Review The Sanctions Regime In The Financial Sector Regarding Administrative And Criminal

Original Language Title: Revê o regime sancionatório no sector financeiro em matéria criminal e contra-ordenacional

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Read the untranslated law here: http://app.parlamento.pt/webutils/docs/doc.pdf?path=6148523063446f764c3246795a5868774d546f334e7a67774c336470626d6c7561574e7059585270646d467a4c316776644756346447397a4c334277624449794e7931594c6d527659773d3d&fich=ppl227-X.doc&Inline=false

1 PROPOSAL of law No. 227/X explanatory memorandum this proposal of law is, on the one hand, to establish the system of approval and disclosure of remuneration policy of the members of the management bodies of the entities of public interest and carry out the review of the sanctions regime for the financial sector in administrative and criminal matters. As regards remuneration, the requirement to submit for approval by the General Assembly a statement on the remuneration policy of Directors and members of audit of public interest entities. The qualification as a public interest arises from Council Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audit, whose transposition into the internal legal order set out in Decree-law establishing the National Council for supervision of audit. The Declaration contains, inter alia, information on the criteria for the definition of the variable component of the remuneration, the existence of plans of action, the possibility of the payment of the variable component of the remuneration, if any, take place, in whole or in part, after the clearance of the accounts of Office corresponding to the whole mandate and the existence of mechanisms for limiting the variable remuneration in the case of the results show a relevant deterioration of the company's performance in the last acute exercise or when this is expected in the current financial year. With regard to the sanctions regime, proceeds to update the frames and the amounts of criminal fines, which remain unchanged since the 90. In this context, the underlying purpose of this amendment is to adapt the frames of the penalties and the amounts of the fines the size and characteristics of the financial sector at present, to reinforce the effect of punishment and deterrents associated with the sanctions regime 2, as well as to promote the alignment of frames of fines and procedural tools in the three financial sectors. In particular, in criminal matters, the frame of feathers is high from three to five years in cases already typed, i.e. when the exercise of illicit activity of receipt of deposits or other repayable funds, transmission or performance based on insider dealing, market manipulation, or the unlawful practice of acts or insurance operations , reinsurance undertakings or pension funds management. Are also high the limits of fines up to a maximum amount of € 5 000 000, applicable to particularly serious conduct, and referred to the worsening of the maximum fine applicable when twice the economic benefit exceeds that amount, notwithstanding the loss of own economic benefit. It is intended, therefore, to punish so aggravated in cases where the breach of duty has resulted in a financial benefit of particularly high value, through the adjustment of the measurement of fine of up to twice the economic benefit. At the same time, come introduce yourself to the accelerated process in the banking sector and the insurance sector, reinsurers and pension funds, taking advantage of the experience of the use of this procedural mechanism in the securities sector. Legal consecration this way rapid procedure allows speed penalty of supervisory intervention in a large number of less serious unlawful, with advantages from the point of view of procedural efficiency and without prejudice to the deterrent effectiveness of sanctions. This process is applicable in cases where the nature of the infringement, the intensity of guilt and other circumstances characterized the illicit as reduced gravity. The accelerated procedure is essentially characterized by a course that allows you to confront the accused with the existing evidence on the statement, giving you the option to accept the imposition of a fine up to three times the minimum limit of the frame under the law, with the possibility of appeal debarment. In any case, is the defendant required to adopt the behavior because, and may in any case be also applied the sanction judgment publication accessory. 3 advertising decisions in violation process, in the securities sector, come to extend the duty of disclosure in force also to administrative offences, passing this regime of transparency of sentencing decisions of the SEC to cover the very serious and serious offences. Similar scheme is also introduced in the area of banking and insurance, reinsurance and pension funds. Yet, in the context of strengthening the procedural tools at the disposal of the supervisory authority is the consecration of a standard which, in broad terms, allows the request to any persons or entities of the elements considered necessary to the investigation or to the statement of offense. Finally, it should be noted the worsening nature of contravention related to violation of duties of information and creation or contribution to mandatory guarantee funds. As regards the duties of information, the provision of information to the supervisory authorities that is not complete, true, up-to-date, clear, objective and licit or the omission of that provision and the non-compliance with the legal obligations of information to their customers become very serious offenses. Must be given to the need to promote consultation with the National Commission for Data Protection. Was heard the National Council of financial supervisors. So: under d) of paragraph 1 of article 197 of the Constitution, the Government presents to the Assembly of the Republic the following proposal of law: Article 1 subject-matter this law establishes the system of approval and disclosure of remuneration policy of Directors and members of audit of public interest entities and initiate the review of the sanctions regime for the financial sector in administrative and criminal matters. 4


