Law of regulation of the financial system since the General Council in its session of 27 November 1993, has approved the following: law of regulation of the financial system preamble the financial system develops vital functions for the whole of the economy of a country.

From this premise, the public authority has to establish the structural framework and has set the basic rules that should facilitate the proper functioning of the system, enhance their strength and ensure the protection of the general interests of the country.

Another factor that leads to a reasoned public intervention lies in the fact that the financial systems, and more specifically the banking systems, have been everywhere assuming a virtual public dimension, regardless of the private status who might have filled the vast majority of its components. A public dimension which comes configured, in large part, by the exercise of an authority, to create money, which historically was reserved for those who exercised the sovereignty of the nation.

Parallel to these general causes, the legislative action of the General Council of the valleys and of the Government in the planning of the financial field stems from an express constitutional indication.

The structure of the economy of the Principality is carried out in the framework of the market economy; recent economic history suggests that the techniques derived from this principle are those that best favours the creation and distribution of wealth. This recognition established by article 28, the constitutional text have also in mind that if this doctrine is applied to extreme in sofririen seriously some of the core values which form the basis of our society. For these reasons-and because a sensible intervention should not be harmful to economic growth, but it can be, and should be, even fully positive from a global perspective-economically, countries organized on the basis of the market economy, establish measures designed to temper, or to complement, the forces of the market, to promote the general welfare and a balanced development. The article 32 of the Constitution is explicit on this line.

The need to sort the financial system is also, from a functional perspective, a mandatory consequence of the constitutional text. Indeed, the aforementioned article 28 proclaims the freedom of enterprise and, therefore, requires overcoming the status quo existing bank in the Principality and a structuring of the whole financial system from the respect of this freedom and, through the laws, making it compatible with the best interests of Andorran society as a whole.

A specific circumstance has introduced in the legislative planning of the financial scope an element of urgency. The law on provisional measures approved by the General Council, on April 28, 1993, forced the Council to establish, with the greater possible promptness, the management of the financial system. This law gives fulfillment to the commitment then acquired.

Several are the driving ideas around which it has vertebrate this law.

The Organization has wanted to do since the Andorran singularity. Will not be turned down-on the contrary, you have in mind-the historical experiences and formulations that, in this field, prevail in the surrounding countries or those that can serve as points of reference; but the circumstances are factors which, here and now, advise legislate with very specific objectives and very immediate.

The Organization should not disturb the smooth development of those companies in the financial sector that, over the years, they have succeeded to provide a good economic, commercial and professional structure. What I do is intended to the organization is correct situations of privilege; to assume the responsibilities that correspond to the public financial system; to promote that face the future from a perspective that bear in mind, in addition to the legitimate special interests, the general interest of the country; and to support the sector to make a solid, consistent and keep a positive international reputation.

The Organization will carry out thinking about the need to have, now and in the future, with a system that has the ability to provide a complete and qualified services, both in the domestic and international field in the financial space. And you want to provide to do the necessary so that, seen from the side of the users, these services are provided in transparent and favourable economic conditions.

The organization wants to be effective and at the same time want to avoid, as much as possible, the administrative burdens and bureaucratic actions. In the regulations that come out, the supervision will have a reasonable character that should allow a global tracking that contribute to ensuring the soundness of the system, and make it compatible with a clear will not to intervene at all in the individual financial institutions relationship with its customers. The professional secrecy, protected by the Andorran Criminal Code and so rooted in the banking deontology, will be maintained to the fullest extent. The necessary cooperation of the financial system in a matter so exceptional as is the fight against the laundering of money from drug trafficking and organized crime, it is anticipated that will make making compatible the effectiveness of the action with the absolute decision not to create any kind of difficulty in the normal client.

The last basic idea inspiring the organization is that the legal texts, both this law and the regulations and the regulations that will be deployed, do not generate negative situations, due to a hasty action, and that they are open to changes that the experience, the new circumstances and the forecasts for the future are advising.

With regard to the contents of the law, has tried to remain well defined the various groups that make up the financial system, notwithstanding that in the regulations and in the regulations by introducing the necessary clarifications are likely to be and that, in the future, the powers attributed to any specific activity may be expanded or modified.

The good order has advised not to incorporate in the financial system, in this legislative phase, the insurance companies and reinsurance. The uniqueness of this sector makes, everywhere, have a separate treatment, although there is also a widespread trend to consider the dynamics of insurance companies leads to a growing integration into the financial system. In any case, the legislation that currently governs the activity of these entities will be


be reviewed, according to the new regulatory approaches in financial matters.

