Law 10/2014, On June 26, Management, Supervision And Solvency Of Credit Institutions.

Original Language Title: Ley 10/2014, de 26 de junio, de ordenación, supervisión y solvencia de entidades de crédito.

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TEXT

JOHN CARLOS I

KING OF SPAIN

To all who present it and understand it.

Sabed: That the General Courts have approved and I come to sanction the following law:

PREAMBLE

I

The financial sector and, in particular, the banking sector play a vital economic role, operating as a more powerful channel for the transformation of savings into financing for businesses, families and public administrations. Access to this credit under competitive conditions, both in terms of cost and volume, is a prerequisite for the growth of the economy and is therefore closely linked to the creation of jobs and national wealth. At the same time, the risk and uncertainty are inherent in banking activity. The cyclical tendency of economies, the natural appetite of financial companies for business models that prioritize the optimization of short-term profits, the unpredictable evolution of financial innovation and the growing and worldwide interdependence between entities and financial markets, can lead these institutions and the whole of economies to difficult situations, with serious consequences for the overall functioning of the economic system. These consequences sometimes reach such dimensions that they can demand public financial support, thus setting aside the financial sector of the market rule, general and spontaneous, of individual bankruptcy and selection of agents. It is for all the above that it corresponds to the joint legal order, with a greater financial depth than those employed in other areas of economic activity, the necessary regulation for the best prevention and management of the financial risks and, at the same time, the promotion of the more favorable conditions of financing of the economy. It can be said that the ultimate foundation of all financial legislation is the need to ensure the stability and efficient functioning of the financial markets in order to protect the actors involved, in particular clients and investors, and ultimately to provide the economies with the best but prudent financing conditions to boost their prosperity in the long term.

In short, banking activity should be subject to rules that reconcile the necessary capacity of credit institutions to develop their purposes in the context of a market economy, with due ordination and discipline on those aspects that may cause, as has already happened on previous occasions, serious damage to the economy.

These considerations, the result of a sustained experience in time and the succession of crises, were taken into account by the legislator from the moment when the financial activity took place in a central place of the economy, and prompted the creation of the Spanish system of regulation and supervision of credit institutions. The first rules relating to the Spanish banking sector, until then foreign to any public interference, were the Law of Banks of Emission and the Law of Credit Societies of 1854. But the real legislation opening a comprehensive framework of prudential regulation was the Law Relating to the Banking Management of 1921, known as the Cambo Law, who in the defense of the draft law already pointed out that "the bankrupts of a bank do not affect only their shareholders, they affect their clients, they affect the entire economy of the country ...". Since then, the rules that have followed the intervention of the public authorities, such as the Law on Banking Management, of December 31, 1946, which has definitively repealed this Law, or the Law of the Bases of Credit and Banking Management, of 14 April 1962, have taken place.

The last legal body of banking prudential regulation, which is replaced by this Law, is that formed by Law 13/1985, of 25 May, of coefficients of investment, own resources and obligations of information of the financial intermediaries and Law 26/1988, of July 29, on Discipline and Intervention of the Credit Entities. These rules emerged from two historical circumstances which are now clearly recognisable. First of all, the profound crisis that affected the banking system as a whole between 1977 and 1985, which led to the bankruptcy of more than half of the banks operating in the country in early 1978. Secondly, the incorporation of Spain into the European Economic Community in 1986, which opened the current stage of linking the Spanish financial regulation to the prolific evolution of the acquis communautaire in this field.

Since then, banking legislation, influenced by European Union law and international agreements on the subject, has been shaping a complex and profound legal framework that operates in practice as a genuine professional status of credit institutions. This legal body is in charge, first of all, of the continued vigilance of the solvency and risk management of the entities, attributed with extensive prerogatives to the Banco de España. But it is not limited at all to that surveillance and it reaches other very substantive and peculiar elements of the regulation of credit institutions such as the reserve of activity, the control of the access and suitability of directors and shareholders more significant, the specific reinforcement of the requirements of corporate governance or, ultimately, the singularity treatment of entities with difficulties of viability, which includes the possibility of intervention and substitution of their administrators or the imposition of losses on their respective creditors.

Just as it happened in the mid-1980s, the new regulation that incorporates this Law is driven by two powerful currents. One is the international evolution of banking law and the other is the finding that the financial crisis has left over the need to improve the quality of the prudential regulation of credit institutions.

Indeed, one of the most substantial changes that has occurred in the financial market in recent decades has to do with the complete internationalization of this activity, in parallel, but also at the forefront, of the phenomenon of greater scope of economic globalization. This has had a significant impact on the regulatory environment as, while the supervisory and regulatory systems were applied at national level, the banking business was made global and the need to adopt a supranational regulatory perspective was found. Therefore, it is now intended to harmonise the prudential requirements of the solvency rules at global level, avoiding undesirable regulatory arbitrations between different jurisdictions and, at the same time, improving the tools of international cooperation between supervisors.

The international authority leading the harmonization of international financial regulation is the Basel Committee on Banking Supervision. Under the agreements reached by this Committee, a first regulation was provided for a minimum capital of 8% for credit institutions on the whole of their risks (Basel I, 1988). Subsequently, in 2004, the regulations (Basel II) were developed, improving the sensitivity of the risk estimation mechanisms and building two new pillars: the risk assessment by each entity in dialogue with the supervisor (Pillar II) and the market discipline (Pillar III).

But none of the two previous reforms, incorporated in Spain through the European Union law, avoided the effects of the 2008 crisis. The quality and quantity of the capital of the institutions has been insufficient to absorb the losses incurred in a context of strong turbulence and the regulation has also failed to temper the pro-cyclical behavior of the entities, which excessively increased the credit in the expansion phase and reduced it substantially in recession, which initially aggravated the financial instability and then worsened the effects and duration of the economic crisis.

Given the significant challenges of the stability of the financial markets and the world economy from 2008 onwards, and following the political impetus of the great world leaders meeting in Washington in November of that year on the Group of 20, the Basel Committee on Banking Supervision agreed in December 2010 on the "Global regulatory framework for strengthening banks and banking systems" (Basel III), which, in order to avoid future crises and improve international cooperation, has significantly strengthened the capital requirements. of the banks.

The European Union has transferred to its legal system the agreements referred to in Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on the prudential requirements of credit institutions and investment firms and amending Regulation (EU) No 648/2012 and Directive 2013 /36/EU of the European Parliament and of the Council of 26 June 2013 on the access to the business of credit institutions and the prudential supervision of credit institutions and investment firms, by the Directive 2002/87/EC is amended and Directives 2006 /48/EC and 2006 /49/EC are repealed, the transposition of which was initiated with the Royal Decree-Law 14/2013 of 29 November of 29 November, of urgent measures for the adaptation of Spanish law to the European Union's rules on the supervision and solvency of financial institutions, and continues now. These rules of the European Union have, in turn, a greater role and dimension than the mere adoption of the Basel III Agreements, since, on the one hand, they deepen the objective of reducing the excessive dependence of credit rating agencies on the measurement of exposures at different risks and, on the other hand, they make substantial progress in the creation of a genuine single banking regulation on solvency. This harmonisation exercise will be essential for the establishment of the Banking Union, which will be firmly supported in this common financial regulation for the establishment of the single mechanisms for the supervision and resolution of euro area credit institutions. In addition, the reduction in the dependence of external rating agencies is essential to strengthen solvency as the financial crisis has shown how the methods of analysis of these agencies underestimated the risks of certain assets.

For the last few years Spain has known the serious effects of the credit institutions crisis. The infeasibility of certain credit institutions without financial support has demanded a decisive public intervention to undertake their consolidation and restructuring. In this effort, it is now appropriate to adopt a new prudential regulation that will ensure a framework in which our financial institutions carry out their activities, on the other hand vital to the economy, with the least possible risk to the country's financial stability.

II

The main purpose of this Law is to adapt our system to the normative changes that are imposed in the international arena and the European Union, continuing the transposition initiated by the Royal Decree-Law 14/2013, of November 29. In this respect, Regulation (EU) No 575/2013 of 26 June and Directive 2013 /36/EU of 26 June 2013 assume, as has already been mentioned, a substantial change in the rules applicable to credit institutions, as aspects such as the supervisory regime, capital requirements and the sanctioning regime are highly modified.

But this law also affects a company whose realization has been lived as a necessity for years, as is the recasting in a single text of the main rules of ordination and discipline of credit institutions. The very frequent modification of the laws in force has deteriorated its intelligibility in such a way that the regulation has already lacked the minimum systematic rigor necessary to guarantee the coherence of the set and to facilitate its correct application and interpretation. The elaboration, therefore, of a single normative text, in which, at the same time that the transposition of the regulations dictated by the European Union is carried out, are integrated the norms of the national scope that regulate the matter in a dispersed and disconnection way, contributes decisively to the improvement of the efficiency and quality of our financial order.

This Law therefore contains the essential core of the legal regime applicable to credit institutions, without prejudice to the existence of other special rules governing specific aspects of their activity or the particular legal regime of a specific type of credit institution, as is the case with savings banks and credit unions.

The structure of the text should be explained on the basis of its implementation with Regulation (EU) No 575/2013 of 26 June of its vocation for the transposition of Directive 2013 /36/EU of 26 June and of the national provisions currently in force that need to be recast. The Regulation and the Directive constitute the fundamental legal regime for solvency and access to the activity of credit institutions. This Law will regulate the general aspects of the legal system of access to the condition of credit institution, the functioning of its governing bodies and the supervisory and sanctioning instruments to be used by the authorities, in order to ensure the full effectiveness of the regulations. The Regulation of the European Union, for its part, lays down the fundamental obligations of the capital and solvency requirements and the proper risk management of institutions.

Title I includes the general provisions of the legal system by which credit institutions are to be governed. Thus, it sets out its definition and lists those entities that are considered as credit, establishes the content of the activity whose exercise is reserved exclusively for these entities and the sources of their legal regime.

Additionally, this Title regulates other aspects which, by their specialty, are linked to the very nature of credit institutions and which are developed in the following chapters: their system of authorisation and revocation, the regime of significant participations, the regime of suitability and incompatibilities of the members of the board of directors or equivalent body and the regime of corporate governance and remuneration policies.

The rule makes a very substantive advance on corporate governance. These reforms arise from the evidence that the prudential regulation of institutions must promote the most efficient and optimal management practices for the development of a complex and risky activity such as the financial one. Fundamentally, there are two areas affected: the establishment of efficient corporate governance systems and the development of a remuneration policy that is better aligned with the risks in the medium term of the institution.

Although the nuclear standard for credit institutions has since 1 January 2014 been Regulation (EU) No 575/2013 of 26 June 2014, Title II contains provisions on the subject to be maintained in national law. These provisions concern, first and foremost, the assessment of the capital adequacy of institutions for the risk they assume. This assessment complements the resource requirements set out in the Regulation with a clearly generalist and automatic vocation, which might not take into account the singularities arising from the risk profile of each entity. In short, it is for each entity to determine whether the capital requirements laid down in the Regulation are sufficient or whether, on the contrary, given its business model and level of risk exposure, it requires a higher level of capital. The final decision on these requirements is determined in a dialogue between the supervisor and the entity known as the Basel Pillar II.

Also, in this Title, the criteria to be taken into account by the Banco de España are introduced to establish possible liquidity requirements in the framework of the review of the strategies, procedures and systems implemented by the institutions to comply with the solvency regulations. This power is intended to contribute to the prevention of liquidity crises, during which institutions find it difficult to access the markets and this ends up deteriorating their solvency. This power is also an individual supplement for each institution to the liquidity requirements that will be required as of 2016 in accordance with the provisions of the Regulation.

Third, a set of Common Equity Tier 1 capital requirements is articulated to those laid down in Regulation (EU) No 575/2013 of 26 June. It's the so-called capital mattresses. Two of these mattresses have a non-discretionary character: the conservation of capital and the planned one for entities of global systemic importance. In addition, the buffer for other entities of systemic importance gives a certain discretion to the Banco de España for its demand to certain entities. These three mattresses are due to the need for capital supplements against unexpected losses or to cover the risks arising from the systemic nature of certain entities. On the other hand, the countercyclical buffer and the systemic risk buffer are tools at the disposal of the Banco de España in order to mitigate the pro-cyclical effect on the credit of capital requirements, and, where appropriate, to address the occurrence of risks that may affect the financial system as a whole. In the face of possible breaches of the precepts governing the capital mattress regime, a system based on restrictions on distributions and the elaboration of a capital conservation plan is articulated.

Under Title III and in line with the legislation currently in force, the Bank of Spain is designated as the supervisory authority of the credit institutions. To this end, the powers and powers necessary to perform this function are given to it, the subjective and objective scope of its supervisory action is defined and the capacity to take measures to ensure compliance with the solvency regulations is granted. In accounting matters, the Minister of Economy and Competitiveness is expected to enable the Banco de España, the National Securities Market Commission or the Accounting and Audit Institute to establish and modify the accounting standards and the models to be held by the financial statements of credit institutions and entities governed by Article 84.1 of the Law 24/1988 of 28 July 1988 on the Securities Market, as well as the consolidated groups of certain investment services companies and other entities. This rating is without prejudice to the reports to be requested by the Accounting and Audit Institute on accounting planning.

Likewise, while the activity of credit institutions is limited in an increasingly integrated environment, particularly at European level, the Bank of Spain's relations with other supervisory authorities and, in particular, the European Banking Authority, should be regulated. In this context, it should be underlined that, on the basis of the entry into force and full effectiveness of the Single Supervisory Mechanism in the European Union, the Bank of Spain shall exercise its supervisory functions in cooperation and without prejudice to the powers that will be directly conferred on the European Central Bank in accordance with the provisions of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank on policies related to the prudential supervision of credit institutions. The Single Supervisory Mechanism will play a crucial role in ensuring the consistent and effective implementation of the Union's policies on the prudential supervision of credit institutions.

The Banco de España can access to the information of credit institutions it is necessary to monitor the activities carried out by the institutions. This monitoring refers, in particular, to the systems, procedures and strategies of the entities to comply with the solvency rules, to the risks to which the institutions may be exposed and could deteriorate the solvency of the entity and the systems of corporate governance and remuneration policy. It is, in short, a matter of early detection of breaches of the solvency rules and of situations which may in the future give rise to such breaches and which pose a danger to the stability of the financial system.

This supervisory work must be carried out within an orderly and systematic framework for which the Banco de España will produce a monitoring program annually. It is of the utmost importance to provide clear criteria for supervised entities on how the solvency rules and other types of rules for the management and discipline of credit institutions should be applied.

The organisational complexity of institutions, often included within a group in which companies are not necessarily regulated, advises that the supervisory scope of the Banco de España should be as broad as possible. It is also appropriate to define the supervisory capacities of the Banco de España in relation to branches, while, in particular, in the case of branches of European entities, its parent has been authorised and supervised in another Member State.

In the exercise of its powers, the Banco de España may be the supervisor of a subsidiary within a group or the parent of a group. In this case, it is essential to ensure the necessary coordination with other supervisors and to arbitrate mechanisms such as joint decision-making or the formation of colleges of supervisors to make coherent and effective decisions for the whole group. The cooperation between the Banco de España, the National Securities Market Commission and the General Directorate of Insurance and Pension Funds, for those groups in which credit institutions, insurance companies and investment firms develop, must be guaranteed.

In case of non-compliance with the solvency rules, the Banco de España is granted powers and powers to intervene in the activity of the entity, introducing higher capital requirements, provisions or restricting the distribution of dividends, among others. If the situation were of exceptional seriousness, the Bank of Spain could even reach the intervention of the entity and the replacement of its governing bodies.

Title IV includes the sanctioning procedure applicable to credit institutions, following the scheme established by Law 26/1988 of 29 July on the discipline and intervention of credit institutions. The necessary amendments are made to transpose Directive 2013 /36/EU of 26 June, which mainly concerns the inclusion of new sanctioning types and the modification of the amount and method of calculation of the applicable infringements, as well as of their advertising. Technical amendments have also been introduced, minor but necessary to update some of the provisions of the rules on general administrative procedures currently in force.

The Law finally concludes with a series of provisions that contain, among other things, the regime of preference shares or the rules applicable to institutional protection systems. A significant number of rules of transitional law are also included, in the light of the fact that the European Union's own rules of law, which are transposed into law, provide for a phased application of many of its provisions, such as those relating to the setting up of capital buffers. On the other hand, the composition of the Management Committee of the Deposit Guarantee Fund is modified, incorporating representatives of the Ministries of Economy and Competitiveness and Finance and Public Administrations.

III

As for the final provisions, the extensive modification of the Law 24/1988, of July 28, of the Stock Market stands out. This amendment is due to the extension to the service companies of the prudential supervisory regime for credit institutions in Directive 2013 /36/EU of 26 June 2013. In particular, this scheme is extended to all investment firms whose scope of activity is not limited solely to the provision of investment advisory services or to the receipt and transfer of orders from investors without the holding of funds or transferable securities belonging to clients.

In this way, the members of the board of directors of the investment services companies subject to the scope of Directive 2013 /36/EU of 26 June are subject to the same regime of suitability and incompatibilities and corporate governance as their counterparts in credit institutions.

Although the main rule for the solvency of investment firms is, as for the solvency of credit institutions, Regulation (EU) No 575/2013 of 26 June, these entities may present particular risks in their activity which are not adequately covered by that Regulation. For this reason, they are required to carry out a process of self-assessment of their capital and liquidity levels in order to determine whether it is necessary to maintain their own resources or liquidity levels higher than those laid down in the Regulation. The final decision regarding these requirements is determined through the dialogue between the National Securities Market Commission and the investment services company.

Additionally, the National Securities Market Commission, like the Banco de España, has the capacity to require a set of additional Common Equity Tier 1 capital requirements, the so-called capital buffers. However, the capital mattress scheme shall not apply to investment firms which do not carry out trading activities on their own account or to secure financial instruments or their placement on the basis of a firm commitment. In the case of investment firms having the consideration of small and medium-sized enterprises, the National Securities Market Commission may choose not to apply the capital conservation buffer and countercyclical buffer if it considers that this does not pose a threat to the stability of the financial system.

The proper exercise of these functions by the National Securities Market Commission requires some coordination of this supervisory body with other supervisors both domestic and other countries. This is why a substantial part of the amendments to the Law 24/1988 of 28 July are in line with this need to strengthen coordination.

In addition, the supervisory work of the National Securities Market Commission should be developed in an orderly and systematic framework, for which this body will have to produce annually a monitoring program that provides the supervised investment firms with clear criteria for the implementation of the regulations.

On the other hand, it is important to highlight the adaptation of the planned sanctioning regime for investment firms. In this respect, the current regime is updated to include the relevant infringements and penalties resulting from the non-compliance with the solvency rules.

In addition to the appropriate amendments to the proper transposition of Directive 2013 /36/EU, among the amendments to Law 24/1988 of 28 July, the update of the regulation of central counterparties should be highlighted in order to make it compatible with Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories and their development rules, which entered into force in 2012 and 2013. In addition, the sanctioning regime applicable to breaches of the European Union's short selling rules is improved. For the sake of better clarity and greater legal certainty, these effects are expressly set out in violation of Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps, which will be additional to the existing regime operating on the basis of broader and broader classifications. In addition, Article 79c is reworded in order to extend the scheme of information to the customer provided for, in general, in Articles 79a and 79b, to those investment services which may be offered in connection with other financial products. This is without prejudice to the fact that these other services, such as mortgage loans, already have their own rules of transparency and customer protection. In this way, in order to maximise protection for investors and ensure legal certainty and homogeneity in the transparency rules applicable to the marketing of investment services, the extension of this information regime to the customer is anticipated in Spain, in line with the European Union's regulatory projects on the markets for financial instruments.

IV

The financial crisis has highlighted the need for the public authorities to adopt integrated perspectives in regulating the financial markets. The fact that, at European Union level, the necessary steps are being taken to create a Banking Union, which involves the unification of supervisory and resolution powers at European level, is proof that the financial matter, and in particular the regulation of credit institutions, requires harmonised, unitary legislation, which is capable of laying down common ground in all Member States. The aim of achieving a genuine internal financial market and thus avoiding the dysfunctions which the regulatory and institutional dispersion originates, is a fact that the new European regulation certifies. The cross-border nature of credit institutions and their financial activity requires action by public authorities, with powers that transcend the borders of the Member States, such as the Single Supervisory Mechanism and the Single Resolution Authority. With this philosophy being transferred to our country, the need for a basic regulation which is capable of ensuring the application of a common legal regime for credit institutions, which in turn is fully respectful of the European Union's system, is made clear.

The financial and credit system of a country can hardly be divided into compartments, since financial stability, and its possibilities of having a smooth circulation of credit, capable of implementing the rest of the economic sectors, depends on the situation in which credit institutions are located, even those that may not be a priori in nature. The legislation that includes this law respects, therefore, the basic concept defined by the Constitutional Court over the last few years, and is based on the conviction that the regulation of financial markets must be made from the basic state legislation, in a unitary way, in order to avoid fragmentation and to ensure that the public authorities can, in fact, order a highly globalized activity and whose regulation and supervision derives, fundamentally, from the action of the European authorities and institutions.

INDEX

Title I. Of the credit institutions.

Chapter I. General provisions.

Article 1.Credit institutions.

Article 2. Rules for the management and discipline of credit institutions.

Article 3.Reserve of activity and denomination.

Article 4. Powers of the Bank of Spain.

Article 5.Protection of the credit institution client.

Chapter II. Authorisation, registration and revocation.

Article 6. Authorisation.

Article 7. Refusal of authorisation.

Article 8.Revocation of the authorization.

Article 9. Waiver of the authorization.

Article 10.Caducity of the authorization.

Article 11. Opening of branches and freedom to provide services in other Member States of the European Union by Spanish credit institutions.

Article 12.Opening of branches and freedom to provide services in Spain by credit institutions of another Member State of the European Union.

Article 13. Opening of branches and freedom to provide services in Spain by credit institutions of a non-EU Member State.

Article 14.Agents of credit institutions.

Article 15. Records of the Banco de España.

Chapter III. Significant shareholdings.

Article 16.Significant Participation.

Article 17. Duty to notify significant units.

Article 18.Evaluation of the proposed acquisition.

Article 19. Collaboration between supervisory authorities.

Article 20.Effects of non-compliance with obligations.

Article 21. Reduction of significant shareholdings.

Article 22.Debres of information and communication of credit institutions.

Article 23. Measures to ensure the sound and prudent management of the institution.

Chapter IV. Suitability, incompatibilities and registration of senior positions.

Article 24.Requirements Requirements.

Article 25. Monitoring of suitability requirements.

Article 26.Regime of incompatibilities and limitations.

Article 27. Record of high charges.

Chapter V. Corporate governance and remuneration policy.

Article 28. Corporate governance rules.

Article 29. Corporate governance system.

Article 30.Plan General feasibility.

Article 31. Committee on appointments.

Article 32.Policy of remuneration.

Article 33. General principles of the remuneration policy.

Article 34.Variable Elements of Remuneration.

Article 35. Credit institutions receiving public financial support.

Article 36.remuneration Committee.

Article 37. Responsibility for risk management.

Article 38.Risk Management Function and Risk Committee.

Title II. Solvency of credit institutions.

Chapter I. General provisions.

Article 39.Regulations of solvency.

Article 40. The subjective scope of application of the solvency rules.

Chapter II. Internal capital and liquidity

Article 41.Self-assessment of capital.

Article 42. Liquidity.

Chapter III. Capital mattresses.

Article 43.Requirement combined with capital buffers.

Article 44. Capital conservation buffer.

Article 45.Colchon of specific countercyclical capital.

Article 46. Capital buffer for institutions of systemic importance.

Article 47.Colchon against systemic risks.

Article 48. Restrictions on distributions.

Article 49.Plan for the conservation of capital.

Title III. Monitoring.

Chapter I. Supervisory role.

Article 50 Supervisory role of the Banco de España.

Article 51. Monitoring of regulatory compliance mechanisms.

Article 52.Risk Monitoring.

Article 53. Supervision of corporate governance systems and remuneration policies.

Article 54.Development of guides on supervisory matters.

Article 55. Supervisor programme.

Chapter II. Scope of the supervisory function.

Article 56.Scope of the supervision of the Banco de España.

Article 57. Supervision of the consolidable groups.

Article 58.Supervision of mixed financial holding companies and mixed portfolio companies.

Article 59. Supervision of branches of credit institutions of Member States of the European Union.

Article 60,Supervision of branches of credit institutions of non-EU Member States and assessment of the equivalence of supervision on a consolidated basis in those States.

Chapter III. Collaboration between supervisory authorities.

Article 61. Collaboration of the Banco de España with authorities from other countries.

Article 62. Cooperation with the supervisory authorities of the European Union as a responsible authority for supervision on a consolidated basis.

Article 63.Collaboration in the event of breaches of branches of credit institutions authorised in other Member States of the European Union.

Article 64. Provisional measures in the event of breaches of branches of entities from other Member States of the European Union.

Article 65.Joint Decision.

Article 66. Colleges of supervisors.

Article 67.Relations of the Banco de España with other national financial authorities.

Chapter IV. Prudential supervision measures.

Article 68. Prudential supervision measures.

Article 69. Additional requirements for own resources.

Chapter V. Intervention and replacement measures.

Article 70. Causes of intervention and replacement of the administrative organ.

Article 71. Competition for intervention and substitution.

Article 72.Intervention or substitution agreements.

Article 73. Content of the intervention and replacement agreement.

Article 74.Requirements of validity of acts and agreements after the date of intervention.

Article 75. Provisional administration.

Article 76.Cese of the intervention or substitution measures.

Article 77. Dissolution and voluntary liquidation of the credit institution.

Article 78,Intervention of settlement operations.

Article 79. Communication to the Cortes.

Chapter VI. Reporting and publication obligations.

Article 80.Obligations of publication of the Banco de España.

Article 81. Information obligations of the Banco de España in emergency situations.

Article 82.Obligation of secrecy.

Article 83. Duty to reserve information.

Article 84.Accounting Information to be submitted by credit institutions.

Article 85. Information with the prudential relevance of credit institutions.

Article 86.Information payable to branches of credit institutions based in the European Union.

Article 87. Annual bank report.

Article 88.Information on shares in credit institutions.

Title IV. Sanctioning regime

Chapter I. General provisions.

Article 89. General provisions.

Article 90. Competence for the instruction of files.

Chapter II. Infringements.

Article 91. Classification of offences.

Article 92.Very serious infractions.

Article 93. Serious infringements.

Article 94.Infractions mild.

Article 95. Limitation of infringements and penalties.

Chapter III. Sanctions.

Article 96.Sanctions.

Article 97. Penalties for the commission of very serious infringements.

Article 98.Sanctions by the commission of serious infractions.

Article 99. Penalties for the commission of minor infringements.

Article 100.Penalties to which you are charged with administration or management by the commission of very serious infractions.

Article 101. Penalties for those who are in charge of administration or management for the commission of serious infringements.

Article 102.Penalties to which you are charged with administration or management by the commission of minor infractions.

Article 103. Criteria for the determination of penalties.

Article 104.Responsibility for Administration or Address Charges.

Article 105. Responsibility of the consolidable groups of credit institutions.

Article 106.Temporary Appointment of Members of the Management Body.

Chapter IV. Procedural rules.

Article 107.Procedure for imposing sanctions.

Article 108. Procedure applicable in the case of minor infringements.

Article 109.Appointment of instructors or assistant secretaries.

Article 110. Testing practice.

Article 111.Provisional measures.

Article 112. Provisional suspension of persons holding office or management positions.

Article 113.Implementation of sanctions and impeachment on administrative channels.

Article 114. Penalties consisting of fine.

Article 115.Advertising of sanctions.

Article 116. Notification of infringements.

Article 117.Concurrence with criminal proceedings.

Article 118. Referral of the memory of sanctioning actions to the General Courts.

Additional provision first. Requirements for the computability of the preference shares for the purposes of the solvency rules and the tax regime applicable to them as well as certain debt instruments.

Additional provision second. Limitations on the issuance of bonds.

Additional provision third. Financial leasing operations.

Additional provision fourth. Monitoring of entities not enrolled in administrative records.

Additional provision 5. Legal framework for institutional protection systems.

Additional provision sixth. References to the repealed legislation.

Additional provision seventh. Nominative actions and economic exercise.

Additional disposition octave. Legal status of the Official Credit Institute.

Additional provision ninth. Arrangements for the management and discipline of mutual guarantee companies.

Additional provision 10th. Incompatibility of auditors to carry out work on credit institutions.

Additional provision 1st. Responsibility of the members of the control committee of the savings banks.

Additional provision twelfth. Authorization of structural modification operations.

Additional provision thirteenth. Regime for the adaptation of the Statutes of credit unions.

Additional disposition fourteenth. Sanctioning powers of the State and the Autonomous Communities.

Additional provision 15th. Authorization for collaborators of supervisory bodies.

Additional provision sixteenth. Integration of the Banco de España into the Single Supervisory Mechanism.

Additional provision seventeenth. Plans to comply with the minimum level of social capital and own resources by mutual guarantee companies.

18th additional disposition. Strengthening the institutional framework for financial stability.

Additional Decision Nineteenth. Rate for the realization of the overall assessment to the credit institutions.

320th additional disposition. Proposals for the protection of the customer.

Transitional provision first. Sanctions and authorization procedures in progress.

Second transient disposition. Transitional tax arrangements for preference shares and debt instruments.

Transitional provision third. Participatory Quota Regime.

Transitional disposition fourth. Transitional arrangements for reporting requirements imposed on branches of credit institutions in a Member State of the European Union.

Transitional provision 5. Transitional arrangements for branches of credit institutions authorised in other Member States of the European Union.

Transitional disposition sixth. Transitional arrangements for precautionary measures in emergency situations.

Transitional provision seventh. Transitional arrangements for the supervision of branches of credit institutions of Member States of the European Union.

Transient disposition octave. Transitional arrangements for the capital conservation buffer.

Transient arrangement ninth. Transitional regime of the specific countercyclical capital buffer of each entity.

Transient disposition tenth. Transitional arrangements for capital buffers for institutions of systemic importance.

Transitional provision, 1st. Transitional arrangements for the restrictions on the distribution of dividends and the capital conservation plan in relation to capital buffers.

Transitional provision, 12th. Transitional arrangements for the annual banking report and for the annual report of investment firms.

Transitional provision thirteenth. Transitional arrangements for central counterparties and official secondary markets for futures and options.

Transitional disposition fourteenth. General Plan of Viability.

Transitional provision 15th. Designation of the members of the Management Committee of the Credit Entities Deposit Insurance Fund.

Transient disposition sixteenth. Supervision of branches of credit institutions of non-EU Member States.

Repeal provision.

Final disposition first. Amendment of the Law 24/1988, of July 28, of the Stock Market.

Final disposition second. Amendment of Law 13/1989, of 26 May, of Credit Cooperatives.

Third final provision Amendment of Law 1/1994 of 11 March on the legal status of mutual guarantee companies.

Final disposition fourth. Amendment of Law 41/1999 of 12 November on payment systems and securities settlement.

Final disposition fifth. Amendment of Law 36/2003, of November 11, of measures of economic reform.

Final disposition sixth. Amendment of the recast of the Law on the Law on the Management and Supervision of Private Insurance, approved by the Royal Decree of Law 6/2004 of 29 October.

Final provision seventh. Amendment of Law 5/2005, of 22 April, of supervision of financial conglomerates and amending other laws of the financial sector.

Final disposition octave. Amendment of the Recast Text of the Law of Audit of Accounts approved by the Royal Legislative Decree 1/2011, of July 1.

Final provision novena. Modification of the Royal Decree-Law 16/2011 of 14 October establishing the Deposit Insurance Fund of Credit Entities.

Final disposition tenth. Amendment of Law 26/2013, of 27 December, of savings banks and bank foundations.

Final provision 1st. Competential title.

Final disposition twelfth. Incorporation of European Union law.

Final disposition thirteenth. Regulatory development.

Final disposition fourteenth. Entry into force.

Attachment. List of activities subject to mutual recognition.

TITLE I

Of credit institutions

CHAPTER I

General provisions

Article 1. Credit institutions

1. Credit institutions are the authorised companies whose business is to receive deposits or other repayable funds from the public and to grant credits on their own account.

2. They have the consideration of credit institutions:

a) Banks.

b) The savings banks.

c) Credit cooperatives.

d) The Official Credit Institute.

Article 2. Rules for the management and discipline of credit institutions.

1. The legal status of credit institutions shall be that laid down by the rules of organisation and discipline. They have this consideration the following rules:

(a) This Law and the provisions that develop it.

(b) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012.

(c) The rest of the rules of the Spanish legal order and of European Union law containing precepts specifically referred to credit institutions.

2. The rules governing commercial companies shall apply to credit institutions as soon as they are not opposed to those referred to in the preceding paragraph, and in particular to the special rules governing savings banks and credit unions.

Article 3. Reservation of activity and denomination.

1. It is reserved for credit institutions which have obtained the required authorisation and are registered in the corresponding register, the collection of repayable funds from the public, whatever their destination, in the form of a deposit, loan, temporary transfer of financial assets or other similar assets.

2. Credit institutions shall use their own generic names, which shall be different for each type of credit institution, in accordance with what is provided for in regulation or in a specific law.

3. Any person, natural or legal person, not authorised or registered as a credit institution, is prohibited from exercising the activities legally reserved for credit institutions and the use of their own names or any other designations which may lead to confusion with them.

4. Foreign credit institutions may use their designations of origin in Spain provided that they do not raise doubts about their identity. If there is a danger of confusion, the Banco de España may require that some clarification be added.

5. The Commercial Registry and other public records shall refuse the registration of those entities whose activity or social object or whose denomination is contrary to the provisions of this Article. The entries made in contravention of the above shall be null and void and shall be cancelled ex officio or at the request of the competent administrative body. Such nullity shall not prejudice the rights of third parties in good faith, acquired in accordance with the content of the relevant records.

Article 4. Powers of the Bank of Spain.

1. It is for the Bank of Spain to exercise the powers conferred on it by the rules of organisation and discipline on credit institutions and, where appropriate, on financial holding companies and mixed financial holding companies.

The Bank of Spain shall exercise its powers without prejudice to the tasks conferred on the European Central Bank and in cooperation with the European Central Bank, in accordance with the provisions of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank on policies relating to the prudential supervision of credit institutions.

2. In particular, the Bank of Spain shall:

(a) Authorise the creation of credit institutions and the opening in Spain of branches of foreign credit institutions not authorised in a Member State of the European Union.

b) Authorize the creation of a foreign credit institution or the acquisition of a significant participation in an existing entity, by a credit institution or a group of Spanish credit institutions, when that foreign credit institution is to be incorporated or is domiciled in a State that is not a member of the European Union.

c) Authorize the statutory modifications of credit institutions, in terms that they regulate are established. In particular, those statutory amendments in which the authorisation may be replaced by the mandatory communication to the Banco de España may be determined.

(d) Revoke the authorisation granted to a credit institution in the cases provided for in Article 8.

(e) Practice the registration in the registers referred to in Article 15, as well as the management of the same and the others provided for in other rules of ordination and discipline.

f) To exercise the supervisory and sanctioning function of credit institutions and, where appropriate, of financial holding companies and mixed financial holding companies, for the enforcement of regulation and discipline.

g) Grant the authorisations provided for in Regulation (EU) No 575/2013 of 26 June and, where appropriate, revoke them.

(h) Without prejudice to the powers of the National Securities Market Commission, the control and inspection of the application of Law 2/1981, of March 25, of regulation of the mortgage market.

i) How many other competencies are established in the legal system.

Article 5. Customer protection of credit institutions.

1. The Minister for Economic Affairs and Competitiveness, in order to protect the legitimate interests of customers of banking services or products, other than investment, provided by credit institutions, may issue provisions relating to:

(a) The pre-contractual information to be provided to customers, the information and content of contracts and subsequent communications that enable them to be followed up, so that they explicitly and with the utmost clarity reflect the rights and obligations of the parties, the risks arising from the customer service or product and the other circumstances necessary to ensure the transparency of the most relevant conditions of the services or products and enable the customer to assess whether they meet their needs and their situation. financial. To this end, contracts for such services or products shall always be formalised in writing or in electronic form or on other durable medium, and the Minister for Economic Affairs and Competitiveness may, in particular, lay down the clauses which contracts relating to typical banking products or services shall deal with or provide for in an express manner.

(b) The transparency of the basic conditions for the marketing or hiring of the banking services or products offered by credit institutions and, where appropriate, the duty and the manner in which they must communicate such conditions to their customers or to the Banco de España. It may also be possible to establish basic conditions for the services or banking products of due compliance for credit institutions. In particular, charges may be levied only or passed on for services requested on firm or expressly accepted by a customer and provided that they respond to services actually provided or expenses that can be credited.

(c) The principles and criteria to which the advertising activity of the banking services or products should be subject, and the modalities of administrative control over it, in order to make it clear, sufficient, objective and not misleading.

(d) Specialties in the procurement of electronic banking services or products or by other means of distance communication and information which, in the light of the provisions of this Article, should be included in the electronic pages of credit institutions.

(e) The scope of application of the rules laid down under this Article to any contracts or transactions of the nature provided for in those rules, even if the entity that intervenes does not have the status of a credit institution.

2. In particular, in the marketing of loans or loans, the Minister for Economic Affairs and Competitiveness may lay down rules that favour:

a) The proper attention to the income of the clients in relation to the commitments they acquire when receiving a loan.

(b) The appropriate and independent valuation of property guarantees to ensure loans in such a way as to provide for mechanisms to avoid undue influence by the institution itself or its subsidiaries in the valuation.

c) The consideration of different scenarios of interest rate developments in variable interest loans, the possibilities of hedging against such variations, and all of this taking into account the use or not of official benchmarks.

d) The appropriate obtaining and documentation of relevant data from the applicant.

e) Precontractual information and appropriate assistance for the client.

f) Respect for data protection rules.

Without prejudice to contractual freedom, the Ministry of Economy and Competitiveness may, on its own or through the Banco de España, carry out regular, official publication of certain benchmarks or reference interest rates that may be applied by credit institutions to variable-interest loans, especially in the case of loans or mortgage loans.

3. The provisions which, in the exercise of their powers, may be issued by the Autonomous Communities on the matters referred to in this Article shall not provide for a level of protection lower than that provided for in the rules adopted by the Minister for Economic Affairs and Competitiveness. In addition, standard models of information which cannot be modified by the autonomous rules may be established on a basic basis, in order to ensure the proper transparency and homogeneity of the information supplied to customers of banking services or products.

4. The rules laid down in this article will be considered as regulations of ordination and discipline and their supervision will be the responsibility of the Banco de España.

CHAPTER II

Authorization, Registration, and Revocation

Article 6. Authorisation.

