Law of regulation of basic administrative regime of the banks since the General Council in its session of the 30th of June 1998 has approved the following: law of regulation of basic administrative regime of the banking entities preamble The legislative development of the financial system began in 1993 has been doing from the premise that Andorra has to maintain a financial system structurally and functionally sound as a prerequisite to ensure the highest level of confidence of customers and the recognition of the international financial community.

In keeping with this premise, and from the Andorran singularity, the laws approved to date reflect a high level of technical and economic requirements. The regulation of the banks, in a special way, since they are the only ones that can receive deposits and other reimbursable funds, has been established in such a way that incorporates some obligations that, in general, exceed international standards.

This circumstance is given in a way relevant to the regulation of minimum capital and solvency and liquidity standards.

It is in this same line that fits the present law regulating the administrative regime of the banking entities. Establish administrative requirements, both operational and structural, with the aim that, while avoiding an interventionist attitude, personal, technical and economic basis on which should support the implementation of the activity of the Bank meet those conditions that should promote the quality and safety management.

As to which gets a special accent can be pointed out that, on the basis that the most effective guarantee of solvency, liquidity and the irreplaceable and the stability of a bank is determined by the professional self-discipline of its managers and leaders, is given a fundamental importance in the composition of the higher organs of administration and management, and gets a particular attention in the control functions both the internal and the external.

In this last aspect, it gives a significant importance to the role of external auditors, which will constitute a key element in the functioning of discrete mechanisms and effective operational and financial safety.

With regard to the requirements of a new instrumental introduction, the most remarkable fact is the creation of some official registers where you must register, compulsory and timely, those acts which, in the home and in the evolution of the Organization, have a specific weight that may be inferred, directly or indirectly, in the technical and economic solvency of the organization. This obligation, as well as the corresponding to a systematic presentation of the financial statements prepared on the basis of an accounting plan, it is expected that, without weakening its effectiveness, does not involve a bureaucratic overload.

This law also gives particular importance to the shareholders of the company that have significant shares. In that regard, it introduces a significant change in the nature of capital of the banks of Andorran law that, in view of the specific nature of their activities, allows, in general, the participation of credit institutions up to 51% of the capital.

With this measure we want to promote a balanced and prudent openness to the outside that will contribute to strengthening the international image of the Andorran banking and provided at the same time strengthening the sector in those areas more susceptible to a constant technological innovation.

The provisions contained in the present law, even though the central body of the administrative requirements, do not include the obligations resulting from the operational activity that has already been regulated by previous laws about specific subjects, nor the emanating from the laws that affect them, in a way, all the generic companies. In either case, the corresponding obligations remain in force, except in cases in which they are affected by the contents of the present law.

Chapter i. administrative requirements, of a structural nature Article 1 legal form the banks should take the legal form of limited liability company of Andorran law.

Article 2 nature of capital a) as an exception to the general rule established by the legislation in force with regard to the limitations of the foreign capital in the companies, the foreign credit institutions can participate up to 51% in the share capital of banks of Andorran law. In these cases, it is understood well that the total foreign participation can reach the referred to 51% of the Bank of Andorran law b) without prejudice to the provisions laid down in the law regulating the powers of the various operational components of the financial system, in cases where, in application of the content of the sections a) and b) of this article or in which , by virtue of any other provision, foreign participation in the capital of the Bank of Andorran law exceeds the third of the capital, the sum of the shares, in companies of Andorran law, the Bank and foreign entities is limited to one-third of the capital this limitation does not apply to the investments in non-banking financial institutions.

Article 3 Subject specific social social object to appear in the statutes of the banks should be limited to activities of the banks, as are defined in the legislation.