You have defined the basic requirements demanded to entities in the financial system. It is planned that the supplementary regulations of the Spanish law, as well as the specific regulations of each entity, will be completing the regulatory Panel. Of a specific way it is necessary to mention the regulations relating to the share capital, in the Constitution of a compulsory reservation deposit, in the application of the coefficients of binding and in the fight against the laundering of money from drug trafficking.

In relation to the new basic requirements, has a special significance to the implementation of a regime of mandatory reserves and a few coefficients of binding to part of the banking system and, when appropriate, on the part of the other components of the financial system. Until now, Andorra had not been involved with these regulatory instruments. A balanced use of the possibilities that emanate from these technical provisions should be allowed to influence positively on the solvency and liquidity of the entities.

A component of special importance is the relative to the definition of the technical bodies of the financial authority.

It established two: a-the Institut Nacional Andorrà de Finances-of character essentially technical; the other-the Superior Commission of finance-, with legal and sectoral structuring features.

In the present law, the transitional rules have a special importance and significance.

Indeed, the starting point is a situation of fact that you want to normalize and redirect with efficiency and equity; and, at the same time, trying to avoid the risk that it will create functional problems or that, by not sufficiently predict the consequences of changes, negative situations occur. For these reasons, establishes a period of adaptation to the new rules, and it is determined that the deployment of specific regulations and the regulations can be done in a gradual way. In short, you want to combine caution with the aim to bring the financial system to the new constitutional framework.

During this transitional period will be resolved also exceptional situations that may require unique solutions, dealing with both individual rights and the general interest.

Chapter first. Scope of the Law Article 1 this law affects all people, and individuals who have a professional activity in the financial sector, and establishes the legal framework that will regulate the exercise of these activities.

Is meant for professional activity in the financial sector, carrying out normal banking operations and the provision of financial services.

Second chapter. Composition of the financial system, Article 2 the whole of the Andorran financial system consists of: 1) banks, financial institutions, credit activity and other financial institutions of various services.

2) professional associations of the financial sector.

3) Organs of authority Executive technique.

Third chapter. Definition of the operating components of the financial system Article 3 banks is meant to "Bank" a company that is dedicated to receiving deposits from the public and other reimbursable, in sight or term, and to grant credits for its own account; and provides other financial services, especially those related to the means of payment.

The approved activities as characteristics of the banks are as follows:-receipt of deposits and other funds refundable-loans of diverse nature – financial leasing (leasing)-payment transactions-issuing and managing means of payment – granting of guarantees and the like-transactions in monetary markets, stock market, currency and financial instruments in terms of options-participation in the issuance of securities-brokerage in the interbank markets-management of heritage-custody and administration of securities-commercial reports-rental safes

Article 4 financial institutions with credit activity 1) financial institutions with credit activity are companies that engage, on a regular basis and on their own, in a branch of specialised credit; for this purpose they use their own resources, the Bank source and from the international financial system, as long as they meet the conditions established by the corresponding regulations. They are not, therefore, entitled to receive direct deposits from the public.

2) have the status of financial institutions with credit activity the following specialized forms of the financial credit:-mortgage-financing term sales-leasing/"leasing"-purchase and collection management of invoices/"factoring" Article 5 other financial institutions 1) is meant to "other financial institutions" the financial activity of which is not related to the credit.

2) are included in this group all finance that do not form part of the group "of banks" or "financial institutions with credit activity", in accordance with the following classification: a) wealth management b) investment companies c) portfolio companies) mutual funds of investment companies holding generic character e) f) money exchange, as a main activity entities operating in this group may not receive money directly from the public on deposit.

Are excluded from the letter a) of this section to the family companies the object of which is exclusively the management of their own heritage.

3) insurance companies are governed by a specific legislation, in anticipation of a future integration into the financial system. With regard to the performance of reasseguradores entities will need to wait for the appropriate legislative development.

Article 6 professional associations within a period to be fixed in the respective regulations, each of the three groups of operating entities in the financial system will have to be a professional association which, in addition to protecting the general interests of its members, will have to take those initiatives aimed to improve the technical standards of the sector; to promote sectoral cooperation that respects the exercise of mutual competition; to ensure transparency in the application of conditions to customers and to ensure compliance with the ethical standards inherent to the profession.

The professional association will be the usual interlocutor of the technical bodies of the Executive authority for the issues of general interest of the sector.