1. The Banco de España will authorize the creation of credit institutions and the freedom to provide services and the creation of branches of credit institutions from non-EU Member States that intend to establish themselves in Spain in terms of regulations. For these purposes, and prior to the granting of the authorization, you will request, in the aspects that are of your competence, to report to the Executive Service of the Commission on the Prevention of Money Laundering and Money Violations, to the National Securities Market Commission and to the General Directorate of Insurance and Pension Funds. Failure to resolve within the time limit laid down in paragraph 8 shall entail the refusal of the application.

2. The Bank of Spain shall communicate to the Ministry of Economy and Competitiveness the opening of the authorisation procedure indicating the essential elements of the file to be processed and also the completion of the procedure.

3. The authorisation for the establishment of a credit institution shall be the subject of prior consultation with the competent supervisory authority of the relevant Member State of the European Union, where any of the following circumstances arise:

(a) The credit institution is to be controlled by another credit institution, an investment firm or an insurance or reinsurance undertaking authorised in that State.

(b) The credit institution is to be controlled by the dominant entity of a credit institution, an investment firm or an insurance or reinsurance undertaking authorised in that State.

(c) The credit institution is to be controlled by the same natural or legal persons controlling a credit institution, an investment firm or an insurance or reinsurance undertaking authorised in that Member State.

An entity shall be understood to be controlled by another entity when any of the assumptions regulated in Article 42 of the Trading Code are made.

4. The consultation provided for in the preceding paragraph shall include, in particular, the assessment of the suitability of the shareholders, members of the board of directors and the directors-general and the like of the new entity or of the dominant entity, in the case of a financial holding company or mixed financial holding company, and may be reiterated for the purpose of assessing the continued compliance with those requirements by the Spanish credit institutions.

5. The Banco de España will reciprocate the consultations sent to it by the authorities responsible for the authorization of the credit institution of another Member State and, if necessary, also the National Securities Market Commission or the General Directorate of Insurance and Pension Funds. In addition, all information which is essential for the intended authorisation shall be made available to them on their own initiative and without undue delay.

6. For the purposes of this Law, directors-general shall be understood as such:

(a) Those persons who develop in the credit institution senior management functions under the direct dependence of their management body or executive commissions or delegated directors thereof, and the persons who run the branches of foreign credit institutions in Spain.

b) Those persons who meet the above dependency requirements, limit their senior management functions to a specific area of activity, provided that they are integrated into an organizational management structure that takes the day-to-day management of the entity at the highest level.

(c) Those persons who had a work contract of senior management subject to Royal Decree 1382/1985, of 1 August, for which the employment relationship of a special character of senior management is regulated.

7. For the purposes of this Law, the Governing Board shall be deemed to be equivalent to the Governing Board of Credit Unions and to any equivalent administrative body of credit institutions.

8. The application for authorization must be resolved within six months of its receipt at the Banco de España, or at the time the required documentation is completed and, in any case, within twelve months of its receipt. Where the application is not settled within the time limit, it may be deemed to be dismissed.

However, the time limit for the resolution referred to in the preceding paragraph shall be three months for applications for authorisation within the meaning of Article 7.3.

Article 7. Refusal of authorisation.

1. The authorisation for the creation of a credit institution shall be refused in the following cases:

(a) Where the minimum capital requirement is lacking, an appropriate organisational structure, good administrative and accounting organisation or adequate internal control procedures to ensure the sound and prudent management of the institution.

(b) Where any of the members of its Board of Directors, Director General or Assimilated Person does not meet the required eligibility requirements.

(c) Where any of the members of the board, director-general or equivalent of its parent entity, provided that it is a financial holding company or a mixed financial holding company, in accordance with Article 4.1 (20) and (21) respectively of Regulation (EU) No 575/2013 of 26 June, does not meet the required eligibility requirements.

(d) When lacking adequate internal procedures for the prevention of money laundering and terrorist financing.

e) When you do not comply with any of the other requirements that are regulated to acquire the status of credit institution.

2. Authorisation shall also be refused if, in view of the need to ensure sound and prudent management of the entity, shareholders who are to hold a significant or, in default of shareholders with significant participation, are not considered to be eligible if the suitability of any of the 20 largest shareholders is not considered appropriate.

3. The authorisation of the entities referred to in Article 4.2.b) may be refused in any of the following cases:

(a) where, taking into account the financial situation of the credit institution or its management capacity, it is considered that the project may adversely affect it;

(b) where, in view of the location and characteristics of the project, the effective supervision of the group, on a consolidated basis, by the Banco de España cannot be ensured;

(c) where the activity of the dominated entity is not subject to effective control by a national supervisory authority.

Article 8. Revocation of the authorisation.

1. The revocation of the authorisation granted to a credit institution may only be agreed in accordance with the procedure laid down in the following cases:

(a) If you actually interrupt the specific activities of your social object for a period of more than six months.

b) If the authorization was obtained by false statements or by another irregular means.

(c) If the conditions that prompted the authorisation are not met, unless otherwise provided for in the rules of organisation and discipline.

(d) If it fails to comply with the prudential requirements set out in the third, fourth and sixth parts of Regulation (EU) No 575/2013 of 26 June, or imposed pursuant to Articles 42 and 68.2.a) of this Act, or commits the ability to repay the funds entrusted to it by depositors or does not provide a guarantee of being able to fulfil its obligations to creditors.

e) When the penalty of revocation is imposed in the terms provided for in Title IV.

(f) Where the assumption provided for in Article 23 is met.

g) If the entity is excluded from the Credit Entities Deposit Insurance Fund.

(h) When a judicial decision to open the settlement phase was issued in a court proceeding.

2. The authorisation of a branch of a credit institution of a non-EU Member State shall be revoked if the authorisation of the credit institution itself is revoked. In the case of branches of a credit institution of a Member State of the European Union, the authorisation shall be revoked where the authorisation of the institution itself has been revoked by the competent authority of the home Member State.

3. In the case of branches of credit institutions authorised in another Member State of the European Union, the revocation of the authorisation shall be replaced by the prohibition on the initiation of new operations in the Spanish territory. Before such a decision is taken, the Bank of Spain shall consult the competent authority of that State.

When the Banco de España becomes aware that a credit institution of another European Union Member State operating in Spain has been revoked its authorisation, it shall immediately agree on appropriate measures to ensure that the institution does not initiate new activities, as well as to safeguard the interests of depositors.

4. The Banco de España shall communicate the revocation of the authorisation granted to a credit institution or branch to the Ministry of Economy and Competitiveness.

5. In the case of revocation of the authorisation of a Spanish credit institution, the Banco de España shall immediately inform the competent authorities of the Member State in which the institution has a branch or exercise the freedom to provide services.

6. The revocation of the authorisation shall imply the dissolution of the entity and the opening of the settlement period to be developed in accordance with the rules and statutes governing the institution.

Notwithstanding the revocation of the authorization, in the cases referred to in paragraph 1 (h), the insolvency administration may continue to carry out the activities of the credit institution that are necessary for its liquidation, in the terms previously authorized by the Banco de España.

7. The revocation of the authorisation shall be recorded in all the relevant public records and, as soon as it is notified to the credit institution, it shall entail the cessation of the activity for which it was authorised.

Article 9. Waiver of the authorization.

The waiver of the authorization granted to be a credit institution must be communicated to the Banco de España, which will accept it expressly unless there are reasonable grounds to consider that the cessation of activity may cause serious risks to financial stability.

Article 10. Expiration of the authorization.

1. The authorisation to operate as a credit institution shall be revoked when, within 12 months of its date of notification, the specific activities of the social object of the institution are not initiated for reasons attributable to it.

2. The Bank of Spain shall expressly declare the expiry of the procedure in accordance with the procedure laid down in the Rules of Procedure.

Article 11. Opening of branches and free provision of services abroad by Spanish credit institutions.

1. Where a credit institution intends to open a branch abroad, it must first request the Banco de España to accompany the application, the documentation provided for in regulation.

The Banco de España will communicate to the European Commission and the European Banking Authority the number and nature of the cases in which the previous application was refused.

2. When a Spanish credit institution wishes to exercise for the first time, under the freedom to provide services, any kind of activity abroad must inform the Banco de España. Where the services are to be provided in another Member State of the European Union, the Banco de España shall, within a period of not more than one month from the receipt of such communication, transfer that information to the supervisory authority of that Member State.

3. The procedure for the applications provided for in this Article shall be specified.

Article 12. Opening of branches and freedom to provide services in Spain by credit institutions of another Member State of the European Union.

1. Credit institutions authorised in another Member State of the European Union may carry out in Spain, either by opening a branch or under the freedom to provide services, the activities of mutual recognition within the European Union set out in the Annex to this Law. For this purpose, the authorisation, the statutes and the legal system to which the entity is subject shall enable it to carry out the activities it intends to carry out.

2. The institutions referred to in the preceding paragraph shall respect, in the course of their activity in Spain, the arrangements for the management and discipline of credit institutions which, where appropriate, are applicable as well as any other provisions laid down for reasons of general interest, whether they are State, regional or local.

3. The rules of procedure and requirements necessary for the registration of the branch in the corresponding Register of the Banco de España, or for the beginning in Spain of its activity in the system of freedom to provide services, will be established.

4. Any financial institution of another Member State of the European Union, whether a subsidiary of a credit institution or a joint subsidiary of several credit institutions, may, by means of the establishment of a branch, as well as by the provision of services, carry out the activities listed in the Annex provided that its statutes permit the exercise of such activities and fulfil the following conditions:

(a) The parent institution or entities are authorised as credit institutions in the Member State of the European Union to which the financial institution is subject to the legal order.

b) the activities in question are effectively carried out in the territory of the home Member State.

(c) The parent institution or entities has at least 90% of the voting rights attached to the holding of shares or shares of the financial institution.

(d) that the parent institution or entities have demonstrated, in the opinion of the competent supervisory authority of the home Member State, that they perform sound and prudent management of the financial institution and have been declared, with the consent of the competent authorities of the home Member State, jointly and severally to the commitments made by the financial institution.

(e) that the financial institution is effectively included, in particular for the activities referred to in that Annex, in the consolidated supervision to which its parent institution or each parent institution is subject, in accordance with Article 57 and with Part One, Title II, Chapter 2 of Regulation (EU) No 575/2013 of 26 June, in particular for the purposes of the own funds requirements set out in Article 92 of that Regulation, for the control of large exposures provided for in Part 4 of that Regulation and for the purposes of the limitation of the shares provided for in Articles 89 and 90 of the same Regulation.

If the competent authorities of the home Member State inform the Banco de España that the financial institution has ceased to comply with any of the requirements set out in this paragraph, the activities carried out by that entity shall be subject to the Spanish rules of ordination and discipline.

The forecasts set out in this paragraph shall also apply to the subsidiaries of the financial institutions provided for therein.

Article 13. Opening of branches and freedom to provide services in Spain by credit institutions of a non-EU Member State.

1. The establishment in Spain of branches of credit institutions authorised in States other than members of the European Union shall require the authorisation of the Banco de España in the form that it is regulated. The absence of a decision within the prescribed period shall mean a refusal of the application.

The Banco de España shall notify the European Commission, the European Banking Authority and the European Banking Committee of all the authorisations of branches granted to credit institutions that have their central administration in a non-member State of the European Union.

2. The freedom to provide services without a branch open in Spain by credit institutions of a non-member State of the European Union shall be subject to prior authorisation by the Banco de España in the form it is regulated.

Article 14. Agents of credit institutions.

Reglamentarily, the requirements to be met by those who act as agents in Spain of credit institutions, and the conditions to which they will be subject in the exercise of their activity, may be fixed.

Article 15. Records of the Banco de España.

1. To carry out their activities, credit institutions must be registered in the Register of credit institutions of the Banco de España. The registration will be practiced, once the required authorization is obtained and after its constitution and registration in the public register that corresponds according to its nature.

2. They shall also be entered in the Register of credit institutions, identifying themselves in a singular manner:

(a) branches of credit institutions authorised in another Member State of the European Union carrying on their business in Spain.

(b) branches of foreign credit institutions not authorised in a Member State of the European Union.

(c) The freedom to provide services by credit institutions authorised in another Member State of the European Union and those of third countries which have communicated in accordance with Article 13 the exercise of activities under the freedom to provide services

3. The entries in the Register of credit institutions referred to in paragraphs (a) and (b) above, as well as the losses therein, shall be published in the "Official Gazette of the State", shall be communicated to the European Banking Authority and shall be available on the Bank of Spain's website.

4. Additionally, the Banco de España will be responsible for the registration and management of:

(a) The Registry of the dominant companies of Spanish credit institutions when such entities are financial holding companies or mixed financial holding companies, in accordance with Article 4.1 (20) and (21) respectively of Regulation (EU) No 575/2013 of 26 June.

b) The Register of credit institution agents.

CHAPTER III

Significant shareholdings

Article 16. Significant participation.

1. A significant participation in a Spanish credit institution shall be understood to be such that it reaches, directly or indirectly, at least 10% of the capital or voting rights of the institution.

It will also have the consideration of significant participation, which, without reaching the percentage indicated, will allow to exert a notable influence on the entity.

It shall be determined, in the light of the characteristics of the various types of credit institution, when it is necessary to assume that a natural or legal person may exercise such significant influence, taking into account these effects, inter alia, the power to appoint or remove any member of its board of directors.

2. The provisions of this Chapter for credit institutions shall be without prejudice to the application of the rules on takeover bids and information on significant holdings contained in the Securities Market Act of 28 July 1988.

Article 17. Duty to notify the acquisition or increase of significant holdings.

1. Any natural or legal person who, on its own or acting in concert with others (hereinafter referred to as the proposed acquirer) has decided to acquire, directly or indirectly, a significant participation in a Spanish credit institution, either directly or indirectly to increase the share of the holding in such a way that, or the percentage of voting rights or capital held is equal to or greater than 20, 30 or 50%, or that, by virtue of the acquisition, the credit institution (hereinafter referred to as the proposed acquisition) may be controlled. to the Banco de España, indicating the amount of the planned participation and including all information that is regulated. Such information shall be relevant for the assessment, proportionate and appropriate to the nature of the proposed acquirer and the proposed acquisition.

It is understood that there is a control relationship for the purposes of this Chapter provided that it is one of the assumptions provided for in Article 42 of the Commercial Code.

2. Where the Banco de España receives several proposals for the acquisition or increase of significant holdings in the same credit institution, it shall treat all potential acquirers in a non-discriminatory manner.

3. Any natural or legal person, who alone or acting in concert with others, has acquired, directly or indirectly, a participation in a Spanish credit institution in such a way that the percentage of voting rights or of the capital held is equal to or greater than 5%, it shall immediately and in writing inform the Bank of Spain and the corresponding credit institution, indicating the amount of the participation achieved.

4. For the purposes of this Article, no account shall be taken of the voting rights or capital resulting from the insurance of an issue or a placement of financial instruments or the placement of financial instruments based on a firm commitment, provided that such rights are not exercised to intervene in the issuer's management and are transferred within one year of its acquisition.

Article 18. Evaluation of the proposed acquisition.

1. When examining the notification referred to in paragraph 1 of the previous article, the Banco de España, after reporting by the Executive Service of the Commission on the Prevention of Money Laundering and Monetary Infringements in the field of its powers, in order to ensure a sound and prudent management of the credit institution in which the acquisition is proposed, and taking into account the potential influence of the proposed acquirer on the acquisition, will assess the suitability of this and the financial soundness of the proposed acquisition.

2. The criteria and procedure for this assessment shall be determined and the time limit for the assessment shall be determined.

Article 19. Collaboration between supervisory authorities.

1. The Bank of Spain when carrying out the assessment referred to in the previous Article shall consult the supervisory authorities in other Member States of the European Union where the proposed acquirer is:

(a) a credit institution, an insurance or reinsurance undertaking, an investment firm or a management company of collective investment institutions or pension funds authorised in another Member State of the European Union;

(b) the parent company of a credit institution, an insurance or reinsurance undertaking, an investment firm or a management company of collective investment institutions or pension funds authorised in another Member State of the European Union;

(c) a natural or legal person exercising the control of a credit institution, an insurance or reinsurance undertaking, an investment firm or a management company of collective investment institutions or pension funds authorised in another Member State of the European Union.

2. The Banco de España, when carrying out the assessment referred to in the previous paragraph, shall consult the National Securities Market Commission and the Directorate-General for Insurance and Pension Funds in the field of its powers.

3. The Bank of Spain shall reciprocally address the consultations referred to it by the authorities responsible for the supervision of the potential acquirers of other Member States of the European Union and, where appropriate, the National Securities Market Commission or the Directorate-General for Insurance and Pension Funds. In addition, all information that is essential for the assessment, as well as the other information requested, shall be made available to them on their own initiative and without undue delay, provided that it is appropriate for the assessment.

4. The consultation provided for in the preceding paragraphs shall include, in particular, the assessment of the suitability of the potential acquirers and of the good repute and experience of the members of the board of directors and of the directors-general and those who, where appropriate, are to be appointed to the entity to be acquired; and in particular the assessment of the members holding one of the positions referred to in another company of the same group. Such consultation may be repeated for the purpose of assessing the continued compliance with these charges by the Spanish credit institutions.

5. The decisions taken by the Banco de España in relation to the proposed acquisition should mention any comments or reservations expressed by the competent authority responsible for the acquirer.

Article 20. Effects of non-compliance with obligations.

The acquisition of significant shareholdings without prior notification to the Banco de España and those made without having passed the deadline for its assessment or with the express opposition of the Banco de España will produce the following effects:

(a) The political rights corresponding to the shares acquired irregularly cannot be exercised. If, however, they are to be exercised, the votes cast in contravention of the foregoing shall be null and void and the agreements adopted shall be impugable on the judicial basis provided that the votes corresponding to the irregularly acquired interests have been decisive for their adoption, as provided for in Chapter IX of the Recast Text of the Law of Capital Societies, approved by Royal Legislative Decree 1/2010, of 2 July, being legitimized to the effect the Banco de España.

(b) If necessary, the intervention of the entity or the replacement of its administrators, as provided for in Title III, shall be agreed.

(c) The penalties provided for in Title IV shall be imposed.

Article 21. Reduction of significant shareholdings.

Any natural or legal person who has decided to cease to have, directly or indirectly, a significant participation in a credit institution, shall notify the Bank of Spain thereof, indicating the amount of his or her intended participation. It shall also notify the Banco de España if it has decided to reduce its significant participation in such a way that the percentage of voting rights or of capital held is less than 20, 30 or 50 percent or that it results in the loss of control of the credit institution.

The breach of this duty may be sanctioned as provided for in Title IV.

Article 22. Information and communication duties of credit institutions.

1. Credit institutions shall report to the Banco de España, as soon as they are aware of this, the acquisitions or disposals of holdings in their capital which transfer one of the levels referred to in Articles 16, 17 and 21.

2. In addition, credit institutions must inform the Banco de España, in the form and with the periodicity that it regulates, on the composition of its shareholders or on the changes that occur in it. Such information shall necessarily include the information relating to the participation of other financial institutions in their capital, irrespective of the amount.

Article 23. Measures to ensure the sound and prudent management of the institution.

Where there are substantiated and substantiated reasons to consider that the influence exercised by persons holding a significant holding in a credit institution may result in detriment to the sound and prudent management of the credit institution, which will seriously damage its financial position, the Banco de España may adopt some or some of the following measures:

(a) Those provided for in Article 20 (a) and (b), while the suspension of voting rights may not exceed three years.

b) By way of exception, the withdrawal of the authorisation.

In addition, sanctions may be imposed as provided for in Title IV.

CHAPTER IV

Suitability, incompatibilities, and record of high charges

Article 24. Eligibility requirements.

1. Credit institutions shall have a board of directors consisting of persons who meet the requirements of suitability for the performance of their duties. In particular, they shall have recognised trade and professional good repute, have adequate knowledge and experience to perform their duties and be in a position to exercise good governance of the institution.

The overall composition of the board of directors as a whole shall gather sufficient knowledge, competence and experience in the government of credit institutions to adequately understand the activities of the institution, including its main risks and to ensure the effective capacity of the management board to make decisions independently and autonomously for the benefit of the institution. In any case, it must ensure that the selection procedures of its members favour the diversity of experiences and knowledge, facilitate the selection of counselling and, in general, do not suffer from implicit bias which may involve discrimination.

2. The above requirements for good repute, knowledge and experience shall also be met by the Directors-General or assimilated persons, as well as those responsible for the internal control functions and other key positions for the daily development of the credit institution's financial activity. These requirements shall also be required for natural persons representing the board of directors to be legal persons. They shall also apply to persons who effectively determine the orientation of branches of credit institutions not authorised in a Member State of the European Union.

3. For the purposes of the above paragraphs:

(a) Concurre honorability in those who have been showing a personal, commercial and professional conduct that does not cast doubt on their ability to perform a sound and prudent management of the entity. In order to assess the concurrency of good repute, all available information must be considered according to the parameters to be determined.

(b) They possess adequate knowledge and experience to perform their functions in credit institutions with appropriate level and profile training, in particular in the areas of banking and financial services, and practical experience derived from their previous occupations for periods of sufficient time.

(c) In order to assess the capacity of the members of the Board of Directors to exercise good governance, the existence of potential conflicts of interest and the ability to devote sufficient time to carry out the relevant functions shall be taken into account.

Article 25. Monitoring of suitability requirements.

1. Credit institutions and branches of credit institutions that are not authorised in a Member State of the European Union shall, under conditions proportionate to the nature, scale and complexity of their activities, have adequate internal units and procedures to carry out the selection and ongoing assessment of charges under the eligibility regime in accordance with the provisions of the previous Article.

Also, credit institutions should identify key positions for the daily development of their financial activity and those responsible for internal control functions, keeping at the disposal of the Banco de España an up-to-date relationship of the persons who perform them, the assessment of the suitability made by the institution and the documentation that accredits it.

2. The assessment of the suitability requirements shall be carried out either by the credit institution itself or, where appropriate, by its promoters, or by the acquirer of a significant holding, if applicable, as well as, where appropriate, by the Bank of Spain.

3. Credit institutions shall at all times ensure that the eligibility requirements set out in this Chapter are met. For these purposes, the Banco de España shall require the temporary suspension or permanent cessation of the charges provided for in the previous article or the remedy of the deficiencies identified in the event of lack of good repute, adequate knowledge or experience or the capacity to exercise good governance.

If the entity does not proceed with the execution of such requirements within the time limit indicated by the Banco de España, the Bank of Spain shall agree to the temporary suspension or permanent cessation of the corresponding charge, in accordance with the procedure provided for in Chapter V of Title III. All this, without prejudice, to the imposition of the corresponding penalties in accordance with Title IV.

Article 26. Regime of incompatibilities and limitations.

1. The Bank of Spain shall determine the maximum number of charges that a member of the board of directors or a director general or equivalent may hold simultaneously taking into account the particular circumstances of the credit institution and the nature, size and complexity of its activities.

Except in the case of administrators appointed in a replacement measure of administrators as provided for in Chapter V of Title III, members of the board of directors and general directors and those who are assimilated to larger, more complex or more singular nature credit institutions on the basis of the criteria in the preceding paragraph may not hold more than the same time as those provided for in one of the following combinations:

a) An executive position along with two non-executive positions.

b) Four non-executive positions.

Executive positions shall be understood to be those that perform management functions whatever the legal link that these functions attribute to them.

2. For the purposes of the preceding paragraph, they shall be counted as a single charge:

a) The executive or non-executive positions held within the same group.

b) The executive or non-executive positions occupied within:

1. º Entities forming part of the same institutional protection system, provided that the conditions laid down in Article 113.7 of Regulation (EU) No 575/2013 of 26 June, or

2. Company companies in which the entity holds a significant share.

3. For the determination of the maximum number of charges, the charges shall not be computed on non-profit organisations or entities or which do not pursue commercial purposes.

4. The Banco de España may authorise the members of the Board of Directors and Directors-General or assimilated persons referred to in paragraph 1 to hold an additional non-executive position if it considers that this does not prevent the proper performance of its activities in the credit institution. Such authorisation shall be communicated to the European Banking Authority.

5. Persons holding the positions referred to in the preceding paragraphs shall not be able to obtain credit, guarantees or guarantees from the credit institution in whose direction or administration they intervene, above the limit and in terms that are determined in a regulated manner, except express authorization of the Banco de España.

Article 27. Record of high charges.

1. Without prejudice to your prior registration in the Trade Register, the exercise of the functions of a member of the board of directors or general director or the equivalent of a credit institution or branches of foreign credit institutions shall require your prior registration in the Register of High Charges of the Bank of Spain.

2. Prior to the registration in the Register of High Charges, the Banco de España will verify the compliance of the persons concerned with the requirements of this Law.

3. In addition, the Banco de España shall be responsible for the registration and management of the Register of Directors and Directors-General or assimilated to the dominant entities of credit institutions, when such entities are financial holding companies or mixed financial holding companies, in accordance with Article 4.1, points 20 and 21, respectively, of Regulation (EU) No 575/2013 of 26 June.

CHAPTER V

Corporate governance and remuneration policy

Article 28. Corporate governance rules.

Credit institutions shall exercise their business in accordance with the corporate governance rules laid down in this Law and other applicable laws.

Article 29. Corporate governance system.

1. Institutions and consolidable groups of credit institutions shall be provided with robust corporate governance procedures, which shall include:

a) A clear organizational structure with well-defined, transparent and consistent lines of responsibility;

(b) Effective procedures for the identification, management, control and communication of the risks to which they are or may be exposed;

(c) Appropriate internal control mechanisms, including correct administrative and accounting procedures;

(d) Policies and remuneration practices that are compatible with adequate and effective risk management and that promote it.

The systems, procedures and mechanisms referred to in this paragraph shall be exhaustive and proportionate to the nature, scale and complexity of the risks inherent in the business model and the activities of the entity. They shall also comply with the technical criteria relating to the organisation and treatment of the risks to be determined.

2. The Governing Board of the credit institutions shall define a corporate governance system that ensures sound and prudent management of the institution, including the appropriate distribution of functions in the organisation and the prevention of conflicts of interest. The Administrative Board shall monitor the implementation of the said system and shall respond to it. To this end, it must monitor and evaluate its effectiveness and take appropriate measures to address its shortcomings.

3. The following administrative board functions shall be the following:

(a) The monitoring, monitoring and periodic evaluation of the effectiveness of the corporate governance system as well as the adoption of appropriate measures to address, where appropriate, its deficiencies.

b) Take responsibility for the administration and management of the Entity, the approval and monitoring of the implementation of its strategic objectives, its risk strategy and its internal governance.

c) Ensure the integrity of accounting and financial reporting systems, including financial and operational control and compliance with applicable law.

d) Monitor the process of disclosure of information and communications relating to the credit institution.

e) Ensure effective supervision of senior management.

4. The Chairman of the Management Board shall not be able to hold the post of Chief Executive at the same time unless the institution justifies it and the Bank of Spain authorizes it.

5. Credit institutions shall have a website where they shall disseminate to the public information provided for in this Chapter and communicate the manner in which they comply with the corporate governance obligations, in accordance with the provisions of this Chapter.

6. Similarly, as part of the governance and organisational structure procedures, credit institutions and consolidable groups of credit institutions providing investment services shall comply with the internal organisation requirements set out in Article 70 ter.2 of the Law 24/1988 of 28 July 1988 on the Securities Market with the specifications which, if appropriate, are to be determined.

The adoption of such measures is without prejudice to the need to define and implement those other organisational policies and procedures which, in specific relation to the provision of investment services, are to be required of those entities in application of the specific securities market rules.

Article 30. General Plan of Viability.

As part of the governance and organisational structure procedures referred to in paragraph 1 of the previous Article, credit institutions and the consolidable groups of credit institutions shall develop and maintain an updated General Plan of Viability which provides for the measures to be taken to restore the viability and financial soundness of institutions in the event of any significant deterioration. The Plan will be submitted for approval by the Banco de España, which may require the modification of its content and, if deemed insufficient, impose on the entities the measures provided for in Article 24 of Law 9/2012 of 14 November, of restructuring and resolution of credit institutions. The content to be included in the General Plan of Viability shall be specified.

Article 31. Committee on appointments.

1. A credit institution shall constitute a nomination committee, composed of members of the board of directors who do not perform executive functions in the institution. At least one third of these members and, in any case, the president, must be independent advisers.

The Banco de España may determine that some entities, due to their size, their internal organization, the nature, the scope or the limited complexity of their activities, may constitute the committee of appointments in a joint manner with the remuneration committee.

2. The savings banks shall in any case establish a remuneration and appointment committee in accordance with their own rules, which shall exercise the powers and functions conferred on the remuneration and appointment committees provided for in this Chapter.

3. The nomination committee shall establish a representation objective for the less-represented sex in the Management Board and draw up guidance on how to achieve this objective.

Article 32. Remuneration policy.

1. Credit institutions, when setting and applying the overall remuneration policy, including salaries and discretionary pension benefits, of categories of staff whose professional activities have a significant impact on the risk profile of the institution, its group, parent company or subsidiaries, shall comply with the principles set out in Article 33 in a manner consistent with their size, internal organisation and the nature, scope and complexity of their activities. In particular, these principles shall apply to senior management, risk-taking employees, those exercising control functions, and to any worker who receives a comprehensive remuneration that includes him or her on the same remuneration scale as that of senior management and risk-taking employees, whose professional activities have an important impact on their risk profile.

2. Credit institutions shall submit to the Banco de España how much information it requires to verify compliance with this obligation and, in particular, a list indicating the categories of employees whose professional activities have a significant impact on their risk profile. This list shall be submitted annually and in any case where significant alterations have occurred. The Bank of Spain shall determine the form of presentation of that list.

3. Without prejudice to the obligations laid down in Article 450 of Regulation (EU) No 575/2013 of 26 June, credit institutions shall make public the total remuneration payable in each financial year of each of the members of their board of directors.

4. The provisions of this Article, as well as the provisions of Articles 33, 34, 35 and 36, shall apply to entities at the level of group, parent and subsidiary companies, including those established in offshore financial centres.

Article 33. General principles of the remuneration policy.

1. The remuneration policy of the categories of staff referred to in Article 32.1 shall be determined in accordance with the following general

:

a) It will promote and be compatible with adequate and effective risk management, and will not provide incentives to take risks that exceed the level tolerated by the entity.

(b) It shall be compatible with the business strategy, objectives, values and long-term interests of the entity and shall include measures to avoid conflicts of interest.

(c) Personnel exercising control functions within the credit institution shall be independent of the business units it supervises, shall have the authority to perform its tasks and shall be remunerated in the light of the achievement of the objectives related to its tasks, irrespective of the results of the business areas it controls.

d) The remuneration of senior managers in charge of risk management and compliance functions will be directly supervised by the remuneration committee.

e) It will clearly distinguish between the criteria for the establishment of:

1. the fixed remuneration, which shall primarily reflect the relevant professional experience and the responsibility of the organisation as stipulated in the description of tasks as part of the working conditions; and

2. the variable remuneration, which should reflect a sustainable and risk-adjusted yield, as well as higher performance than required to meet the requirements of the description of tasks as part of the working conditions.

2. The Governing Board of the entity shall adopt and periodically review the general principles of the remuneration policy and shall be responsible for the supervision of its implementation.

In addition, the remuneration policy shall be subject, at least once a year, to a central and independent internal assessment in order to check whether the remuneration guidelines and procedures adopted by the Management Board in its supervisory role are met.

3. The remuneration policy of the members of the Board of Directors of the credit institutions shall be subject to the approval of the shareholders ' meeting, general assembly or equivalent body, on the same terms as those laid down for companies listed in the commercial law.

Article 34. Variable elements of the remuneration.

1. The fixing of the variable components of the remuneration of the categories of staff referred to in Article 32.1 shall comply with the following

:

(a) Where the remuneration is linked to the results, its total amount shall be based on an assessment that combines the individual's results, measured according to both financial and non-financial criteria, of the business unit concerned, and the overall results of the credit institution.

(b) The assessment of the results shall be entered in a multi-annual framework to ensure that the assessment process is based on long-term results, and that the effective payment of the results-based remuneration components is scaled over a period that takes into account the underlying economic cycle of the credit institution and its business risks.

c) The total variable remuneration shall not limit the institution's ability to strengthen the soundness of its capital base.

(d) The guaranteed variable remuneration is not compatible with sound risk management or with the principle of rewarding performance, and will not be part of any remuneration plans.

e) The guaranteed variable remuneration shall be exceptional, shall only be made when new staff are contracted and the institution has a sound and sound capital base and shall be limited to the first year of employment.

f) In total remuneration, fixed components and variable components shall be appropriately balanced. The fixed component will be a sufficiently high part of the total remuneration, so that a fully flexible policy can be applied as regards the variable components of the remuneration, to the extent that it is possible not to pay for these components.

g) Entities shall establish the appropriate ratios between the fixed components and the variables of the total remuneration, applying the following principles:

1. The variable component shall not be greater than one hundred per cent of the fixed component of the total remuneration of each individual.

2. However, the General Shareholders ' Meeting of the institution may approve a level higher than that provided for in the preceding number, provided that it does not exceed two hundred percent of the fixed component. Approval of the highest level of variable remuneration will be performed according to the following procedure:

(i) The General Shareholders ' Meeting of the entity shall take its decision on the basis of a detailed recommendation of the Board of Directors or equivalent body setting out the reasons and scope of the decision and including the number of persons concerned and their positions, as well as the expected effect on the entity's maintenance of a sound capital base.

(ii) The General Shareholders ' Meeting of the entity shall take its decision by a majority of at least two-thirds, provided that at least half of the equivalent shares or rights with the right to vote are present or represented in the vote. If the previous quorum is not possible, the agreement shall be adopted by a majority of at least three quarters of the present or represented social capital with the right to vote.

(iii) The board of directors or equivalent body shall inform all the shareholders in good time of the matter to be submitted for approval.

(iv) The management board or equivalent body shall immediately communicate to the Banco de España the recommendation addressed to the General Shareholders ' Meeting, including the highest level of the variable component of the proposed remuneration and its justification, and shall demonstrate that this level does not affect the entity's obligations under the solvency rules, and in particular taking into account the institution's own resources obligations.

v) The Board of Directors or equivalent body shall immediately inform the Bank of Spain of the decision taken in this respect by the General Shareholders ' Meeting, including the highest percentage of the variable component of the approved remuneration. The Banco de España shall use the information received to compare the practices of the entities in that matter, and shall provide this information to the European Banking Authority.

(vi) Where appropriate, personnel directly affected by the application of higher maximum levels of variable remuneration may not exercise, directly or indirectly, the voting rights that they may have as a shareholder of the entity and their shares shall be deducted from the share capital for the computation of the majority of votes that are required in each case in the agreements that relate to the application of higher maximum levels of variable remuneration.

The entries made in this letter to the shareholders will also apply to the members of the General Assemblies of the savings banks and credit unions.

3. The Banco de España may authorise institutions to apply a theoretical discount rate, in accordance with the guidance published by the European Banking Authority, to 25% of the total variable remuneration, provided that it is paid by deferred instruments for a period of five years or more. The Bank of Spain may set a lower percentage.

h) Payments for early termination of a contract will be based on the results obtained over time and will not reward bad results or improper conduct. The Bank of Spain may define the assumptions which may lead to a reduction in the amount of the abovementioned payments by early resolution.

i) Remuneration packages relating to compensation or abandonment payments for previous work contracts shall be adapted to the interests of the entity in the long term, for which they shall include provisions on retention, deferral, performance and recoveries.

j) When assessing the results for the calculation of the variable components of the remuneration, an adjustment shall be made for all types of current and future risks, taking into account the cost of capital and liquidity required.

k) The allocation of variable remuneration components in the entity shall also take into account all current and future risk types.

l) A substantial part, and in any case at least 50 percent of any variable remuneration element, whether deferred or non-deferred, will be fixed by reaching an appropriate balance between:

1. number of equivalent shares or shares, depending on the legal form of the institution concerned, or instruments linked to the shares or other equivalent non-pecuniary instruments, in the case of a credit institution that does not cotice in an official organised market and,

2. where possible, other instruments which the Bank of Spain may determine, within the meaning of Article 52 or Article 63 of Regulation (EU) No 575/2013 of 26 June, or other instruments which may be converted in full into Common Equity Tier 1 instruments, or capable of absorbing losses, which adequately reflect in each case the credit rating of the credit institution as a functioning undertaking and are appropriate for variable remuneration purposes.

The instruments referred to in this paragraph shall be subject to an appropriate retention policy designed to ensure that the incentives are in line with the long-term interest of the credit institution. The Bank of Spain may impose restrictions on the design or types of these instruments and even prohibit some of them.

The provisions of this letter shall apply to both the variable component of deferred remuneration in accordance with point (m) and the part of the variable component of non-deferred remuneration.

m) A substantial part, and in any case at least 40 per cent of the variable remuneration element will be deferred for a period of not less than three to five years and will be correctly adapted to the nature of the business, its risks and the activities of the corresponding staff member.

The remuneration payable under the deferral provisions shall not be collected more quickly than in a proportional manner. In the case of a variable remuneration element of a particularly high level, at least 60% shall be deferred. The duration of the deferral period shall be determined taking into account the economic cycle, the nature of the business, its risks and the activities of the staff member concerned.

n) The variable remuneration, including the deferred part, shall be paid or consolidated only if it is sustainable in accordance with the financial situation of the entity as a whole, and if it is justified on the basis of the results of the entity, the business unit and the person concerned.

Without prejudice to the application of the general principles of contract and employment law, the total variable remuneration will be significantly reduced when the entity obtains low or negative financial results, taking into account both the current remuneration and the reductions in the payments of previously established amounts, where appropriate, through terms of reduction of remuneration or recovery of remuneration already met.

Up to one hundred per cent of the total variable remuneration will be subject to remuneration reduction or recovery clauses for the remuneration already paid. Institutions shall lay down specific criteria for the application of the terms of reduction of remuneration or recovery of remuneration already paid. Those criteria shall include situations in which the employee has participated or is responsible for conduct that has generated significant losses for the entity and in which it fails to meet the necessary requirements for suitability and correction.

n) The pension policy shall be compatible with the business strategy, objectives, values and long-term interests of the institution.

If the employee leaves the entity before retirement, the entity shall retain the discretionary pension benefits for a period of five years in the form of instruments such as those referred to in point (l). If an employee reaches the retirement age, he or she will be paid the discretionary pension benefits in the form of instruments such as those referred to in point (l), subject to a five-year retention period.

or) No personal coverage or insurance strategies related to remuneration and liability that undermine the alignment effects with sound management of the risks that promote their remuneration systems may be used.

p) Variable remuneration shall not be paid by means of instruments or methods that facilitate non-compliance with the rules of organisation and discipline.

2. The principles set out in this Article may be developed.

Article 35. Credit institutions receiving public financial support.

For credit institutions that receive public financial support, the following principles shall apply in addition to those set out in Article 33:

(a) Variable remuneration shall be strictly limited to a percentage of net income where it is incompatible with the maintenance of a sound capital base and with the timely waiver of public support.