Article 4 the Board of Directors to) the banks have to have one Board of Directors made up of five members at least b) people who componguin the Board of directors should be persons of recognised good repute and professional business c) a minimum of two and one-third of the total at least of the members of the Board of directors should be persons of Andorran nationality or resident with those from economic rights of) The Board of Directors must meet whenever in Andorra Article 5 General Directorate a) The Directorate-General should be composed of two persons at least one of which must explicitly assume the responsibilities of intervention and control b) people who componguin the Directorate General must have suitable knowledge to perform their role, and at least two must have a proper professional experience


c) people who componguin the General direction should be persons of recognised professional business and good repute) a minimum of one and a half of the total at least of the members of the Directorate-General should be Andorran nationals or residents with those from economic rights Article 6 opening offices and hiring staff in) the new banks that receive the authorization of creation in accordance with the development of the fourth transitional provision of the law of regulation of the financial system should be open at least an Office in a different parish in the URinstal.lat that have their main office b) in the same way banks already installed in Andorra before the adoption of this law should keep open offices in at least two parishes c) No less than half of the staff employed by the banks will have to be a resident of Andorra or of no less than five years

Chapter II. Administrative requirements of functional character Article 7 technical and administrative organization Structure The technical structures and administrative organization, and a special way the internal procedures of control, must maintain internationally comparable quality standards in the sector and to promote the development of the activities under conditions that facilitate quality and safety management.

The banks must have computer systems and accounting systems fully autonomous in relation to any related credit institutions, without prejudice to the latter to participate in its implementation.

Article 8 minimum volume of own resources without prejudice to the obligations arising from the legislation which establishes the criteria of solvency and liquidity, banks must have a permanently effective volume of own resources no less than the amount of the share capital at least legally.

Article 9 financial statements to) the banks have to reflect in its financial statements the true picture of their heritage, their financial situation, the nature of the risks of their operations and results of the entity b) the financial statements must be hold to accounting principles, to the rules of valuation and classification, and formal models that are established legally c) the banks have to audit their balance sheets and profit and loss accounts at least 31 December of each year) without prejudice to the procedures and rules of the INAF instrumental techniques relating to financial statements, the banks have to the INAF anyalment a copy of the publication of its audited financial statements closed at 31 December Article 10 external Audits) the banks have hired , permanently, a company auditor in charge of the external audit b) banks cannot hire the same company auditor for more than five years in a row c) audit firms and their employees, as part of his performances in banks, are subject to professional secrecy. The violation of professional secrecy, except for legal cause of justification, it constitutes a crime in the terms provided for in the criminal code d) in the event that the external auditors should have knowledge of the existence of elements likely to significantly affect the solvency, liquidity and the stability of the banks, have issued a report immediately, and the audited entity has an obligation to send a copy to the INAF. If within a period of five working days the auditor does not have reliable verification that there has been this shipment, you should send a copy of the report to the INAF e) the auditors who fail to comply with the obligations arising from the provisions of the preceding point, and/or that do not run the demands and requests of the INAF established supervision and control in the media relating to the disciplinary regime of the financial system , will be sanctioned with a fine of up to 50,000 5 million pesetas and its professional disqualification in Andorra for a period not exceeding five years if the breach has been caused by negligence, or with a fine of up to 25 million 5,000,001 pesetas and his ultimate professional disqualification in Andorra if the breach has occurred intentionally f) for graduation of sanctions to the auditors , within the limits established in the preceding point, will take into account the gravity of the danger created and/or damages caused and the strong sanctions that have been imposed for the last five years Article 11 Uniqueness of administrative procedures to) The requests for authorization from the Government and/or for registration in the records of the Government of the acts referred to in article 12 of this law , that have been made in application of the legislation on commercial companies, must be processed through the INAF b) the INAF, in a maximum period of ten working days from the receipt, you must send the applications to the Ministry of finance with its chapter III. The official registers of administrative acts Article 12 Acts subject to registration to) to have full administrative effectiveness, the following events must be registered in the corresponding registries: the creation and dissolution of banks the appointments and revocation of members of Board of Directors appointments and revocation of members of the Directorate-General changes in the shareholding of the Bank qualified investments that affect changes in the shareholding of the Bank that represent an increase in the participation of capital

changes in foreign shares in other companies of the Bank approved the modification of the links with other credit entities the appointment of external auditors.