The fourth chapter. Technical organs of the financial authority Article 7


Delegated bodies entities in the Andorran financial system are subject to public authority delegated to the following organisms:-Commission of Finances, and-Institut Nacional Andorrà de Finances (INAF) Article 8 Commission of Finance Will create a Higher Commission of Finances, as the autonomous body attached to the Ministry in charge of finance, the Mission of which will be to exercise executive authority for the top Government Office in the structuring and supervision of the financial system.

Article 9 Duties of the Commission of Finance the Commission of Finance has competencies for: 1) Submit to the Government, with the previous report of the INAF, proposals on the arrangement and the regulations relating to the financial sector.

2) Review, from the legal and institutional perspective, the proposals of the INAF in relation with the ordering, the regulations and the regulations relating to the financial sector.

3) Ruled, on the basis of the report containing the explicit opinion of the INAF, and raise to the Government the cases of application of Constitution and of establishment of companies in the Andorran financial sector.

4) functions as a liaison between the Executive authority and the judicial sector.

5) Assume control of compliance with the rules regarding the regulation against money laundering of money from drug trafficking and organized crime.

6) Exercise disciplinary power over the whole of the financial system.

Article 10 composition of the Finance Commission of the composition of the Commission will be as follows: Chairman: the Minister responsible for Finance or his delegate-Vice-President: the director general of the INAF or his delegate-the following vowels: * A mayor or magistrate, appointed by the Superior Council of Justice.

* A professional banking sector, appointed by the Government, at the proposal of the sector.

* Two persons of recognised professional prestige, named by the Government.

The term of Office of the members appointed by the Government will be three years. The secretariat of this Committee will be taken up by the INAF.

Article 11 the functions of the INAF technical body Executive of the financial authority delegated by the Government, in accordance with the law of 3 September 1993, are as follows: 1. to propose measures to take with regard to the planning and regulation of the financial sector.

2. To apply the coefficients and warranties binding on the part of banks and the financial.

3. To exercise control of the various components of the operating system.

Chapter five. The basic requirements demanded to entities Article 12 All entities in the financial system must meet certain basic requirements with regard to:-the personal and professional characteristics of the headlines-the status of the entity-the nature and the number of social capital-the establishment of compulsory reserves-the coverage of the coefficients of binding, in the sectors that affect them technical and administrative structures-the obligation to audit the financial statements and to keep a strict professional secrecy

Article 13 personal and professional characteristics of the members of the Board of Directors must be individuals who do not have a criminal record for wilful and that you will enjoy a good personal and professional reputation.

Responsible for the management of each entity, ultra gather the characteristics mentioned above, must have an appropriate professional qualification.

Article 14 status authorization, or the adequacy of the existing authorization to exercise activities in the financial field, will be granted only to legal persons of Andorran law.

Article 15 nature of social capital social capital of all companies included in the Andorran financial system must respect the maximum ceiling of foreign participation established by the current Regulation of commercial companies.

Article 16 minimum social Capital 1. Entities operating in the Andorran financial system must have a social capital appropriate to the nature of its activity.

2. The General Council, by means of a specific regulation and subject to a report of the Commission of finance, shall determine the number of minimum share capital required for each entity, by virtue of their membership of the groups or sub-groups listed in articles 3, 4 and 5.

3. The Government will establish, by means of the respective regulations, the additional conditions must meet the shareholders ' equity in relation to the above-mentioned social capital.

Article 17 reservations Deposit in warranty 1. In addition to the share capital, entities in the financial system will have the obligation to hold minimum reserves of shareholders ' equity that must be deposited at the Institut Nacional Andorrà de Finances, in guarantee of their obligations.

2. The Government, on the proposal of the Minister in charge of the Department of finance, will fix with the previous report of the INAF and the opinion of the Committee of finance, the scales to be applied in the establishment of the related deposits, depending on the nature of the activity of the Organization and, with respect to the banks-and when appropriate, the financial-credit activity , the volume of investments by all concepts, with deduction of the made with own funds and a bank source.

3. The General Council, by means of a specific regulation, fix the maximum limits applicable to this concept and the minimum amounts required in each entity, depending on the nature of its activity.

4. The conditions applicable to related deposits will be established by the Government.

Article 18 financial structure coefficients of the banks-and, when and in the corresponding concepts, financial institutions-will be forced to maintain an orderly financial structure to ensure the ability to meet their obligations towards third parties.

To this end, the regulation shall determine the "ratios" compulsory minimum that must certify the effective assumption by the entities, solvency and liquidity criteria.

Article 19 required Investment banks – and when, and in the corresponding concepts, financial institutions with credit activity-will be forced to keep an investment in public funds.