(b) Entities shall be required to restructure remuneration in such a way as to be in line with appropriate risk management and long-term growth, including, where appropriate, by establishing limits on the remuneration of members of the board of directors and the directors of the institution.

(c) Members of the credit institutions ' management board shall not receive variable remuneration unless justified.

Article 36. Remuneration Committee.

1. Credit institutions shall constitute a remuneration committee composed of members of the board of directors who do not perform executive functions in the institution. At least one third of these members, and in any case the President, must be independent directors.

2. The Banco de España may determine that some entities, due to their size, their internal organization, the nature, the scope or the limited complexity of their activities, may constitute the remuneration committee jointly with the nomination committee.

Article 37. Responsibility for risk management.

1. The Board of Directors is responsible for the risks to be incurred by a credit institution. For this purpose, credit institutions shall establish effective channels of information to the management board on the risk management policies of the institution and all the significant risks to which it is facing.

2. In the exercise of its responsibility for risk management, the Management Board shall:

a) To devote sufficient time to the consideration of the issues related to the risks. In particular, it shall actively participate in the management of all the substantial risks referred to in the solvency rules, ensure that adequate resources are allocated for risk management, and shall address in particular the valuation of assets, the use of external credit ratings and internal models relating to these risks.

b) Approve and periodically review the strategies and policies of assumption, management, supervision and reduction of risks to which the institution is or may be exposed, including those that present the macroeconomic situation in which it operates in relation to the economic cycle phase.

Article 38. Risk management function and risk committee.

1. Credit institutions shall have a unit or body that assumes the risk management function commensurate with the nature, scale and complexity of its activities, independent of operational functions, which has sufficient authority, range and resources, as well as timely access to the management board.

2. The Banco de España will determine the entities that, by their size, internal organization and by the nature, scale and complexity of their activities, must establish a risk committee. This committee shall be composed of members of the board of directors who do not perform executive functions and who possess the appropriate knowledge, capacity and experience to fully understand and control the risk strategy and risk propensity of the institution. At least one third of these members, and in any case the President, must be independent directors.

3. Institutions which, in the opinion of the Banco de España do not have to establish a risk committee, shall constitute joint audit committees which shall assume the relevant functions of the risk committee.

TITLE II

Solvency of credit institutions

CHAPTER I

General provisions

Article 39. Solvency rules.

The solvency rules of credit institutions are set out in Regulation (EU) No 575/2013 of 26 June, this Law and its implementing provisions.

Article 40. The subjective scope of application of the solvency rules.

1. The solvency rules shall apply:

a) To credit institutions.

(b) to the consolidated groups and sub-groups of credit institutions, in which financial institutions, including asset management companies and, as defined in Article 4.1 (26) of Regulation (EU) No 575/2013 of 26 June, in which they are integrated, shall form part.

c) To financial holding companies and mixed financial holding companies.

2. For the purposes of the preceding paragraph, the management companies of collective investment institutions, the management companies of venture capital institutions and the self-managed companies and funds shall be considered as asset management companies.

In addition, the management companies of mortgage securitisation funds and asset-securitisation funds shall be understood to be included within the concept of a financial institution.

CHAPTER II

Internal capital and liquidity

Article 41. Self-assessment of capital.

Consolidated groups of credit institutions, as well as credit institutions that are not integrated into one of these consolidable groups, shall specifically have robust, effective and comprehensive strategies and procedures to assess and maintain on a permanent basis the amounts, rates and distribution of domestic capital that they consider appropriate to cover the nature and level of the risks to which they are or may be exposed. Those strategies and procedures shall be regularly reviewed within the internal review to ensure that they remain exhaustive and proportionate to the nature, scale and complexity of the activities of the credit institution concerned.

Article 42. Liquidity.

In order to determine the appropriate level of liquidity requirements of credit institutions, the Banco de España will assess:

a) The entity's specific business model.

(b) The systems, procedures and mechanisms of corporate governance of the entities referred to in Article 29.

(c) The results of the monitoring and evaluation carried out in accordance with Article 52.

(d) Any systemic liquidity risk that compromises the integrity of the financial markets.

CHAPTER III

Capital Mattresses

Article 43. Combined requirement of capital buffers.

1. Credit institutions shall at all times comply with the combined requirement of capital buffers, understood as the total of the Common Equity Tier 1 capital required to comply with the obligation to have a capital conservation buffer, and, if applicable:

a) A specific countercyclical capital buffer for each entity.

b) A buffer for entities of global systemic importance.

c) A buffer for other systemically important entities.

d) A systemic risk buffer.

This obligation shall be without prejudice to the own resources requirements set out in Article 92 of Regulation (EU) No 575/2013 of 26 June, and those other than, where applicable, the Bank of Spain may require, in accordance with Article 68.2.a).

2. The Common Equity Tier 1 capital required to satisfy each of the different mattresses established under Articles 44 to 47 shall be different and, therefore, additional to that required to satisfy the remaining mattresses and the other own resources requirements required in accordance with the solvency rules, except as provided by the Banco de España in relation to the mattresses for institutions of systemic importance, whether EISM or OEIS, and the systemic risk buffer.

3. The fulfilment of the capital mattress requirements shall be carried out on an individual, consolidated or sub-consolidated basis, in accordance with the provisions laid down in Regulation (EU) No 575/2013 of the first part of Title II of Regulation (EU) No 575/2013 of 26 June 2014.

4. Where an institution or group fails to comply with the obligation laid down in paragraph 1, it shall be subject to the restrictions on distributions set out in Article 48 and shall submit a capital conservation plan in accordance with Article 49.

The provisions of the preceding paragraph are without prejudice to the application, where appropriate, of the sanctioning regime provided for in Title IV and the measures which the Banco de España may have taken in accordance with Article 68.

Article 44. Capital conservation buffer.

Credit institutions shall maintain a capital conservation buffer consisting of Common Equity Tier 1 capital equal to 2.5% of the total amount of their risk exposure, calculated in accordance with Article 92.3 of Regulation (EU) No 575/2013 of 26 June, and, where applicable, in accordance with the details that the Bank of Spain may establish.

Article 45. Specific countercyclical capital buffer.

1. Credit institutions shall maintain a countercyclical capital buffer calculated specifically for each institution or group. Such a buffer shall be equivalent to the total amount of risk exposure calculated in accordance with Article 92.3 of Regulation (EU) No 575/2013 of 26 June, with the details that the Bank of Spain may establish, multiplied by a percentage of specific capital buffer.

2. The specific countercyclical capital buffer rate shall consist of the weighted average of the percentages of countercyclical mattresses that are applicable in the territories in which the relevant credit exposures of the institution are located.

3. Regulations will be determined:

(a) The procedure for calculating the specific countercyclical capital buffer rate.

(b) The procedure for fixing the percentages of countercyclical mattresses by the Bank of Spain for exposures located in Spain and their periodicity.

(c) The mechanism for the recognition of percentages of countercyclical mattresses set by the competent authority of a Member State of the European Union.

(d) The mechanism for the recognition of percentages of countercyclical mattresses fixed by the competent authority of a third country or a decision in respect of those percentages.

e) The communication mechanism.

Article 46. Capital buffer for institutions of systemic importance.

1. The Banco de España will identify the credit institutions authorised in Spain which are:

a) Entities of global systemic importance (EISM), on a consolidated basis.

(b) Other institutions of systemic importance (OEIS), on an individual, sub-consolidated or consolidated basis.

2. The method of identification of the EISM shall be determined, which shall in any case be based on the following circumstances:

a) The size of the group.

b) The interconnection of the group with the financial system.

c) The possibility of replacing the services or financial infrastructure provided by the group.

d) The complexity of the group.

(e) The cross-border activity of the group, including cross-border activity between Member States of the European Union and between a Member State and a third country.

A method of classifying credit institutions identified as EISM in several sub-categories according to their systemic importance will also be established.

3. The method of identification of the OEIS shall be determined. For the assessment of its systemic importance, at least one of the following criteria must be taken into account:

a) Size.

b) Importance for the Spanish economy or the European Union.

c) Importance of cross-border activities.

d) The interconnectedness of the entity or group with the financial system.

4. Each EISM shall maintain, on a consolidated basis, an EISM buffer for the sub-category in which the institution is classified, which in any case shall not be less than 1 per cent and not more than 3.5 per cent.

5. The Banco de España may impose on each OEIS on a consolidated, consolidated or individual basis, as the case may be, the obligation to have a buffer of up to 2% of the total amount of risk exposure, taking into account the criteria for the identification of the OEIS, and in accordance with the procedure to be determined.

6. The Banco de España shall notify the European Commission, the European Systemic Risk Board and the European Banking Authority of the EISM and the OEIS and the corresponding sub-categories in which the first ones have been classified, and make their names public. The Bank of Spain shall also make public the sub-category in which each EISM has been classified.

7. The arrangements for the joint implementation of the mattresses for EISM and OEIS, as well as those with the systemic risk buffer provided for in Article 47, shall be developed.

Article 47. Systemic risk buffer.

1. The Bank of Spain may require the establishment of a buffer against systemic risk capital of Common Equity Tier 1 in order to prevent or avoid long-term systemic or macro-prudential risks that are not covered by Regulation (EU) No 575/2013 of 26 June. These risks will be understood as those that could lead to a disruption in the financial system with serious negative consequences for such a system and the real economy.

2. The systemic risk buffer may be applied to all or some of the exposures located in Spain or in the Member State that establishes such a buffer, to exposures in third countries and to exposures located in other Member States of the European Union, with the limits to be determined.

3. The systemic risk buffer may be required for all credit institutions that are integrated or not in a consolidated group of credit institutions, or for one or more sub-sectors of credit institutions. Different requirements may be laid down for different sub-sectors.

4. The Banco de España may require credit institutions to provide the percentage of systemic risk buffer fixed by the competent authorities of other Member States of the European Union, for exposures located in the Member State that set that percentage, in terms and with the procedure to be determined.

Article 48. Restrictions on distributions.

1. Credit institutions that meet the combined requirement of capital buffers may make distributions relating to Common Equity Tier 1 capital provided that such distribution does not lead to a decrease in capital buffers to a level where the combined requirement is no longer respected, or where any of the measures provided for in Article 68.2 have been adopted by the Bank of Spain, to strengthen own resources or to limit or prohibit the payment of a dividend.

2. Credit institutions that do not meet the combined requirement of capital buffers or have an ordinary Tier 1 capital distribution that implies their decrease to a level where the combined requirement is no longer respected shall calculate the maximum distributable amount, in the terms that are determined by regulation.

Credit institutions will not be able to perform any of the following actions before they have calculated the maximum distributable amount and have immediately informed the Banco de España of this amount:

a) Perform a distribution relative to Common Equity Tier 1 capital.

(b) To assume an obligation to pay a variable remuneration or discretionary pension benefits, or to pay a variable remuneration if the payment obligation was assumed at a time when the institution did not meet the combined buffer requirement.

c) Make payments linked to additional Tier 1 capital instruments.

Credit institutions shall have mechanisms in place to ensure that the amount of distributable profits and the maximum distributable amount are calculated accurately, that the Bank of Spain shall be able to be demonstrated when requested.

3. As long as an entity does not meet or exceed its combined buffer requirement or the Banco de España has adopted any of the measures provided for in Article 68 to strengthen own resources or to limit or prohibit the payment of dividends, that institution may not distribute more than the maximum amount of distributable calculated in accordance with paragraph 2 for the purposes provided for in that paragraph.

4. The restrictions imposed by this Article shall apply only to payments that result in a reduction in Common Equity Tier 1 or a reduction in profits, and provided that the suspension or cancellation of the payment does not constitute a breach of the payment obligations or other circumstance leading to the opening of the appropriate insolvency proceedings.

5. For the purposes of this Article, they shall be construed as distributions relating to Common Equity Tier 1 capital:

a) The payment of cash dividends.

(b) The distribution of shares in whole or in part released or other capital instruments referred to in Article 26.1.a) of Regulation (EU) No 575/2013 of 26 June.

(c) The redemption or purchase by an entity of own shares or other capital instruments referred to in Article 26.1.a) of Regulation (EU) No 575/2013 of 26 June.

(d) The reimbursement of amounts paid in relation to the capital instruments referred to in Article 26.1.a of Regulation (EU) No 575/2013 of 26 June.

(e) The distribution of the items referred to in points (b) to (e) of Article 26.1 of Regulation (EU) No 575/2013 of 26 June.

(f) Other than the Bank of Spain may determine or consider that they have an effect similar to those mentioned in the preceding letters.

6. The provisions of this article will be regulated.

Article 49. Plan for the conservation of capital.

1. Where a credit institution does not meet the combined requirement of a buffer, it shall draw up a capital conservation plan and present it, in the terms that are regulated, to the Banco de España.

The deadline for the presentation of the plan to the Banco de España will be five days, from the date on which the institution establishes the non-compliance with those requirements. However, the Bank of Spain may extend that period to 10 days, on the basis of the individual credit institution's situation and taking into account its scale and the complexity of its activities.

2. The Banco de España will evaluate the capital conservation plan and approve it if it considers that, if it is to be executed, the preservation or obtaining of sufficient capital is reasonably foreseeable so that the institution can meet the combined requirement of capital buffers within the time limit that the Banco de España deems appropriate.

3. In case you do not approve the capital conservation plan presented, the Banco de España may:

(a) Require the entity to increase its own resources within the time limit it determines.

b) Employ the powers conferred on it by Article 68 to impose restrictions on the more stringent distributions than those provided for in the previous article.

TITLE III

Monitoring

CHAPTER I

Supervisor Function

Article 50. Supervisory role of the Banco de España.

1. The Bank of Spain is the authority responsible for the supervision of credit institutions and other entities provided for in Article 56, in order to ensure compliance with the rules of organisation and discipline. For the exercise of this function, it may develop the actions and exercise the powers provided for in this Law and any other powers assigned to it by the legal system.

The provisions of the preceding paragraph shall be without prejudice to the powers conferred on other institutions or administrative bodies by the legal system.

2. In the exercise of its supervisory role and in particular for the choice of the various supervisory and sanction instruments, the Banco de España may:

(a) To obtain from the entities and persons subject to its supervisory function, and to third parties to whom those entities have outsourced activities or operational functions, the information necessary to verify compliance with the rules of management and discipline.

In order for the Banco de España to obtain such information, or to confirm its veracity, the entities and persons mentioned are obliged to make available to the Banco de España how many books, records and documents it considers accurate, including software, files and databases, whatever their physical or virtual support.

For these purposes, access to the information and data required by the Banco de España is covered by Article 11.2.a) of the Organic Law 15/1999, of 13 December, on the protection of personal data.

b) Require and communicate to the entities subject to their supervisory function, by electronic means, the information and measures contained in the regulations of ordination and discipline. The entities concerned shall have the obligation to enable, within the time limit set for this purpose, the technical means required by the Banco de España for the effectiveness of its electronic communication systems, in the terms that it takes into effect.

c) Carry out all necessary investigations in relation to any entity or person referred to in point (a), where necessary to perform its supervisory function. For these purposes, you can:

1. Require the presentation of documents.

2. Browse books and records and obtain copies or extracts from them.

3. Request and obtain written or verbal explanations from any other person other than those provided for in point (a) in order to obtain information related to the subject matter of an investigation.

(d) Carry out any necessary inspections in the professional establishments of the legal entities referred to in point (a), and in any other entity included in the consolidated supervision.

3. In the exercise of its supervisory role, the Bank of Spain shall also:

a) Valorar, in the choice of the measures to be adopted, criteria such as the seriousness of the facts detected, the effectiveness of the supervisory function itself in terms of the underhealing of the detected defaults or the previous behavior of the entity.

b) Take into account the possible impact of their decisions on the stability of the financial system of the other Member States of the European Union concerned, particularly in urgent situations, on the basis of the information available at the time.

c) Take into account the convergence of supervisory instruments and practices at the level of the European Union.

4. In the terms provided for in Article 4 of Law 30/1992, of November 26, of the Legal Regime of the Public Administrations and of the Common Administrative Procedure, the organs and agencies of any Public Administration, without prejudice to the duty of secrecy that they have under the current legislation, are subject to the duty of collaborating with the Bank of Spain and are obliged to provide, at the request of the Bank of Spain, the data and information that they have and may be necessary for the exercise by the latter of the supervisory function.

Article 51. Monitoring of regulatory compliance mechanisms.

It will be up to the Banco de España to supervise the systems, strategies, procedures or mechanisms of any kind, applied by the credit institutions to comply with the regulations of ordination and discipline.

Article 52. Risk monitoring.

It will be up to the Banco de España to monitor the risks to which institutions are or may be exposed, and based on this assessment and the previous article, to determine whether the regulatory compliance mechanisms, own resources and liquidity maintained by credit institutions ensure sound management and coverage of their risks.

Article 53. Supervision of corporate governance systems and remuneration policies.

It will be up to the Banco de España to monitor compliance by credit institutions with the rules on suitability, remuneration and liability in risk management, as well as the other rules on corporate governance provided for in Title I and its development provisions.

Article 54. Development of guides in supervisory matters.

1. The Banco de España may develop technical guides to the supervised entities and groups, indicating the criteria, practices, methodologies or procedures it considers appropriate for compliance with the supervisory regulations. These guidelines, which must be made public, may include the criteria that the Banco de España will follow in the exercise of its supervisory activities. The Banco de España may require the supervised entities and groups to provide an explanation of the reasons why, where appropriate, they would have been separated from such criteria, practices, methodologies or procedures.

2. The guidelines drawn up by the Banco de España shall relate to

following subjects:

a) Assessment of the risks to which institutions are exposed and appropriate compliance with the rules of management and discipline.

(b) Remuneration practices and risk-taking incentives that are compatible with adequate risk management.

(c) Financial and accounting information and obligations to subject to external audit the annual accounts or financial statements of supervised entities and groups.

d) Adequate management of the risks arising from the holding of significant holdings of credit institutions in other financial institutions or non-financial undertakings.

e) Instrumentation of restructuring or resolution mechanisms of credit institutions.

f) Corporate governance and internal control.

g) Any other matters included in the scope of the Bank of Spain.

3. The Banco de España may make its own, and transmit as such to the entities and groups, as well as develop, supplement or adapt the guides that, on these issues, approve the international bodies or committees active in the banking regulation and supervision.

Article 55. Supervisor programme.

1. The Banco de España shall approve, at least once a year, a supervisory programme for all credit institutions subject to its supervision with particular attention to the following entities:

(a) Those whose results in the stress tests or in the supervisory and supervisory review process indicate the existence of significant risks to their financial soundness or disclose the possible non-compliance with the solvency rules.

b) Those that pose a systemic risk to the financial system.

(c) Other than, in the opinion of the Banco de España, require special consideration in the exercise of the supervisory function.

2. The programme shall contain at least the following information:

(a) An indication of how the Banco de España intends to carry out its supervisory work and allocate its resources.

(b) The identification of the credit institutions that are intended to be subject to enhanced supervision and the measures they intend to take to that effect in accordance with paragraph 3.

c) An on-site inspection plan for credit institutions.

3. The Banco de España, in the light of the results of the review and supervisory evaluation provided for in Articles 51 to 53, may take the measures it considers appropriate in each case, including:

a) Increasing the number or frequency of on-site inspections of the entity.

b) Permanent presence in the credit institution.

c) Issuance of additional or more frequent information by the credit institution.

d) Further or more frequent review of the credit institution's operational, strategic or business plans.

e) Thematic examinations focused on specific risks.

4. The Banco de España shall take into account when establishing its supervisory programme the information received from the authorities of other Member States in relation to the established branches of Spanish credit institutions. To these same effects, it will also take into account the stability of the financial system in those Member States.

5. At least once a year, the Banco de España shall submit to evidence of resistance to the credit institutions it supervises in order to facilitate the review and evaluation process provided for in this Article.

CHAPTER II

Scope of the monitor function

Article 56. Scope of the supervision of the Banco de España.

The Banco de España will supervise the Spanish credit institutions, the consolidated groups of credit institutions with a parent in Spain and the branches of credit institutions of non-EU Member States in accordance with the provisions of this Law and its implementing regulations. Also, where the parent undertaking of one or more credit institutions is a financial holding company or a mixed financial holding company, the Banco de España, as the person responsible for the authorisation and supervision of such credit institutions, shall supervise that company with the limits and specificities which it shall regulate.

In the same way, the supervision of the Banco de España will be able to reach the Spanish people who control credit institutions from other Member States of the European Union, within the framework of the collaboration with the authorities responsible for the supervision of these credit institutions.

Article 57. Supervision of the consolidable groups.

1. The Banco de España shall supervise the consolidated groups of parent credit institutions in Spain, as defined in accordance with the provisions of Regulation (EU) No 575/2013 of 26 June.

2. Where there are foreign entities which may be incorporated into a consolidated group of credit institutions, the extent of supervision on a consolidated basis by the Banco de España shall be determined in a regulatory manner and shall, among other criteria, be determined by the nature of a national or not of a Member State of the European Union of the institutions, their legal nature and their degree of control.

Article 58. Supervision of mixed financial holding companies and mixed portfolio companies.

1. Where a mixed financial holding company subject to the supervision of the Banco de España is subject to equivalent provisions under this Law and Law 5/2005 of 22 April of the supervision of financial conglomerates and amending other laws of the financial sector, in particular in terms of supervision on the basis of risk, the Banco de España, after consultation with the other authorities responsible for the supervision of subsidiaries of the mixed financial holding company, may decide that only the provisions of Law 5/2005 apply to that company. of 22 April, and its implementing regulations.

2. Also, where a mixed financial holding company subject to the supervision of the Banco de España is subject to equivalent provisions under this Law and the recast of the Law on the Management and Supervision of Private Insurance approved by Royal Decree-Law 6/2004 of 29 October, in particular in terms of supervision on the basis of risk, the Banco de España, after consultation with the other authorities responsible for the supervision of subsidiaries of the mixed financial holding company, may decide to apply only to such companies. provisions of the recast of the Law on the Management and Supervision of Private Insurance.

3. The Banco de España shall inform the European Banking Authority and the European Insurance and Pension Fund Authority of the decisions taken pursuant to the preceding paragraphs.

4. Without prejudice to the provisions of Part Four of Regulation (EU) No 575/2013 of 26 June, where the parent undertaking of one or more Spanish entities is a mixed holding company, the Banco de España shall carry out the general supervision of the transactions between the institution and the joint holding company and its subsidiaries.

5. The subsidiaries of a mixed-company holding company shall have adequate risk management systems and internal control mechanisms, including sound reporting and accounting procedures, in order to identify, measure, monitor and control operations with their parent portfolio joint venture and its subsidiaries. The Bank of Spain shall require the institution to report any other significant transaction with those entities other than that referred to in Article 394 of Regulation (EU) No 575/2013 of 26 June. Such significant procedures and operations shall be subject to the supervision of the Banco de España.

Article 59. Supervision of branches of credit institutions of Member States of the European Union.

1. The Banco de España may carry out on-the-spot checks and inspections of the activities carried out by branches of credit institutions from other Member States of the European Union. For this purpose, it may require information from that branch on its activities for reasons linked to the stability of the financial system.

Before carrying out these checks and inspections, the Banco de España shall consult the competent authorities of the home Member State. Following the checks and inspections, the Banco de España shall communicate to those authorities the information obtained and the circumstances that are relevant to the risk assessment of the institution or the stability of the financial system.

2. The Banco de España may make requests to the competent authorities for the supervision of a credit institution authorised in the European Union with branches in Spain to be considered as significant branches, as well as, in the absence of a joint decision in this respect, to resolve their significant character, in accordance with the procedure to be determined.

In these cases the Banco de España will promote the adoption of a joint decision on the application with the other competent authorities of other Member States entrusted with the supervision of the various entities integrated in the group.

Article 60. Supervision of branches of credit institutions of non-EU Member States and assessment of the equivalence of supervision on a consolidated basis in those States.

1. The obligations laid down in the solvency rules shall be payable to branches of credit institutions based in a non-Member State of the European Union. The criteria shall be laid down in accordance with which the Banco de España may introduce specific provisions for those branches in that system. In any event, the obligations required of branches of non-EU Member States may not be less stringent than those required of branches of Member States of the European Union.

2. Credit institutions subsidiaries of a financial institution with an address outside the European Union shall not be subject to supervision on a consolidated basis, provided that they are already subject to such supervision by the relevant competent authority of the third country, which is equivalent to that provided for in this Act and its implementing rules, and in Part 1, Title II, Chapter 2 of Regulation (EU) No 575/2013 of 26 June.

The Bank of Spain will have to check this equivalence, for which it will take into account the guidelines drawn up for this purpose by the European Banking Authority, which it will consult before taking a decision on this matter.

In the event that the existence of an equivalent supervisory regime is not appreciated, the credit institutions referred to in the first subparagraph of this paragraph shall be applicable to the supervisory arrangements on a consolidated basis provided for in the solvency rules.

By way of derogation from the preceding paragraph, the Banco de España may establish other methods for the supervision on a consolidated basis of the groups referred to in this paragraph. Such methods shall include the power of the Bank of Spain to require the establishment of a dominant financial institution having its registered office in the European Union. The methods shall comply with the objectives of the supervision on a consolidated basis as defined in this Law and shall be communicated to the other competent authorities involved, to the European Commission and to the European Banking Authority.

CHAPTER III

Collaboration between monitoring authorities

Article 61. Collaboration of the Banco de España with authorities from other countries.

1. In the exercise of its supervisory functions, the Banco de España shall cooperate with the authorities entrusted with similar tasks in other countries and may or may, as the case may be, communicate information concerning the management, management and ownership of these entities, as well as those which may facilitate the control of the solvency and liquidity of such entities, factors that may influence the systemic risk posed by the institution, and any other that may facilitate its supervision or serve to prevent, prosecute or punish irregular conduct. To this end, it may conclude partnership agreements.

The communication of information referred to in the preceding paragraph shall be conditional upon the submission of foreign supervisory authorities to obligations of professional secrecy equivalent to at least those laid down in Article 82.

The content and conditions of the collaboration provided for in this section will be determined.

2. Provided that they are important for the supervisory work of the competent authorities concerned of another Member State of the European Union, the Banco de España shall consult those authorities before adopting:

(a) The decisions referred to in Article 17, whatever the extent of the change in the shareholding to be resolved in the relevant decision.

(b) Decisions relating to merger, division or any other major changes in the organisation or management of a credit institution and which are subject to administrative authorisation.

(c) The penalties for very serious and serious infringements involving public admonition or disablement of administrators or managers.

d) The intervention and replacement decisions contained in Chapter V of this Title and the measures arising from Law 9/2012, of 14 November, of Restructuring and Resolution of the Credit Entities.

e) The request for additional own resources as provided for in Article 68.2 and the imposition of limitations on the use of internal methods of measurement of operational risk.

In the cases referred to in points (c), (d) and (e), the authority of the European Union should always be consulted in charge of the consolidated supervision of the group concerned.

In any case, the Banco de España may not carry out the consultation provided for in this paragraph in cases of urgency, or when it understands that the consultation may compromise the effectiveness of the decisions themselves. In such cases it shall inform the authorities concerned without delay of the final decision taken.

Article 62. Cooperation with the supervisory authorities of the European Union as a responsible authority for supervision on a consolidated basis.

1. The Banco de España, as the authority responsible for the exercise of the supervision of the consolidable groups of credit institutions, shall collaborate with the supervisory authorities of the European Union to:

a) Coordinate the collection of information and disseminate among the other authorities responsible for the supervision of entities of the group the most relevant and essential information, in both ordinary and urgent situations.

b) Plan and coordinate supervisory activities in ordinary situations, in relation to, inter alia, the activities referred to in Chapter I linked to consolidated supervision and the provisions concerning technical criteria concerning the organisation and treatment of risks.

(c) Plan and coordinate supervisory activities, in collaboration with the competent authorities involved and, where appropriate, with central banks, in situations of urgency or in anticipation of such situations, and in particular in cases where there is an adverse development of credit institutions or financial markets, where possible, using existing specific channels of communication to facilitate crisis management.

(d) Co-operate with other competent authorities with supervisory responsibility for foreign credit institutions, matrices, subsidiaries or participants of the same group in the terms provided for in the previous article.

(e) to conclude coordination and cooperation agreements with other competent authorities which aim to facilitate and establish effective supervision of the groups entrusted to their supervision and to take on the additional tasks resulting from such agreements and with the content that is regulated.

In particular, the Banco de España may enter into a bilateral agreement in accordance with Article 28 of Regulation (EU) No 1093/2010 of 24 November 2010 to delegate its supervisory responsibility for a subsidiary entity to the competent authorities which have authorised and supervise the parent undertaking, in order to ensure that they are responsible for the supervision of the subsidiary in accordance with the provisions laid down in this Law, in its implementing rules and in Regulation (EU) No 575/2013 of 26 June. The Bank of Spain shall inform the European Banking Authority of the existence and content of such agreements.

(f) Solve by joint decision, requests for a declaration of significant branches issued by the competent authorities of the countries where branches of Spanish credit institutions are located, as well as, in the absence of a joint decision on the matter, to recognise the resolution of that competent authority on its significant character.

2. The Banco de España shall meet the requests of competent authorities of another Member State of the European Union in order to verify information on an entity subject to its supervision.

Article 63. Cooperation in the event of breaches of branches of credit institutions authorised in other Member States of the European Union.

1. If the Banco de España finds that a credit institution of a Member State of the European Union, with a branch in Spain or operating in a national territory in the free supply of services, does not comply or there is a significant risk that it will not comply with the solvency rules in Spain, it shall inform its supervisory authorities, in order to adopt, without delay, any measures deemed appropriate for the institution to terminate its infringement or take measures to avoid the risk of non-compliance and, in any event, avoid its repetition in the future. These measures shall be communicated without delay to the Bank of Spain.

2. Where the competent authorities of the home Member State do not comply with the provisions laid down in the previous paragraph, the Banco de España may use the European Banking Authority and request its assistance in accordance with Article 19 of Regulation (EU) No 1093/2010 of 24 November 2010.

Article 64. Provisional measures in the event of breaches of branches of entities from other Member States of the European Union.

1. In situations of urgency, before recourse to the cooperation provided for in Article 63.1, and as long as the measures of the competent authorities of the home Member State are not taken in accordance with that provision or the reorganisation measures referred to in Article 3 of Directive 2001 /24/EC, of the European Parliament and of the Council of 4 April 2001 on the reorganisation and liquidation of credit institutions, the Bank of Spain may take the necessary provisional measures to avoid any instability in the financial system which could seriously threaten the collective interests of depositors, investors or clients in Spain. The adoption of these measures shall be communicated immediately to the European Commission, the European Banking Authority and the competent authorities of the other Member States of the European Union concerned.

2. The provisional measures, which may include the suspension of the fulfilment of the payment obligations, shall in any event be proportionate to the objective of collective interest protection referred to in the preceding paragraph. In any event, these measures may give a preference to the creditors of Spanish nationality of the credit institution on the creditors of other Member States.

3. Such provisional measures shall be without effect when the administrative or judicial authorities of the Member State of origin adopt reorganisation measures.

4. The Banco de España may terminate the provisional measures if it considers that they are no longer necessary.

Article 65. Joint decision.

Within the framework of the collaboration established in Article 62, and in accordance with the terms that are provided for in regulation, the Banco de España, as a supervisor on a consolidated basis of a group or as a competent authority responsible for the supervision of subsidiaries of a European Union parent credit institution, a financial holding company or a mixed financial holding company in the European Union in Spain, shall endeavour to reach a consensus decision with the other supervisory authorities of the European Union on:

(a) The application of the provisions of Articles 41 and 51 to determine the adequacy of the consolidated level of own resources held by the group in relation to its financial position and risk profile and the level of own resources necessary for the application of Article 68 to each of the entities in the group and on a consolidated basis.

(b) Measures to address any significant issues and important findings related to the supervision of liquidity.

Article 66. Colleges of supervisors.

1. Where the Bank of Spain is responsible for supervision on a consolidated basis, it shall designate colleges of supervisors in order to facilitate the exercise of the tasks referred to in points (a) to (d) of Article 62.1, Article 65 and Article 81. It shall also take the necessary measures to ensure an appropriate level of coordination and cooperation with the competent authorities of third countries, while respecting the confidentiality requirements laid down in the applicable law and in the law of the European Union.

2. The colleges of supervisors shall provide the framework for the Bank of Spain, as a consolidating supervisor, the European Banking Authority and, where appropriate, the other competent authorities involved to carry out the following tasks:

(a) Exchange information in accordance with Article 21 of Regulation (EU) No 1093/2010 of 24 November 2010.

(b) To agree, where appropriate, to voluntary assignment of duties and voluntary delegation of responsibilities.

c) Establish the supervisory programmes referred to in Article 55, based on a risk assessment of the group, in accordance with Articles 51 and 52.

d) Increase the efficiency of supervision, eliminating any unnecessary duplication of prudential requirements, including those related to requests for information referred to in Article 81 and Article 61.1.

e) Apply in a consistent manner the prudential requirements set out in this Law and its implementing rules, as well as in Regulation (EU) No 575/2013 of 26 June, in all entities of a group, without prejudice to the options and powers provided by European Union legislation.

(f) Apply Article 6 (2) (c) on the basis of work carried out in other fora which may be established in this field.

3. The procedure for the establishment of colleges of supervisors and their operating rules shall be determined.

Article 67. Relations of the Banco de España with other national financial authorities.

1. Any rule that the Banco de España dictates in the development of the regulations of ordination and discipline that may directly affect the exercise of the functions legally attributed to the National Securities Market Commission, the Directorate General of Insurance or the Fund for Bank Ordered Restructuring will be given prior to report of these.

2. Provided that in a consolidated group of credit institutions there are entities subject to supervision on an individual basis by bodies other than the Banco de España, the latter, in the exercise of the powers conferred on it by this Law, must act in a coordinated manner with the supervisory body that in each case corresponds. The Minister for Economic Affairs and Competitiveness may lay down the rules necessary to ensure proper coordination.

3. The Banco de España will transfer to the Fund for the orderly restructuring of the Bank, either on its own initiative or at its request, the information derived from the exercise of its supervisory function that is necessary for the development of the functions attributed by Law 9/2012, of 14 November, of Restructuring and Resolution of the Credit Entities, to the aforementioned Fund. For the purpose of properly coordinating the exercise of their respective functions, the Banco de España and the Fund for the Orordered Restructuring of Banks will be able to conclude collaboration agreements.

CHAPTER IV

Prudential monitoring measures

Article 68. Prudential supervision measures.

1. The Banco de España shall require credit institutions or consolidable groups of credit institutions to take immediately the necessary measures to return to compliance with the following circumstances:

(a) Where they do not comply with the obligations contained in the solvency rules, including liquidity, and those relating to the adequacy of the organisational structure or the internal control of the risks, or consider that the institution's own resources and liquidity do not ensure sound management and coverage of its risks.

(b) When, in accordance with the data at the disposal of the Banco de España, there are reasonable grounds to consider that the institution will be in breach of the obligations described in point (a) within the next 12 months.

2. In the circumstances provided for in the preceding paragraph, the Bank of Spain may, among the following, take the measures it considers to be most appropriate in the light of the situation of the institution or group:

(a) Require credit institutions to maintain own resources higher than those set out in Title II, Chapter III and Regulation (EU) No 575/2013 of 26 June, in relation to risks and risk elements not covered by Article 1 of that Regulation.

(b) Require credit institutions and their groups to strengthen established procedures, mechanisms and strategies to comply with Articles 29, 30 and 41.

(c) Require credit institutions and their groups to submit a plan to return to compliance with the requirements set out in this Law and in Regulation (EU) No 575/2013 of 26 June, as well as to introduce into the plan the necessary improvements in terms of their scope and time of execution.

(d) Require credit institutions and their groups to implement a specific policy of provision of provisions or a specific treatment of assets in terms of own resource requirements.

e) Restrict or limit the activities, operations or network of entities or request the abandonment of activities that pose excessive risks to the soundness of an entity.

f) Require the risk reduction inherent in the entities ' activities, products and systems.

g) Require credit institutions and their groups to limit variable remuneration as a percentage of net income, where it is incompatible with the maintenance of a sound capital base.

h) Require credit institutions and their groups to use net profits to strengthen their own resources.

i) Banning or restricting the distribution by the entity of dividends or interest to shareholders, partners or holders of additional Tier 1 capital instruments, provided that the prohibition does not constitute an alleged breach of the entity's payment obligations.

j) Impose additional or more frequent reporting obligations, including information on the situation of capital and liquidity.

k) Impose the obligation to have a minimum amount of liquid assets to allow for the potential outflows of funds arising from liabilities and commitments, including in the case of serious events that could affect liquidity, and to maintain an adequate structure of sources of financing and maturities in their assets, liabilities and commitments in order to avoid potential imbalances or liquidity strains that may damage or risk the financial situation of the institution.

l) Require the communication of supplementary information.

3. The provisions of the above paragraph are without prejudice to the application of the sanctioning regime provided for in Title IV and the measures for early action that may be taken in accordance with the provisions of Law 9/2012 of 14 November 2012 on Restructuring and Resolution of Credit Institutions.

4. The Banco de España will communicate to the Bank Orordinate Restructuring Fund its decision to require an entity the measures provided for in this article and the process of execution and subsequent compliance with them. For these purposes, the Banking Ordered Restructuring Fund may request the additional information it deems necessary for the performance of its tasks.

Article 69. Additional requirements for own resources.

1. The Bank of Spain shall require credit institutions to maintain own resources higher than those established in accordance with Article 68.2.a), at least in the following cases:

(a) If the institution does not meet the requirements set out in Articles 29, 30 and 41 or Article 393 of Regulation (EU) No 575/2013 of 26 June.

(b) If there are risks or items of risk that are not covered by the own resources requirements set out in the solvency rules.

(c) If there are reasonable grounds for considering that the implementation of other measures is not sufficient to sufficiently improve the systems, procedures, mechanisms and strategies within an appropriate timeframe.

(d) If the risk review referred to in Article 52 shows that the non-compliance with the requirements for the application of a method of calculation of own resources requirements requiring prior authorisation in accordance with Part Three of Regulation (EU) No 575/2013 of 26 June, could result in insufficient own resources requirements; or if the valuation adjustments with respect to specific positions or portfolios within the trading book, as set out in Article 105 of the Regulation (EU), n. 575/2013, of June 26, do not allow the entity to sell or cover its positions in a short period of time without incurring significant losses under normal market conditions.

e) If there were reasonable grounds to consider that the risks could be underestimated despite the fulfilment of the requirements required in accordance with the solvency rules.

(f) If the institution notifies the Banco de España, in accordance with Article 377.5 of Regulation (EU) No 575/2013 of 26 June, that the results of the stress test referred to in that Article significantly exceed the own resources requirements arising from the correlation trading book.

