Tuesday January 7 2014

News Source: Global Disclosures

Focus: Substantial Acquisitions

Type: General

Country: European Union




The European Securities and Markets Authority has published drafts of the Regulatory Technical Standards and the Implementing Technical Standards under Article 10a(8) of MiFID on the assessment of acquisitions and increases in EU qualifying holdings (EU substantial acquisitions) in investment firms.

Regulatory Technical Standards

ESMA’s Consultation Paper on the Draft Regulatory Technical Standards was published on 9 July 2013. The draft RTS are based on the Appendix II of the CEBS, CESR and CEIOPS ‘Guidelines for the prudential assessment of acquisitions and increases in holdings in the financial sector required by Directive 2007/44/EC’ (3L3 Guidelines), as well as the report issued by the Commission (in February 2013) to the European Parliament, the Council, the European Economic and Social Committee, and the Committee of Regions on the application of Directive on acquisitions and increase of holdings in the financial sector.

ESMA`s final report sets out the feedback statement to the CP, provides an analysis of the responses to the consultation, describes any material changes to the technical proposals set out in Annex V of the CP (or confirms that there have been no material changes), and explains the reasons for this in the light of feedback received.

The RTS covers the following:

  • Information relating to the identity of the proposed acquirer
  • Information relating to the proposed acquisition
  • Information on the new proposed group structure and its impact on supervision
  • Information relating to the financing of the proposed acquisition
  • Additional information requirements where there is a proposed change in control in the target entity
  • Additional information requirements where the proposed acquisition would result in a qualifying holding of up to 20%
  • Additional information requirements where the proposed acquisition would result in a qualifying holding of 20% or more or of equivalent influence
  • Reduced information requirements

The following changes were made to the initial consultation draft as a result of feedback received:

  • consolidated supervision and close links – ESMA has deleted the requirement that was included in Article 6(1)(b) of the CP in relation to the waiver from capital requirements on a consolidated basis, and ESMA has modified the information required under Article 6(1)(a) to limit its scope to an analysis of the perimeter of consolidated supervision after acquisition, specifically which group entities would be included in the scope of consolidated supervision requirements after acquisition, and at which levels within the group these requirements would apply on a full or sub-consolidated basis.
  • third-country acquirers – ESMA has amended the text of the RTS to clarify that a “certificate of good standing”, or equivalent, shall be provided only where available. ESMA has also introduced an additional information requirement under Article 5(2) to require general information on the regulatory regime of the third country as applicable to the proposed acquirer.

Implementing Technical Standards

At the same time as publishing the RTS, ESMA has also published implementing technical standards with regard to standard forms, templates and procedures for the consultation process between the relevant competent authorities. Unlike the Regulatory Technical Standards, ESMA did not carry out a public consultation, analyse the potential, related costs and benefits or request the opinion of the SMSG in relation to the ITS as ESMA considered that it was not appropriate to do so. This is because the ITS concern cooperation arrangements between competent authorities and ESMA has developed them in cooperation with the competent authorities.

The draft ITS are based on the principles set out in the guidelines on cooperation arrangements and information exchange between competent authorities and the multilateral memorandum of understanding between those authorities to the extent that the obligations in that memorandum relate to Article s 10, 10(a) and 10(b) of MiFID. These draft implementing technical standards have adapted those principles to meet the specific requirements of Article 10(4) of MiFID.

The ITS cover the following:

  • Designated contact persons
  • Preliminary notice
  • Consultation notice
  • Aknowledgement of receipt of a consultation notice
  • Response from a requested authority
  • Procedures for consultation

Annexed to the ITS are the following draft forms:

  • Preliminary notice template
  • Consultation notice template
  • Response from requested authority template

The final report has been submitted to the Commission for approval. The Commission has three months to decide whether to endorse the documents.

Click on the above link for the ESMA report.