This matter will be the subject of a specific regulation.

Article 20 technical and administrative conditions Are holders of an authorisation, or applicants for an authorisation, to operate in the financial sector must be able to demonstrate that they have, or will have, an appropriate technical and administrative structure to


the term, in ideal conditions, its specific activity.

The Government shall determine the regulations the conditions that must be met by entities with regard to premises, installations and personnel recruitment overseas Andorran.

Article 21 Audits all societies included in the financial system have to audit their balance sheets and profit and loss accounts.

The characteristics and frequency of audits are set out, for each group or sector, in the respective regulations of the development of the present law.

Article 22 professional secrecy the owners of the companies forming part of the financial system, its managers and its staff, as well as the external auditors, are subject to professional secrecy, in accordance with the provisions of the criminal code.

Chapter six. Normative deployment Article 23 specific regulations in addition to the regulations provided for in articles 16, 17 and 19, relating to the minimum social capital, deposit guarantee reserves and the investment required, the General Council will complement the basic legislative scheme referred to the financial sector with a law regulating the fight against the laundering of money from drug trafficking and organized crime , and legislative development of any other matter arising from this framework law, who so require.

Article 24 Regulations Each of the groups of entities forming part of the financial system-"banks", "financial institutions with credit activity" and "other financial institutions"-will be subject, by the Government, of a specific regulation that will address all those aspects related to this law that require a regulatory development at the level of regulation.

Transitional provisions the first regulations in force until the regulations are not approved and published, the activities of the various entities of the financial sector will be governed by this law and by other legal texts in force that have not been modified by this same law.

Second modification of authorisations 1. All the people, and individuals, who perform their professional activity in the financial sector or that have an authorization to operate it, must urge a file of adaptation of their authorization.

2. The application must be accompanied by the following documents:-registration certification of authorisation-balance sheet and income statement of the last two exercises-activities report of the last two exercises-composition of the current Board of directors or of the superior administrative body-composition of share capital 3. Applications must be submitted to the Department of Finance of the Government no later than 30 June 1994.

4. The adequacy of the record will be declared by the Ministry in charge of Finances on the basis of the technical report of the INAF and the opinion of the Commission of finance.

5. Non-submission of the request to adapt it will amount to waiver of the authorization.

6. The Declaration of compliance of the authorization, as long as appropriate, will be granted within a period not exceeding six months from the date of receipt of the request, or the presentation of the eventual explanatory information complementary to that you can ask for the Higher Commission of Finances or ITS JURISDICTION.

Third period of adaptation to the new rules 1. Once obtained the Declaration of suitability established in the second transitional provision, the entities that are operating in the financial sector will have a period of one year to adapt their structure to the conditions required by the present law and to which emanin of the respective regulations and regulations regulatory development.

2. The Government shall determine the reference date from which will be attended by the indicated deadline.

Fourth New applications for authorisation 1. Six months after the publication of the Act referred to in article 16, may be submitted to the Government requests of incorporation or establishment of new entities to integrate in the Andorran financial system subject to the present law.

2. The reglamentarà Government promptly the procedure to be followed and documents to submit.

3. The requests set out in paragraph 1 above) must be cleared no later than one year from the date of its presentation.

Fifth unique Situations Are cases relating to organisms or foreign entities with activity in the financial sector, currently installed in the Principality, under special concessions or as a result of historical circumstances, despite being the subject of a singularitzat treatment, they must follow the provisions of the third transitional provision.

Sixth national and social interest investments With transitory character, until they have completed the development of the present law, the banks will be able to compute the credit operations included in the investment programs that the Government has classified as national and social interest, such as a reduction in the amount to be invested in public funds, in compliance with the obligatory provisions to article 19.

In the regulation referred to in article 19, the General Council shall determine the maximum percentage of investments of national interest and calculable social and Government in reglamentarà procedures and establish the terms and conditions applicable to each program.

Final provisions First will not be authorised transactions or financial activities that are not included in the list of banking operations incorporated in article 3 or which are not inherent in the financial activities classified in articles 4 and 5.

Second no person, natural or legal, can become professionally related activities in articles 3, 4 and 5 If you don't have the corresponding authorization to exercise, under penalty of sanctions that will be set out in the regulations.

Third this law shall enter into force on the day of its publication in the official bulletin of the Principality of Andorra.

Casa de la Vall, 27 November 1993 Jordi Farràs Forné 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.

Joan Martí Alanís François Mitterrand and President of the French Republic and the Bishop of Urgell Co-prince of Andorra Co-prince of Andorra