2. For the purpose of determining the appropriate level of own resources on the basis of review and evaluation carried out in accordance with the provisions of this Title, the Bank of Spain shall assess:

(a) The quantitative and qualitative aspects of the assessment process of credit institutions referred to in Article 41.

(b) The systems, procedures and mechanisms related to the viability and resolution plans of credit institutions.

(c) The results of the review and evaluation carried out in accordance with Articles 51 to 53.

d) The systemic risk.

CHAPTER V

Intervention and replacement measures

Article 70. Causes of intervention and replacement of the administrative organ.

1. The intervention of a credit institution or the temporary replacement of its administrative body shall take place in the following cases:

(a) In accordance with the provisions of Law 9/2012 of 14 November 2012 on Restructuring and Resolution of Credit Entities, in relation to the replacement of the administrative body.

(b) Where there are reasonable indications that the credit institution is in a situation other than those provided for in the scope of Law 9/2012 of 14 November 2012 on Restructuring and Resolution of Credit Institutions, but of exceptional seriousness and which could jeopardise its stability, liquidity or solvency.

(c) Where significant participation in a credit institution is acquired without respect to the scheme provided for in this Act or where there are substantiated and substantiated reasons for considering that the influence exercised by the persons holding it may result to the detriment of the sound and prudent management of the institution, which would seriously damage its financial situation.

2. The intervention or replacement measures referred to in this Article may be taken during the processing of a criminal case or irrespective of the exercise of the power of sanction.

Article 71. Competition for intervention and substitution.

1. The intervention or replacement measures referred to in the previous article shall be agreed by the Bank of Spain, giving a reasoned account of its adoption to the Minister for Economic Affairs and Competitiveness and to the Fund for Banking Restructuring.

2. The agreement may be made on its own initiative or on the basis of an institution's own request. In this case, the request may be made by the administrators of the credit institution, its internal audit body and, where appropriate, a minority of partners, at least equal to that required by commercial law to call for the convening of an Extraordinary General Assembly or General Meeting.

Article 72. Intervention or replacement agreements.

The intervention or replacement arrangements shall be adopted after a hearing of the credit institution concerned during the period granted to it, which may not be less than five days.

The processing of the hearing may be waived where the adoption of the measure has been requested by the institution itself or where such a procedure seriously compromises the effectiveness of the measure or the economic interests involved. In the latter case, the time limit for the decision of the relevant appeal shall be ten days from the date of its interposition.

Article 73. Content of the intervention and replacement agreement.

1. The agreement shall designate the person (s) to exercise the functions of intervention or to act as interim administrators, and shall indicate whether such persons should act jointly, jointly or severally.

2. Such an agreement, of an executive nature from the moment it is given, will be immediately published in the "Official Gazette of the State" and registration in the corresponding public registers. The publication in the "Official State Gazette" will determine the effectiveness of the agreement against third parties.

3. Where this is necessary for the implementation of the intervention or replacement agreement of the administrators, direct compulsion may be made to take possession of the offices, books and documents concerned or for the examination of the latter, without prejudice to the provisions of Article 96.3 of Law No 30/1992 of 26 November 1992 on the Legal Regime of Public Administrations and the Common Administrative Procedure.

Article 74. Requirements for the validity of acts and agreements after the date of intervention.

1. In the case of intervention, the acts and agreements of any body of the credit institution which are adopted as from the date of publication of the agreement in the 'Official Gazette of the State' shall, for their validity and effects, require the express approval of the designated financial controllers. The exercise of shares or resources by the credit institution in relation to the intervention measure or to the action of the financial controller is exempted from this approval.

2. The appointed financial controller shall have the power to revoke any powers or delegations which have been conferred by the administrative body of the credit institution or by its proxies or delegates prior to the date of publication of the agreement. Such a measure shall be taken by the financial controller to require the return of the documents in which the powers are established and to promote the registration of their revocation in the competent public registers.

Article 75. Provisional administration.

1. In the case of replacement of the administrative body, the appointed interim administrators shall have the character of auditors in respect of the acts or agreements of the General Board or the Assembly of the credit institution, and shall apply to them as provided for in paragraph 1 of the previous Article.

2. The obligations for the submission of periodic public information, the formulation of the annual accounts of the institution and the approval of the institution and the social management shall be suspended for a period of not more than one year from the expiry of the period legally laid down for this purpose, if the new administrative body reasonably considers that there is no reliable and complete data or documents for this purpose.

Article 76. Cessation of intervention or replacement measures.

Agreed by the Bank of Spain to cease intervention or replacement measures, provisional administrators will immediately convene the General Meeting or Assembly of the credit institution, in which the new management body will be appointed. Until the latter's inauguration, provisional administrators will continue to perform their duties.

Article 77. Dissolution and voluntary liquidation of the credit institution.

In the event that a credit institution decides its dissolution and a corresponding voluntary liquidation, it must inform the Bank of Spain, which may set conditions for such a decision within three months of the filing of the corresponding application.

Article 78. Intervention of settlement operations.

1. Where the dissolution of a credit institution occurs, the Minister of Economy and Competitiveness may agree to the intervention of the settlement operations if such a measure is advisable by the number of the affected or by the entity's assets.

2. The provisions of Article 74 and the acts of the liquidators and the powers of the financial controller shall apply to the agreement referred to in Article 74, as referred to in Article 75.

Article 79. Communication to the Cortes.

The Banco de España will send an annual report to the Cortes of the actions that have led to intervention or substitution measures.

The Bank of Spain will also send to the General Cortes the aggregated results of the stress tests referred to in Article 55.5 as soon as they are available.

CHAPTER VI

Reporting and publishing obligations

Article 80. Publication obligations of the Banco de España.

1. Without prejudice to the obligations of secrecy set out in this Law, the Banco de España shall periodically publish the following information regarding the solvency rules:

(a) The general criteria and methods used for the review and evaluation of regulatory compliance, risk monitoring and corporate governance and remuneration policies.

b) aggregated statistical data on the fundamental aspects of the exercise of the supervisory function, including the number and nature of the supervisory measures taken and the administrative penalties imposed.

(c) The general criteria and methods adopted for checking compliance with the provisions of Articles 405 to 409 of Regulation (EU) No 575/2013 of 26 June.

(d) A brief description of the outcome of the supervisory review and the description of the measures imposed in cases of non-compliance with Articles 405 to 409 of Regulation (EU) No 575/2013 of 26 June on an annual basis.

e) The results of the stress tests as provided for in Article 32 of Regulation (EU) No 1093/2010 of 24 November 2010.

When determined by the European Banking Authority, the information referred to in this letter shall be transmitted to this authority for subsequent publication of the result at European Union level.

(f) Other to be determined by regulation.

2. The information published in accordance with paragraph 1 shall be sufficient to allow a meaningful comparison of the approaches adopted by the Bank of Spain with those of the counterpart authorities of the different Member States of the European Union. The information shall be published in the format determined by the European Banking Authority and updated regularly. It will be accessible on the Banco de España website.

Article 81. Information obligations of the Banco de España in emergency situations.

The Bank of Spain shall, as soon as possible, warn the Minister of Economy and Competitiveness, the Bank Ordered Restructuring Fund, the central banks of the European System of Central Banks, the other supervisory authorities, nationals or foreign authorities, affected, the European Banking Authority and the European Systemic Risk Board, of the emergence of an emergency situation, including that defined in Article 18 of Regulation (EU) No 1093/2010 of 24 November 2010, or in cases where there is an adverse development of the markets financial, which may compromise the liquidity in the market and the stability of the financial system of any Member State of the European Union in which entities of a group subject to supervision on a consolidated basis of the Banco de España have been authorised or where significant branches of a Spanish credit institution are established, as referred to in Article 62.1.f.

Article 82. Obligation of secrecy.

1. The data, documents and information held by the Banco de España pursuant to the exercise of the supervisory function or any other functions entrusted to it by the laws shall be used exclusively in the exercise of those functions, shall be reserved in nature and shall not be disclosed to any person or authority. The reservation shall be deemed to be lifted from the moment when the persons concerned make public the facts to which they relate. The data, documents or information relating to the procedures and methodologies used by the Banco de España in the exercise of the aforementioned functions shall also be reserved, unless the reserve is expressly raised by the competent authority of the Banco de España.

In any event, the Banco de España may publish the results of the stress tests carried out in accordance with Article 55.5 and Article 32 of Regulation (EU) No 1093/2010 of 24 November 2010.

The access of the General Cortes to the information submitted to the obligation of secrecy will be carried out through the Governor of the Banco de España. To this end, the Governor may request the competent bodies of the Chamber to hold a secret session or to apply the procedure laid down for access to classified materials.

2. All persons who perform or have carried out an activity for the Banco de España and have had knowledge of data, documents and information of a reserved nature are obliged to keep secret about them. Such persons shall not be able to provide a statement or testimony or to publish, communicate or display data or documents reserved, even after they have ceased their service, unless expressly authorised by the competent authority of the Banco de España. If such permission is not granted, the person concerned shall keep the secret and shall be exempt from the responsibility which it may give.

Failure to comply with this obligation will determine criminal and other liability under the laws.

3. Except for the obligation of secrecy laid down in this Article:

(a) The assumptions in which the data subject expressly consents to the dissemination, publication or communication of the data.

(b) The publication of aggregated data for statistical purposes, or in summary or aggregate communications, so that individual entities cannot be identified even indirectly.

c) Information required by the competent judicial authorities in criminal proceedings.

(d) Information which, in the context of the commercial procedures resulting from the compulsory liquidation or liquidation of a credit institution, is required by the judicial authorities, provided that they do not deal with third parties involved in the reflation of the entity.

(e) Information which, in the framework of administrative or judicial remedies brought against administrative decisions given in the field of the organisation and discipline of credit institutions, is required by the competent authorities for the purposes of hearing the appeal.

(f) The information that the Banco de España has to provide for the fulfilment of its respective functions to the National Securities Market Commission, the Directorate-General for Insurance, the Accounting and Audit Institute of Accounts, the Deposit Insurance Fund of Credit Institutions, the Bank Ordered Restructuring Fund, the Financial Stability Board and the financial controllers or the directors of a credit institution or an institution of its group, designated in the corresponding administrative or administrative procedures (a) the Court of Justice of the European Court of Justice, and the auditors of the credit institutions and their groups.

(g) Information that the Banco de España transmits to central banks and other similar function agencies as monetary authorities, when the information is relevant to the performance of their respective legal functions, such as the application of monetary policy and the corresponding provision of liquidity, the supervision of payment, clearing and settlement systems, and the defense of the stability of the financial system.

(h) Information which the Bank of Spain has to provide, in order to fulfil its tasks, to the bodies or authorities of other countries where the public oversight function of credit institutions, investment firms, insurance undertakings, other financial institutions and financial markets, or the management of deposit guarantee schemes or the compensation of credit institutions ' investors, is to be carried out in order to maintain the stability of the financial system in the Member States through the use of macro-prudential rules, of reorganisation activities aimed at maintaining the stability of the financial system, or of supervision of contractual or institutional protection systems, provided that there is reciprocity, and that the bodies and authorities are subject to professional secrecy under conditions which, at least, are comparable to those laid down by the Spanish laws.

(i) Information that the Banco de España decides to provide to a chamber or similar body legally authorised to provide clearing or settlement services on the Spanish markets, when it considers that they are necessary to ensure the proper functioning of such bodies in the face of any non-compliance, or possible non-compliance, that occurs on the market.

(j) The information that the Banco de España has to provide to the authorities responsible for the fight against money laundering and the financing of terrorism, as well as the communications that may exceptionally be carried out under the provisions of Section 3 of Chapter I of Title III of Law 58/2003 of 17 December, General Tax, subject to the authorization of the Minister of Finance and Public Administration. For these purposes, the cooperation agreements signed by the Banco de España with supervisory authorities in other countries should be taken into account.

k) Information which, for reasons of prudential supervision or preventive action in the area of restructuring and resolution of credit institutions, the Banco de España has to make known to the Ministry of Economy and Competitiveness, the Bank Ordered Restructuring Fund or the authorities of the autonomous communities with powers over credit institutions, as well as, in the cases of urgency referred to in Article 81, to the relevant authorities of the Member States of the European Union concerned.

(l) The information required by the Court of Auditors or by a Commission of Inquiry of the General Courts in the terms laid down in its specific legislation.

m) The information communicated to the European Banking Authority under the current rules, and in particular the information provided for in Articles 31 and 35 of Regulation (EU) No 1093/2010 of 24 November 2010. However, this information shall be subject to professional secrecy.

n) The information communicated to the European Systemic Risk Board, where this information is relevant for the performance of its statutory tasks under Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on the macro-prudential supervision of the financial system in the European Union and establishing a European Systemic Risk Board.

n) The information communicated to the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority, where the information is relevant for the performance of its statutory tasks under Regulations (EU) No 1094/2010 and No 1095/2010 of the European Parliament and of the Council of 24 November 2010.

o) The information that the Banco de España has to provide to the contractual or institutional protection systems in accordance with the provisions of Article 113.7 of Regulation (EU) No 575/2013 of 26 June.

4. The judicial authorities which receive from the Banco de España information of a reserved nature shall be obliged to take the appropriate measures to guarantee the reservation during the substantiation of the process in question. The other authorities, persons or entities that receive information of a reserved nature shall be subject to the obligation of secrecy regulated in this article and shall not be able to use it but in the framework of the performance of the functions that they have legally established.

Members of a Commission of Inquiry of the General Courts who receive information of a reserved nature will be obliged to take the appropriate measures to guarantee the reservation.

5. The transmission of reserved information shall be conditional, where the information has originated in another Member State, to the express conformity of the authority which transmitted it, and may be communicated to the addressees only for the purposes for which that authority has given its agreement. This limitation shall apply to the information to the chambers and bodies referred to in paragraph 3 (h) and (i), to the information required by the Court of Auditors and to the Research Committees of the General Courts and to the information to the Accounting and Audit Institute of Accounts.

6. The Banco de España shall communicate to the European Banking Authority the identity of the authorities or bodies to which it may transmit data, documents or information in accordance with points (d) and (f) of paragraph 3 in relation to the Accounting and Audit Institute of Accounts, and (h) in relation to the supervisory bodies of the contractual or institutional protection systems.

Article 83. Duty to reserve information.

1. Institutions and other persons subject to the regulations governing the management and discipline of credit institutions are obliged to reserve the information regarding the balances, positions, transactions and other transactions of their clients without being able to be communicated to third parties or the object of disclosure.

2. The information in respect of which the client or the laws allow their communication or disclosure to third parties or, where appropriate, to be required or to refer to the respective supervisory authorities or in the context of the fulfilment of the obligations laid down in Law 10/2010, of 28 April, of prevention of money laundering and the financing of terrorism, are exempted from this duty. In this case, the transfer of the information must be in accordance with the provisions of the client itself or the laws.

3. The exchange of information between credit institutions belonging to the same consolidated group is also exempted from the reserve duty.

4. Failure to comply with this Article shall be deemed to be a serious infringement and shall be punishable under the terms and in accordance with the procedure laid down in Title IV.

5. The provisions of this Article shall apply without prejudice to the provisions of the rules on the protection of personal data.

Article 84. Accounting information to be submitted by credit institutions.

1. Credit institutions and consolidated groups of credit institutions shall provide the Banco de España and make public its financial statements, without prejudice to any additional reporting obligations that correspond to them in accordance with the applicable rules.

2. Without prejudice to Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards and the rules on accounting information provided for in Law 24/1988 of 28 July 1988 on the Market in Securities and other relevant commercial law, the Minister for Economic Affairs and Competitiveness may establish and amend the accounting standards and models to which the financial statements of credit institutions and consolidated financial statements are to be subject to the limits and specifications to be determined, providing the frequency and detail with which the corresponding data must be supplied to the Banco de España and made public in general by the credit institutions themselves. In the use of this option, which the Minister of Economy and Competitiveness may entrust to the Bank of Spain, the National Securities Market Commission or the Accounting and Audit Institute, there will be no more restrictions than the requirement that the advertising criteria be homogeneous for all credit institutions in the same category and analogs for the various categories of credit institutions.

The ministerial order in which the rating is established will determine the reports which, if any, will be required for the establishment and modification of the standards and models, as well as for the resolution of consultations on these rules.

Article 85. Information with the prudential relevance of credit institutions.

1. In accordance with Part 8 of Regulation (EU) No 575/2013 of 26 June, the consolidated groups of credit institutions and credit institutions which are not integrated into one of these consolidable groups shall make public, as soon as practicable, at least on an annual basis and duly integrated in a single document referred to as information with prudential relevance, specific information on those data on their financial situation and activity in which the market and other interested parties may be interested in order to assess the risks to which such groups are confronted and institutions, their market strategy, their risk control, their internal organisation and their situation in order to comply with the minimum requirements for own resources provided for in the solvency rules.

2. Groups and entities shall adopt a formal policy for the fulfilment of such disclosure requirements, the verification of the adequacy and accuracy of the data disclosed and the frequency of their disclosure, and shall have procedures to assess the adequacy of such policy.

3. The Banco de España may require parent companies to publish on an annual basis, either in full or through references to equivalent information, a description of the legal structure and corporate governance and the organisational structure of the group.

4. The disclosure, in compliance with the requirements of the commercial or securities market legislation, of the data referred to in paragraph 1, shall not exempt from its integration in the manner provided for in that paragraph.

5. Credit institutions required to disclose the information referred to in paragraph 1, the Banco de España may require them to:

(a) The verification by auditors or independent experts, or by other means satisfactory to their judgment, of the information not covered by the audit of accounts, in accordance with the provisions regarding the independence regime to which the auditors are subject in Chapter III of the Recast Text of the Audit of Accounts Law approved by the Royal Legislative Decree 1/2011, of July 1.

(b) The disclosure of one or more of the said information, either independently at any time, or at a frequency higher than the annual rate, and to set maximum deadlines for disclosure.

c) Disclosure in media and places other than financial statements.

Article 86. Information required for branches of credit institutions based in the European Union.

1. The Banco de España may require the credit institutions of another Member State of the European Union to have a branch in Spain for the periodic referral of information on the operations carried out in Spain by that branch.

2. Such information shall be required for information or statistical purposes only, for the purposes of applying Article 59.2 in particular as regards the determination of whether a branch is significant, and for supervisory purposes in accordance with this Title. These reports shall be subject to the obligation of secrecy referred to in Article 82.

3. In accordance with Article 84.2, the scope of its accounting obligations and the information to be provided by a statistical purpose shall be determined.

4. In addition, Spanish credit institutions with branches in other Member States of the European Union will be required to meet equivalent requests from other Member States.

Article 87. Annual bank report.

1. Credit institutions shall send to the Bank of Spain and publish annually, specifying by country where they are established, the following consolidated information for each financial year:

a) Denomination, nature and geographical location of the activity.

b) Business volume.

c) Number of full-time employees.

d) Gross profit before tax.

e) Taxes on the result.

f) Grants or public aid received.

2. The information referred to in the previous paragraph shall be published as an annex to its audited financial statements in accordance with the regulatory audit of accounts and called the annual bank report.

3. Institutions shall make public in their annual bank report, among the key indicators, the performance of their assets, which shall be calculated by dividing net profit by the total balance sheet.

4. The Banco de España will have these reports available on its website.

Article 88. Information on shares in credit institutions.

Credit institutions shall make public, in terms that are determined by regulation, the participation of other credit institutions, national or foreign, in their capital, and their participation in the capital of other credit institutions.

TITLE IV

Sanctioning Regime

CHAPTER I

General provisions

Article 89. General provisions.

1. Credit institutions, as well as those who have administrative or management positions in them, who infringe rules of ordination and discipline shall incur administrative responsibility punishable under the provisions of this Title.

The liability to a credit institution and to the management or management positions of the credit institution shall be independent. The failure to initiate a sanctioning file or the filing or dismissal of the case against a credit institution shall not necessarily affect the liability of the management or management of the credit institution, and vice versa.

2. The administrative responsibility referred to in the preceding paragraph may also reach the natural or legal persons holding a significant participation as provided for in Chapter III of Title I, and those who, having Spanish nationality, control a credit institution of another Member State of the European Union, as well as those subject to the notification obligation laid down in Article 17. The responsibility will also be met by those holding management or management positions in the responsible entities.

3. The management bodies of an entity are those that are empowered to set the strategy, objectives and general guidance of the entity and which deal with the monitoring and control of the decision-making process of management, including those who effectively direct the entity.

Ostend management or management positions in credit institutions, for the purposes of the provisions of this Title, their administrators or members of their collective management bodies, their directors-general or those assimilated in the terms provided for in Article 6.6.

4. The sanctioning regime provided for in this Title will also apply to:

(a) The branches opened in Spain by foreign credit institutions.

(b) Natural or legal persons and their administrators in fact or in law who infringe the prohibitions referred to in Article 3.

(c) Financial holding companies, mixed financial holding companies and those holding management or management positions therein.

(d) All other entities that are provided for in the legal order.

(e) Those third parties to which credit institutions or entities referred to in points (a), (c) and (d) have subcontracted operational functions or activities.

5. The sanctioning regime provided for in this Title shall apply without prejudice to the tasks conferred on the European Central Bank in accordance with Regulation (EU) No 1024/2013 of 15 October 2013.

Article 90. Competence for the instruction of files.

1. It is for the Bank of Spain to be responsible for the instruction and resolution of the cases referred to in this Title, and may impose the penalties in the case described and the administrative measures which, where appropriate, proceed.

2. The Banco de España will give a reasoned account to the Minister for Economic Affairs and Competitiveness of the imposition of sanctions for very serious infringements and, in any case, will transmit to him on a quarterly basis the essential information about the procedures in processing and the resolutions adopted.

CHAPTER II

Violations

Article 91. Classification of offences.

The violations are classified in very serious, severe, and mild.

Article 92. Very serious infringements.

Constitute very serious violations:

(a) to exercise the activity of receiving deposits or other repayable funds from the public on a professional basis, as well as to make use of the reserved names of the credit institutions or others that may lead to confusion with them, without having been authorised as a credit institution.

(b) Perform the following acts, without authorization, without regard to the basic conditions laid down therein, or having obtained the authorization by means of false statements or by other irregular means:

1. Füsions or divisions affecting credit institutions as well as the global transfer of assets or liabilities in which a credit institution is involved.

2. º Acquisition or disposal, direct or indirect, of shares or other securities representing the capital, or of their political rights, of foreign credit institutions, by Spanish credit institutions or by a subsidiary or dominant entity thereof.

3. The distribution of reservations, express or hidden.

4. º Opening by Spanish credit institutions of branches abroad.

c) To maintain for a period of six months own resources lower than those required to obtain the authorization as a credit institution.

(d) Credit institutions or the consolidated group or the financial conglomerate to which they belong in an insufficient coverage of the required own resources requirements, when they are below 80% of the minimum established according to the risks assumed, or below the same percentage of the own resources requirements as required, if any, by the Banco de España to a given entity, remaining in both cases in such a situation for a period of at least six months.

e) To engage in activities outside its legally determined exclusive object, unless it is merely occasional or isolated.

(f) Performing acts or operations prohibited by rules of ordination and discipline with a range of law or by regulations of the European Union or with non-compliance with the requirements laid down therein, unless it has a purely occasional or isolated character.

g) Carishing of the accounting required by law or carrying it with essential irregularities that prevent knowing the financial or financial situation of the entity or of the consolidated group or financial conglomerate to which they belong.

(h) Incompliance with the obligation to submit their annual accounts to audit accounts in accordance with the relevant legislation.

i) Refusing or resisting the performance of the Banco de España in the exercise of the supervisory function, provided that it is an express and written requirement in this respect.

(j) Do not refer to the competent administrative body how much data or documents are to be sent or required in the exercise of its functions, or remitted them in an incomplete or inaccurate manner, where the assessment of the solvency or liquidity of the entity or of the consolidated group or financial conglomerate to which it belongs is made difficult. For the purposes of this point, it shall also be understood as a lack of remission, the temporary remission outside the time limit laid down in the relevant rule or the time limit granted by the competent body, when appropriate, when necessary.

In particular, they are understood to be included in this letter:

1. No remission or incomplete or inaccurate remission of:

i) The data referred to in Article 101 of Regulation (EU) No 575/2013 of 26 June.

(ii) Information on major risks, in breach of Article 394.1 of Regulation (EU) No 575/2013 of 26 June.

(iii) Information on compliance with the obligation to maintain own resources laid down in Article 92 of Regulation 575/2013 of 26 June, in breach of Article 99.1 of the Regulation.

(iv) Information on liquidity, in breach of Article 415 (1) and (2) of Regulation (EU) No 575/2013 of 26 June.

v) Information on the leverage ratio, in breach of Article 430.1 of Regulation (EU) No 575/2013 of 26 June.

2. º The non-communication or incomplete or inaccurate communication of the following information, provided that due to its importance or the delay in its submission, such breaches can be estimated as particularly relevant:

i) Financial information to be reported on a regular basis.

ii) The data declared to the Risk Information Central.

k) To breach the duty of information due to its partners, financial partners, clients and the general public, as well as the non-compliance with the duty of confidentiality on the data received from the Risk Information Central, its use for purposes other than those provided for in the regulatory regulations of the same, or the request for reports on persons with risk holders outside the cases expressly authorized in the aforementioned regulations. All this except that, by the number of persons concerned or by the importance of the information, such non-compliances can be estimated to be of little relevance.

(l) Serious infringements, where the committed acts have been carried out by fraudulent or used natural or legal persons.

m) To directly or indirectly acquire a significant share in a credit institution or to increase, directly or indirectly, such participation, in such a way that the proportion of voting rights or owned capital is equal to or greater than the thresholds set out in Article 17, in breach of the provisions of Chapter III of Title I, and in particular, the duty to notify the Bank of Spain.

n) Ceder directly or indirectly a significant share in or reduce a credit institution in such a way that the proportion of voting rights or owned capital is less than the thresholds set out in Article 16, in breach of Article 21.

n) To jeopardize the sound and prudent management of a credit institution through the influence exercised by the holder of a significant participation.

or) Present the credit institution, or the consolidable group or financial conglomerate to which it belongs, deficiencies in its organisational structure, internal control mechanisms or administrative and accounting procedures, including those relating to the management and control of the risks, where such deficiencies endanger the solvency or viability of the institution or of the financial conglomerate or group to which it belongs.

p) Incompliance with specific policies that, in particular, have been required by the Banco de España to a given entity in terms of capital buffers, provisions, treatment of assets or reduction of the risk inherent in its activities, products or systems, where the aforementioned policies have not been adopted within the period and conditions set for the purpose by the Banco de España and the non-compliance risks the solvency or viability of the institution.

q) To comply with the restrictions or limitations imposed by the Banco de España on the business, operations or network of a given entity.

(r) Do not refer to the Banco de España by the administrators of a credit institution the plan of return to the fulfilment of the solvency rules required under Article 68.2 (c) or of the action or restructuring plans referred to in Law 9/2012 of 14 November, when this is appropriate. It shall be understood that there is a lack of referral where the time limit for making the referral has elapsed, from the moment the administrators knew or had to know that the entity was in one of the situations that determine the existence of that obligation.

s) Take an exposure exceeding the limits laid down in Article 395 of Regulation (EU) No 575/2013 of 26 June.

t) Assume an exposure to credit risk in a securitisation position that does not satisfy the conditions set out in Article 405 of Regulation (EU) No 575/2013 of 26 June.

u) Make payments to the holders of the instruments included in own resources that lead to non-compliance with the Common Equity Tier I capital requirements, Additional Tier I capital, Tier II capital or the capital buffer levels set out in this Act or in Regulation (EU) No 575/2013 of 26 June.

v) Not to publish the required information in breach of Article 431 (1), (2) and (3) or Article 451.1 of Regulation (EU) No 575/2013 of 26 June, as well as the publication of such information in an incomplete or inaccurate manner.

w) Incompliance with the suitability requirements of the members of the management bodies, directors general or assimilated persons and other persons who are key to the development of the activity of the credit institution, when the Banco de España appreciates the existence of a non-compliance with these requirements, which is not remedied after the referral of the corresponding requirement; as well as the failure to comply with the other corporate governance and remuneration policies provided for in Chapter V of Title I, where it is considered particularly significant. the non-compliance in the light of the importance of the specific rules in breach or the financial economic situation of the institution.

x) To exercise acts or transactions in breach of the rules laid down under Article 5, provided that the number of persons concerned, the reiteration of the conduct or the effects on the confidence of the clientele and the stability of the financial system, such breaches can be estimated to be particularly relevant.

and) Serious infringements when, during the five years preceding their commission, the credit institution has been imposed on the same type of infringement by the credit institution.

Article 93. Serious infringements.

Constitute serious violations:

(a) Carry out acts or operations without authorization where this is mandatory, without observing the basic conditions of the same, or having obtained the authorization by means of false statements or by other irregular means, provided that this does not involve the commission of a very serious infringement in accordance with the provisions of the previous article.

(b) Not to present communication, where this is required, in the cases referred to in Article 92 (b) and in cases where it relates to the composition of the administrative bodies of the institution or the composition of its shareholding.

c) To exercise in a purely occasional or isolated manner activities other than its legally determined exclusive object.

(d) to exercise in a purely occasional or isolated manner acts or operations prohibited by law-range or established rules of ordination and discipline in European Union regulations, or with non-compliance with the requirements laid down therein.

(e) Carry out acts or operations prohibited by regulatory standards of ordination and discipline or with non-compliance with the requirements laid down therein, unless it is occasional or isolated.

(f) To exercise acts or operations with non-compliance with the rules laid down under Article 5, provided that this does not involve the commission of a very serious infringement in accordance with the provisions of the previous Article, unless it is occasional or isolated.

g) Incurring credit institutions or the consolidable group or financial conglomerate to which they belong in an insufficient coverage of the own resources requirements established in the solvency regulations or required, where appropriate, by the Banco de España to a given entity, remaining in such a situation for a period of at least six months, provided that this does not involve the commission of a very serious infringement as provided for in the previous article.

(h) Failure to comply with existing risk limits or any other rules imposing quantitative, absolute or relative limitations on the volume of certain active or passive operations, provided that this does not involve the commission of a very serious infringement in accordance with the provisions of the previous Article.

i) Incompliance with the obligation to maintain liquid assets as set out in Article 412 of Regulation (EU) No 575/2013 of 26 June.

(j) Failure to comply with the conditions and requirements required by the relevant rules in credit operations which are eligible for interest subsidies or other public aid.

k) Defend in an insufficient manner the reserves and the provisions for insolvencies or the compensatory funds or items required by the accounting rules for the coverage of other assets or contingencies.

(l) Do not refer to the competent administrative body the data or documents which must be sent to him or which he himself requires in the performance of his duties, or his incomplete or inaccurate remission, unless this involves the commission of a very serious infringement. For the purposes of this letter, it shall also be understood as a lack of remission, the temporary remission outside the time limit provided for in the relevant standard or the time limit granted by the competent authority, when appropriate, when appropriate.

m) Not to communicate to the General Board or Assembly any facts or circumstances whose communication to it has been ordered by the administrative body empowered to do so, provided that this does not constitute a very serious infringement in accordance with the provisions of the previous article.

n) To breach the duty of information due to its partners, financial partners, clients and the general public, as well as to breach the duty of confidentiality on the data received from the Risk Information Central, its use for purposes other than those provided for in the regulatory regulations of the same, or the request for reports on persons with risk holders outside the cases expressly authorized in that Law, provided that this does not constitute a very serious infringement in accordance with the provisions of the previous article.

n) Conduct fraudulent acts or use of natural or legal persons involved in order to achieve a result contrary to the rules of solvency and discipline, provided that this does not constitute a very serious infringement in accordance with the provisions of the previous article.

or) To comply with the existing rules on accounting for transactions and on the formulation of the financial statements of compulsory communication to the competent administrative body.

p) Present the credit institution, or the consolidated group or financial conglomerate to which it belongs, deficiencies in its organisational structure, internal control mechanisms or administrative and accounting procedures, including those relating to the management and control of the risks and provided that this does not constitute a very serious infringement in accordance with the provisions of the previous Article.

q) To manage or direct credit institutions persons who do not exercise their right to such a charge.

r) To comply with specific policies that, in particular, have been required by the Banco de España to a given entity in terms of provisions, treatment of assets or reduction of the risk inherent in its activities, products or systems, when the aforementioned policies have not been adopted within the time limit set for the purpose by the Banco de España and provided that this does not constitute a very serious infringement in accordance with the provisions of the previous article.

s) The departments or services of customer service will not exist or present a malfunction, in the latter case, once, after the deadline granted to the effect by the Banco de España, there has been no cure for the deficiencies detected by the Bank of Spain.

t) To meet the requirements of suitability by the members of the management bodies, directors-general or assimilated persons and other persons who are key to the development of the activity of the credit institution; as well as the other corporate governance and remuneration policies provided for in Chapter V of Title I, where, in both cases, it does not constitute a very serious infringement in accordance with the provisions of the previous article.

u) Incurring minor infractions, when during the two years prior to its commission, the credit institution would have been imposed on a firm sanction for the same type of infringement.

Article 94. Minor infractions.

It constitutes minor infringements of the non-compliance with mandatory requirements for credit institutions falling within the rules of organisation or discipline which do not constitute a serious or very serious infringement in accordance with the provisions of the two preceding articles.

Article 95. Limitation of infringements and penalties.

1. Very serious infractions will be prescribed at five years, the serious ones at four years and the mild ones at two years.

2. The limitation period shall be counted from the date on which the infringement was committed. In the case of infringements resulting from a continuous activity or omission, the initial date of the calculation shall be the date of completion of the activity or of the last act with which the infringement is consumed.

3. The limitation period shall be interrupted by the initiation, with the knowledge of the person concerned, of the sanctioning procedure, the time limit being resumed if the file remained paralyzed for six months for reasons not attributable to those against whom it is directed.

It shall not be understood that there is a standstill for the purposes of the preceding paragraph, in the event that it occurs as a result of the adoption of an agreement to suspend the procedure under the provisions of Article 117.

4. The system of prescription of penalties will be provided for in Law 30/1992, of 26 November, of the Legal Regime of Public Administrations and of the Common Administrative Procedure.

CHAPTER III

Sanctions

Article 96. Sanctions.

1. The commission of the infringements referred to in the preceding Articles shall give rise to the imposition of the penalties provided for in this Chapter.

2. The penalties imposed, as well as any action brought against them and the results of these resources, must be communicated to the European Banking Authority.

3. Unless otherwise specified, the penalties provided for in the following Articles shall apply to the subjects referred to in Article 89.4 and to their management or management positions, as appropriate. Holders of significant holdings or persons subject to the obligation referred to in Article 17 who commit very serious infringements as provided for in this Law shall be punished in accordance with the provisions of Article 97, subject to their administrative or management charges in accordance with the provisions of Article 100.

Article 97. Penalties for the commission of very serious infringements.

1. The commission of very serious infringements shall impose on the offending credit institution one or more of the following penalties:

a) Multa, which may be, in the judgment of the competent body to resolve:

1. º Between the triple and the five-fold of the amount of the profits derived from the infringement, when such benefits can be quantified; or

2. No of between 5% and 10% of the total annual net turnover, including gross income from interest to be collected and income assimilated, income from shares and other fixed or variable income securities and commissions or corretages receivable from the institution in the previous financial year; or a fine of between 5,000,000 and 10,000,000 euros, if that percentage is less than this figure.

When the infringing entity is a subsidiary of another company, the own resources of the parent company in the previous financial year shall be taken into account for the purposes of determining the amount of the fine.

b) Revocation of the entity's authorization.

In the case of branches of credit institutions authorised in another Member State of the European Union, the sanction for revocation of the authorisation shall be understood as being replaced by the prohibition on the initiation of new operations on Spanish territory.

2. In addition to the penalties provided for in the preceding paragraph, the following ancillary measures may be imposed:

a) A requirement for the offender to terminate his conduct and refrain from repeating it.

(b) Suspension of the voting rights of the shareholder (s) responsible in the alleged commission of very serious infringements arising from the non-compliance with the requirements for authorisation and those applicable to the acquisition of significant holdings.

(c) Public assembly with publication in the "Official State Gazette" of the identity of the offender, the nature of the infringement and the penalties imposed.

Article 98. Penalties for the commission of serious infringements.

1. For the commission of serious infringements the credit institution shall be imposed a fine which may be, in the judgment of the body competent to resolve:

(a) Between double and triple the amount of profit arising from the infringement, where such benefits can be quantified; or

(b) Of between 3% and 5% of the total annual net turnover, including gross income from interest to be collected and income assimilated, income from shares and other fixed or variable income securities and commissions or corretages receivable from the institution in the preceding financial year; or a fine of between EUR 2,000,000 and EUR 5,000,000, if that percentage is less than this figure.

Where the infringing entity is a subsidiary of a parent undertaking, the own resources of the parent undertaking in the preceding financial year shall be taken into account for the purposes of determining the amount of the fine.

2. In addition to the penalties provided for in the preceding paragraph, the following ancillary measures may be imposed:

a) A requirement for the offender to terminate his conduct and refrain from repeating it.

b) Public assembly with publication in the "Official State Gazette" of the identity of the offender and the nature of the infringement, and the penalties or ancillary measures imposed; or private admonition.

Article 99. Penalties for the commission of minor infringements.

1. For the commission of minor infractions the credit institution shall be imposed a fine which may be, in the judgment of the body competent to resolve:

(a) Between double and triple the amount of profit arising from the infringement, where such benefits can be quantified; or

(b) Between 0,5% and 1% of the total annual net turnover, including gross income from interest to be collected and income assimilated, income from shares and other fixed or variable income securities and commissions or corretages receivable from the institution in the previous financial year; or a fine of between EUR 100 000 and EUR 1,000,000, if that percentage is less than this figure.

Where the infringing entity is a subsidiary of a parent undertaking, the own resources of the parent undertaking in the preceding financial year shall be taken into account for the purposes of determining the fine.

2. In addition to the penalties provided for in the preceding paragraph, the following ancillary measures may be imposed:

a) A requirement for the offender to terminate his conduct and refrain from repeating it.

b) Private assembly.

Article 100. Penalties for those who are in charge of administration or management for the commission of very serious infringements.

1. Irrespective of the sanction which, where appropriate, is required to impose on the offending credit institution by the commission of very serious infringements, one or more of the following penalties may be imposed on those who, exercising administrative or managerial positions, in fact or in law, are liable for the offence:

a) Multa each one of them for amount of up to 5,000,000 euros.

(b) Suspension in the exercise of the management or management charge in the credit institution for a term of not more than three years.

(c) Separation of the position in the credit institution, with disablement to exercise management or management positions in the same credit institution for a maximum period of five years.

(d) Disablement to exercise management or management positions in any credit institution or financial sector, with separation, where appropriate, from the management or management position of the infringer in a credit institution, for a period not exceeding ten years.

2. In addition to the penalties provided for in the preceding paragraph, the following ancillary measures may be imposed:

a) A requirement for the offender to terminate his conduct and refrain from repeating it.

b) Public assembly with publication in the "Official State Gazette" of the identity of the offender, the nature of the infringement and the penalties or ancillary measures imposed.