Article 2 1-remuneration policy the Board of directors or compensation Committee, if any, of the public-interest entities, listed in Decree-law establishing the National Audit supervision Council, submit, annually, the adoption of a General Assembly Declaration on remuneration policy of the members of their supervisory and management bodies. 2-for the purposes of this law, the following shall be considered as public interest entities, other than those referred to in the preceding paragraph, the financial corporations and fund managers of venture capital funds and pension funds. 3-the Declaration referred to in paragraph 1 contains, inter alia, information on: a) The mechanisms the alignment of the interests of members of the Board of Directors with the interests of society; (b) definition of the criteria) the variable component of remuneration; c) the existence of plans for allocation of shares or options to acquire shares by members of the administrative and supervision; d) the possibility of the payment of the variable component of the remuneration, if any, take place, in whole or in part, after the clearance of the accounts of Office corresponding to the whole mandate; e) limitation mechanisms variable remuneration, in the case of the results show a relevant deterioration of the performance of the company in the last financial year calculated or when this is expected in the current financial year.

Article 3 remuneration Disclosure public interest entities shall disclose in the annual accountability documents, or being issuers of shares admitted to trading on a regulated market in the document referred to in article 245 of the Código dos Valores Mobiliários, 5 approved by Decree-Law No. 486/99, of 13 November, the policy of remuneration of the members of the Board of Directors and supervision , approved in accordance with article before, as well as the annual amount of the remuneration received by the members of these organs, in aggregate or individual.

Article 4 administrative 1-Illicit violation of articles 2 and 3 by credit institution, finance company or holding company that are in the nature of public-interest entities listed in Decree-law establishing the National Council of audit Supervision is an especially serious offence, punishable under article 211 of the general scheme of credit institutions and financial corporations , being applicable to articles 201 to 232 of that Regime. 2-infringement of articles 2 and 3 for insurance or reinsurance undertaking, holding company, insurance holding company or mixed holding company pension funds constitutes a very serious infraction, punishable under article 214 of the Decree-Law Nr 94-B/98, of 17 April , being applicable the scheme provided for in articles 204 to 234 of that diploma. 3-regardless of the previous paragraphs, the violation of the provisions of articles 2 and 3 for open society, issuer of securities admitted to trading on a regulated market, venture capital companies, management companies of venture capital funds and companies of securitisation constitutes a very serious infraction, punishable in accordance with subparagraph (a)) of paragraph 1 of article 388.º of Código dos Valores Mobiliários , being applicable the arrangements laid down in articles 388.º to 422.º of that code. 4-the violation of the provisions of the preceding articles for public companies that are in the nature of public-interest entities listed in Decree-law establishing the National Council of audit Supervision is a serious breach of the law for purposes of paragraph 6 b) of paragraph 1 of article 25 of the Statute of the Public Manager, approved by Decree-Law No. 71/2007 , March 27.