Article 13 Body responsible to) the INAF, by delegation of the Government, is the body responsible for resolving requests and establish and update the official records that contain the information of banks relating to the acts listed in the preceding article b) the obligations arising from the content of the preceding article are set without prejudice to the General provisions emanating from the central administration and local administration relating to the authorisations and registrations of acts Article 14 applications for registration


The banks must submit to the INAF registration requests relating to the acts referred to in article 12 of this law, within a maximum period of seven working days from the date on which occurs the event to register.

Article 15 documentation to be attached to the applications the banks should attach to the applications the documentation set in the adaptation to the current legislation of the acts register and provide arguments in virtue of which, on the basis of the criteria set out in chapter V of the law regulating the creation of new banks of Andorran law , cannot be affected negatively, in a meaningful way, their technical, economic and professional guarantees.

Article 16 additional information the INAF can request to the banks that supplementary information that it considers appropriate in relation to the Act the subject of registration.

Article 17 term of the INAF resolution should resolve the applications for registration within a maximum of thirty working days from the date of filing of the applications or complementary information.

Article 18 Denial the INAF deny registration if, in the review of the documentation, it follows that the Act to register does not conform to the legislation in force or which may negatively affect a significant way the elements that constitute technical, economic and professional guarantees of the entity.

In particular will take into account the criteria set out in chapter V of the law regulating the creation of new banks of Andorran law.

Article 19 Notification within the period provided for in article 17 of this law, the INAF has to notify the Bank its resolution with regard to the registration requested and inform you of the resource.

Article 20 Resource banks can lodge an appeal before the Government against resolutions of the INAF within thirteen working days starting from the day after the notification of the decision or, in the case of administrative silence, within thirteen working days starting from the day after the deadline established by the article 17 of this law.

Article 21 notification of prior banking entities, when deemed appropriate, before adopting decisions relating to the acts referred to in article 12 of this law, can perform a query to the INAF to find out if there are elements that may be cause of denial.

Chapter IV. Definitions for the purposes of Article 22 business and professional good repute this law, it is considered that they are people of recognized good repute and professional business which enjoyed a good personal and professional reputation, people the public image of which corresponds to that of good administrators and, in a specific way, that: do not have a criminal record for crimes of forgery, of infidelity in the custody of documents , in violation of secrets, of embezzling public flows, of discovery and revelation of secrets or offences against the property;

do not have a criminal record for other malicious crimes;

they are not, nor have been disabled to exercise public office or administration or management bodies of the financial system;

have not been declared bankruptcies or in a situation of legal arrangement, and if they have been, have been legally rehabilitated.

Article 23 Residents with those from economic rights for the purposes of this law, are considered to be living with the economic rights from those who meet the requirements of the second paragraph of article 2 of the regulation of commercial companies dated May 19, 1983, or any subsequent policy to replace this article.

Article 24 General direction for the purposes of this law, it is understood by members of the Directorate General for those who have a position of director or Deputy Director general, and those that are part of the upper body of the entity.

Article 25 professional experience suitable for the purposes of this law, is considered to have adequate professional experience the people that have played, with normal, for a period exceeding five years functions administration, management or control of the banks, or functions of a similar responsibility in other organizations, public or private, of significant dimension.

Article 26 resources for the purposes of this law, it is understood by those who are own resources referred to in article 3 of the law on regulation of solvency and liquidity criteria in financial institutions.

Article 27 the financial statements for the purposes of this Act, the financial statements include the balance sheets, profit and loss accounts and the States of origin and application of funds, with the corresponding notes, and any other additional financial information the requirement which is legally established.

Article 28 links with other financial institutions for the purposes of this law, it is understood to links with other credit institutions the banks of Andorran law with other credit entities which provide banking and technological knowledge or involved in the management or that are committed to provide financial support in the case of financial hardship or have a significant impact on the technical guarantees economic, and professionals in the Bank.