Article 101. Penalties for those who are in charge of administration or management for the commission of serious infringements.

1. Irrespective of the sanction which, where appropriate, is applicable to the offending credit institution by the commission of serious infringements, one or more of the following penalties may be imposed on those who, in the case of administrative or managerial positions, in fact or in law, are liable for the offence:

a) Multa each one of them for amount of up to 2,500,000 euros.

(b) Suspension in the exercise of the term of office not exceeding one year.

c) Separation of the charge, with disablement to exercise management or management positions in the same credit institution for a maximum period of two years.

(d) Disqualification to exercise management or management positions in any credit institution or financial sector, with separation, where appropriate, from the management or management position of the infringer in a credit institution, for a period not exceeding five years.

2. In addition to the penalties provided for in the preceding paragraph, the following ancillary measures may be imposed:

a) A requirement for the offender to terminate his conduct and refrain from repeating it.

b) Public assembly with publication in the "Official State Gazette" of the identity of the offender, the nature of the infringement and the penalties or ancillary measures imposed.

Article 102. Penalties for those who are in charge of administration or management for the commission of minor offences.

1. Irrespective of the sanction which, where appropriate, is required to impose on the offending credit institution by the commission of minor offences, one or more of the following penalties may be imposed on those who, in the case of administrative or managerial positions, in fact or in law, are liable for the offence:

a) Multa each one of them for amount of up to 500,000 euros.

b) Private assembly.

2. In addition to the penalties provided for in the previous paragraph, the offender may be required to terminate his conduct and refrain from repeating it.

Article 103. Criteria for the determination of penalties.

The penalties applicable in each case for the commission of very serious, serious or minor infractions will be determined on the basis of the following criteria:

a) The nature and entity of the infringement.

b) The degree of responsibility in the facts.

c) The severity and duration of the violation.

(d) The importance of the benefits obtained or the losses avoided, if any, as a result of the acts or omissions constituting the infringement.

(e) The financial soundness of the legal person responsible for the infringement, among other objectivable elements, in the total turnover of the responsible legal person.

(f) The financial soundness of the natural person responsible for the infringement reflected, among other objectivable elements, in the annual income of the responsible natural person.

g) The unfavorable consequences of the facts for the financial system or the national economy.

h) The underhealing of the infringement on its own initiative.

i) Repair of damages caused.

j) Losses caused to third parties by the infringement.

k) The level of cooperation with the competent authority.

l) The systemic consequences of the infringement.

m) The level of representation that the offender has in the offending entity.

n) In the case of insufficient own resources, the objective difficulties that may have been encountered in order to achieve or maintain the legally required level.

n) The offender's previous conduct in relation to the rules of ordination and discipline affecting him, taking into account the firm sanctions that would have been imposed on him, over the last five years.

Article 104. Responsibility for the management or management charges.

1. The person who exercises in the credit institution administrative or management fees shall be liable for the offences when they are attributable to his or her intentional or negligent conduct.

2. Its administrators or members of its administrative bodies shall not be held liable for the infringements in the following cases:

(a) Where those who are part of the administrative bodies have not been assisted by reason of the corresponding meetings, they have voted against or expressly saved their vote in relation to the decisions or agreements which have resulted in the infringements.

(b) Where such infringements are solely attributable to executive commissions, members of the administrative body with executive functions, general directors or similar bodies, or other persons with executive functions in the institution.

Article 105. Responsibility of the consolidable groups of credit institutions.

1. Where the offences referred to in Articles 92, 93 and 94 relate to the obligations of the consolidable groups of credit institutions, the required entity shall be punished and, where appropriate, its administrators and managers.

In addition, where such infringements relate to the obligations of financial conglomerates, the sanctioning measures provided for in this Law shall apply to the obligated entity when it is a credit institution or a mixed financial holding company, provided that in the latter case it is the responsibility of the Banco de España to carry out the task of coordinating the additional supervision of that financial conglomerate. The aforementioned sanctioning measures may also be imposed on the managers and managers of the required entity.

2. If the penalty to be applied outside the approval of the authorisation provided for in Article 97.1.b) and the financial institution head of the consolidated group does not have the status of an institution of credit, the penalty of forced dissolution shall be imposed at the opening of the settlement period.

3. Where, pursuant to the provisions of the two preceding paragraphs or pursuant to Article 92.b) 2. penalties are imposed on natural persons or entities which do not have the status of credit institutions, it shall apply to that effect in this Law for institutions which do have such a condition, without prejudice to the provisions of the preceding paragraph.

Article 106. Temporary appointment of members of the administrative body.

In the event that, by the number and position of the persons affected by the sanctions of suspension or separation, it is strictly necessary to ensure continuity in the administration and direction of the credit institution, the Banco de España may arrange for the appointment, on a provisional basis, of the members that are required to enable the administrative body to adopt agreements or of one or more administrators, specifying their functions. Such persons shall exercise their positions until, by the competent body of the credit institution, which must immediately convene, the corresponding appointments are provided and the persons appointed, where appropriate, shall be appointed until the period of suspension has elapsed.

CHAPTER IV

Procedure rules

Article 107. Procedure for the imposition of sanctions.

1. The imposition of the penalties provided for in this Law shall be carried out in accordance with the procedure and principles laid down in Law 30/1992, of 26 November, of the Legal Regime of the Public Administrations and of the Common Administrative Procedure, with the specialties listed in the following Articles, and in the provisions that develop it.

2. The penalties which, where appropriate, correspond to both the credit institutions and those carrying out administration or management positions, shall be imposed, where possible, in a single resolution, resulting in the processing of a single sanctioning procedure.

Article 108. Procedure applicable in the case of minor infringements.

In the case of minor infringements, the sanction may be imposed upon the processing of the simplified procedure, with only the hearing of the interested party and the corresponding administrative or management charges being mandatory.

Article 109. Appointment of instructors or assistant secretaries.

In the procedure initiating the procedure itself, or throughout the procedure, instructors or assistant secretaries may be appointed if the complexity of the case so advises. The assistant instructors shall act under the direction of the instructor.

Article 110. Testing practice.

The statement of objections shall be answered by the instructor, either on his own initiative or at the request of the parties concerned, in his arguments to the said specifications, the practice of any additional evidence which he considers necessary.

Article 111. Provisional measures.

1. Prior to the initiation of the procedure, and subject to urgent reasons, the Bank of Spain may, on its own initiative or at the request of a party, take the provisional measures it deems necessary to ensure the proper exercise of its supervisory function and to ensure the effectiveness of the decision which, if appropriate, may be made. These measures must be confirmed, amended or lifted in the agreement to initiate the procedure for penalties.

2. The competent authority to initiate the procedure may also, by means of a reasoned agreement, adopt the measures of a provisional nature which are necessary to ensure the effectiveness of the decision which may be taken, the good end of the procedure, the maintenance of the effects of the infringement and the requirements of the general interest.

3. The body which has adopted the provisional measures may provide, if the nature of the measures and the circumstances of the case so advise, the publication of those measures, as provided for in Article 60 of Law 30/1992, of 26 November, of the Legal Regime of Public Administrations and of the Common Administrative Procedure and their registration in the relevant public registers, especially in the event that their addressee does not comply with them voluntarily.

4. The provisional measures to be taken include the suspension of the activity of the alleged infringer or any other that is considered, provided that this is advisable for the protection of the financial system or the economic interests concerned.

Article 112. Provisional suspension of persons holding office or management positions.

1. In the agreement on the opening of the file or during the procedure, the provisional suspension may be made in the exercise of its functions of persons who, having administrative or managerial positions in the credit institution, appear to be liable for very serious infringements, provided that this is advisable for the protection of the financial system or the economic interests concerned. Such suspension shall be entered in the Trade Register and in the other records in which it applies.

2. The provisional suspension, except in the case of the cessation of the file attributable to the person concerned, shall be for a maximum period of six months, and may be lifted at any time of its own motion or at the request of the person concerned.

3. The duration of the provisional suspension shall be taken into account for the purpose of compliance with the suspension sanctions.

4. The provisions of Article 106 concerning the temporary appointment of members of the administrative body shall apply to the provisional suspension provided for in this Article.

Article 113. Enforcement of sanctions and impeachment on the administrative path.

1. The penalties imposed in accordance with this Law shall not be enforceable until they have ended the administrative route.

2. The decisions of the Bank of Spain ending the sanctioning procedure shall be brought before the Minister for Economic Affairs and Competitiveness, as provided for in Articles 114 and 115 of Law No 30/1992 of 26 November 1992 on the Legal Regime of Public Administrations and the Common Administrative Procedure.

Article 114. Penalties consisting of fine.

1. Where the penalty is fine, the amount must be entered in the Treasury.

2. If the penalty referred to in the preceding paragraph is not met within the time limit specified, it may be claimed on an executive basis in accordance with the applicable rules of procedure.

Article 115. Publicity of the sanctions.

1. The imposition of the penalties, with the exception of that of private admonition, shall be recorded in the administrative records of credit institutions and senior officials.

2. The penalties for suspension, separation and separation with disablement, once they are executive, shall also be recorded in the Commercial Register and, where applicable, in the Register of Cooperatives.

3. The appointment of members of the administrative body or of the provisional administrators referred to in Article 106 shall also be recorded in the relevant records.

4. Once the sanctions imposed on the credit institution or those carrying out administration or management positions in the credit institution are enforceable, they shall be communicated to the following General Meeting or Assembly.

5. Penalties for very serious infringements will be published in the "Official State Gazette" once they are firm on the administrative side. The publication of a public warning shall also be the subject of such publication. For the remaining penalties for serious infringements, the Banco de España may arrange for its publication in the "Official State Gazette" once the latter have acquired a firm position on the administrative basis.

6. Without prejudice to data protection rules, penalties and warnings for very serious and serious infringements must also be published on the Banco de España's website, within a maximum period of 15 working days after the sanction or warning is signed on an administrative basis, with information on the type and nature of the offence and the identity of the natural or legal person on whom the sanction or admonition falls. This information must remain on the website for the following five years.

The Banco de España may agree that the sanction shall be published by keeping the identity of the sanctioned subjects confidential in any of the following circumstances:

(a) Where the sanction is imposed on a natural person and, after prior assessment, the publication of the personal data shall be disproportionate.

b) When publication could endanger the stability of financial markets or an ongoing criminal investigation.

(c) Where the publication may cause disproportionate damage to the entities or natural persons involved, to the extent that the damage can be determined.

7. In the event that the published sanction has been appealed on an administrative or judicial basis, the Banco de España shall publish, without delay, information on the state of processing of the appeal and the outcome thereof.

Article 116. Notification of infringements.

Credit institutions must have appropriate procedures in place to enable their employees to report internal violations through an independent, specific and autonomous channel. These procedures shall ensure the confidentiality of both the person reporting the offences and the persons who are allegedly responsible for the offence.

Also, institutions should ensure the protection of employees who report violations committed in the entity against retaliation, discrimination and any other type of improper treatment.

Article 117. Concurrence with criminal proceedings.

The exercise of the sanctioning power referred to in this Title shall be independent of the possible concurrency of criminal offences or offences. However, where criminal proceedings are being carried out for the same facts or for others whose separation of the offences punishable under this Title is not rationally possible, the administrative procedure shall be suspended in respect of the same until the judicial authority has made a firm statement. Where appropriate, the procedure shall be resumed, the decision to be taken shall respect the assessment of the facts contained in that statement.

Article 118. Referral of the memory of sanctioning actions to the General Courts.

The Banco de España will send an annual report to the Cortes General of the actions that have led to very serious sanctions.

Additional disposition first. Requirements for the computability of the preference shares for the purposes of the solvency rules and the tax regime applicable to them as well as certain debt instruments.

1. Preference shares shall be considered as Tier 1 capital in addition to the effects provided for in Regulation (EU) 575/2013 of 26 June, provided that they comply with the conditions laid down in Chapter 3 of Title I of Part Two or Chapter 2 of Title I of Part 10 of that Regulation.

2. Preference shares which meet the conditions described in the preceding paragraph shall apply to the tax arrangements provided for in paragraphs 3 and 4 of this additional provision where they comply with the following additional requirements:

(a) To be issued by a Spanish credit institution or by an anonymous company resident in Spain or in a territory of the European Union, which does not have the status of a tax haven, the voting rights of which correspond in its entirety directly or indirectly to a Spanish credit institution and whose exclusive activity or object is the issue of preference shares.

(b) In the case of issues made by a subsidiary of those provided for in point (a), the resources obtained must be fully invested, discounting the issue and management costs, and on a permanent basis, in the dominant credit institution of the issuing subsidiary, in such a way that they are directly affected by the risks and financial situation of that dominant credit institution and that of its consolidated group or sub-group to which it belongs.

(c) Not to grant their holders political rights, except in the exceptional cases to be established in the respective issuing conditions.

d) Not to grant preferential subscription rights for future new issues.

e) Listing on regulated markets, multilateral trading systems, or other organized markets.

(f) The public offering for sale must have a tranche aimed exclusively at professional customers of at least 50% of the total of the issue, without the total number of such investors being less than 50, and without applying to this assumption as provided for in Article 78 bis.3.e) of the Law 24/1988, of 28 July, of the Securities Market.

g) In the case of issues of entities that are not listed companies, in the terms of Article 495 of the Recast Text of the Capital Companies Act, approved by Royal Legislative Decree 1/2010, of 2 July, the minimum unit value of the preferred shares shall be EUR 100,000 and in the case of the remaining issues, the minimum unit value of the preferred shares shall be EUR 25,000.

3. The tax arrangements for preference shares issued in accordance with the preceding paragraph shall be as follows:

a) Your remuneration will have the consideration of deductible expense for the issuing entity.

(b) The income derived from the preference shares shall be classified as income earned by the transfer to third parties of own capital in accordance with the provisions of Article 25.2 of Law 35/2006 of 28 November of the Tax on the Income of the Physical Persons and the partial modification of the laws of the Taxes on Societies, on the Income of Non-Residents and on the Heritage.

(c) In the case of issues made by a subsidiary company, the income generated by the deposit of the resources obtained in the dominant credit institution shall not be subject to any withholding tax. If applicable, the exemption provided for in Article 14.1.f of the recast of the Non-Resident Income Tax Law, approved by Royal Legislative Decree 5/2004 of 5 March 2004, shall apply.

(d) The income derived from the preference shares obtained by taxable persons of the Income Tax of non-residents without permanent establishment shall be exempt from such tax in the same terms established for the income derived from the public debt in Article 14 of the Recast Text of the Income Tax Law of Non-Residents, approved by Royal Legislative Decree 5/2004, of 5 March.

e) The transactions arising from the issuance of preference shares will be exempt from the corporate operations modality of the Tax on Proprietary Transmissions and Documented Legal Acts.

4. The dominant credit institution of a consolidated group or sub-group of credit institutions shall have an obligation to inform the Tax Administration and the institutions in charge of financial supervision, in the manner in which it is regulated, of the activities carried out by the subsidiaries referred to in paragraph 2 (a) of this Additional Provision and of the identity of the taxpayers of the Income Tax of the Physical Persons and the taxable persons of the Company Tax, which are holders of the securities issued by those companies, as well as the Non-Resident Income Tax Taxpayers who obtain income from such securities by permanent establishment located in Spanish territory.

5. The provisions of this Additional Provision shall also apply in cases where the dominant entity referred to in paragraph 2 (a) is an entity governed by the law of another State.

6. The arrangements provided for in paragraphs 3 and 4 shall also apply to the issuance of debt instruments by credit institutions which comply with the requirements laid down in paragraph 2 (a), (b), (c), (d) and (e). In these cases, the exclusive activity or object referred to in paragraph 2 (a) shall relate both to the issue of preference shares and to the issuance of other financial instruments.

The scheme provided for in paragraphs 3 and 4 shall also apply to securities listed on regulated markets, multilateral trading systems or other markets organised and issued by mortgage-backed securities, regulated by Law 19/1992 of 7 July on the Company and the Fund for Real Estate Investment and on the Fund for Mortgage Securitisation, and to asset-backed securitization funds governed by the fifth additional provision of Law 3/1994 of 14 April, adapting Spanish legislation on the credit institutions to the Second Banking Coordination Directive and other amendments relating to the financial system are introduced.

7. The tax arrangements provided for in paragraphs 3 and 4 shall also apply to preference shares issued by listed entities other than credit institutions or by a company resident in Spain or in a territory of the European Union, which does not have a tax haven consideration, and whose voting rights correspond in full, directly or indirectly, to non-credit listed entities. In these cases, preference shares shall comply with the following requirements:

(a) Those provided for in points (b), (c), (d), (e), (f) and (g) of paragraph 2

b) that have been issued and disbursed;

(c) that have not been acquired by the issuing entity or its subsidiaries, or by an entity in which the issuing entity holds a share, in the form of direct or indirect ownership, of 20% or more of the voting rights or capital;

d) that its acquisition has not been financed directly or indirectly by the issuing entity;

(e) shall be placed, for the purposes of the credit ranking order, immediately after all creditors, whether subordinated or not, of the issuer or the parent of the consolidated group or sub-group and in front of the ordinary shareholders;

(f) which are not supported or covered by a guarantee that improves the ranking of the credit in the event of insolvency or liquidation by any of the following entities:

i) the entity or its subsidiaries,

(ii) the parent company of the entity or its subsidiaries,

(iii) any undertaking which has close links with the entities referred to in points (i) and (ii) above. For these purposes, the presence of close links in accordance with Article 4.1.38 of Regulation (EU) 575/2013 of 26 June 2014 shall be assessed.

(g) that are not subject to any agreement, whether contractual or otherwise, that increases the ranking of claims arising from preference shares in the event of insolvency or liquidation;

h) that are of a perpetual nature and the provisions that regulate them do not provide for incentives by the entity to reimburse them;

(i) that, if the provisions governing them provide for one or more options for purchase, the exercise of such options depends exclusively on the will of the issuer;

(j) which may be reimbursed or repurchased only from the fifth year from the date of disbursement;

k) for the remuneration of the units to their holders, the following conditions must be met:

i) that are credited to distributable items,

ii) that its level is not modified according to the credit quality of the issuing entity or the parent company,

(iii) that the provisions governing the instruments grant the institution full discretion at all times to cancel the payments of remuneration for an indefinite period and without cumulative effects, and the institution may use those cancelled payments without restriction to fulfil its obligations as they become due,

iv) that the cancellation of the remuneration payment is not considered to be non-payment of the issuing entity,

v) that the cancellation of the remuneration payment does not carry any restriction on the issuing institution, in accordance with Article 53 of Regulation (EU) 575/2013 of 26 June.

(l) in cases where the issuing or parent institution, or its consolidated group or sub-group, presents significant accounting losses or a relevant fall in its own funds, the terms of issue of the preferred shares shall establish a mechanism to ensure the participation of its holders in the absorption of current or future losses, and that any recapitalisation processes, either by the conversion of the shares in ordinary shares of the issuing or parent institution, by the reduction of their shares, shall not be impaired. nominal value.

8. The tax regime provided for in paragraphs 3 and 4 shall also apply to debt instruments issued by companies resident in Spain or public entities. In these cases, debt instruments shall comply with the requirements laid down in points (c), (d) and (e) of paragraph 2.

Additionally, this tax regime shall apply to debt instruments issued by a company resident in a territory of the European Union, which does not have the consideration of a tax haven, and whose voting rights correspond in its entirety, directly or indirectly, to the entities resident in Spain referred to in the preceding paragraph. In these cases, debt instruments shall comply with the requirements laid down in points (b), (c), (d) and (e) of paragraph 2.

9. The issuance of debt instruments referred to in paragraphs 6 and 8 shall not apply to the limitation imposed, for reasons of capital and reserves, in Articles 405 and 411 of the Recast Text of the Capital Companies Act, approved by the Royal Decree of Law 1/2010 of 2 July.

Additional provision second. Limitations on the issuance of bonds.

It will be applicable to credit institutions, as provided in Article 510 of the Recast Text of the Capital Companies Law, approved by the Royal Legislative Decree 1/2010 of 2 July.

Additional provision third. Leasing transactions.

1. The consideration of leasing operations shall be those contracts which are exclusive to the disposal of the use of movable or immovable property, acquired for that purpose in accordance with the specifications of the future user, in exchange for a consideration consisting in the periodic payment of quotas. The goods to be transferred shall be affected by the user only to their agricultural, fishing, industrial, commercial, craft, service or professional holdings. The leasing contract will necessarily include an option to purchase, on completion, in favour of the user.

When, for any reason, the user does not acquire the object of the contract, the lessor may assign it to a new user, without the principle established in the previous paragraph being considered to be violated by the circumstance of not having been acquired the good according to the specifications of that new user.

2. In addition, entities carrying out leasing operations may also carry out the following activities:

(a) Maintenance and conservation activities of the assets transferred.

b) Grant financing connected to a current or future lease operation.

c) Intermediate and manage leasing operations.

d) Non-financial leasing activities, which may or may not be supplemented by an option to purchase.

e) Advising and producing trade reports.

Additional provision fourth. Monitoring of entities not enrolled in administrative records.

1. In relation to natural or legal persons who, without being registered in some of the legally provided administrative registers for financial institutions, offer the public the performance of financial operations of assets or liabilities or the provision of financial services, whatever their nature, the Ministry of Economy and Competitiveness, on its own initiative or at the request of the Bank of Spain or any other authority, is empowered to:

(a) To request from them, in themselves or through the Banco de España, the supply of any information, accounting or other nature, relating to their financial activities, with the degree of detail and with the periodicity that are deemed appropriate.

(b) To carry out, on its own or through the Banco de España, any inspections deemed necessary for the purpose of clarifying any aspect of the financial activities of such persons or entities and their suitability for legal order or to confirm the veracity of the information referred to in the previous paragraph.

2. The lack of supply of information requested in accordance with paragraph 1 (a) above within the time limit set or to be granted for the purpose, the lack of accuracy in the information provided and the refusal or resistance to the inspection activities referred to in paragraph 1 (b) shall be considered as very serious infringements for the purposes of Title IV. The penalties provided for in Title IV relating to such infringements may be imposed each of the time when the information referred to is not supplied in time or the refusal or resistance to the said inspection activities is produced.

Additional provision fifth. Legal regime for institutional protection systems.

1. The Banco de España may waive individual compliance with the requirements laid down in the second to eighth parts of Regulation (EU) No 575/2013 of 26 June on credit institutions integrated into an institutional protection system where such a system is established through a contractual arrangement between several credit institutions, which complies with the requirements laid down in Article 10 of that Regulation and with the following:

(a) There is a central entity that determines in a binding manner its business policies and strategies, as well as internal control and risk management levels and measures. This central entity shall be responsible for fulfilling the regulatory requirements on a consolidated basis of the institutional protection system.

(b) that the central institution is one of the credit institutions which are members of the institutional protection system or another credit institution which is involved in all of them and which is also part of the system.

(c) That the contractual arrangement constituting the institutional protection system contains a mutual commitment of solvency and liquidity between the institutions that are members of the system that reaches the entire own resources of each of them as regards the solvency support. The mutual support commitment will include the necessary forecasts for the support among its members to be carried out through funds immediately available.

d) That the institutions belonging to the institutional system of protection put in common the totality of their results, being distributed in proportion to the participation of each of them in the system.

e) That the contractual agreement establishes that the entities must remain in the system for a minimum period of 10 years, and must prewarn at least 2 years in advance of their desire to abandon it after that period.

In addition, the agreement should include a system of penalties for a reduction that will reinforce the permanence and stability of the entities in the institutional protection system.

(f) The Bank of Spain considers that the requirements laid down in the financial institutions ' own resources regulations are met to assign a risk weight of 0% to the exposures that the members of the institutional protection system have among themselves.

2. The Bank of Spain shall be responsible for verifying the above requirements for the purposes of this provision.

3. Prior to the abandonment of an institutional system of protection by any of the entities that integrate it, the Banco de España will assess both the individual viability of the entity that intends to abandon the system and the system of the latter and the rest of the participating entities after the alleged disengagement.

When the integrated entities as provided for in this Provision are Savings Banks, the central entity shall have the nature of a public limited liability company and shall be jointly controlled by all of them, in accordance with Article 42 of the Trade Code.

Additional provision sixth. References to the repealed legislation.

The references in the legal system to the rules repealed in accordance with the provisions of the Derogation Provision shall be construed as being made to the corresponding provisions of this Law.

Additional provision seventh. Nominative actions and economic exercise.

1. The capital of credit institutions which are in the form of a public limited liability company shall in any event be represented by nominative shares.

2. Credit institutions shall adjust the economic year to the calendar year.

Additional disposition octave. Legal status of the Official Credit Institute.

The Institute of Official Credit will have for all purposes the consideration of credit institution, with the particularities provided for in its specific legislation.

In particular, as provided for in this Law, Titles II, III and IV shall apply to it, with the exceptions to be determined in regulation, and the provision of information reserve duty.

Additional provision ninth. Arrangements for the management and discipline of mutual guarantee companies.

1. The Mutual Guarantee Societies and the Societies of Reafirenchment, as well as those who have administrative or management positions in them, which infringe rules of ordination or discipline, will incur punishable administrative responsibility in accordance with the provisions of this Law.

2. To this end, the provisions of the Law 1/1994 of 11 March on the Legal Regime of the Reciprocal Guarantee Societies, and in its implementing rules, shall be considered as rules of ordination and discipline.

Additional provision 10th. Incompatibility of auditors to carry out work on credit institutions.

When the competent bodies of the Autonomous Communities, and the entities or entities that are dependent on them, in the exercise of their powers in relation to savings banks or other entities, seek the collaboration of auditors or audit firms to carry out work other than those of audit regulated in Article 1 of the Recast Text of the Audit of Accounts Law, approved by Royal Legislative Decree 1/2011, of July 1, the provision of collaboration in the exercise of these powers will be incompatible with the simultaneous performance or in the five years preceding or after any audit of accounts in these same entities or their related companies, all without prejudice to the provisions of Chapter III, Section 1 of the Recast Text of the Audit of Accounts Act.

Additional provision 13th. Responsibility of the members of the control committee of the savings banks.

1. The members of the supervisory board of the savings banks who are responsible for the offences referred to in the following paragraphs shall be responsible for administrative responsibility, subject to the procedure and penalties provided for in this Law.

2. They constitute very serious infringements of the members of the savings banks ' control committee:

(a) The serious and persistent negligence in the exercise of the duties that are legally entrusted to them.

(b) Not to propose to the competent administrative body the suspension of agreements adopted by the administrative body where they manifestly infringe the provisions in force or affect the property situation, the results, or the credit of the savings bank or its impositors or customers.

(c) Serious infringements where, during the five years prior to their commission, they had been given a firm sanction for the same type of infringement.

3. They constitute serious infringements of the members of the savings banks ' control committee:

(a) The gross negligence in the performance of the duties which is legally entrusted to it, provided that it is not included in paragraph 2.a) above.

(b) The lack of referral to the competent administrative body of the data or reports to be sent to it or which it requires in the exercise of its functions, or its referral with a notorious delay.

4. They constitute minor offences attributable to the members of the supervisory board of the savings banks, the failure to comply with any obligations which do not constitute a very serious or serious infringement, as well as the repeated failure to attend to the meetings of the committee.

Additional provision twelfth. Authorization of structural modification operations.

1. It shall be for the Minister for Economic and Competitiveness to authorise the merger, division or global or partial transfer of assets and liabilities in which a bank is involved, or any arrangement having similar economic or legal effects to the former. For these purposes, prior to the granting of the authorization, the Bank of Spain will be asked to report to the Executive Service of the Commission on the Prevention of Money Laundering and Money Violations, to the National Securities Market Commission and to the General Directorate of Insurance and Pension Funds, in the aspects of its competition.

2. The application for authorization must be resolved within six months of its receipt at the General Secretariat of the Treasury, or at the time of completion of the required documentation and, in any case, within twelve months of its receipt. Where the application is not settled within the preceding period, it may be deemed to be rejected. The remainder of the terms of the authorisation procedure shall be established.

3. The authorisation of merger, division or global or partial transfer of assets and liabilities in which a savings bank or credit union is involved shall be governed by its specific rules.

Additional disposition thirteenth. Scheme for the adaptation of the Statutes of credit unions.

Credit unions must adapt their Statutes to the provisions of the Second Final Disposition within six months of their entry into force.

After the previous period, the contributions to the capital that do not comply with the requirements laid down in Law 13/1989, of 26 May, of Credit Union, shall maintain their validity, without prejudice to the consideration that corresponds to them for the purposes of their calculation in accordance with the solvency regulations.

Additional disposition fourteenth. Sanctioning powers of the State and the Autonomous Communities.

1. Where the Banco de España has knowledge of facts which may constitute infringements other than those laid down in the basic rules of ordination and discipline which may be classified by the Autonomous Communities, it shall transfer the same to the corresponding Autonomous Community.

2. Where an Autonomous Community has knowledge of facts which, under the provisions of the basic rules of ordination and discipline, may constitute infringements which are to be sanctioned by the Bank of Spain, it shall transfer the same to the Banco de España.

3. When the Autonomous Communities file cases for very serious or serious infringements of credit institutions, the draft resolution must be informed by the Bank of Spain.

4. In any event, the Bank of Spain shall be responsible for the exercise of the power of sanction in respect of credit institutions in the case of breaches of rules of a monetary nature or affecting the solvency of institutions, in so far as the proper functioning of monetary policy within the European System of Central Banks or the stability of the financial system advises the uniform exercise of such power.

Additional provision 15th. Authorisation for the staff of the supervisory bodies.

Bodies exercising the supervision of credit institutions and investment firms and which, in accordance with their rules, seek to cooperate, for the exercise of their powers, auditors, audit accounts, companies providing consultancy services or any other private entities, shall, in the relevant contracts, require prior authorisation for such employees to carry out, at the same time or in the subsequent two years, any work of the same nature in the institutions. the subject of supervision or in its related companies.

Also, in the case of auditors and audit firms, the provisions regarding the independence regime that are subject to the auditors of accounts in Chapter III of the Recast Text of the Audit of Accounts Law approved by the Royal Legislative Decree 1/2011, of July 1, will apply.

Additional provision sixteenth. Integration of the Banco de España into the Single Supervisory Mechanism.

In accordance with the provisions of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions, the Banco de España, as a national competent authority under Article 50 of this Law, forms an integral part of the Single Supervisory Mechanism with the European Central Bank and the other competent national authorities.

Within the framework of the Single Supervisory Mechanism, the Banco de España will act under the principle of loyal cooperation with the European Central Bank and will provide the European Central Bank with the assistance referred to in Article 6 of Regulation (EU) No 1024/2013 and development provisions.

Additional 17th disposition. Plans for compliance with the minimum level of social capital and own resources by mutual guarantee companies.

1. The provisions of Article 35 of Law 14/2013 of 27 September of support for entrepreneurs and their internationalisation, concerning the minimum figure of the paid-up share capital and the own resources of the mutual guarantee companies, shall enter into force on 28 February 2015, without prejudice to paragraph 3.

2. Before 30 June 2014, mutual guarantee companies which do not comply with the requirements referred to in the preceding subparagraph shall submit to the Banco de España a compliance plan detailing the measures taken or planned to achieve, with a high degree of reliability and within the prescribed period, the corresponding levels of social capital and own resources. This plan shall include, in any case, the detailed and calendar description of all agreements, commitments or authorisations that are relevant to their implementation, in particular those measures that have already been adopted.

The plan submitted must be approved by the Banco de España within one month, which may require modifications, additional measures or any additional information necessary to ensure compliance with the provisions of this Disposition.

3. Should the Banco de España consider that there are reasonable indications that the measures included in the plan of compliance provided for in the previous paragraph will not be able to achieve, with a high degree of reliability and within the prescribed period, the corresponding levels of social capital and own resources, the existence of non-compliance with the abovementioned levels shall be considered, for all purposes and immediately.

18th additional disposition. Strengthening the institutional framework for financial stability.

Within six months of the entry into force of this Law, the Government will inform the General Courts of the measures to be taken to strengthen at national level the supervision of financial stability, macro-prudential analysis, coordination and exchange of information in the prevention of financial crises, and in general cooperation between the authorities with powers in the preservation of financial stability. The current institutional framework should be strengthened, with the participation of the Ministry of Economy and Competitiveness, the Banco de España and the National Securities Market Commission.

Additional 19th disposition. Fee for the completion of the overall assessment of the credit institutions.

1. Creation. The fee for the implementation by the Bank of Spain of the tasks related to the overall assessment of the credit institutions provided for in Article 33.4 of Regulation (EU) No 1024/2013 of the Council of 15 October 2013 conferring specific tasks on the European Central Bank on policies related to the prudential supervision of credit institutions is hereby established.

2. Taxable fact. It is the taxable fact of the fee for the Bank of Spain to carry out the tasks related to the overall assessment of the credit institutions provided for in Article 33.4 of Regulation (EU) No 1024/2013 of the Council of 15 October 2013, which entrusts the European Central Bank with specific tasks related to policies related to the prudential supervision of credit institutions.

3. Taxable persons. Credit institutions included in the paragraph corresponding to Spain in the Annex to the Decision of the European Central Bank of 4 February 2014 on the identification of credit institutions which are subject to the global assessment (Decision ECB/2014/ 3) shall be subject to the fee. In the case of the Savings Banks included in that paragraph of the Annex, the bank shall be considered as a taxable person to whom they have transferred their financial business.

4. Tax base. The tax base of the fee shall be the amount of the total assets of the consolidated groups in which the taxable persons declared to the Bank of Spain are integrated as of 31 December 2013.

5. Type of charge. The rate of charge of the levy shall be 0,01048 per thousand, to be applied on the basis of assessment.

6. Tax quota. The tax rate for each taxable person shall be the result of applying the rate of charge on the taxable amount.

7. Accrual. The fee shall be due, for a single time, on 31 December 2014.

8. Settlement and payment. The fee will be settled by the Banco de España. The amount of the fee will be entered in the bank accounts authorized for the purpose by the Banco de España, will be integrated in its budget and will be affected to finance the expenses incurred by the Banco de España in the performance of the tasks described in the taxable fact of the fee.

9. The Banco de España, by means of a circular, will develop the necessary aspects to proceed to the settlement and payment of the fee.

10. Management. The management of the fee for the voluntary period shall be the responsibility of the Banco de España. The revenue management in the executive period shall be the responsibility of the State Tax Administration Agency, which shall be carried out by means of the formalization of the corresponding agreement.

320th additional disposition. Proposals for the protection of the customer.

In order to improve regulation in the protection of the banking client and, in particular, of the mortgage debtor, the Government shall forward to the General Courts within one year of the entry into force of this Law, a draft law for the incorporation of Directive 2014 /17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements concluded with consumers for residential real estate and amending Directives 2008 /48/EC and 2013 /36/EU and Regulation (EU) No 1093/2010. In addition, the government will evaluate, in order to include them in the aforementioned bill, the possibilities for improving the current institutional system for the protection of the client, and the alternatives to enhance the effectiveness of the current complaints services, client advocates and customer services.

First transient disposition. Sanctioning and authorisation procedures in progress.

The administrative and sanctioning procedures that will have been initiated by the date of entry into force of this Law will be governed by the rules previously in force until their completion.

Second transient disposition. Transitional tax arrangements for preference shares and debt instruments.

The entry into force of this Law will not change the tax regime applicable to the preference shares and other debt instruments that would have been issued prior to that date.

Transitional provision third. Arrangements for participative quotas.

The participation rate scheme provided for in Law 13/1985 of 25 May, of investment coefficients, own resources and information obligations shall remain in force until the total depreciation of the participating shares is produced at the date of entry into force of this rule.

Transitional disposition fourth. Transitional arrangements for reporting requirements imposed on branches of credit institutions in a Member State of the European Union.

1. The Banco de España may, for statistical purposes, require the credit institutions of another Member State of the European Union to have a branch in Spain to send it periodic information on the operations carried out by that branch in Spain. In addition, Spanish credit institutions with branches in other Member States of the European Union will be required to meet equivalent requests from other Member States.

2. For the proper exercise of its supervisory function, the Banco de España may request the same information from the branches of credit institutions in a Member State of the European Union as required by the Spanish institutions for the supervision of liquidity.

3. The provisions of the preceding paragraphs shall apply in place of Article 86 until the date on which the liquidity coverage requirement is applicable in accordance with the delegated act adopted by the European Commission pursuant to Article 460 of Regulation (EU) No 575/2013 of 26 June.

Transient disposition fifth. Transitional arrangements for branches of credit institutions authorised in other Member States of the European Union.

1. Without prejudice to Article 89.4, if the Banco de España finds that a credit institution of a Member State of the European Union with a branch in Spain or operating here in freedom to provide services fails to comply with the rules on liquidity requirements in Spain, it shall initiate a criminal case against that branch.

2. The applicable sanctioning regime will be that provided for the Spanish credit institutions. However, the Banco de España shall initiate the procedure of sanctioning with a request to the credit institution to end its conduct and refrain from repeating it and if this does not occur, it shall inform the competent authorities of the supervision of that institution.

3. If, in spite of the measures taken by the Member State of origin of the credit institution or because such measures are inappropriate or are not provided for in that State, the credit institution continues to infringe the rules referred to in paragraph 1, the Banco de España, after informing the competent authorities of the home Member State, shall continue with the sanctions file. The Bank of Spain will notify the decision taken to the aforementioned authorities and, in the case of serious or very serious infringements, the European Commission and the European Banking Authority.

4. The provisions of the preceding paragraphs shall apply in place of Article 63 until the date on which the liquidity coverage requirement is applicable in accordance with the delegated act adopted by the European Commission pursuant to Article 460 of Regulation (EU) No 575/2013 of 26 June.

Transitional disposition sixth. Transitional arrangements for precautionary measures in emergency situations.

1. Before following the procedure laid down in paragraph 1 of the fifth transitional provision, the Banco de España may, in an emergency, take the appropriate provisional measures to protect the interests of depositors, investors or other recipients of services.

The Banco de España shall inform the European Commission and the competent authorities of the Member States concerned of such measures as soon as possible.

2. The provisions of paragraph 1 shall apply in place of Article 62 until the date on which the liquidity coverage requirement is applicable in accordance with the delegated act adopted by the European Commission pursuant to Article 460 of Regulation (EU) No 575/2013 of 26 June.

Transitional disposition seventh. Transitional arrangements for the supervision of branches of credit institutions in the Member States of the European Union.

1. The Bank of Spain shall monitor the liquidity of branches of credit institutions in other Member States in collaboration with the competent authorities of those Member States.

2. Furthermore, without prejudice to the measures necessary for the strengthening of the European Monetary System, the Banco de España will be responsible for the measures resulting from the implementation of its monetary policy.

These measures shall not provide for discriminatory or restrictive treatment of the fact that the credit institution has been authorised in another Member State.