Article 5 amendment to the general scheme of credit institutions and financial corporations are amended articles 200th, 210.º, 211 and 215 of the general scheme of credit institutions and financial corporations, approved by Decree-Law No. 298/92 of 31 December, with amendments introduced by Decree-Law No. 246/95, of September 14, no. 232/96, of 5 December No. 222/99, of July 22, no. 250/00, of October 13, no. 285/2001, of 3 November, no. 201/2002, of 26 September, no. 319/2002 of 28 December, no. 252/2003, of 17 October, no. 145/2006, of July 31, no. 104/2007, of 3 April, no. 357-A/2007, of October 31 No. 1/2008, of 3 January, and no. 126/2008, of July 21, which are replaced by the following:% quot% article 200th [...] The one exercise activity that consists in receiving the public, on their own or of others, deposits or other repayable funds, without authorization exists, and not checking any of the situations referred to in paragraph 3 of article 8, shall be punished with imprisonment up to five years. Article 210.º [...] Are punishable with a fine of € 3 000 to € 1 500 000 and € 1 000 to € 500 000, as is applied to collective entity or natural person, the following offences:) [...]; b) […]; c) […]; d) […]; 7

e) […]; f) […]; g) […]; h) […]; i) […]; j) […].

Article 211 [...] Are punishable with a fine of € 10,000 to € 5 000 000 or € 4 000 € 2 000 000, according to apply to collective entity or natural person, the following offences:) [...]; b) […]; c) […]; d) […]; e) […]; f) […]; g) […]; h) […]; i) […]; j) […]; l) […]; 8


m) […]; n) […]; o) […]; p) […]; q) […]; r) […]; s) […]. Article 215-1 elements collection [...]. 2 - […]. 3-the Bank of Portugal may request any persons and entities all explanations, information, documents, whatever the nature of your support, objects and elements, to the extent that they are required for inquiries or to process your instruction competence.» Article 6 Amendment to the general scheme of credit institutions and financial corporations Are added to articles 211-A, 227.º-A and 227.º-B to the general scheme of credit institutions and financial corporations, approved by Decree-Law No. 298/92 of 31 December, with amendments introduced by Decree-Law No. 246/95, of September 14, no. 232/96, of 5 December No. 222/99, of July 22, no. 250/00, of October 13, no. 285/2001, of 3 November, no. 201/2002, of 26 September, no. 319/2002 of 28 December, no. 252/2003, of 17 October, no. 145/2006, of July 31, no. 104/2007, of 3 April, no. 357-A/2007, of October 31 No. 1/2008, of 3 January, and no. 126/2008, of July 21, with the following text:% quot% article 9 211-the Increase of the fine without prejudice to subparagraph (a)) of paragraph 1 of article 212.º, if twice the economic benefit exceeds the maximum limit of the fine applicable, this is elevated to that value. Article 227-the accelerated Process 1-When the nature of the infringement, the intensity of guilt and the other circumstances justify it, can the Bank of Portugal, before the charge, based on the facts, notify the defendant indicted the possibility of applying a reduced sanction, under the terms and conditions given in the following paragraphs. 2-the applicable sanction is a warning, in accordance with the general scheme of the social ordering, merely unlawful or a fine whose concrete measure does not exceed three times the minimum threshold of abstract frame provided for the offence, which may in any case be also applied the sanction judgment publication accessory. 3-the notification referred to in paragraph 1 is made by written communication which shall contain: a) the description of the facts complained of; b) the specification of the rules and of the illicit contra-ordenacionais practiced; c) the penalty or penalties, with indication of the elements that contributed to your determination; d) Indication, if appropriate, the behavior that the accused must be taken in compliance with the obligation breached and the deadline for that purpose; 10 e) information on the respective consequences of acceptance and refusal of sanction. 4-Received the notification referred to in paragraph 1, the defendant has 15 days deadline to mail to the Bank of Portugal written declaration of acceptance of the penalty in accordance with notified or request for payment of the fine imposed. 5-If the accused accepts the penalty or to proceed with the payment of the fine imposed, and adopting the behavior that was eventually notified the Bank of Portugal's decision becomes final, as judgment and the possibility of new preclude assessment of the facts complained of as an administrative offence. 6-If the defendant refuses the application of sanctions in accordance with notified or not rule within the time limit laid down, or if, having been fined, this has not been paid within due, or if you require any additional diligence or not to adopt the behavior because of the notification made pursuant to paragraph 3 is off, and the alleged infringement process continues under the common form , and the Banco de Portugal perform the other steps to use its and deduct charges without being limited by the contents of the said notification. Article 227.º-(B) Disclosure of the decision 1-the expiry of judicial review, the decision of the Bank of Portugal who condemn the agent for one or more particularly serious offence is disclosed on the website of the Bank of Portugal, by extract prepared by Bank of Portugal or in full, even if it was required to your judicial review and, in this case, made express mention thereof. 2-in the case of a court decision to confirm, alter or revoke the condemnatory decision from the Bank of Portugal or of the Court of first instance, shall apply the provisions of paragraph 5 of article 11 3 227.º-the preceding paragraphs may not be applied in cases when sumaríssimos takes place the suspension of sanction, the unlawfulness and the agent's fault are small or when the Bank of Portugal considers that the disclosure of the decision can be contrary to the interests of investors or depositors, seriously affect the monetary, financial and foreign exchange markets or specific damage to persons or entities involved, manifestly disproportionate to the gravity of the offence charged. 4-Regardless of traffic, judicial decisions relating to the crime of infringing activity of receipt of deposits and other repayable funds are disclosed by the Bank of Portugal pursuant to paragraphs 1 and 2. ' Article 7 amendment to the securities code are amended articles 378.º, 379.º, 388.º, 389.º to 391.º, 408.º and 422.º of the securities code, approved by Decree-Law No. 486/99, of 13 November, with amendments introduced by Decree-Law No. 61/2002, of 20 March, no. 38/2003, 8 March, no. 107/2003, of 4 June No. 183/2003, of 19 August, no. 66/2004 of 24 March, no. 52/2006, of March 15, paragraph 219/2006, of 2 November, no. 357-A/2007, of October 31, which shall be replaced by the following: ' article 378.º [...] 1 - […]: a) […]; b) […]; c) […]; d) […]; 12


