which the Bank issues a direction or seeks an order of the Court under Regulation 27 and shall provide the Commission with such details as the Bank considers necessary for the purposes of complying with this Regulation.

31 Notification by credit institutions.

31.

31. Where a credit institution authorised in another Member State—

( a ) ceases to be authorised in its home Member State either generally or in relation to any activity set out in the Schedule or,

( b ) ceases to carry on any particular activity in the State set out in the Schedule,

it shall immediately inform the Bank in writing of that fact.

32 Notification by financial institutions.

32.

32. Where a financial institution to which paragraph (3) of Regulation 20 applies no longer fulfils any one or more of the conditions set out in that paragraph it shall immediately inform the Bank in writing of that fact.

33 Offences.

33.

33. Any person, other than a competent authority, who fails to comply with a provision of these Regulations shall be guilty of an offence and shall be liable, on summary conviction, to a fine not exceeding £1,000, or to imprisonment for a term of not more than six months, or to both.

34 Provision of false information, etc.

34.

34. Any person who provides the Bank with false, misleading or inaccurate information on his own behalf or on behalf of any other person or institution in relation to any requirement imposed by these Regulations shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £1,000, or to imprisonment for a term of not more than six months, or to both.

35 Prosecution by Bank.

35.

35. A prosecution for an offence under these Regulations may be taken by the Bank.

36 Offences by bodies corporate.

36.

36. Where an offence under these Regulations has been committed by a body corporate and it is proved to have been so committed with the consent or connivance of or to be attributable to any neglect on the part of any person who, when the offence was committed, was a director, manager, secretary or other officer of the body corporate, or a person purporting to act in any such capacity, that person, as well as the body corporate, shall be guilty of an offence and shall be liable to be proceeded against and punished as if he were guilty of the first-mentioned offence.

37 Continuation of contravention of Regulations.

37.

37. Where a person continues to contravene a provision of these Regulations in respect of which he has been convicted, he shall be guilty of an offence on every day on which the contravention continues after the original conviction and for each such offence he shall be liable on summary conviction to a fine not exceeding £100.

38 Construction of licence holder in enactments.

38.

38. (1) Notwithstanding Regulation 11 (1), the references, however expressed, to the holder of a licence under section 9 of the Central Bank Act, 1971 , in—

( a ) the following sections of the Central Bank Acts, 1942 to 1989, namely:

• (i) in the Central Bank Act, 1971 , sections 19 to 26, section 28, sections 31 to 42 and section 58,

• (ii) in the Central Bank Act, 1989 , sections 9, 27 and 28, sections 38 to 42, section 45, sections 48 to 50, sections 51, 53 and 55, sections 57 to 60, sections 62 and 63, sections 65 to 71 and sections 73, 90, 108, 117, 134, 136 (a) (i) and 140,

or

( b ) any other enactment which is in force on the 1st day of January, 1993,

shall be construed so as to include any person who, but for the application of Regulation 11(1), was or would have been required to hold a licence under section 9 of the Central Bank Act, 1971 .

• (2) For the purposes of Chapter V of Part II (which relates to deposit protection) of the Central Bank Act, 1989 , references in that Chapter to the "former holder of a licence" shall not apply to a credit institution to which Regulation 11 (1) applies.

• (3) For the purposes of section 73 (1) (a) of the Central Bank Act, 1989 , a branch of a credit institution authorised in another Member State to whom Chapter V of Part II of that Act applies by virtue of this Regulation shall not be regarded as a member of a class who is not required to be the holder of a licence granted under section 9 of the Central Bank Act, 1971 .

39 Amendment of Central Bank Act, 1971 .

39.

39. The Central Bank Act, 1971 , is hereby amended:

( a ) in section 16 (1), by the insertion of "or the Bank indicates to the registrar that the company is one to which the European Communities (Licensing and Supervision of Credit Institutions) Regulations, 1992, relate" after "or to exempt it under section 8 of this Act",

( b ) in section 17 (7) (inserted by section 36 of the Central Bank Act, 1989 )—

• (i) by the substitution of the following for the definition of "holding company":

'"holding company' has the same meaning as 'parent undertaking' has in the European Communities (Companies: Group Accounts) Regulations, 1992 ( S.I. No. 201 of 1992 ).",

and

• (ii) by the substitution of the following for the definition of "subsidiary company":

'"subsidiary company' has the same meaning as 'subsidiary undertaking' has in the European Communities (Companies: Group Accounts) Regulations, 1992 ( S.I. No. 201 of 1992 ).",

and

( c ) in section 27 (2)—

• (i) by the insertion of the following paragraph after paragraph (a):

"( aa ) by a person authorised by virtue of the European Communities (Licensing and Supervision of Credit Institutions) Regulations 1992, to carry on business in the State, or",

and

• (ii) in paragraph (b), by the insertion of "or (aa)" after "a person specified in paragraph (a)".

Regulations 2, 20, 25, 26, 27, 31.

SCHEDULE

LIST OF ACTIVITIES SUBJECT TO MUTUAL RECOGNITION

( a ) consumer credit,

( b ) mortgage credit,

( c ) factoring, with or without recourse, and

( d ) financial or commercial transactions (including forfeiting).

( a ) money market instruments,

( b ) foreign exchange,

( c ) financial futures and options,

( d ) exchange and interest rate instruments, or

( e ) transferable securities.