3. The provisions of paragraph 1 shall apply until the date on which the liquidity coverage requirement is applicable in accordance with the delegated act adopted by the European Commission pursuant to Article 460 of Regulation (EU) No 575/2013 of 26 June.

Transient disposition octave. Transitional arrangements for the capital conservation buffer.

The requirement relating to the capital conservation buffer provided for in Article 44 of this Law and referred to in the first paragraph of Article 70 quinquies.1 of Law 24/1988 of 28 July 1988 on the Securities Market shall not apply until 1 January 2016. From this date until 31 December 2018, it shall apply in terms of Common Equity Tier 1 on total risk-weighted exposure amounts in accordance with the following calendar:

(a) From 1 January 2016 to 31 December 2016: 0,625%.

(b) From 1 January 2017 to 31 December 2017: 1,25%.

c) From 1 January 2018 to 31 December 2018: 1,875%

transient disposition ninth. Transitional arrangements for the specific countercyclical capital buffer of each institution.

The requirement relating to the countercyclical buffer provided for in Articles 45 of this Law and 70 quinquies.1.a) of the Law 24/1988 of 28 July of the Stock Market will not be applicable until 1 January 2016. From this date to 31 December 2018, this requirement shall not exceed the following levels in terms of Common Equity Tier 1 on total risk-weighted exposures:

(a) From 1 January 2016 to 31 December 2016: 0,625%.

(b) From 1 January 2017 to 31 December 2017: 1,25%.

c) From 1 January 2018 to 31 December 2018: 1,875%.

Transient disposition tenth. Transitional arrangements for capital buffers for institutions of systemic importance.

1. Article 46 of this Law shall apply from 1 January 2016. In particular, the Banco de España may impose the capital buffer for OEIS from 1 January 2016.

The National Securities Market Commission may impose the OEIS buffer referred to in Article 70 quinquies.1.c) of the Law 24/1988, of July 28, of the Securities Market as of January 1, 2016.

2. Notwithstanding the foregoing, the SISM buffer referred to in Article 46.4 of this Law and Article 70 (b) of the Law 24/1988 of 28 July of the Securities Market shall apply in accordance with the following calendar:

a) 25% of the buffer in 2016.

b) 50% in 2017.

c) 75% in 2018.

d) 100% in 2019.

Transient disposition. Transitional arrangements for the restrictions on the distribution of dividends and the plan for the conservation of capital in relation to capital buffers.

The restrictions on distributions and the obligation to establish a capital conservation plan referred to in Articles 48 and 49 of this Law, respectively, and Article 70 quinquies.6 of Law 24/1988 of 28 July, of the Securities Market shall apply from 1 January 2016, unless the institution is required to comply with the systemic risk buffer.

Transitional provision, 12th. Transitional arrangements for the annual banking report and for the annual report of investment firms.

1. The obligation of publication provided for in Article 87 (1) of this Law and Article 70a. One of the Law 24/1988, of July 28, of the Stock Market will have full effect from January 1, 2015.

2. On 1 July 2014, credit institutions and investment firms to which Article 70 bis.One applies shall have the obligation to publish, for the first time, the information referred to in Article 87 (1) (a), (b) and (c) of this Law and in Article 70 (1) (a), (b) and (c) of the Law 24/1988 of 28 July 1988 on the Securities Market.

3. By 1 July 2014 at the latest, all EISM, whether credit institutions or investment firms, which are authorised in Spain and identified at international level, shall provide the European Commission with confidential information as referred to in Article 87 (1) (d), (e) and (f) of this Law and Article 70 (1) (d), (e) and (f) of Law 24/1988 of 28 July of the Stock Market as appropriate.

transient disposition thirteenth. Transitional arrangements for central counterparties and official secondary markets for futures and options.

1. The central counterparties governed by Article 44b of Law 24/1988 of 28 July 1988 on the Securities Market shall comply with the provisions of paragraph 4 of that provision in their new wording, given the final Disposition of the Securities Market within three months of the entry into force of the Law. In the event that the central counterparties are in the process of authorisation in accordance with Regulation (EU) No 648/2012 of 4 July 2012 on the entry into force of this Law, they shall comply with the new wording within three months of the granting of such authorisation.

2. To the Olive Oil Futures Market, governed by FAO, Sociedad Rectora del Mercado de Futures del Oíva de Oliva, S.A., it will only be applicable to the market established in article 59 of the Law 24/1988, of July 28, of the Market of Values in its new wording given by the final Disposition of this Law, from January 1, 2015.

Transitional disposition fourteenth. General Plan of Viability.

The General Plan of Viability provided for in Article 30 will be required for institutions after six months after the regulatory development in which their content is specified.

15th transient disposition. Designation of the members of the Management Committee of the Credit Entities Deposit Guarantee Fund.

Within the maximum period of three months from the entry into force of this Law, the representatives will be appointed to the Management Commission of the Deposit Insurance Fund of Credit Entities in accordance with the provisions of the Final Disposition 9.

Transient disposition sixteenth. Supervision of branches of credit institutions of non-EU Member States.

As long as the regulatory development referred to in Article 60.1 does not take place, branches of credit institutions of non-member States of the European Union established in Spain shall remain subject to the solvency rules which shall apply to them until the entry into force of this Law, in so far as this is not contrary to the provisions of Regulation 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012.

Repeal provision.

All provisions of equal or lower rank that are opposed to this Law are repealed, and in particular the following:

a) Law on Banking Management of December 31, 1946.

b) Law 31/1968, of July 27, of incompatibilities and limitations of the Presidents, Councillors and senior executives of private banking.

(c) Law 13/1985 of 25 May, of investment coefficients, own resources and reporting obligations of financial intermediaries.

(d) Royal Legislative Decree 1298/1986 of 28 June adapting the legal rules governing credit institutions to the legal system of the European Economic Community.

e) Law 26/1988, of July 29, on Discipline and Intervention of Credit Entities.

(f) Article 29 (2) of Law 2/2011 of 4 March 2011 on Sustainable Economy.

g) Paragraph g) of the 13th Final Disposition of Law 14/2013 of 27 September, supporting entrepreneurs and their internationalisation.

Final disposition first. Amendment of the Law 24/1988, of July 28, of the Stock Market.

Law 24/1988 of 28 July of the Stock Market is amended as follows:

One. New wording is given to Article 44b, which is worded as follows:

" 1. The authorisation to provide clearing services as a central counterparty, its revocation and its functioning when such entities are established in Spain, shall be governed by the provisions of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories, by the provisions of this Law and any other rules applicable to the legal order or the law of the European Union.

2. The central counterparty shall be recognised as a system for the purposes of Law 41/1999 of 12 November 1999 on payment and securities settlement systems.

In order to facilitate the exercise of their functions, central counterparties may access the status of a participant or member of the Systems Society, of any other national entity that has the bearing of the accounting record of securities represented by means of an account authorized in accordance with Article 44 bis.11, of foreign entities carrying out such a function and admitting it as a participant, of any other system of settlement of securities and financial instruments or of a regulated market or system. (a) multilateral trading arrangements, where they comply with the conditions required by each system and the performance of the central counterparty in that system does not compromise the security or the solvency of the counterparty.

3. Central counterparties shall take the form of a legally separate public limited liability company of the Systems Company, of any other entity which has a function of taking into account the accounting records of securities represented by means of account entries, authorised in accordance with Article 44 bis.11 and of foreign entities carrying out such a function.

4. Central counterparties shall draw up their social statutes and an internal rules of procedure, which shall be the rule of law for the management and discipline of the securities market.

The rules of procedure shall govern the functioning of the central counterparty and the services it provides. The social statutes shall govern the internal functioning of the central counterparty as a company. The regulation and the statutes shall contain the obligations and organisational and procedural requirements necessary to comply with the provisions of Regulation (EU) No 648/2012 of 4 July 2012. The Minister of Economy and Competitiveness or, by means of his express rating, the National Securities Market Commission, will be able to develop the structure and minimum content that the rules of procedure should have.

Only the status of a member of the central counterparties, the entities referred to in Article 37.2.a) to (d) and (f), the Banco de España and other resident or non-resident entities carrying out similar activities on the terms and with the limitations to be regulated and in the internal rules of the central counterparty shall be accessible only. The access of the latter to the status of member will be subject to the provisions of this Law, in its implementing regulations, and in its rules of procedure, as well as to the approval of the National Commission of the Market of Securities.

In addition, the central counterparties shall draw up a report detailing how they shall comply with the technical, organisational, operational and risk management requirements required by Regulation (EU) No 648/2012 of 4 July 2012 to carry out their duties. The Minister of Economy and Competitiveness or, by means of his express rating, the National Securities Market Commission, may regulate the model to which the said memory is to be adjusted. The central counterparty shall keep the above mentioned memory up to date, the amendments of which shall be sent to the National Securities Market Commission, duly substantiated and incorporating, where they affect risk management in accordance with the provisions of that Regulation, the mandatory report of the risk committee and the internal unit or body that assumes the risk management function.

With the exceptions that are regulated, the modification of the social statutes of the central counterparty or its rules of procedure will require, after the Bank of Spain's report, the authorization of the National Securities Market Commission. The rules of procedure may be completed by means of circulars approved by the central counterparty itself. These circulars shall be communicated to the National Securities and Exchange Commission and the Bank of Spain within 24 hours of their adoption. The National Securities Market Commission may object, as well as suspend or terminate the circulars when it considers that the circulars infringe the applicable law, or impair the prudent and safe functioning of the central counterparty and the markets to which it provides services or the protection of investors.

The appointment of board members, directors-general and the like of central counterparties will be subject to the prior approval of the National Securities Market Commission.

Central counterparties shall have at least one audit committee, the risk committee provided for in Article 28 of Regulation (EU) No 648/2012 of 4 July 2012, a compliance committee and a committee on appointments and remuneration. In addition, they must have a unit or internal body that assumes the risk management function, in proportion to the nature, scale and complexity of their activities. This unit or body shall be independent of the operational functions, have sufficient authority, rank and resources, and shall have access to the administrative board. In addition, they should have mechanisms and organisational structures to enable users and other stakeholders to express their views on their functioning, as well as rules aimed at avoiding potential conflicts of interest to which they may be exposed as a result of their relations with shareholders, managers and directors, participating entities and clients. The provisions of this paragraph may be further developed.

The central counterparty shall forward to the National Securities and Exchange Commission, before 1 December of each year, its annual estimate budget, in which the prices and commissions to be applied shall be expressed in detail, as well as any subsequent amendments to its economic regime. The National Securities Market Commission may require the central counterparty to extend the documentation received and may provide for exceptions or limitations to the maximum prices of those services where they may affect the financial solvency of the central counterparty, cause disruptive consequences for the development of the securities market or the principles governing it, or introduce unjustified discrimination between the different users of the institution's services.

The Minister of Economy and Competitiveness or, with his express rating, the National Securities Market Commission may develop the information that will be necessary to provide for the assessment of the suitability of shareholders who acquire a qualifying holding in the capital of the central counterparty in accordance with Regulation (EU) No 648/2012 of 4 July 2012.

5. The National Securities Market Commission shall be the Spanish authority carrying out the authorisation and supervision activities of the central counterparties established in Spain pursuant to Regulation (EU) No 648/2012 of 4 July 2012.

6. The central counterparty shall bear the central accounting record for the financial instruments cleared together with, where appropriate, the authorised members to carry the details records relating to the contracts of its clients.

The central counterparty shall establish in its rules of procedure the solvency conditions and the technical means required to enable members to be authorised to carry the records of their clients ' contracts, as well as the procedures that safeguard the correspondence between the central accounting register and the detailed records. The solvency and technical means may differ according to the financial instruments on which such members are involved in the conduct of the register or in the clearing. In addition, the central counterparty shall establish mechanisms for access to the information in the detail records in which the members maintain the records of their clients ' contracts in order to identify, monitor and manage the possible risks to the institution arising from the dependencies between members and their clients.

7. The guarantees that members and customers constitute in accordance with the arrangements contained in the central counterparty's rules of procedure and in relation to any transactions carried out in the field of their activity shall only be held in respect of the entities to which they were constituted and only by the obligations arising from such transactions for the central counterparty or its members, or arising from the status of a member of the central counterparty.

The entity's rules of procedure and its circulars may establish assumptions that determine the anticipated maturity of all contracts and positions of a member, either on their own account or on behalf of clients, which, in the terms that are provided for in the said regulation and circulars, will result in their compensation and the creation of a single legal obligation covering all transactions included, and by virtue of which, the parties will only be entitled to demand the net balance of the proceeds from the compensation of such transactions. Prior assumptions may include the non-payment of the obligations and the opening of a insolvency proceedings in relation to members and clients or to the central counterparty itself. This compensation scheme will have the consideration of a contractual compensation agreement in accordance with the provisions of Royal Decree-Law 5/2005 of 11 March 2005 of Urgent Reforms for the Improvement of Productivity and for the Improvement of Public Procurement and without prejudice to the application of the specific regime contained in Law 41/1999 of 12 November on Systems of Payments and Settlement of Securities.

If a member or a customer of a member ceases to attend, in whole or in part, the obligations incurred against the central counterparty or against the member, they may have the guarantees provided by the defaulter, and may be able to take the necessary measures for their satisfaction in the terms that are laid down in the entity's rules of procedure.

In the event that any member of a central counterparty or any of its clients is subject to a bankruptcy procedure, the central counterparty shall have an absolute right of separation in respect of the guarantees which such members or clients would have constituted before that central counterparty. Without prejudice to the foregoing, the excess remaining after the settlement of the guaranteed transactions shall be incorporated into the insolvency estate of the customer or the member.

If the clients of the members of a central counterparty are subject to insolvency proceedings, the members shall have an absolute right of separation in respect of the financial instruments and the cash in which the guarantees that their clients would have constituted in their favour in accordance with the rules contained in the internal rules of the central counterparty. Without prejudice to the foregoing, the excess remaining after the liquidation of the transactions shall be incorporated into the client's insolvency assets.

Declared the contest of a member, the central counterparty, giving prior account to the National Securities Market Commission, will manage the transfer of the contracts and positions that it has registered for the account of the clients, together with the financial instruments and the cash in which the corresponding guarantees are materialized. For these purposes, both the competent court and the court of insolvency shall provide the institution to which the contracts, accounting records and the guarantees, the documentation and the computer records necessary to make the transfer cash are to be transferred. In the event that such a transfer cannot be carried out, the entity may agree to the settlement of the contracts and positions which the member has opened, including those which are on behalf of its clients. In this case, the actions to be carried out in relation to the registered positions and guarantees provided by the customers to the member concerned shall be concluded, and those customers shall have a right of separation in respect of any excess.

If the central counterparty is subject to a bankruptcy procedure, and all contracts and positions of a member, whether on its own account or on behalf of clients, are settled, members and clients who have not failed to fulfil their obligations to the central counterparty shall have an absolute right of separation from the excess of the guarantees which, having been constituted in favour of the central counterparty in accordance with its rules of procedure, result from the liquidation of the transactions. guaranteed with the exception of contributions to the guarantee fund against non-compliances.

8. The central counterparty shall lay down in its rules of procedure the rules and procedures for dealing with the consequences of non-compliance with its members. Those rules and procedures shall specify the manner in which the various collateral arrangements with which the central counterparty and the tracks are to be applied shall be implemented with the aim of allowing the central counterparty to continue operating in a sound and secure manner.

9. Subject to the provisions of this Law and the remaining applicable national or European Union rules, the central counterparty may enter into arrangements with other resident and non-resident entities whose functions are similar or which manage clearing and settlement systems. Such agreements, as well as those which may be concluded with multilateral trading markets or systems, shall require the approval of the National Securities Market Commission, following the report of the Banco de España, and shall comply with the requirements to be determined in accordance with the rules of procedure and the rules of procedure of the institution itself. "

Two. A new wording is given to Article 59, which is worded as follows:

" 1. Official secondary markets for futures and options may be established at the State level, the form of which is the form of an account. It shall be for the Minister for Economic Affairs and Competitiveness, on a proposal from the National Securities Market Commission, to authorise such establishment, in accordance with Article 31a.

In the case of markets in the autonomous region, the authorization of the creation of the market, as well as the other authorizations and approvals mentioned in this article, will correspond to the Autonomous Community with competence in the field.

2. These markets shall have as their object the futures, options and other derivative financial instruments contracts, whatever the underlying asset, as defined by the market company. The company will organize the negotiation of the aforementioned contracts.

The market company will ensure through a central counterparty, after the approval of the National Securities Market Commission, the counterpart in all the contracts it issues.

3. The institutions referred to in Article 37 of this Law may be members of these markets. They may also access the status of a member, with a capacity restricted exclusively to trading, either on their own account or on behalf of entities in their group, those entities whose main social object is investment in organised markets and which meet the conditions of means and solvency established by the market regulation referred to in paragraph 7 of this Article. In futures and options markets with non-financial underlying, the acquisition of such a condition may be determined by other entities other than those mentioned above, provided that they meet the requirements of specialty, professionalism and solvency.

4. In the official secondary markets of futures and options, there shall be, in accordance with Article 31a, a governing company, in the form of a public limited liability company, whose basic functions are to organise, direct and supervise the activity of the market. These companies may not engage in any financial intermediation activities, or the activities related to Article 63, except as provided in this Law.

5. The amendment of the social statutes of the governing company shall require the prior approval by the National Securities Market Commission, in accordance with the provisions of Article 31a, with the exceptions that are regulated.

6. The governing board shall have a board of directors with at least five members, and at least one director-general. Once the initial authorization has been received, the new appointments must be approved by the National Securities Market Commission or, where appropriate, by the Autonomous Community with competence in the matter, for the purposes of verifying that the appointed persons meet the requirements of article 67.2.f) of this Law.

7. These markets, in addition to being governed by the rules laid down in this Law and its implementing rules, shall be governed by a specific regulation, which shall be the rule of law for the management and discipline of the Securities Market, the approval and amendment of which shall be in accordance with the procedure laid down in Article 31a. The Regulation shall specify the classes of members, specifying the technical and solvency requirements to be met in relation to the various activities they carry out on the market, the market's own contracts, the legal relations of the governing company and the members of the market with the customers acting on the market, the rules of supervision, the contracting arrangements, and any other aspects which are required to be regulated. "

Three. Points (e) and (f) of Article 63.1 are worded as follows:

" e) The placement of financial instruments without a firm commitment.

(f) The insurance of financial instruments or the placement of financial instruments on the basis of a firm commitment. "

Four. Article 65a (2) and (5) shall be worded as follows:

" 2. The staff shall comply with the requirements of good repute, knowledge and experience of Article 67.2.f. '

" 5. Investment firms that hire agents must communicate to the National Securities Market Commission, who will register them in the register indicated in Article 92, upon registration of the powers in the Commercial Registry and once it has been established that the agent has accredited good repute, knowledge and experience to be able to communicate accurately to the client or to the possible client all the relevant information about the proposed service. The registration of the National Securities Market Commission will be a necessary requirement for the agents to start their activity.

When the investment firm concludes its relationship with an agent, it shall immediately inform the National Securities Market Commission for its entry into the relevant registry.

When a Spanish investment firm makes use of a related agent established in another Member State of the European Union, the tied agent shall be registered with the National Securities Market Commission when the Member State in which it is established does not allow its domestic investment firms to use related agents. "

Five. The last paragraph of Article 66.4 is worded as follows:

"This consultation shall, in particular, achieve the assessment of the suitability of the shareholders and the good repute, knowledge and experience of the managers and directors of the new entity or of the dominant entity, and may be reiterated for the continued assessment of compliance by Spanish investment services companies with those requirements."

Six. Article 67 is worded as follows:

" Article 67. Refusal of authorisation and access requirements.

1. The Minister of Economy and Competitiveness or, in the case of financial advisory firms, the National Securities Market Commission, may only refuse authorisation to constitute an investment firm for the following reasons:

(a) When the legal and regulatory requirements for obtaining and retaining the authorisation are not met.

(b) Where, in view of the need to ensure sound and prudent management of the institution, the suitability of the shareholders to have a significant holding, as defined in Article 69, is not considered appropriate. Among other factors, suitability will be appreciated based on:

1. The Honorability of shareholders.

2. The heritage means that these shareholders have to meet the commitments they have made.

3. The possibility that the institution may be inappropriately exposed to the risk of its promoters ' non-financial activities; or, when dealing with financial activities, the institution's stability or control may be affected by the high risk of those activities.

The references made to shareholders in this article will be understood to be made to employers in the case of financial advice companies that are natural persons.

(c) The lack of transparency in the structure of the group to which the entity may eventually belong, or the existence of close links with other investment services companies or other natural or legal persons that impede the effective exercise of the oversight functions of the National Securities Market Commission, and, in general, the existence of serious difficulties in inspecting it or obtaining the information that the National Securities Market Commission deems necessary for the proper development of its supervisory functions.

(d) Where the laws, regulations or administrative provisions of a non-Member State of the European Union governing natural or legal persons with whom the investment firm maintains close links, or difficulties arising from its application, prevent the effective exercise of supervisory functions.

e) The lack of good repute, knowledge and experience, and the ability to exercise good governance of the company by members of the board of directors and persons who are in charge of the effective management of the mixed financial holding company, when the investment firm is to be dependent on it as a member of a financial conglomerate.

f) The existence of serious conflicts of interest between the positions, responsibilities or functions held by the members of the management board of the investment firm and other positions, responsibilities or functions that are simultaneously held.

2. They shall be eligible for an entity to obtain its authorisation as an investment firm:

(a) That it has as its exclusive social object the realization of the activities that are owned by the investment services companies, according to this Law.

b) Which magazine the form of a public limited company, constituted for an indefinite period, and that the actions of its social capital have a nominative character. It may be envisaged that the investment firm is to review another form of company in the case of financial advisory firms which are legal persons.

c) That in the case of a newly created entity, it is constituted by the simultaneous founding procedure and that its founders do not reserve any special benefits or remuneration of any kind.

(d) the existence of a minimum fully paid-up share capital and of the minimum own resources to be determined on the basis of the services and activities to be provided and the estimated volume of its activity.

In the case of investment firms which are only authorised to provide the investment advisory service or to receive and transmit orders from investors without the holding of funds or transferable securities belonging to clients, and which for this reason may never be in a debt situation in respect of such clients, they shall subscribe to a minimum social capital or professional liability insurance, or a combination of both, in accordance with what is to be regulated.

e) Having at least three administrators or, if applicable, the board of directors, consists of no less than three members. A higher number of administrators may be required, depending on the investment and ancillary services that the institution is to provide. In the case of financial advice undertakings which are legal persons, the institution may appoint a single administrator.

(f) That the presidents, vice-presidents, directors or directors, directors-general and similar to the latter, have recognized good repute, knowledge and experience for the proper performance of their duties and are in a position to exercise good governance of the investment firm. In the case of dominant entities of investment firm undertakings, the requirement of good repute shall also be provided for in the presidents, vice-presidents, directors or administrators, directors-general and equivalent to the latter, and the majority of the members of the board of directors shall have knowledge and experience for the proper performance of their duties.

Also, the requirements of good repute, knowledge and experience will have to be met by those responsible for internal control functions and other key positions for the daily development of the business of an investment firm and its dominant entity, as established by the National Securities Market Commission.

g) Having the procedures, measures and means necessary to meet the organisational requirements set out in Article 70b (2) and (3) of this Law.

(h) The existence of an internal rules of conduct, adjusted to the provisions of this Law, as well as control and security mechanisms in the field of computer and adequate internal control procedures, including, in particular, a system of personal operations of the directors, managers, employees and proxies of the company.

i) To adhere to the Investment Guarantee Fund provided for in Title VI of this Law, where the specific regulation of this Law so requires. This requirement shall not be required by the investment service undertakings provided for in Article 64.1 (d) of this Law.

j) That you have submitted a business plan that reasonably proves that the investment services company project is viable in the future.

k) That it has provided adequate documentation of the conditions and services, functions or activities that are to be outsourced or outsourced, so that it can be verified that this fact does not distort or leave the requested authorisation without content.

l) That it has adequate procedures for the prevention of money laundering and the financing of terrorism.

The regulatory development of the requirements referred to in this paragraph shall take into account the type of investment firm concerned and the type of activities it carries out, in particular with regard to the establishment of the minimum social capital and the minimum own resources provided for in point (d) above.

When the official secondary market is requested by the official secondary market for authorisation and the persons managing the multilateral trading system are the same as those managing the multilateral trading system, those persons shall be presumed to comply with the requirements laid down in point (f) above.

3. In addition, where the application for authorisation concerns the provision of the management service of a multilateral trading system, the investment firm, the company or, where appropriate, the entity set up for that purpose by one or more collecting societies, shall submit to the approval of the National Securities Market Commission an operating regulation which, without prejudice to the other specifications laid down in Article 120, shall:

(a) Establish clear and transparent rules governing access to the multilateral trading system in accordance with the conditions set out in Article 37.2 and set out the criteria for determining the financial instruments that may be traded on the system.

b) Establish rules and procedures that regulate the negotiation in these systems in a fair and orderly manner, establishing objective criteria that allow for the effective execution of the orders.

4. For the purposes of paragraphs 1 and 2:

(a) Concurre honorability in those who have shown a personal, commercial and professional conduct that does not cast doubt on their ability to perform a sound and prudent management of the investment firm.

To assess the concurrency of good repute, all available information must be considered, according to the parameters to be determined. In any event, such information shall include the information concerning the conviction by the commission of offences or offences and the penalty for the commission of administrative offences.

(b) Possess adequate knowledge and experience to perform their functions in investment firms who have the appropriate level and profile training, in particular in the areas of financial services and securities, and practical experience derived from their previous occupations for a sufficient period of time.

(c) Account shall be taken for the purpose of assessing the willingness of the members of the Management Board to exercise good governance of the investment firm, the presence of potential conflicts of interest that generate undue influence from third parties and the ability to devote sufficient time to carry out the relevant functions.

5. Financial advice undertakings which are natural persons shall comply with the following requirements to obtain the relevant authorisation:

(a) Having adequate good repute, knowledge and experience in accordance with paragraph 2.f above.

b) Meet the financial requirements that are regulated.

(c) comply with the requirements set out in paragraph 2.g) and (h) above, in terms that are established in regulation. "

Seven. A new Article 67a is hereby established.

" Article 67a. Regime of incompatibilities and limitations.

1. The National Securities Market Commission shall determine the maximum number of charges that a member of the board of directors or a director-general or equivalent may hold simultaneously taking into account the particular circumstances and the nature, size and complexity of the entity's activities.

The members of the executive board with executive functions and the directors-general and the like of investment-service companies will not be able to hold more positions than those provided for the credit institutions in Article 26 of Law 10/2014 on the Management, Supervision and Solvency of Credit Entities.

2. The National Securities Market Commission may authorize the charges referred to in the previous paragraph to hold an additional non-executive position if it considers that this does not preclude the correct performance of its activities in the investment services company. Such authorisation shall be communicated to the European Banking Authority.

3. However, this Article shall not apply to investment firms which fulfil the following requirements:

(a) They are not authorised to provide the ancillary service referred to in Article 63.2.a),

(b) Only one or more of the investment services or activities listed in Article 63.1 (a), (b) (d) and (g) are provided; and

c) They are not allowed to deposit money or securities of their clients and, for this reason, they may never be in a debt situation with respect to such clients. "

Eight. Article 70 (3) and (4) are deleted and a new wording is given to paragraph 2, which is worded as follows:

" 2. The consolidable groups of investment services companies, as well as investment firms not integrated into a consolidated group, except as referred to in the second subparagraph of point (a) of the previous paragraph, shall specifically have robust, effective and comprehensive strategies and procedures in order to assess and maintain on a permanent basis the amounts, rates and distribution of domestic capital that they consider appropriate to cover the nature and level of the risks to which they are or may be exposed. Those strategies and procedures shall be regularly reviewed within the internal review to ensure that they remain exhaustive and proportionate to the nature, scale and complexity of the activities of the entity concerned. '

Nine. Article 70a is worded as follows:

" Article 70a. Information on solvency.

1. The consolidated groups of investment firms, as well as investment firms not integrated into one of these consolidable groups, shall make public, as soon as possible and at least on an annual basis, duly integrated in a single document known as 'Solvency Information', the information referred to in Part 8 of Regulation (EU) No 575/2013 of 26 June, and in the terms in which they are set out in that Part.

2. The National Securities Market Commission may require parent companies to publish on an annual basis, either in full or through references to equivalent information, a description of their legal structure and governance and the organisational structure of the group.

3. The disclosure, in compliance with the requirements of the market or securities market legislation, of the data referred to in paragraph 1, shall not exempt from its inclusion in the 'Solvency Information' document in the manner provided for in that paragraph.

4. The National Securities Market Commission may require entities to disclose the information referred to in paragraph 1:

(a) The verification by auditors or independent experts, or by other means satisfactory to their judgment, of the information not covered by the audit of accounts, in accordance with the provisions of Chapter III of the Recast Text of the Audit of Accounts Law, approved by the Royal Legislative Decree 1/2011, of July 1, regarding the independence regime to which the auditors are subject.

(b) The disclosure of one or more of the said information, either independently at any time, or at a frequency higher than the annual rate, and to set maximum deadlines for disclosure.

c) Employment for the dissemination of means and places other than financial statements.

5. The provisions of this Article shall not apply to undertakings for investment services referred to in the second paragraph of Article 70 (1) (a).

Ten. The following Article 70 bis.One is added:

" Article 70 bis.One. Annual report of investment services companies.

1. Investment firms shall forward to the National Securities Market Commission and publish annually, specifying the countries where they are established, the following consolidated information on a consolidated basis for each financial year:

a) Denomination, nature and geographical location of the activity.

b) Business volume.

c) Number of full-time employees.

d) Gross profit before tax.

e) Taxes on the result.

f) Grants or public aid received.

2. The information referred to in the preceding paragraph shall be published as an annex to the financial statements of the audited entity in accordance with the regulatory auditing of accounts.

3. Institutions shall make public in their annual report of investment services companies, among the key indicators, the performance of their assets, which shall be calculated by dividing net profit by the total balance sheet.

4. The National Securities Market Commission will have these reports available on its website.

5. The provisions of this Article shall not apply to undertakings for investment services referred to in the second paragraph of Article 70 (1) (a). "

Once. Article 70 ter is worded as follows:

" Article 70 ter. Corporate governance standards and internal organization requirements.

1. Investment firms shall exercise their business with respect to the corporate governance rules and internal organisation requirements set out in this Law and other applicable legislation.

2. Investment firms and other entities which, in accordance with the provisions of this Title, provide investment services shall define and implement appropriate policies and procedures to ensure that the company, its directors, its staff and its agents comply with the obligations imposed on them by the securities market.

To this effect they must:

(a) In the case of investment firms, they shall have strong corporate governance procedures, including a clear, appropriate and proportionate organisational structure in accordance with the nature, scale and complexity of their activities and with well-defined, transparent and consistent lines of responsibility. And, in the case of other entities providing investment services, in accordance with the provisions of this Title, with an equally clear, appropriate and proportionate organisational structure in accordance with the nature, scale and complexity of the investment services they provide.

(b) Dispose of a unit that ensures the development of the regulatory compliance function under the principle of independence with respect to those areas or units that develop the activities of providing investment services on which the exercise of that function rotates. The existence of procedures and controls must be ensured to ensure that staff comply with the decisions taken and the tasks entrusted.

The regulatory compliance function shall monitor and regularly assess the adequacy and effectiveness of the procedures established for risk detection, and the measures taken to address potential deficiencies as well as assist and advise the competent persons responsible for the performance of the investment services for the performance of the tasks.

(c) Dispose of information systems that ensure that their personnel are aware of the obligations, risks and responsibilities arising from their actions and the rules applicable to the investment services they provide.

d) To provide appropriate administrative and organizational measures to prevent potential conflicts of interest in Article 70c from harming their clients.

They shall also establish control measures for operations which, on a personal basis, carry out the members of their administrative bodies, employees, agents and other persons linked to the undertaking, where such operations may involve conflicts of interest or in general breach the provisions of this Law.

(e) To keep records of all transactions on securities and financial instruments and investment services that lend in such a way as to enable them to verify that they have fulfilled all the obligations imposed on them by this Law in relation to their clients.

The data to be included in the trade repositories are set out in Commission Regulation (EU) No 1287/2006 of 10 August 2006 implementing Directive 2004 /39/EC of the European Parliament and of the Council as regards the obligations of investment firms to keep a register, information on transactions, market transparency, admission to trading of financial instruments, and terms defined for the purposes of that Directive. The other extremes relating to the obligation to keep the register shall be determined by regulation.

They shall also inform the National Securities Market Commission, in the manner that it is regulated, of the operations they carry out, in accordance with the provisions of Article 59a.

f) Adopt appropriate measures to protect the financial instruments entrusted to them by their clients and to prevent their misuse. In particular, they may not use the financial instruments of the clients on their own account, except where they express their express consent. They shall also maintain an effective separation between the securities and financial instruments of the company and those of each client. The internal records of the institution shall permit to be known, at all times and without delay, and in particular in the event of the insolvency of the company, the position of securities and ongoing operations of each client.

Initiated the bankruptcy procedure of a securities depository entity, the National Securities Market Commission, without prejudice to the powers of the Banco de España, may immediately dispose of the transfer to another entity empowered to carry out this activity, of the securities deposited on behalf of its clients, even if such assets are deposited in third entities in the name of the entity that provides the deposit service. For these purposes, both the competent judge and the court or tribunal shall provide the entity with which the securities are to be transferred to the accounting and accounting records and records necessary to make the transfer effective. The existence of the insolvency proceedings shall not prevent the holder of the securities from being sent to the client for cash from the exercise of his or her economic rights or for sale.

g) Develop and keep up to date a general feasibility plan that provides for the measures to be taken to restore the viability and financial soundness of the investment firm in the event that the investment firm suffers any significant deterioration. The plan will be submitted for approval by the National Securities Market Commission, which may require the modification of its content.

3. In addition, institutions providing investment services shall:

(a) Dispose of effective procedures for the identification, management, control and communication of the risks to which they are exposed or may be, and have adequate internal control mechanisms, including appropriate administrative and accounting procedures. They should also have remuneration policies and practices that are compatible with adequate and effective risk management and promote it.

The organization must have a verification body that performs the internal audit function under the principle of independence with respect to those areas or units that develop the activities of providing investment services on which the exercise of that function is turned.

The internal audit function should develop and maintain an audit plan aimed at examining and evaluating the adequacy and effectiveness of the systems, internal control mechanisms and provisions of the investment services company, making recommendations based on the work carried out in implementation and verifying compliance.

b) Adopt appropriate measures to ensure, in the event of incidents, the continuity and regularity in the provision of their services. They will have to rely, in particular, on mechanisms for monitoring and safeguarding their IT systems and with contingency plans for damage or disasters.

c) Adopt the appropriate measures, in relation to the funds entrusted to them by their clients, to protect their rights and prevent the improper use of those rights. Institutions may not use their clients ' own funds on their own account, except in exceptional cases which may be established on a regulated basis and with the express consent of the client. The internal records of the institution shall permit to be known, at all times and without delay, and in particular in the event of the insolvency of the company, the position of funds of each client.

In particular, the accounts held on behalf of clients shall be of an instrumental and transitory nature and shall be related to the execution of transactions carried out on behalf of them. The entity's clients shall maintain the ownership right over the funds provided to the entity even when they are materialised in assets on behalf of the entity and on behalf of clients.

(d) Adopt the necessary measures to ensure that the operational risk does not increase unduly when they entrust to a third party the performance of investment services or the exercise of essential functions for the provision of investment services. Where internal control functions are delegated to third parties, institutions shall ensure that this does not reduce their internal control capacity and ensure the necessary access of the competent supervisor to the information. In no case may they delegate functions to third parties where the internal control capacity or the supervisory authority of the competent supervisory body is diminished. It shall be for the institution to verify that the person or entity in which it intends to delegate functions complies with the requirements laid down in this Law and its implementing provisions.

Credit institutions that provide investment services must respect the internal organization requirements referred to in this paragraph, with the specifications that are determined to be determined, corresponding to the Bank of Spain the powers of supervision, inspection and sanction of these requirements. Such entities shall not be subject to the prohibition of the use of their clients ' funds on their own account as provided for in point (c) above.

4. The systems, procedures and mechanisms referred to in this Article shall be exhaustive and proportionate to the nature, scale and complexity of the risks inherent in the business model and the activities of the entity. They shall also be set up on the basis of technical criteria to ensure proper management and treatment of the risks to be determined.

The content and requirements of the procedures, records and measures outlined in this article will be established. In addition, the internal organisation requirements for financial advice undertakings which are natural persons shall be laid down.

5. In any group of investment firms, each of the integrated financial institutions shall take the necessary measures to adequately address potential conflicts of interest between the clients of different entities in the group.

6. The management board of investment firms shall define a corporate governance system that ensures effective and prudent management of the entity and includes the appropriate division of functions in the organisation and prevention of conflicts of interest.

The board of directors will monitor and respond to the implementation of the corporate governance system. To this end, it shall monitor and evaluate the effectiveness of the system and take appropriate measures to address its shortcomings.

7. The corporate governance system shall be governed by the following principles:

(a) The responsibility for the management and administration of the entity, the approval and monitoring of the implementation of its strategic objectives, its risk strategy and its internal governance shall be on the board of directors.

(b) The management board shall ensure the integrity of the accounting and financial reporting systems, including financial and operational control and compliance with applicable law.

c) The management board shall monitor the process of disclosure of information and communications relating to the investment firm.

d) The board of directors is responsible for ensuring effective supervision of senior management.

(e) The Chairman of the Board of Directors shall not be able to hold the position of Chief Executive at the same time, unless justified by the institution and the National Securities Market Commission.

8. Investment firms shall have, under conditions proportionate to the nature, scale and complexity of their activities, with appropriate internal units and procedures to carry out the selection and ongoing assessment of the members of their board of directors and their directors-general or assimilated persons, and of persons who assume internal control functions or hold key positions for the daily development of the business of the investment firm, as set out in this paragraph.

The assessment of the suitability of the above charges in accordance with the criteria of good repute, experience and good governance established in this Law will be produced both by the investment services company itself, and by the National Securities Market Commission, in the terms that are regulated.

Investment services companies must ensure at all times that the eligibility requirements set out in this Law are met.

9. Investment firms shall have a website where they shall disseminate to the public information provided for in this Chapter and communicate the manner in which they comply with the corporate governance obligations.

10. For the purposes of this Law, the board of directors shall be deemed to be equivalent to any equivalent body of the investment firm. "

Twelve. A new Article 70 ter.One is added:

" Article 70 ter.One. Committee on appointments.

1. An investment firm shall constitute a nomination committee, consisting of members of the board of directors who do not perform executive functions in the institution. The National Securities Market Commission may determine that an investment firm, by reason of its size, internal organisation, nature, scope or limited complexity of its activities, may constitute the said committee jointly with the remuneration committee, or be exempt from this requirement.