and to transmit to someone outside the normal scope of their duties or, on the basis of that information, trade or advise anyone to trade in securities or other financial instruments or order your subscription, purchase, sale or Exchange, directly or indirectly, for himself or for another, is punished with imprisonment up to five years or with fine penalty. 2-Any person not covered by the preceding paragraph who, having knowledge of a privileged information to transmit to others or, on the basis of that information, trade or advise anyone to trade in securities or other financial instruments or order your subscription, purchase, sale or Exchange, directly or indirectly, for himself or for another, is punished with imprisonment up to four years or with a fine penalty up to 240 days. 3 - […]. 4 - […]. 5 - […]. 6-[Repealed]. 7 - […]. Article 379.º [...] 1 who spread false information, incomplete, exaggerated or biased, perform operations of fictional nature or perform other fraudulent practices that are fit to change the regular functioning of the market artificially of securities or other financial instruments is punished with imprisonment up to five years or with fine penalty. 2 - […]. 3-the members of the Board of Directors and the persons responsible for the management or monitoring of areas of activity of a financial intermediary who, having knowledge of the facts described in paragraph 1, carried out by 13 people directly subject to your management or supervisory bodies and in the performance of their duties, they get immediately are punished with imprisonment up to four years or a fine penalty up to 240 days If more serious penalty is not applicable to them by virtue of another legal provision. 4-[Repealed]. 5 - […]. 6 - […]. Article 388.º [...]-1 [...]: a) Between € 25 000 and € 5 000 000 when qualified as very serious; b) Between € 12 500 and 2 500 000 euro, when they are classified as serious;