Article 29 qualified Shareholdings for the purposes of this law, it is understood by the qualified participation you get, directly or indirectly, to a 5% or more of the capital or of the voting rights in the company participated. It also has the consideration of qualified participation which, without reaching the stated percentage, enable a notable influence in the organization.

First additional provision additional provisions the Ministry of finance, with regard to article 9 of this law, relating to the financial statements, you must establish an accounting plan to be implemented by banks and should determine the subsidiary rules inherent in its application and its development.

The Ministry of finance may delegate this right to the INAF.

Second additional provision the INAF has to establish the procedures and instrumental techniques that rules for monitoring of compliance with the precepts contained in the legislation relating to the Andorran financial system, and for the supervision and control of the entities.

Third additional provision without prejudice to the provisions of the preceding additional provision, the INAF has to apply for the


banks, in the form and with the frequency that this organism determine, information about the so-called "other solvency rules" described in the third chapter of the law on regulation of solvency and liquidity criteria in financial institutions dated 29 February 1996.

Transitional provisions first transitory provision of the INAF should proceed to register ex officio in the register of banks the banks that, properly authorized, are operational to date today: Banc Agrícol i Comercial d'Andorra, SA to Andorra Banc Internacional Banca Mora SA SA SA SA Private Banking Banca Reig Caixabank SA Crèdit Andorrà SA second transitional provision the INAF, by means of appropriate technical releases , you must ask for the banks now authorized the necessary information to include in the official registers defined in article 12 of this law.

Third transitional provision to) the banks currently authorized to have modify your object to comply with article 3 of this law must request it within a maximum period of six months from the date of publication of this law in the Official Gazette of the Principality of Andorra b) currently authorized banks that do not comply with the requirements of article 8 of the present Law , relating to own resources, have a maximum period of six months from the date of publication of this law in the Official Gazette of the Principality of Andorra to make the appropriate adjustments c) currently authorized banks that have to adapt the composition of its Board of Directors, to meet the requirements of article 4 of this law, they must do so within a maximum period of twelve months from the date of publication of the present Law in the official bulletin of the Principality of Andorra of) the banks currently authorised that have to adapt the structure of the directorate-general to meet the requirements of article 5 of this law have to do it within a maximum period of two years from the date of publication of this law in the Official Gazette of the Principality of Andorra fourth transitional provision the exception to the general rule established by the legislation in force with regard to the limitations of the foreign capital in the companies referred to in section a) of article 2 of this law, which empowers the participation of foreign credit institutions can achieve up to a 51% of the share capital of banks of Andorran law, will be effective for the currently authorized banks as of September 30, 1999.

Fifth transitional provision as an exception from the provisions of article 2 of this law, related to the nature of capital, remains in force the fourth transitional provision of the law regulating the powers of the various operational components of the financial system of date December 19, 1996 by which la Caixa d'Estalvis i Pensions de Barcelona may have, until 31 December 2011 , up to 100% of the capital of Caixabank SA.

Sixth transitional provision for the calculation of exercises during which a Bank has hired the same company auditor, are not taken into account the previous exercises in 1998.

Seventh transitional provision While not been developed the legislation relating to the concept and to the administrative treatment of groups of companies, empowers the Government to establish when and how the financial information provided in the current regulations has been to facilitate consolidated basis.

Eighth transitory provision the Government has presented to the General Council, no later than September 30, 1998, the regulations relating to the non-banking financial institutions, defined in articles 3, 4 and 5 of the law on regulation of the operational of the different components of the financial system, dated December 19, 1996.

Repealing provision abolishes the previous legal provisions in that they are affected by this law.

Final provisions first final provision this law enters into force on the day of its publication in the official bulletin of the Principality of Andorra.

Casa de la Vall, 30 June 1998 Francesc Areny Casal Syndic General Us the co-princes the sancionem and promulguem and let's get the publication in the official bulletin of the Principality of Andorra.

Jacques Chirac Joan Martí Alanis, President of the French Republic the Bishop of Urgell Co-prince of Andorra Co-prince of Andorra