2. The nomination committee shall establish a representation objective for the less-represented sex in the Management Board and draw up guidance on how to achieve this objective.

3. By way of derogation from paragraph 1, this Article shall not apply to investment firms which fulfil the following requirements:

(a) Not authorised to provide the ancillary service referred to in Article 63.2.a.

(b) To provide only one or more of the investment services or activities listed in Article 63.1.a), (b), (d) and (g).

(c) Not to be authorized to deposit money or securities of your clients and, for this reason, they may never be in a debtor situation in respect of such clients.

This article shall also not apply to investment firms authorised exclusively to provide the service referred to in Article 63.1 (h). "

Thirteen. A new Article 70 ter.Two is added:

" Article 70 ter.Two. Obligations in respect of remuneration.

1. Investment firms shall have, under conditions proportionate to the nature, scale and complexity of their activities, of remuneration policies consistent with the promotion of sound and effective risk management.

2. The remuneration policy shall apply to the categories of employees whose professional activities have a significant impact on their risk profile, group level, parent company and subsidiary. In particular, it shall apply to senior management, to employees who take risks to the investment firm, to those who exercise control functions, as well as to any worker who receives a comprehensive remuneration which includes him in the same remuneration scale as the former, whose professional activities have an important impact on the risk profile of the institution.

3. Investment firms shall submit to the National Securities Market Commission how much information they require for the performance of remuneration obligations and, in particular, a list indicating the categories of employees whose professional activities have a significant impact on their risk profile. This list shall be submitted annually and, in any case, where significant alterations have occurred in the lists submitted.

4. The remuneration policy shall be determined in accordance with the general principles foreseen for credit institutions in Article 33 of Law 10/2014 on the Management, Supervision and Solvency of Credit Entities.

5. As regards the variable elements of the remuneration, the principles foreseen for the credit institutions in Article 34 of Law 10/2014 on the Management, Supervision and Solvency of Credit Entities shall apply.

6. Investment firms must set up a remuneration committee. The National Securities Market Commission may determine that an investment firm, by reason of its size, internal organisation, nature, scope or limited complexity of its activities, may constitute the said committee jointly with the nomination committee, or be exempted from this requirement.

However, this Article shall not apply to investment firm undertakings which meet the following requirements:

(a) Not authorised to provide the ancillary service referred to in Article 63.2.a.

(b) To provide only one of the investment services or activities listed in Article 63.1.a), (b), (d) and (g).

(c) Not to be authorized to deposit money or securities of your clients and, for this reason, they may never be in a debtor situation in respect of such clients.

This article also does not apply to investment firms authorised exclusively to provide the service referred to in Article 63.1 (h).

7. In the case of investment services companies that receive public financial support, they shall apply, in addition to the rules laid down in Article 33 of Law 10/2014, for the Management, Supervision and Solvency of Credit Entities, those contained, for credit institutions, in Article 35 of that Law and its implementing rules, with the adaptations that, if any, were necessary due to the nature of the entity. "

Fourteen. A new Article 70b is added. Three:

" Article 70 ter. Three. Risk management and risk committee.

1. The Board of Directors is responsible for the risks incurred by an investment firm. To this end, investment firms should establish effective channels of information to the management board on the company's risk management policies and all the important risks to which it is facing.

2. In the exercise of its responsibility for risk management, the Management Board shall:

a) To devote sufficient time to the consideration of the issues related to the risks. In particular, it shall actively participate in the management of all the substantial risks referred to in Regulation (EU) No 575/2013 of 26 June, and in the solvency rules laid down in this Law and its implementing provisions, shall ensure that adequate resources are allocated for risk management and shall address in particular the valuation of assets, the use of external credit ratings and internal models relating to these risks.

b) Approve and periodically review strategies and policies for the assumption, management, supervision and reduction of risks to which the investment firm is or may be exposed, including those that present the macroeconomic situation in which it operates in relation to the economic cycle phase.

3. Investment firms shall have a unit or body that assumes the risk management function commensurate with the nature, scale and complexity of their activities, independent of operational functions, which has sufficient authority, range and resources, as well as timely access to the management board.

4. Investment firms must set up a risk committee. The National Securities Market Commission may determine that an investment firm, by reason of its size, internal organisation, nature, scope or limited complexity of its activities, may assign the functions of the risk committee to the joint audit committee or be exempted from the establishment of this committee.

However, this Article shall not apply to investment firm undertakings which meet the following requirements:

(a) Not authorised to provide the ancillary service referred to in Article 63.2.a.

(b) To provide only one of the investment services or activities listed in Article 63.1.a), (b), (d) and (g).

(c) Not to be authorized to deposit money or securities of your clients and, for this reason, they may never be in a debtor situation in respect of such clients.

This article shall also not apply to investment firms authorised exclusively to provide the service referred to in Article 63.1 (h). "

Fifteen. A new wording is given to Article 70d:

" Article 70 quinquies. Combined requirement of capital buffers.

1. Investment firms shall at all times comply with the combined requirement of capital buffers, understood as the total Common Equity Tier 1 capital as defined in Article 26 of Regulation (EU) No 575/2013 of 26 June, necessary to comply with the obligation to have a capital conservation buffer, more if applicable:

a) A specific countercyclical capital buffer for each entity.

b) A buffer for global systemically important entities (ISSIs).

c) A buffer for other systemically important entities (OEIS).

d) A systemic risk buffer.

This obligation shall be without prejudice to the own resources requirements set out in Article 92 of Regulation (EU) No 575/2013 of 26 June, and to those other than, where applicable, the National Securities Market Commission may require, pursuant to the provisions of Article 87.

2. These mattresses shall be calculated in accordance with the provisions of Chapter III of Title II of Law 10/2014 on the Management, Supervision and Solvency of Credit Entities.

3. However, these mattresses shall not apply to investment firms which are not authorised to carry out the activities set out in points (c) and (f) of Article 63.1.

Likewise, they will not apply to small and medium-sized investment firms, provided that, in the opinion of the National Securities Market Commission, this does not pose a threat to the stability of the Spanish financial system, the capital conservation buffer, and the countercyclical buffer.

For these purposes, small and medium-sized enterprises are defined in accordance with Commission Recommendation 2003 /361/EC of 6 May 2003 on the definition of micro, small and medium-sized enterprises.

4. The Common Equity Tier 1 capital required to satisfy each of the different mattresses as provided for in paragraphs 1 and 2 shall not be used to satisfy the rest of the mattresses and the own resources requirements referred to in the last subparagraph of paragraph 1, except as provided by the National Securities Market Commission in relation to mattresses for institutions of systemic importance and mattresses against systemic risks.

5. The fulfilment of capital mattress requirements shall be carried out on an individual, consolidated or sub-consolidated basis in accordance with the provisions of Title II of Title II of Regulation (EU) No 575/2013 of 26 June.

6. Where a company or group fails to comply with the obligation laid down in paragraph 1, it shall be subject to restrictions on distributions related to Common Equity Tier 1, pursuant to Article 48 of Law 10/2014, for the Management, Supervision and Solvency of Credit Entities and shall submit to the National Securities Market Commission a capital conservation plan in accordance with the provisions of Article 49 of that Law. "

Sixteen. A new Article 70 sexies is introduced, with the following literal wording:

" Article 70 sexies. Notification of infringements.

Investment services companies must have appropriate procedures in place to enable their employees to report internal violations through an independent, specific and autonomous channel.

These procedures should ensure the confidentiality of both the person who reports the infringements and the natural persons allegedly responsible for the infringement.

It should also be ensured that employees who report violations committed in the entity are protected from retaliation, discrimination and any other unfair treatment. "

seventeen. The fifth paragraph of Article 71 bis.2 is read as follows:

" The National Securities Market Commission shall assume the responsibility of ensuring that the services provided by the branch in Spanish territory comply with the obligations laid down in Articles 59a, 79, 79a, 79b, 79e and the obligations laid down in Chapter III of Title XI and the measures taken pursuant thereto. Consequently, the National Securities Market Commission shall have the right to examine the measures taken by the branch and to request the necessary changes to ensure compliance with the provisions of these Articles and the measures taken in accordance with these Articles in respect of the services or activities provided by the branch in Spanish territory. "

Eighteen. The first paragraph of point (e) of Article 78b is amended as follows:

" e) Other customers who request it on a prior basis, and expressly waive their treatment as retail customers. However, in no case shall customers who request to be treated as professionals be considered to have a knowledge and experience of the market comparable to the categories of professional clients listed in points (a) to (d) of this paragraph. '

nineteen. Paragraph (d) of Article 79 bis.8 is amended as follows:

"(d) the entity complies with the provisions of Article 70 ter.2.d)."

Twenty. Article 79c is amended as follows:

" Article 79c. Investment services as part of a financial product.

The reporting and registration obligations referred to in Articles 79a and 79b above shall apply to investment services which are offered as part of other financial products, without prejudice to the application to the latter of their specific rules, in particular that related to the assessment of the risks and the information requirements to be provided to customers. "

Twenty-one. A new paragraph 5a is added to Article 84:

" 5 bis. Financial holding companies, mixed financial holding companies and mixed holding companies, in accordance with Article 4.1.20 and 21 respectively of Regulation (EU) No 575/2013 of 26 June, between whose subsidiaries are investment services undertakings. '

Twenty-two. A new Article 84a is added:

" Article 84a. Supervisor programme.

1. The National Securities Market Commission shall approve, at least once a year, a supervisory programme in relation to the following investment services companies:

(a) Those whose results in the stress tests referred to in paragraph 3, or in the monitoring and evaluation process, show the existence of significant risks to their financial soundness or disclose the non-compliance with the solvency rules.

b) Those that pose a systemic risk to the financial system.

(c) Other than the National Securities Market Commission considers necessary in the exercise of its supervisory functions.

2. This program shall contain at least the information referred to in Article 55.2 of Law 10/2014, of the Management, Supervision and Solvency of Credit Entities and the National Securities Market Commission, in the light of the results of the program, may adopt the measures it deems appropriate in each case, among which are those established in Article 55.3 of the aforementioned Law.

3. At least once a year, the National Securities Market Commission shall submit to evidence of resistance to investment service undertakings subject to its supervision in order to facilitate the review and evaluation process provided for in this Article. To this end, the National Securities Market Commission may make its own and transmit to the entities and groups the guides approved by the European Banking Authority for these purposes.

However, this Article shall not apply to investment firms which are not authorised to provide the ancillary service referred to in Article 63.2.a), who provide only one or more of the investment services or activities listed in Article 63.1.a), (b), (d) and (g), and which are not allowed to deposit money or securities of their clients and which, for this reason, may never be in a debt situation in respect of such clients.

4. The National Securities Market Commission shall take into account when establishing its supervisory programme the information received from the authorities of other Member States in relation to branches of established investment services companies there. For these same purposes, it shall also take into account the stability of the financial system of those Member States. "

Twenty-three. Article 85.2 (e) and the first paragraph of Article 85.6 shall be worded as follows:

"e) Require the cessation of any practice that is contrary to the provisions laid down in this Law and its implementing rules, as well as requiring that such practice not be repeated in the future."

" 6. The National Securities Market Commission, in the exercise of the supervisory and inspection powers referred to in this Law, may communicate and require, to the entities provided for in Articles 64, 65, 84.1 (a) to (e), and 84.2.a) to (c), by electronic means, the information and measures contained in this Law and its development provisions. The entities concerned shall be required to enable the technical means required by the National Securities Market Commission for the effectiveness of their electronic notification systems within the time limit set for this purpose, in accordance with the provisions of Article 27.6 of Law 11/2007 of 22 June of the electronic access of citizens to Public Services. "

Twenty-four. Article 86 is worded as follows:

" Article 86. Reporting and consolidation reporting obligations.

1. The individual and consolidated accounts and management reports for each financial year of the entities referred to in Article 84.1 shall be approved, within four months of the closing of the accounts, by their corresponding general meeting, after the audit of accounts has been carried out.

2. Without prejudice to Title III of Book I of the Trade Code, the Minister of Economy and Competitiveness is empowered and, with his express rating, the National Securities Market Commission, the Banco de España or the Accounting and Audit Institute of Accounts, to establish and modify in relation to the entities mentioned in the previous paragraph, the accounting rules and the models to be adjusted their financial statements, as well as those related to the compliance with the coefficients to be established, having the frequency and the detail with which the corresponding data must be supplied to the Commission or made public in general by the entities themselves. This power shall have no more restrictions than the requirement that the advertising criteria be homogeneous for all entities of the same category and similar for the various categories.

The ministerial order in which the rating is established will determine the reports which, if any, will be required for the establishment and modification of the standards and models, as well as for the resolution of consultations on these rules.

The Minister of Economy and Competitiveness is also empowered, and with his express rating, to the National Securities Market Commission, to regulate the records, internal or statistical databases and documents to be carried by the entities listed in Article 84.1, as well as, in relation to their securities market operations, the other entities referred to in Article 65.

3. The Minister of Economy and Competitiveness and, with his express rating, the National Securities Market Commission, the Banco de España or the Institute of Accounts and Audit of Accounts, shall have the same powers provided for in the previous paragraph in relation to the consolidated groups of investment services companies referred to in the following paragraph and to the consolidable groups whose parent entity is one of those referred to in Article 84.1.a) and b). The exercise of these powers shall require the mandatory reports to be determined in the ministerial enabling order.

4. In order to comply with the minimum levels of own resources and limitations due under Regulation (EU) No 575/2013 of 26 June, investment firms shall consolidate their accounting statements with those of other investment firms and financial institutions which constitute a unit of decision, as provided for in Article 4 and in accordance with the provisions of that Regulation.

5. The National Securities Market Commission may require institutions subject to consolidation as much information as necessary to verify the consolidations made and to analyze the risks assumed by the set of consolidated entities, as well as, with the same object, to inspect their books, documentation and records.

When the economic, financial, or managerial relationships of an investment firm with other entities may be presumed to have a controlling relationship within the meaning of this Article, without the entities having proceeded to the consolidation of their accounts, the National Securities Market Commission may request information from or inspect those entities for the purposes of determining the origin of the consolidation.

6. The National Securities Market Commission may request information from natural persons and inspect non-financial institutions with which there is a control relationship as provided for in Article 4, for the purpose of determining their impact on the legal, financial and economic situation of investment firms and their consolidable groups.

7. The consolidation obligation laid down in Article 42 of the Code of Commerce shall be understood as being fulfilled by the consolidation referred to in the preceding numbers by those groups of companies whose dominant entity is an investment firm, or by those other than the dominant one of a company whose principal activity is the holding of shares in investment firms. This duty shall also be understood as being fulfilled for the groups of the governing bodies of the official secondary markets and the Securities Clearing and Settlement Service.

This is without prejudice to the obligation to consolidate one another, which may exist for subsidiaries other than financial institutions, in cases where appropriate in accordance with Article 42 of the Trade Code. "

Twenty-five. Article 87 is worded as follows:

" Article 87. Relations with other supervisors in the area of supervision on a consolidated basis.

1. Any rule that is dictated in development of what this Law provides for and which may affect financial institutions subject to the supervision of the Banco de España or the Directorate General of Insurance and Pension Funds will be given prior report.

2. Provided that in a consolidated group of investment services companies exist entities subject to supervision on an individual basis by a body other than the National Securities Market Commission, the latter, in the exercise of the powers conferred on them by this Law, must act in a coordinated manner with the supervisory body that in each case corresponds. The Minister for Economic Affairs and Competitiveness may lay down the rules necessary to ensure proper coordination.

3. The Minister of Economy and Competitiveness, following a report of the National Securities Market Commission, on a proposal from the Banco de España, may agree that a group of investment firms in which one or more credit institutions may be integrated into a deposit guarantee fund should be considered a consolidated group of credit institutions and therefore be subject to supervision on a consolidated basis by the Banco de España. "

Twenty-six. Article 87a (1) and (2) and Article 87 (3) (a) are reworded as follows:

" 1. It shall be the responsibility of the National Securities Market Commission, in its capacity as the authority responsible for the supervision of investment firms and their consolidable groups:

(a) Review the systems, whether agreements, strategies, procedures or mechanisms of any kind, applied to comply with the solvency rules contained in this Law and the provisions that develop it, as well as in Regulation (EU) No 575/2013 of 26 June.

(b) Determine whether the systems, own resources and liquidity held by investment firms ensure sound and prudent management and sound coverage of their risks.

(c) Determine from the review and assessment referred to in the preceding paragraphs whether the systems referred to in point (a) and the own funds and the liquidity held ensure sound management and cover, respectively, of their risks.

The analyses and assessments referred to in the preceding paragraphs shall be updated at least annually.

2. The National Securities Market Commission, in the development of its functions as the authority responsible for the supervision of investment services companies and their consolidable groups:

(a) It shall take due account of the possible impact of its decisions on the stability of the financial system of all other Member States concerned, in particular in emergency situations, on the basis of the information available at the moment.

b) It shall take into account the convergence of supervisory instruments and practices at the level of the European Union.

(c) Cooperate with the competent authorities of other Member States of the European Union, as parties to the European System of Financial Supervision (ESFS), with confidence and full mutual respect, in particular to ensure the flow of relevant and reliable information between them and other parts of the ESFS, in accordance with the principle of fair cooperation set out in Article 4.3 of the Treaty on European Union.

(d) Participate in the activities of the European Banking Authority and, where appropriate, in the colleges of supervisors.

e) It shall make every effort to comply with the guidelines and recommendations issued by the European Banking Authority in accordance with Article 16 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716 /2009/EC and repealing Commission Decision 2009 /78/EC and complying with the warnings and recommendations issued by the European Systemic Risk Board in accordance with Article 16 of Regulation (EU) No 1092/2010 of 24 June 2010. This is the case for the Commission's proposal for a Council Directive on the protection of the environment and the protection of the environment.

f) Co-operate closely with the European Systemic Risk Board. "

" (a) obligate investment firms and their groups to maintain their own resources in addition to those required at a minimum. The National Securities Market Commission shall, at least, whenever it considers serious deficiencies in the organisational structure of the investment firm or in the internal control, accounting or valuation procedures and mechanisms, including in particular those referred to in Article 70.2, or whenever it advises, as provided for in paragraph 1 (c) of this Article, that the systems and own funds held under that provision do not ensure sound management and coverage of the risks. In both cases the measure must be taken when the National Securities Market Commission considers it unlikely that the mere implementation of other measures will improve such deficiencies or situations within an appropriate time frame. "

Twenty-seven. The following Article 87b is

:

" Article 87 ter. Supervision of mixed financial holding companies and mixed portfolio companies.

1. Where a mixed financial holding company subject to the supervision of the National Securities Market Commission is subject to equivalent provisions under this Law and Law 5/2005 of 22 April of the supervision of financial conglomerates and amending other laws of the financial sector, in particular in terms of risk supervision, the National Securities and Exchange Commission, after consultation with the other authorities responsible for the supervision of subsidiaries of the mixed financial holding company, may decide to apply it to such a company. only the provisions of Law 5/2005 of 22 April and its implementing legislation.

2. Also, where a mixed financial holding company subject to the supervision of the National Securities Market Commission is subject to equivalent provisions under this Law and the recast of the Law on the Management and Supervision of Private Insurance approved by Royal Decree-Law 6/2004 of 29 October, in particular in terms of risk supervision, the National Securities and Exchange Commission, after consultation with the other authorities responsible for the supervision of subsidiaries of the mixed financial holding company, may decide to apply to that company only the provisions of the recast of the Law on the Management and Supervision of Private Insurance.

3. The National Securities Market Commission shall inform the European Banking Authority and the European Insurance and Pension Fund Authority of the decisions taken pursuant to the preceding paragraphs.

4. Without prejudice to the provisions of Part Four of Regulation (EU) No 575/2013 of 26 June, where the parent undertaking of one or more of the Spanish investment services companies is a mixed holding company, the National Securities Market Commission shall carry out the general supervision of the transactions between the investment firm and the mixed holding company and its subsidiaries.

5. The subsidiary investment services undertakings of a mixed holding company shall have adequate risk management systems and internal control mechanisms, including sound reporting and accounting procedures, in order to identify, measure, monitor and control operations with their parent portfolio joint venture and its subsidiaries. The National Securities Market Commission shall require the investment firm to report any other significant transaction with those entities other than that referred to in Article 394 of Regulation (EU) No 575/2013 of 26 June. Such significant procedures and operations shall be subject to the oversight of the National Securities Market Commission. "

Twenty-eight. The following Article 87c is

:

" Article 87 quater. Supervision of investment firms from third countries and their branches.

1. The obligations laid down in the solvency rules shall not be required for branches of investment services firms based in a non-Member State of the European Union provided that they are subject to equivalent obligations in terms of which they are regulated.

2. Investment firms whose dominant entity is a financial institution with an address outside the European Union shall not be subject to supervision on a consolidated basis, provided that they are already subject to such supervision by the relevant competent authority of the third country, which is equivalent to that provided for in this Act and its implementing rules, and in Part 1, Title II, Chapter 2 of Regulation (EU) No 575/2013 of 26 June.

The National Securities Market Commission will have to check this equivalence, for which it will have to take into account the guidelines developed by the European Banking Authority for this purpose, to which it will consult before taking a decision on this.

In the event that the existence of an equivalent supervisory regime is not appreciated, the investment firms referred to in the first subparagraph of this paragraph shall be applicable to the supervisory arrangements on a consolidated basis provided for in the solvency rules.

By way of derogation from the preceding paragraph, the National Securities Market Commission may establish other methods for supervision on a consolidated basis of the groups referred to in this paragraph. Such methods shall include the power of the National Securities Market Commission to require the establishment of a dominant financial institution having its registered office in the European Union. The methods shall meet the objectives of the supervision on a consolidated basis as defined in this Law and shall be communicated to the other competent authorities involved, to the European Commission and to the European Banking Authority. "

Twenty-nine. The following Article 87d is added:

" Article 87 quinquies. Development of guides in supervisory matters.

1. The National Securities Market Commission may develop technical guidance to entities and persons subject to its supervision, indicating the criteria, practices or procedures it considers appropriate for compliance with the securities markets. These guidelines, which must be made public, may include the criteria that the National Securities Market Commission itself will follow in the exercise of its supervisory activities.

2. To this end, the National Securities Market Commission may make its own, and transmit as such, as well as develop the guides that, addressed to the subjects subject to its supervision, approve the international bodies or committees active, regarding the criteria, practices or procedures suitable to favor the best compliance with the rules of management and discipline of the securities markets and the supervision of their compliance. "

Thirty. The following Article 87 sexies is added:

" Article 87 sexies. Information obligations of the National Securities Market Commission in urgent situations.

The National Securities Market Commission shall, as soon as possible, warn the Minister of Economy and Competitiveness, the other supervisory authorities, nationals or foreign authorities, affected, the European Banking Authority and the European Systemic Risk Board, of the emergence of an emergency situation, including a situation as defined in Article 18 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority) Decision No 716 /2009/EC and repealing Commission Decision 2009 /78/EC, and in particular in cases where there is an adverse development of the financial markets, which may compromise the liquidity in the market and the stability of the financial system of any Member State of the European Union in which investment services companies of a group subject to supervision on a consolidated basis of the National Securities Market Commission or in which significant branches of a Spanish investment firm are established, are authorised, referred to in Article 9d. '

Thirty-one. The following Article 87 septies is added:

" Article 87 septies. Disclosure obligations of the National Securities Market Commission.

1. The National Securities Market Commission shall periodically disclose the following information regarding the solvency rules of investment firms:

(a) aggregated statistical data on the fundamental aspects of the application of the prudential framework in Spain, including the number and nature of the supervisory measures taken in accordance with Articles 70, 70, 87 and 87 and the administrative penalties imposed; all in accordance with the rules of professional secrecy laid down in Article 90.

(b) The general criteria and methods adopted for checking compliance with the provisions of Articles 405 to 409 of Regulation (EU) No 575/2013 of 26 June.

(c) A brief description of the outcome of the supervisory review and the description of the measures imposed in cases of non-compliance with Articles 405 to 409 of Regulation (EU) No 575/2013 of 26 June on an annual basis, and without prejudice to the obligations of secrecy laid down in Article 90.

(d) The results of the stress tests carried out in accordance with Article 84a (3) or Article 32 of Regulation (EU) No 1093/2010 of 24 November 2010.

When determined by the European Banking Authority, the information referred to in this paragraph shall be transmitted to this authority for subsequent publication of the result at European Union level.

e) Other information to be determined by regulation.

2. The information published in accordance with paragraph 1 shall be sufficient to allow a meaningful comparison of the approaches adopted by the National Securities Market Commission with those of the counterpart authorities of the different Member States of the European Union. The information shall be published in the format determined by the European Banking Authority and updated regularly. It will be accessible at the electronic headquarters of the National Securities Market Commission. "

Thirty-two. The following Article 87 octies is added:

" Article 87 octies. Prudential supervision measures.

1. The National Securities Market Commission will require investment firms or consolidable groups of investment firms to quickly take the necessary steps to return to compliance with the following circumstances:

(a) When they do not comply with the obligations contained in the solvency rules.

(b) Where the National Securities Market Commission itself has data in accordance with which it is reasonably foreseeable that the institution fails to comply with the obligations referred to in the preceding paragraph in the following 12 months.

2. In the circumstances provided for in the preceding paragraph, the National Securities Market Commission may take one or more of the following measures which it considers to be more appropriate in view of the situation of the investment firm or group:

(a) Require investment firms to maintain own resources in excess of the capital requirements laid down in Article 70d and in Regulation (EU) No 575/2013 of 26 June, in relation to risks and risk factors not covered by Article 1 of that Regulation.

b) Require investment firms and their groups to strengthen established procedures, mechanisms and strategies to comply with the provisions of Article 70.2.

(c) Require investment firms and their groups to submit a plan to restore compliance with the supervisory requirements set out in this Law and in Regulation (EU) No 575/2013 of 26 June, which set a deadline for their implementation and which introduce into the plan the necessary improvements in terms of their scope and time of execution.

(d) Require investment firms and their groups to implement a specific policy of provision of provisions or a specific treatment of assets in terms of own resources requirements.

e) Restricting or limiting the business, operations or network of investment firms or requesting the abandonment of activities that pose excessive risks to the soundness of an investment firm.

f) Require the reduction of the risk inherent in the activities, products and systems of investment services companies.

g) Require investment firms and their groups to limit variable remuneration as a percentage of net income, where it is incompatible with the maintenance of a sound capital base.

h) Demand investment firms and their groups to use net profits to strengthen their own resources.

i) Banning or restricting the distribution by the company of investment services of dividends or interest to shareholders, partners or holders of additional Tier 1 capital instruments, provided that the prohibition does not constitute an alleged breach of the payment obligations of the investment firm.

j) Impose additional or more frequent reporting obligations, including information on the situation of capital and liquidity.

(k) The obligation to have a minimum amount of liquid assets to deal with potential outflows of funds arising from liabilities and commitments, including in the case of serious events that could affect the availability of liquidity, and to maintain an adequate structure of sources of financing and maturities in their assets, liabilities and liabilities in order to avoid potential imbalances or liquidity strains that may damage or risk the financial situation of the investment firm.

3. The provisions of the above paragraph are without prejudice to the application of the sanctioning regime provided for in this Law. "

Thirty-three. The following Article 87 nonies is added:

" Article 87 nonies. Additional requirements for own resources.

1. The National Securities Market Commission shall require investment firms to maintain their own resources in excess of those established in accordance with Article 87 (2) (a), at least in the following cases:

(a) If the investment firm does not meet the requirements laid down in Article 70.2 or Article 393 of Regulation (EU) No 575/2013 of 26 June.

(b) If there are risks or items of risk that are not covered by the own resources requirements set out in Article 70d or in Regulation (EU) No 575/2013 of 26 June.

(c) If it is likely that the implementation of other measures alone is sufficient to sufficiently improve the systems, procedures, mechanisms and strategies at an appropriate time.

(d) If the revision referred to in Article 87 bis.1 shows that the non-compliance with the requirements for the application of a method of calculation of own resources requirements requiring prior authorisation in accordance with Part Three of Regulation (EU) No 575/2013 of 26 June may result in insufficient own resources requirements, or if the valuation adjustments with respect to specific positions or portfolios within the trading book, in accordance with Article 105 of Regulation (EU) No 575/2013, are not sufficient. 575/2013, dated 26 June, does not allow the investment firm to sell or cover its positions in a short period of time without incurring significant losses under normal market conditions.

e) If there were reasonable grounds to consider that the risks could be underestimated in spite of compliance with the applicable requirements of Regulation (EU) No 575/2013 of 26 June and of this Law and its implementing rules.

(f) If the investment firm notifies the National Securities Market Commission, in accordance with Article 377.5 of Regulation (EU) No 575/2013 of 26 June, that the results of the stress test referred to in that Article significantly exceed the own resources requirements arising from the correlation trading book.

2. For the purposes of determining the appropriate level of own resources on the basis of review and assessment carried out in accordance with Article 87 bis.1, the National Securities Market Commission shall assess the following:

(a) The quantitative and qualitative aspects of the evaluation process of the investment services companies referred to in Article 70.2.

b) The systems, procedures and mechanisms related to the rescue and resolution plans of investment firms.

(c) The results of the review and evaluation carried out in accordance with Article 87 bis.1.

d) The systemic risk. "

Thirty-four. Article 87 shall be added.

" Article 87 decies. Supervision of the requirements of good repute, knowledge and experience and good governance.

In its functions of oversight of the requirements of good repute, knowledge and experience and good governance as referred to in Article 70 ter.8, the National Securities Market Commission may:

(a) Revoke the authorisation in an exceptional manner in accordance with the provisions of Article 73.

b) Require the temporary suspension or permanent cessation of the post of Counselor or Director-General or assimilated or the remedy of the deficiencies identified in the event of lack of good repute, adequate knowledge or experience or ability to exercise good governance.

If the investment firm does not proceed with the execution of such requirements within the time limit set by the National Securities Market Commission, the National Securities Market Commission may agree to the temporary suspension or final termination of the corresponding charge, in accordance with the procedure laid down in Article 107. "

Thirty-five. The second paragraph of Article 88 is read as follows:

" In all cases of the confluence of supervisory and inspection powers between the National Securities and Exchange Commission and the Banco de España, both institutions will coordinate their actions under the principle that the protection of the functioning of the securities markets, including the internal organization issues identified in Article 70 ter.2, corresponds to the National Securities Market Commission, and the supervision of the solvency as well as the other internal organization issues will fall on the institution that maintains the corresponding registration. The National Securities and Exchange Commission and the Bank of Spain shall conclude agreements in order to coordinate the respective supervisory and inspection powers. "

Thirty-six. A new wording is given to Article 90.4 (f) and two new paragraphs 6 and 7 are added to Article 90:

" (f) The information that the National Securities Market Commission has to provide, for the fulfilment of its respective functions, to the Autonomous Communities with competence in matters of Stock Exchanges; to the Banco de España; to the General Directorate of Insurance and Pension Funds; to the Accounting and Audit Institute of Accounts, to the companies that are responsible for the official secondary markets in order to guarantee the regular operation of the same; to the guarantee funds of investors; to the financial controllers or syndicates of a service company investment or an institution of its group, designated in the relevant administrative or judicial procedures, and auditors of the accounts of investment firms and their groups. '

" 6. The transmission of information reserved to the bodies and authorities of countries outside the European Economic Area referred to in paragraph 4 (j) shall be conditional, where the information has originated in another Member State, to the express conformity of the authority which transmitted it, and may be communicated only to the addressees referred to for the purposes for which the authority has given its agreement. The same limitation applies to information to the chambers and bodies referred to in paragraph 4 (i) and to the information required by the Court of Auditors and the Research Committees of the General Courts. "

" 7. The National Securities Market Commission shall communicate to the European Banking Authority the identity of the authorities or bodies to which it may transmit data, documents or information in accordance with points (d) and (f) in relation to the Accounting and Audit Institute of Accounts. '

Thirty-seven. Paragraph 1a is amended and a new paragraph 6 is added to Article 91 with the following wording:

" 1 bis. The National Securities Market Commission shall cooperate with the European Banking Authority for the purposes of Regulation (EU) No 575/2013 of 26 June 2010 in accordance with Regulation (EU) No 1093/2010 of 24 November 2010. '

" 6. The National Securities Market Commission, in its capacity as the authority responsible for the solvency supervision of the consolidable groups of investment firms, shall cooperate with the supervisory authorities of the European Union. To this end:

(a) Coordinate the collection of information and disseminate among the other authorities responsible for the supervision of investment services companies of the group information that it considers important in both normal and urgent situations.

(b) Plan and coordinate supervisory activities in normal situations, in relation to, inter alia, the activities referred to in Articles 70, 70 quinquies, 87 octies and 87 nonies linked to consolidated supervision, and in the provisions relating to technical criteria concerning the organisation and treatment of risks, in collaboration with the competent authorities involved.

(c) Plan and coordinate supervisory activities, in collaboration with the competent authorities involved and, where appropriate, with central banks in emergency situations or in anticipation of such situations, and in particular in cases where there is an adverse development of investment firms or financial markets, where possible, where possible, from existing specific channels of communication to facilitate crisis management. The content of this planning and coordination may be determined.

(d) cooperate closely with other competent authorities with supervisory responsibility for foreign investment firms, parent companies, subsidiaries or participants of the same group in accordance with the terms of Article 9c.

(e) shall conclude coordination and cooperation agreements with other competent authorities which aim to facilitate and establish effective supervision of the groups entrusted to their supervision and to take on the additional tasks resulting from such agreements and with the content that is regulated.

In particular, the National Securities Market Commission may enter into a bilateral agreement in accordance with Article 28 of Regulation (EU) No 1093/2010 of 24 November 2010 to delegate its supervisory responsibility for a subsidiary entity to the competent authorities which have authorised and supervise the parent undertaking, in order to ensure that they are responsible for the oversight of the subsidiary in accordance with the provisions of this Law, its implementing rules and Regulation (EU) No 575/2013 of 26 June. The National Securities Market Commission shall report the existence and content of such agreements to the European Banking Authority. '

Thirty-eight. Article 91a (8) is amended as follows:

" 8. The National Securities Market Commission, prior to the adoption of decisions which may affect the exercise of supervisory functions by the competent authorities concerned of another Member State of the European Union, shall consult them with those authorities, providing information that is essential or relevant, in the light of the importance of the relevant subject matter.

In particular, the appropriate consultation must be performed before the following decisions are taken:

(a) Those referred to in Article 69, irrespective of the extent of the change in the shareholding to which the relevant decision is affected.

(b) Reports to be issued in merger, division or any other relevant changes in the organisation or management of an investment firm.

(c) The penalties for the commission of very serious and serious violations that, in the opinion of the National Securities Market Commission, are considered to be of particular relevance.

(d) The intervention and replacement measures referred to in Article 107.

e) The request for additional own resources, as provided for in Article 87 octies.2, as well as the imposition of limitations on the use of internal methods of measurement of operational risk.

In the cases referred to in points (c), (d) and (e) above, the European Union authority responsible for the consolidated supervision of the group eventually affected by the decision should be consulted in any event.

By way of exception, the National Securities Market Commission may omit prior consultation with the competent authority concerned of another Member State of the European Union, where circumstances of urgency arise or where such consultation may compromise the effectiveness of the decisions to be taken, and shall without delay inform the said authorities as soon as the decision has been taken. "

Thirty-nine. Article 91 (e) is worded as follows:

" Article 91 sexies. Joint decisions in the framework of the supervision of groups of investment firms operating in several Member States.

Within the framework of the cooperation referred to in Article 91.1, the National Securities Market Commission, as a supervisor on a consolidated basis of a group, or as the competent authority responsible for the supervision of subsidiaries of an parent investment firm of the European Union or a financial holding company or a mixed financial holding company in the European Union in Spain shall do all in its power to reach a joint decision on:

(a) The application of Article 70.2 and Article 87 (1) (1) to determine the adequacy of the consolidated level of own resources held by the group in relation to its financial position and risk profile and the level of own resources necessary for the application of Article 87 bis.2 to each of the entities in the investment services group and on a consolidated basis.

(b) Measures to address any significant issues and important findings related to the supervision of liquidity.

The joint decision shall be taken in accordance with the procedure laid down in regulation. "

Forty. Article 91 (1) of the Treaty shall read as

:

Article 91 septies. Establishment of colleges of supervisors.

" 1. The National Securities Market Commission shall establish as a supervisor on a consolidated basis, colleges of supervisors, in order to facilitate the exercise of tasks which are regulated in accordance with the framework of the cooperation referred to in Article 91.1 and, in accordance with the requirements of confidentiality provided for in the applicable law and with the law of the European Union, shall ensure, where appropriate, appropriate coordination and cooperation with the competent authorities of third countries.

The colleges of supervisors will form the framework in which the following tasks are developed:

(a) Exchange information between competent authorities and the European Banking Authority in accordance with Article 21 of Regulation (EU) No 1093/2010 of 24 November 2010.

b) Agree to voluntary assignment of tasks and voluntary delegation of responsibilities if appropriate.

c) Establish prudential examination programmes based on a risk assessment of the group, in accordance with Article 87a.

(d) Increase the efficiency of supervision by removing any duplication of unnecessary prudential requirements, in particular with regard to requests for information referred to in Article 91 bis.8.

(e) to apply in a consistent manner the prudential requirements laid down in Regulation (EU) No 575/2013 of 26 June in all entities of a group of investment services undertakings, without prejudice to the options and powers provided by the legislation of the European Union.

(f) Plan and coordinate supervisory activities, in collaboration with the competent authorities involved and, where appropriate, with central banks, in situations of urgency or in anticipation of such situations, taking into account the work carried out in other fora which may be established in this field. "

Forty-one. Article 98 (1) and (3) are reworded and a new paragraph 3a is included.

" 1. In the case of a sanctioning procedure, Law 30/1992, of 26 November, of the Legal Regime of Public Administrations and of the Common Administrative Procedure, and its regulatory development, with the specialties listed in Articles 108, 110 and 112 of Law 10/2014, of the Management, Supervision and Solvency of Credit Entities as well as in this Law and its regulatory development, will apply.

Likewise, in the exercise of the sanctioning power attributed to the National Securities Market Commission, the provisions of Article 106 of the aforementioned Law 10/2014 on the Management, Supervision and Solvency of Credit Entities shall apply to the entities covered by Article 84.1.

3. The imposition of the penalties will be stated in the corresponding Administrative Register in charge of the National Securities Market Commission, which will be accessible through its website. Where the penalties under appeal are published, information on the state of the appeal and the outcome of the appeal shall be included on that website. In addition, the sanctions of suspension, separation and separation with disablement, once they are executive, will be made on the Mercantile Register, in addition to their case.

3 bis. In the publication of the sanctions, both on the website of the National Securities Market Commission and in the "Official Gazette of the State", information on the type and nature of the offence and the identity of the natural or legal person on which the sanction is placed shall be included.