c) Between € 500 and € 2 500 000 when qualified as less severe. 2-Notwithstanding the provisions of subparagraph (a)) of paragraph 1 of article 404.º, if twice the economic benefit exceeds the maximum limit of the fine applicable, this is elevated to that value. 3-[previous No. 2]. 4-[previous paragraph 3]. 5-[previous paragraph 4]. 6-[previous No. 5]. Article 389.º [...]-1 [...]: 14 a) [...]; b) […]; (c)) the provision of information to the SEC that is not complete, true, up-to-date, clear objective and legal or the omission of that provision. 2 - […]. 3 - […]: a) […]; b) sending to fund managers of regulated markets, multilateral trading systems, settlement systems, clearing house, of central counterparty and centralized systems of securities information is complete, true, up-to-date, clear, objective and lawful; c) lack of submission, in whole or in part, of documents or information to the managing bodies of regulated markets; d) […]; e) […]. 4 - […]. 5 - […]. Article 390.º [...]-1 Is very serious infraction the omission of communication or disclosure of qualifying holding in open society or interest held by open society in a society based on State or jurisdiction which is not a member of the European Union. 2 - […]. 3 - […]. 15 Article 391.º [...] Is very serious infraction the lack of mandatory guarantee funds and the failure to comply with the duty of contributing to the same. Article 408.º [...]-1 [...]. 2-the SEC may request delivery or carry out the seizure, freezing or inspection of any documents, or objects related to the practice of offences, regardless of the nature of your support, seal of objects not seized at the premises of the persons or entities subject to supervision, as well as your request to any persons and entities all clarifications and information to the extent that they are required for inquiries or to process your statement. Article 422.º [...] 1-expiry of the judicial review, the decision of the PORTUGUESE SECURITIES MARKET COMMISSION that condemns officer for one or more serious or very serious offenses is disclosed through the dissemination of information referred to in article 367, extract prepared by the SEC or in full, even if it was required to your judicial review, and, in this case express mention thereof made. 2 - […]. 3 - […]. 4 - […].» 16 Article 8 amendment to Decree-Law No. 94-B/98, of 17 April are amended articles 202, 212.º the 214 and 217 of the Decree-Law Nr 94-B/98, of 17 April, republished by Decree-Law No. 251/2003 of 14 October, amended by Decree-Law No. 76-A/2006, of 29 March, no. 145/2006, of July 31 , no. 291/2007, of 21 August, n° 357-A/2007, of October 31, and no. 72/2008, of 16 April, which are replaced by the following:% quot% article 202 [...] Who practice acts or operations of insurance, reinsurance and management of pension funds, on their own or of others, without authorization exists, is punished with imprisonment up to five years. Article 212.º [...] Are punishable with a fine of € 100 000 2 500 € or € 7 500 € 500 000, as is applied to a natural or legal person, the following offences:) [Repealed]; b) […]; c) [Repealed]; d) [Repealed]; e) […]; f) […]; g) […]; h) […]. 17 Article 213 [...] Are punishable with a fine of € 300 000 7 500 € or € 15 000 to € 1 500 000, as is applied to a natural or legal person, the following offences:) [...]; b) […]; c) […]; d) […]; e) […]; f) […]; g) […]; h) […]; i) […]; j) […]; l) […]; m) […]; n) […].

Article 214 [...] Are punishable with a fine of € 15 000 to € 1 000 000 or € 30,000 to € 5 000 000, according to apply to any natural or legal person, the following offences 18, without prejudice to the application of severe penalties provided for in the law: a) [...]; b) […]; c) […]; d) […]; e) […]; f) […]; g) […]; h) non-compliance with the duties of information to decision makers, policyholders or beneficiaries of insurance policies, to the Associates, participants or beneficiaries of pension plans, or to the general public; I) the breach of duties of information, communication or clarification to the Minister of finance and the Instituto de Seguros de Portugal; j) the incomplete or inaccurate information to the Instituto de Seguros de Portugal.


Article 217 [...] 1-[...]. 2 - […]. 3 - […]. 4-the Instituto de Seguros de Portugal, while competent authority to instruct a misdemeanour procedures, may, when necessary for investigation or 19 arraignment, proceed to seizure of documents and values and seal of objects not seized as well, request any persons and entities all explanations and information, which are necessary for this purpose.»

Article 9 Amendment to Decree-Law No. 94-B/98, of 17 April articles are added 214-A, 229a and 229-B to the Decree-Law Nr 94-B/98, of 17 April, republished by Decree-Law No. 251/2003 of 14 October, amended by Decree-Law No. 76-A/2006, of 29 March, no. 145/2006, of July 31 , no. 291/2007, of 21 August, n° 357-A/2007, of October 31, and no. 72/2008, of April 16, with the following text:% quot% article 214-the Increase of the fine without prejudice to subparagraph (a)) of paragraph 1 of article 216, if twice the economic benefit exceeds the maximum limit of the fine applicable, this is elevated to that value. Article 229a accelerated Process 1-When the nature of the infringement, the intensity of guilt and the other circumstances justify it, can the Instituto de Seguros de Portugal, before the charge, based on the facts, notify the defendant indicted the possibility of applying a reduced sanction, under the terms and conditions given in the following paragraphs. 2-the applicable sanction is a warning, in accordance with the general scheme of the social ordering, merely unlawful or a fine whose concrete measure does not exceed three times the minimum threshold of abstract frame of 20 infringement and may in any case be also applied the sanction judgment publication accessory. 3-the notification referred to in paragraph 1 is made by written communication which shall contain: a) the description of the facts complained of; b) the specification of the rules and of the illicit contra-ordenacionais practiced; c) the penalty or penalties, with indication of the elements that contributed to your determination; d) Indication, if appropriate, the behavior that the accused deveadoptar in line of duty violated and the deadline for that purpose; and their consequences) information on the acceptance and refusal of sanction. 4-Received the notification referred to in paragraph 1, the defendant has 15 days deadline to mail to the Instituto de Seguros de Portugal written declaration of acceptance of the penalty in accordance with notified or request for payment of the fine imposed. 5-If the accused accepts the penalty or to proceed with the payment of the fine imposed, and adopting the behavior that was eventually notified, the decision of the Instituto de Seguros de Portugal becomes final, as judgment and the possibility of new preclude assessment of the facts complained of as an administrative offence. 6-If the defendant refuses the application of sanctions in accordance with notified or not rule within the time limit laid down, or if, having been fined, this has not been paid within due, or if you require any additional diligence or not to adopt the behavior because of the notification made pursuant to paragraph 3 is without effect and the administrative offense 21 process continues under the common form , and the Instituto de Seguros de Portugal perform the other steps to use its and deduct charges without being limited by the contents of the said notification. Article 229a (B) Disclosure of the decision 1-the expiry of judicial review, the decision of the Instituto de Seguros de Portugal to condemn the agent for one or more against serious and very serious offences is disclosed on the website of the Instituto de Seguros de Portugal, extract prepared by the Instituto de Seguros de Portugal or in full even if you have been required to your judicial review, and, in this case, made express mention thereof. 2-the Court decision to confirm, alter or revoke the judgment of Instituto de Seguros de Portugal or of the Court of first instance is communicated immediately to the Instituto de Seguros de Portugal and obligatorily released under the preceding paragraph. 3-the preceding paragraphs may not be applied in cases when sumaríssimos takes place the suspension of sanction, the unlawfulness and the agent's fault are small or when the Instituto de Seguros de Portugal considers that disclosure of the decision may be contrary to the interests of policyholders, insured persons or beneficiaries of insurance policies, as well as of the associated , participants or beneficiaries of pension plans, seriously affect insurance markets reinsurer or pension funds, or cause damage, to persons or entities involved, manifestly disproportionate to the gravity of the offence charged. 4-Regardless of traffic, judicial decisions relating to the crime of unlawful practice of acts or insurance operations reinsurance undertakings or pension funds management are published by the Instituto de Seguros de Portugal in accordance with paragraphs 1 and 2. ' 22 article 10 Rule set Are deleted paragraph 6 of article 378.º and paragraph 4 of article 379.º of Código dos Valores Mobiliários and points), c) and (d)) of article 212.º of the Decree-Law Nr 94-B/98, of 17 April. Article 11 entry into force 1-this law shall enter into force on the day following your publication. 2-To cases pending at the date of entry into force of this law continues to be applied to substantive and procedural legislation before.

Seen and approved by the Council of Ministers of 2 October 2008 the Prime Minister, the Minister of Parliamentary Affairs Minister Presidency