The National Securities Market Commission may agree that the penalties imposed for the application of the rates applicable to investment firms contained in paragraphs (d), (e), (e) (e) (e) (e) (e) (e) quater, (e) (e) (e) (e) (e) (e) (e), (k), (l), (l) (a), (m), (q), (u), (w), (z), (z) (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), (c), Stock Market, there are some of the following assumptions:

(a) Where the sanction is imposed on a natural person and, after prior assessment, the publication of the personal data is deemed to be disproportionate.

(b) Where publication may jeopardise the stability of financial markets or an ongoing criminal investigation.

(c) Where the publication may cause disproportionate damage to the entities or natural persons involved, to the extent that the damage can be determined. "

Forty-two. New wording is given to paragraphs (c) (a), (c) (c) (c) (c), (l), (l) (a) and (x) of Article 99; paragraphs (z) quinquies and (z) sexies, which become, respectively, z) sexies and z) septies, are listed and paragraphs (e) (e) (e) (e) (e) (k) (k) (b) (b) (z) of (z) are inserted.

" c bis) The failure to refer to the National Securities Market Commission by the entities listed in Article 84.1.a) and b) within the time limit set by the rules or granted by it, of any documents, data or information to be sent to it pursuant to the provisions of the Law, its rules of development or the law of the European Union, or the National Securities and Exchange Commission to require in the performance of its duties, where the relevance of the information or the delay in which it was incurred has seriously hindered its assessment of its situation or activity, as well as the remission of incomplete information or with inaccurate or non-truthful data, where in these cases the incorrectness is relevant.

(c) (b) Non-compliance by the entities listed in Article 84.1 (a) and (b) of the related obligations, in each case, with the authorisation, approval or non-opposition to their statutes, regulations, or any other subject under the previous regime, provided for in this Act, its implementing rules or the law of the European Union.

(c) (c) (c) (c) failure by the entities listed in Article 84.1.a (a) and (b) of the requirements of capital structure or level of own resources which are applicable to them, as provided for in this Law, their rules of development or European Union law, failure to comply with the obligations under which they are to grant access to them, as provided for in this Law, their rules of development or European Union law, as well as non-compliance with the exceptions or limitations on their prices, tariffs or commissions to be applied by the Commission National of the Securities Market.

(e) sexies) The payment or distribution to holders of instruments that compute as own resources within the investment services undertaking where Article 70 quinquies.6 or Articles 28, 51 or 63 of Regulation (EU) No 575/2013 of 26 June are not complied with.

k) (a) Take an exposure exceeding the limits laid down in Article 395 of Regulation (EU) No 575/2013 of 26 June.

(k) (k) (b) Take an exposure to credit risk in a securitisation position that does not satisfy the conditions set out in Article 405 of Regulation (EU) No 575/2013 of 26 June.

(l) The lack of procedures, policies or measures referred to in Article 70b; non-compliance, not merely occasional or isolated, of the corporate governance obligations and organisational requirements set out in that Article 70b or of the remuneration obligations arising from Article 70 ter.Dos; and the non-implementation of the general feasibility plan provided for in Article 70 ter.2.g).

l bis) The failure to refer investment services to the National Securities Market Commission for any data or documents should be referred to it in accordance with this Law and its implementing rules, with Regulation (EU) No 575/2013 of 26 June, or which the National Securities Market Commission requires in the exercise of its functions, or its remission with inaccurate, non-truthful or misleading data, where the assessment of the solvency of the entity or of the financial conglomerate or group in which it is integrated is made difficult.

For the purposes of this paragraph, it shall also be understood as a lack of remission, the remission of the period provided for in the relevant rule or the time limit granted when making, where appropriate, the appropriate requirement.

In particular, the lack of remission or incomplete or inaccurate remission of:

is included in this section.

1. °) The data referred to in Article 101 of Regulation (EU) No 575/2013 of 26 June.

2. (º) Information on large exposures, in breach of Article 394 (1) of Regulation (EU) No 575/2013 of 26 June.

3.) Information on compliance with the obligation to maintain own resources laid down in Article 92 of Regulation (EU) No 575/2013 of 26 June, in breach of Article 99.1 of the Regulation.

4. (º) Information on established liquidity requirements, as well as the non-compliance with Article 415 (1) and (2) of Regulation (EU) No 575/2013 of 26 June.

5. (º) Information on the leverage ratio, in breach of Article 430 (1) of Regulation (EU) No 575/2013 of 26 June.

x) Non-compliance by investment firms, by other financial institutions, or by public bodies, of the obligations, limitations or prohibitions resulting from the provisions of Article 36, or of the provisions or rules laid down in accordance with Articles 43 and 44, without prejudice to the provisions of Article 107c.

z) sexies) The lack of referral by the credit rating agencies to the National Securities Market Commission of how much data or documents should be provided in accordance with this Law and Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies, or requiring them in the exercise of the functions assigned to it by delegation or cooperation with other competent authorities, as well as the referral of information to the National Securities Market Commission with data (a) inaccurate where the assessment of the organisation or functioning of the institution or the way in which its activities are carried out is difficult.

z) septies) The absence of a department or customer service.

(z) (z) (g) The non-constitution of the appointment committee provided for in Article 70b. One or the remuneration committee in accordance with the terms laid down in Article 70 ter.Two.

z) nonies) Not to publish the required information in breach of Article 431 (1), (2) and (3) or Article 451.1 of Regulation (EU) No 575/2013 of 26 June, as well as the publication of such information in an incomplete or inaccurate manner. "

Forty-three. A new wording is given to points (e), (g) (a) and (t) of Article 100, and a new point (z) (z) is introduced.

" (e) Non-compliance by those who are not investment firms, financial institutions or public authorities, obligations, limitations or prohibitions resulting from the provisions of Article 36 or the provisions or rules laid down in accordance with Articles 43 and 44, without prejudice to the provisions of Article 107c.

g) (a) Failure to comply with the obligation to make public the information referred to in Article 70a and Article 70 bis.One, as well as the publication of such information with omissions or false, misleading or non-truthful data.

(t) The occasional or isolated non-observance by those who provide investment services of the corporate governance obligations and organisational requirements set out in Article 70b, as well as the remuneration obligations provided for in the 70b. Two or the occasional or isolated non-compliance by those who provide investment services from the obligations, rules and limitations provided for in Articles 70c, 79, 79a, 79b, 79 quinquies and 79 sexies.

z) (z) (f) the non-performance of the obligation to keep the general viability plan referred to in Article 70 (2) (g) to be kept up to date. '

Forty-four. Article 102 is worded as follows:

" Article 102. Penalties for very serious infringements.

1. For the commission of very serious infringements one or more of the following penalties shall be imposed on the infringer:

(a) Multa for the amount of up to the largest of the following amounts: the five-fold gross profit obtained as a result of the acts or omissions in which the infringement consists; 5 percent of the infringer's own resources, 5 percent of the total funds, own or foreign, used in the infringement, or 600,000 euros.

In the case of investment firms which fail to comply with the rules laid down in Regulation (EU) No 575/2013 of 26 June or commit the very serious infringements referred to in the second paragraph of Article 98.3 (a), the fine to be imposed shall be the amount of up to the maximum of the following amounts: the fivefold of the gross profit obtained as a result of the acts or omissions in which the infringement consists; 10% of the total annual net turnover, including gross receipts from interest to be collected and revenue assimilated; the income from shares and other fixed or variable income securities, and the fees or charges to be charged, in accordance with Article 316 of Regulation (EU) No 575/2013 of 26 June, which was carried out by the undertaking in the previous financial year, the own resources of the offending entity, 5% of the total, own or other funds used in the infringement, or EUR 10,000,000.

If the company referred to in this paragraph is a subsidiary, the relevant gross proceeds shall be the gross proceeds resulting from the consolidated accounts of the parent undertaking of which it is subject in the previous financial year.

(b) Suspension or limitation of the type or volume of the operations or activities that the infringer may perform on the securities markets for a period not exceeding five years.

(c) Suspension of the status of a member of the official secondary market or of the relevant multilateral trading system for a period not exceeding five years.

d) Exclusion from the negotiation of a financial instrument in a secondary market or in a multilateral trading system.

e) Revocation of the authorization in the case of investment firm, Public Debt Market Management Entities or other entities registered in the National Securities Market Commission records. In the case of investment firms authorised in another Member State of the European Union, this revocation penalty shall be replaced by the prohibition on the initiation of new operations in the Spanish territory.

(f) Suspension in the exercise of the office or address of the infringer in a financial institution for a period not exceeding five years.

g) Separation of the charge of administration or management that the infringer occupies in a financial institution, with disablement to exercise management or management positions in the same entity for a term of no more than five years.

(h) Separation of the charge of administration or address held by the infringer in any financial institution, with disablement to pursue administration or management positions in any other entity as provided for in Article 84.1 and 84.2 (b), (c) bis and (d) for a period not exceeding ten years.

In the case of the infringement provided for in Article 99 (o), the penalty referred to in paragraph (a) above shall be imposed in any event, without the fine being less than EUR 30,000 and, in addition, one of the penalties provided for in paragraphs (b), (c) or (e) of this Article, as appropriate on the condition of the offender.

In addition, in the case of non-compliance with the activity reserve provided for in Article 99.q), the offender shall be subject to the penalty referred to in point (a) of this Article, in this case, in the case of gross profit, the income obtained by the infringer in the development of the reserved activity, without the fine being less than EUR 600,000.

In the event that an investment firm acquires a stake in spite of the opposition of the National Securities Market Commission, regardless of any other sanction that may be imposed, the suspension of the exercise of the corresponding voting rights, or the nullity of the votes cast, or the possibility of annulling them, shall be provided.

In the case of infringements committed by the persons referred to in Article 85.8, the penalties shall be imposed in accordance with Article 98, without prejudice to the ability of other competent authorities of the European Union to impose sanctions in accordance with the provisions of Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies.

2. Penalties for very serious infringements shall be published in the Official Gazette of the State once they are firm on the administrative basis. "

Forty-five. Article 103 is worded as follows:

" Article 103.

1. One or more of the following penalties shall be imposed on the infringer by the commission of serious infringements:

(a) Multa for the amount of up to the largest of the following figures: double the gross profit obtained as a result of the acts or omissions in which the infringement consists; 2 percent of the infringer's own resources, 2 percent of the total funds, own or foreign, used in the infringement, or 300,000 euros.

In the case of investment firms that fail to comply with the rules contained in Regulation (EU) No 575/2013 of 26 June or commit the serious infringements referred to in the second paragraph of Article 98.3 (a), the fine to be imposed shall be the amount of up to the maximum of the following figures: double the gross profit obtained as a result of the acts or omissions in which the infringement consists; 5 per cent of the total annual net turnover, including gross income from interest to be collected and income assimilated, the income of shares and other securities of fixed or variable income, and commissions or corretages receivable, in accordance with Article 316 of Regulation (EU) No 575/2013 of 26 June, which the company has carried out in the previous financial year; 2% of the total, own or other funds used in the infringement, or EUR 5,000,000.

If the company referred to in this paragraph is a subsidiary of a parent undertaking, the gross proceeds shall be the gross proceeds resulting from the consolidated accounts of the parent undertaking in the preceding financial year.

(b) Suspension or limitation of the type or volume of the operations or activities that the infringer may perform on the stock markets for a period not exceeding one year.

(c) Suspension of the status of a member of the official secondary market or of the relevant multilateral trading system for a period not exceeding one year.

(d) Suspension of a term of no more than one year in the year of the administration or management office of the infringer in a financial institution.

In the case of the infringement provided for in Article 100 (x), in relation to the failure to comply with the obligations laid down in Article 81, the penalty referred to in point (a) of this Article shall be imposed in any event and, in addition, one of the penalties provided for in points (b) or (c) of the same provision, without the fine which, if applicable, is imposed, may be less than EUR 12 000.

The commission of the infringement provided for in Article 100g) bis shall in any case lead to the cancellation of the registration of the representative or proxy in the records of the National Securities Market Commission.

In the event that an investment firm acquires significant participation in spite of the opposition of the National Securities Market Commission, regardless of any other sanction that may be imposed, the suspension of the exercise of the corresponding voting rights shall be well disposed, either the nullity of the votes cast or the possibility of annulling them.

2. Penalties for serious infringements shall be published in the Official Gazette of the State once they are firm on the administrative path. "

Forty-six. Article 105 is worded as follows:

" Article 105.

1. In addition to the penalty to be imposed on the infringer by the commission of very serious infringements, where the offender is a legal person, one or more of the following sanctions may be imposed on those who, exercising administrative or managerial positions in the infringer, are responsible for the infringement:

a) Multa for up to 400,000 euros.

In the case of investment firms that fail to comply with the rules contained in Regulation (EU) No 575/2013 of 26 June, or commit the very serious infringements referred to in the second paragraph of Article 98.3 (a), the fine to be imposed shall be, in the amount of up to EUR 5,000,000.

(b) Suspension in the exercise of the management or management position of the infringer in the entity for a term of not more than three years.

c) Separation of the charge with disablement to exercise management or management positions in the same entity for a period not exceeding five years.

(d) Separation of the charge with disablement to exercise management or management positions in any entity as provided for in Article 84.1 or in a credit institution for a term of not more than ten years.

e) Public assembly in the "Official State Gazette" of the identity of the offender and the nature of the infringement or private admonition.

In the case of the infringement provided for in Article 99 (o), the penalty referred to in point (a) above shall be imposed in any event, without the penalty being less than EUR 30,000.

2. In any event, the penalties imposed in accordance with paragraph 1 shall be published in the Official Gazette of the State once they are signed on an administrative basis. "

Forty-seven. Article 106 is worded as follows:

" Article 106.

1. In addition to the penalty to be imposed on the infringer by the commission of serious infringements, where the offender is a legal person, one or more of the following sanctions may be imposed on those who, exercising administrative or managerial positions in the offender, are responsible for the offence:

a) Multa for up to 250,000 euros.

In the case of investment firms that fail to comply with the rules contained in Regulation (EU) No 575/2013 of 26 June, or commit the serious infringements referred to in the second paragraph of Article 98.3 (a), the fine to be imposed shall be EUR 2,500,000.

(b) Suspension in the exercise of any administration or management charge that the infringer occupies in the entity for a term of not more than one year.

c) Public assembly in the "Official State Gazette" of the identity of the offender and the nature of the infringement or private admonition.

In the case of the infringement referred to in Article 100 (x), in relation to the failure to comply with the obligations laid down in Article 81, the penalty laid down in point (a) of this Article shall be imposed in any event, without the fine being less than EUR 12 000.

2. In any event, the penalties imposed in accordance with paragraph 1 shall be published in the Official Gazette of the State once they are signed on an administrative basis. "

Forty-eight. Article 106 (1) shall be worded as

:

" Article 106 ter. The determining criteria for penalties.

1. The penalties applicable in each case for the commission of very serious, serious or minor infringements shall be determined in accordance with the criteria laid down in Article 131.3 of Law No 30/1992 of 26 November 1992 on the Legal Regime of Public Administrations and the Common Administrative Procedure, and the following:

a) The nature and entity of the infringement.

(b) The degree of responsibility of the natural or legal person responsible for the infringement.

(c) The financial soundness of the natural or legal person responsible for the infringement reflected, among other objectivable elements, in the total turnover of the responsible legal person or the annual income of the natural person.

d) The severity and temporary persistence of the danger caused or the damage caused.

e) Losses caused to third parties by the infringement.

(f) The gains obtained, if any, as a result of the acts or omissions constituting the infringement.

g) The unfavorable consequences of the facts for the financial system or the national economy.

h) The circumstance of having proceeded to the underhealing of the infringement on its own initiative.

i) Repair of damages caused.

j) The collaboration with the National Securities Market Commission, provided that the natural or legal person has provided relevant elements or data for the clarification of the facts investigated.

k) In the case of insufficient own resources, the objective difficulties which may have been encountered in order to achieve or maintain the legally required level.

(l) the entity's previous conduct in relation to the rules of ordination and discipline affecting it, in the light of the firm sanctions imposed on it, over the last five years. "

Forty-nine. A new wording is given to the first paragraph of Article 107, with the following literal wording:

" It shall apply to the entities listed in Article 84.1.a), (b), (c), (d), (e) and (f) the provisions for credit institutions in Article 106 and Chapter V of Title III of Law 10/2014 on the Management, Supervision and Solvency of Credit Entities. The competence to agree the intervention or replacement measures shall be the responsibility of the National Securities Market Commission. "

Fifty. Article 107b is worded as follows:

" Article 107 ter. Information and notification of administrative infringements and penalties.

1. The National Securities and Exchange Commission shall provide the European Securities and Markets Authority with aggregate information on infringements committed for non-compliance with the obligations of this Law and the penalties imposed each year.

In the event that an administrative measure or a sanction has been publicly disclosed, the National Securities Market Commission shall simultaneously notify that fact to the European Securities and Markets Authority.

In addition, subject to the requirements of professional secrecy, the National Securities Market Commission shall notify the European Banking Authority of all administrative penalties imposed on investment firm undertakings having regard to the institution for the purposes of the definition referred to in Article 4.1 (3) of Regulation (EU) No 575/2013 of 26 June. '

Fifty-one. A new Article 107c is added which is worded as follows:

" 1. They are subject to the supervision, inspection and sanction regime of the National Securities Market Commission provided for in this Law, natural and legal persons performing operations subject to Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps.

They are also subject to the supervision, inspection and sanction regime of the National Securities Market Commission provided for in this Law, the natural and legal persons carrying out operations under Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July.

The National Securities Market Commission shall have the powers contained in Article 85 of this Law that are necessary to comply with the tasks and tasks assigned to it by delegation or cooperation with other competent authorities.

2. Without prejudice to the types of offenders already provided for in Articles 99 to 101, the persons referred to in paragraph 1, as well as those who have administrative or managerial positions in the legal persons referred to therein, who infringe rules of organisation or discipline included in the aforementioned regulations of the European Union, shall incur punishable administrative responsibility and shall apply to them the sanctioning regime provided for in this Chapter with the particularities provided for in this Article.

3. The following breaches of Regulation (EU) No 236/2012 of 14 March 2012 are very serious:

(a) Failure to comply with the obligations contained in Articles 5 to 8 of the Regulation without respecting the provisions of Article 9 of the Regulation, in the event that the delay in the communication is significant or that there has been a requirement on the part of the National Securities Market Commission, and the failure to comply with the duty to preserve information contained in that Article 9.

(b) Failure to comply with the communication obligation referred to in Article 17 (9) and (10) of the Regulation, where the delay in the communication or the number and volume of operations is significant; and the failure to comply with the communication duty contained in Article 17 (11), where there has been a delay in the communication or there has been a requirement on the part of the National Securities Market Commission.

c) Short selling when the conditions described in Article 12 of the Regulation are not met, and at least one of the following conditions is present:

1. º) short selling is not merely occasional or isolated,

2. º) realization has a major impact on the price of the action,

3. º) the transaction has relative importance in relation to the volume traded in the value in the session in the multilateral market of orders,

4. º) there is high volatility in the market or in the value in particular,

5. º) the transaction increases the potential risk of settlement failure or delay.

(d) The performance of transactions with sovereign credit default swaps where they are not permitted under Article 14 of the same Regulation, in a significant volume.

e) Failure to comply with the obligations contained in Articles 13, 15, 18 and 19 of the Regulation.

(f) The conduct of operations which have been prohibited or limited by the National Securities Market Commission pursuant to Articles 20, 21 and 23 of the Regulation.

4. The following breaches of Regulation (EU) No 236/2012 of 14 March 2012 are serious infringements:

(a) Failure to comply with the communication and publication obligations contained in Article 9 of the Regulation, and those contained in Article 17 of the Regulation, where they do not constitute very serious infringements.

(b) The conduct described in points (a), (b), (c) and (d) of the previous paragraph, where they do not constitute very serious infringements.

5. Without prejudice to the types of offenders already provided for in Article 99 of this Law, the following breaches of Regulation (EU) No 648/2012 of 4 July 2012 are very serious:

(a) Non-compliance, where the solvency or viability of the offending person or his/her group, of the obligations contained in Articles 11.1, 11.2, 11.3 and 11.4 and in Titles IV and V of the Regulation is put at risk.

b) Failure to comply with the obligations laid down in Articles 4 and 10 of the Regulation, not merely occasional or isolated or with substantial irregularities.

c) Failure to comply with any of the obligations contained in Article 9 of the Regulation by the financial counterparties referred to in Article 2 (8) of that Regulation and of central counterparties, not merely occasional or isolated or with substantial irregularities.

6. Without prejudice to the types of offenders already provided for in Article 100 of this Law, the following breaches of Regulation (EU) No 648/2012 of 4 July 2012 are serious infringements:

(a) Failure to comply with the obligations referred to in points (a), (b) and (c) of paragraph 5 above, where they do not constitute a very serious infringement.

(b) Non-compliance with a non-purely occasional or an isolated or substantial irregularity of any of the obligations contained in Article 9 of the Regulation by the non-financial counterparties referred to in Article 2 (9) of that Regulation.

7. They constitute minor infractions in relation to Regulation (EU) No 648/2012 of 4 July 2012, the lack of a referral to the National Securities Market Commission for how many documents, data or information are to be sent in the exercise of the functions assigned to it by delegation or cooperation with other competent authorities, as well as to be absent from the duty of collaboration with supervisory actions of the National Securities Market Commission, including the failure to appear before a summons for the taking of the declaration, when these conduct do not constitute a serious or very serious infringement in accordance with the provisions of the preceding paragraphs.

The non-compliance with obligations arising from Regulation (EU) No 236/2012 of 14 March 2012 and Regulation (EU) No 648/2012 of 4 July 2012, which do not constitute a serious or very serious infringement in accordance with the provisions of the previous paragraphs, shall also be considered as minor infringements.

8. The National Securities Market Commission shall request a report prior to the Bank of Spain or the General Directorate of Insurance and Pension Funds, as appropriate, for the adoption of any of the following decisions in relation to counterparties subject to their respective prudential supervision:

(a) Decisions concerning the existence of risk management procedures and the adequacy of the capital of financial counterparties for the purposes of Article 11 (3) and (4) of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012.

(b) The application of the exemptions to intra-group transactions referred to in Article 4.2 and Article 11 (5) and (5) of that Regulation.

Decisions to be taken by the National Securities Market Commission referred to in point (a) above shall, in any case, be based on the report issued by the authority responsible for the prudential supervision of the relevant institution.

The National Securities Market Commission may require the Banco de España and the Directorate-General for Insurance and Pension Funds, as much information as is necessary for the exercise of the supervisory, inspection and sanction powers relating to the application of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July.

9. The infringements provided for in this Article shall be sanctioned in accordance with the sanctioning regime provided for in this Law.

10. The fines and periodic penalty payments adopted by the European Securities and Markets Authority pursuant to Articles 65 and 66 of Regulation (EU) No 648/2012 of 4 July 2012 shall be subject to an analysis of authenticity by the National Securities Market Commission and shall subsequently be executed. '

Fifty-two. The transitional provision is added fourteenth, which is worded as follows:

" Transient disposition fourteenth. General feasibility plan.

The general feasibility plan provided for in Article 70 (g) ter.2 shall be required by the institutions after six months after the completion of the regulatory development in which their content is specified. "

Fifty-three. The third subparagraph of paragraph 1 of the Additional 17th Disposition is amended, which is worded as follows:

" Correspond to the National Securities Market Commission to authorize the statutes governing those acquiring entities and their modifications, with the exceptions to be established in regulation, as well as to authorize the appointment of the members of its board of directors and its directors-general, which shall meet the requirements of Article 67.2 (f) of this Law. If the acquiring institutions do not have their registered office in Spain and their statutes and amendments and the requirements of the members of the board of directors and directors-general have been verified by the competent authority of another Member State of the European Union or by the supervisory authority of a non-Member State of the European Union whose arrangements for organisation and operation are similar to that of the National Securities Market Commission, it shall be for the latter to verify such verifications. '

Fifty-four. The 4th Final Disposition is modified as follows:

" Final disposition fourth.

1. The National Securities Market Commission is the competent authority in Spain for the purposes of Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps.

2. The National Securities Market Commission shall also be the competent authority in Spain for the purposes of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories. The Commission shall carry out the supervision and sanction of the activities of the central counterparties, financial counterparties and non-financial counterparties.

The Banco de España and the Directorate-General for Insurance and Pension Funds shall immediately inform the National Securities Market Commission of any effective non-compliance, or the existence of substantiated evidence of the foreseeable non-compliance, of the obligations laid down in Articles 11.3 and 11.4 of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012. '

Final disposition second. Amendment of Law 13/1989, of 26 May, of Credit Cooperatives.

Article 7 (4) of Law 13/1989, of 26 May, of Credit Unions, is hereby amended as follows:

" 4. The contributions shall be reimbursed to the partners in accordance with the conditions laid down in the regulations and provided that the Governing Council so permits. In any event, such reimbursement may not be approved where there is insufficient coverage of the compulsory social capital, reserves and solvency ratio.

Contributions may not present one or more of the privileges in their preliation in the event of the cooperative or the liquidation of the cooperative. "

Final disposition third. Amendment of Law 1/1994 of 11 March on the legal status of mutual guarantee companies.

Article 59 (1) (e) of Law 1/1994 of 11 March 1994 on the legal status of mutual guarantee companies is amended as follows:

"e) By reduction of the paid-up share capital or of the own resources, below the minimum figures required by this Law."

Final disposition fourth. Amendment of Law 41/1999 of 12 November on payment systems and securities settlement.

Article 8 (g) of Law 41/1999 of 12 November 1999 on payment and securities settlement systems is amended as follows:

"(g) The central counterparty BME Clearing S.A.U., and the system of clearing and settlement of securities and financial instruments derived from MFAO, the Company Rector of the Olive Oil Futures Market, S.A., approved by the Minister of Economy and Competitiveness in accordance with the provisions of Law 24/1988 of 28 July of the Securities Market."

Final disposition fifth. Amendment of Law 36/2003 of November 11, of measures of economic reform.

The first paragraph of Article 19 (2) of Law 36/2003 of 11 November of economic reform measures is worded as follows:

" 2. The entities referred to in the preceding paragraph shall offer to those who apply for mortgage loans at the variable rate at least one instrument, product or system for hedging the risk of an increase in the interest rate, provided that it is appropriate for the customer, in accordance with Article 79a of Law 24/1988 of 28 July of the Securities Market. "

Final disposition sixth. Amendment of the recast of the Law on the Law on the Management and Supervision of Private Insurance, approved by the Royal Decree of Law 6/2004 of 29 October.

The Recast Text of the Law on the Management and Supervision of Private Insurance, approved by Royal Decree-Law 6/2004 of 29 October, is amended as follows:

One. The wording of Article 20.3 (a) is hereby amended as follows:

" (a) A group of financial institutions is considered to be a consolidable group of insurance entities, with a determination to regulate the types of entities integrated into that group, when any of the following circumstances arise:

1. An insurance entity controls the other entities.

2. The dominant entity is an entity whose principal activity is to have holdings in insurance institutions.

3. A company whose main activity consists of having a stake in financial institutions, a mixed financial holding company, a natural person, a group of persons acting systematically in concert or an entity which is not consolidated under this Law, controls several financial institutions, at least one of them being an insurance undertaking, and provided that the insurance institutions are the largest relative size of the financial institutions, in accordance with the criteria set out in that effect by the Minister for Economic Affairs and Competitiveness.

When any of the last two circumstances apply, it shall be for the Directorate-General for Insurance and Pension Funds to designate the person or entity required to formulate and approve the consolidated annual accounts and the consolidated management report and to proceed to its deposit, corresponding to the appointment of the auditors. For the purpose of the specified designation, the insurance institutions belonging to the group shall report their existence to the Directorate-General for Insurance and Pension Funds, with an indication of the domicile and the social reason of the entity exercising the control, or its name, if it is a natural person.

When the dominant entity of the consolidable group of insurance entities is a mixed financial holding company subject to this Law and to which supervisory standards are applicable equivalent to those contained in Article 4.1 of Law 5/2005 of 22 April of the supervision of financial conglomerates and amending other laws of the financial sector and its development regulations, the General Directorate of Insurance and Pension Funds, after consultation with the other authorities responsible for the supervision of subsidiaries of the financial company It may decide that only the provisions of Law 5/2005 of 22 April and its implementing rules or the regulatory provisions of the most important financial sector of that mixed financial holding company will apply to that company.

The Directorate-General for Insurance and Pension Funds shall inform the European Insurance and Occupational Pensions Authority of the decision taken under the preceding paragraph. "

Two. A new paragraph 6 is added to Article 71 in the following terms

" 6. The Directorate-General for Insurance and Pension Funds may draw up technical guides to the entities subject to its supervision, indicating the criteria, practices or procedures it considers appropriate for compliance with the supervisory rules. These guidelines, which must be made public, may include the criteria that the Directorate-General for Insurance and Pension Funds itself will follow in the exercise of its supervisory activities.

To this end, the Directorate-General for Insurance and Pension Funds may make its own, and transmit as such, as well as develop, supplement or adapt the guidelines which, addressed to the subjects subject to its supervision, approve the international bodies or committees active in the regulation or supervision of insurance or pension schemes. "

Final disposition seventh. Amendment of Law 5/2005, of 22 April, of supervision of financial conglomerates and amending other laws of the financial sector.

Law 5/2005, of 22 April, of supervision of financial conglomerates and amending other laws of the financial sector is amended as follows:

One. The sixth and seventh paragraphs of the explanatory memorandum are worded as follows:

" The Law therefore responds to the fundamental objective of establishing a specific prudential regime applicable to financial conglomerates. There is, however, a secondary objective: to move towards greater coherence between the various sectoral legislations, which apply to the 'homogeneous' groups, and between them and the financial conglomerates themselves. This sector-wide regulation, to which the text of the Law makes continuous references, would be contained, for the credit institutions, in Law 10/2014, for the Management, Supervision and Solvency of Credit Entities; for the stock market, in Law 24/1988, of July 28, of the Market of Securities; for the insurance sector, in the Recast Text of the Law on the ordination and supervision of private insurance, approved by Royal Decree-Law 6/2004, of 29 October; for the management companies of collective investment institutions, in Law 35/2003, of 4 November, of Institutions of Collective investment; and for the management companies of venture capital entities in Law 25/2005 of 24 November, regulatory of venture capital institutions and their management companies. The recast of the Law on the regulation of pension plans and funds, approved by the Royal Legislative Decree 1/2002 of 29 November, should be added to them.

Chapter I is dedicated to the first of the outstanding objectives: the design of a new supervisory system to which credit institutions, investment firms and insurance and reinsurance undertakings, as well as the management companies of collective investment institutions, the management companies of venture capital institutions and the pension fund management entities (to which both Directive 2011 /89/EU of 16 November and the Law are generically referred to as 'regulated entities') integrated into a conglomerate, are to be subject to the design of a new supervisory system. financial. Thus, a definition of a financial conglomerate is first provided, based on the already classic group definition provided by Article 4 of Law 24/1988 of 28 July. The following are the vertebral elements of such supervision: solvency, capital adequacy policies, risk concentration, intra-group transactions and risk management procedures and internal control mechanisms. '

Two. Paragraphs 2, 3 and 5 and the first subparagraph of Article 2 (6) shall be worded as

:

" 2. For the purposes of this Law, the definition of a group of companies as set out in Article 42 of the Trade Code shall be included.

In addition, any right to participate in the capital of other companies shall be understood to mean that, by creating with them a lasting link, it is intended to contribute to the activity of society, and, in any case, the holding, directly or indirectly, of at least 20 percent of the capital or voting rights.

The group will integrate all entities that maintain the links mentioned in the previous two paragraphs, whatever their nationality, domicile or legal nature, and regardless of the country in which they develop their activities.

3. For the purposes of this Law, credit institutions, investment firms, the management companies of collective investment institutions, the management companies of venture capital institutions, the pension fund management entities and the insurance and reinsurance entities shall be regulated entities.

Regulated entities will understand:

(a) The Spanish registered in the special registers by the Banco de España, the National Securities Market Commission and the General Directorate of Insurance and Pension Funds.

(b) Those authorised in other Member States of the European Union.

(c) bodies or undertakings, both public and private, which have been authorised in third countries, when they carry out activities reserved for credit institutions, investment firms, insurance and reinsurance undertakings, management companies of collective investment institutions, management companies of venture capital institutions and pension fund management entities. "

" 5. Activities in a financial sector shall be understood to be significant if the average of the ratio between the total balance sheet of that sector and the total balance of the financial sector entities in the group and the ratio between the solvency requirements of that sector and the total solvency requirements of the financial sector entities in the group is greater than 10%.

The requirement provided for in paragraph 1.c) shall be deemed to be equally satisfied if the total balance of the group's smaller financial sector is more than EUR 6 billion. Regulations shall determine the assumptions in which, if only the threshold referred to in this subparagraph or the one referred to in the preceding subparagraph is exceeded, the group may not be considered as a financial conglomerate or the provisions referred to in Article 4.1.c), (d) and (e) may not be considered as financial conglomerate.

For the purposes of this Law, the smaller financial sector of a group will be the sector with the lowest average and the most important financial sector will be the sector with the highest average. In order to calculate the smallest and most important financial sector, the banking and investment services sectors shall be considered together and the management companies of collective investment institutions and the management companies of venture capital institutions shall be added to the sector to which they belong within the group. If the latter do not belong exclusively to a sector within the group, they will be added to the smaller financial sector.

6. In cases and in accordance with the requirements to be laid down in regulation, the total balance sheet may be replaced or supplemented by the ratios set out in paragraphs 4 and 5 by one or more of the following parameters:

a) The revenue structure.

b) Off-balance-sheet activities.

c) Total assets managed. "

Three. Article 3.2 (b) and (d) shall be worded as follows:

" (b) Mixed financial holding companies with registered offices in Spain which are the dominant company of financial conglomerates referred to in point (a) above.

(d) The regulated entities of financial conglomerates to which the exemption assumptions referred to in the second paragraph of Article 2.5 apply, as provided for in Article 4.3 of this Law. "

Four. Article 4 (2) and (3) shall be worded as

:

" 2. Where the dominant entity in the financial conglomerate is a mixed financial holding company to which sectoral rules equivalent to those contained in the previous paragraph and in its development rules apply, the coordinator may decide, after consultation with the other relevant competent authorities, that only the provisions of this Law and its implementing rules or the regulatory provisions of the most important financial sector of the financial conglomerate apply to that company.

The consolidating supervisor shall inform the Joint Committee of the European Supervisory Authorities of the decision taken pursuant to this paragraph.

3. Regulations may cover all or some of the obligations laid down in paragraph 1 to those groups which fulfil all the requirements referred to in Articles 2 and 3, even if the exemption cases referred to in the second paragraph of Article 2.5 are applied.

Groups which are subject to the above obligations shall also apply Articles 5, 6 and 7, with specifications to be determined in accordance with the rules. "

Five. Article 5 (3) is worded as follows:

" 3. The functions of the coordinator in relation to the supplementary supervision of regulated entities in a financial conglomerate are as follows:

(a) Coordination of the collection and dissemination of relevant or essential information, including the dissemination of information that is relevant to the supervisory work of a competent authority in accordance with the sectoral rules.

(b) General supervision and assessment of the financial situation of a financial conglomerate.

(c) The assessment of compliance with the obligations referred to in the previous Article and its implementing rules.

d) The evaluation of the structure, organization and internal control systems of the financial conglomerate.

e) The planning and coordination of supervisory activities where necessary for the purposes of supplementary supervision and, in any case, in serious situations.

(f) The identification of the legal structure and the governance and organisational structure.

g) Performing periodic resistance tests at the level of financial conglomerates.

h) The other functions attributed to you by this Law and its development provisions. "

Six. The last subparagraph of paragraph 2 is amended and a new paragraph 5a is added to Article 6:

" Without prejudice to the requirements of confidentiality and European Union legislation, they shall also conclude such agreements where, as competent authorities, they are required by the authorities of other Member States or third States to perform the functions described in the first subparagraph of this paragraph.

The coordination agreements referred to in this paragraph shall be reflected separately in the written provisions referred to in Article 66 of Law 10/2014 on the Management, Supervision and Solvency of Credit Entities and Article 91 septies of Law 24/1988 of 28 July of the Securities Market. "

" 5 bis. The functions set out in Article 5 and the cooperation required pursuant to this Article and Article 5 shall be carried out through colleges of supervisors established in accordance with the provisions of Article 64 of Law 10/2014, of the Management, Supervision and Solvency of Credit Entities and in Article 91 septies of Law 24/1988 of 28 July of the Stock Market. In such cases, the provisions of the cluster in the field of conglomerates shall be reflected separately from the other provisions.

Also, without prejudice to the requirements of confidentiality and of the legislation of the European Union, appropriate coordination and cooperation with the supervisory authorities of third States shall also be carried out through these schools.

The coordinator, when I will act as president of any of these schools, will decide which other competent authorities will participate in the activity of the college for the purpose of implementing this Law and its development regulations. It shall also ensure appropriate coordination and cooperation with the competent authorities of third countries.

However, in the absence of sectoral colleges of supervisors, the coordinator of the supervision of a financial conglomerate, shall establish a college to carry out the tasks and cooperation referred to in the first paragraph of this paragraph, in the terms that it regulates. "

Final disposition octave. Amendment of the Recast Text of the Law of Audit of Accounts approved by the Royal Legislative Decree 1/2011, of July 1.

The Recast Text of the Audit of Accounts Law approved by Royal Legislative Decree 1/2011, of July 1, is amended as follows:

One. Paragraphs 4 to 7 are added to Article 29:

" 4. The information or data that the Accounting and Audit Institute has obtained in the exercise of its functions of public oversight and audit of the audit of accounts provided for in this Law shall be confidential and shall not be disclosed or provided to any person or authority.

Without prejudice to the provisions of this article and of the cases covered by criminal law, no confidential information which they may receive in the performance of their duties may be disclosed to any person or authority.

5. All persons who perform or have carried out an activity for the Accounting and Audit Institute of Accounts and have had knowledge of data of a confidential nature are obliged to keep secret. Failure to comply with this obligation shall determine the criminal and other responsibilities provided for by the laws. These persons may not provide a statement or testimony, or publish, communicate, display confidential data or documents, even after they have ceased their service, except for the permission granted by the Accounting and Audit Institute of Accounts. If such permission is not granted, the person concerned shall retain the duty of secrecy and shall be exempt from the responsibility which emanates from this.

6. Except for the obligation of secrecy laid down in this Article:

(a) When the data subject expressly consents to the dissemination, publication or communication of the data.

b) The publication of aggregated data for statistical purposes, or communications in summary or aggregate form in such a way that auditors and audit firms cannot be identified, in accordance with the fifth Additional Disposition.

c) Information required by the competent judicial authorities or the Prosecutor's Office in criminal proceedings, or in a civil trial.

(d) Information which, in the context of administrative or judicial remedies instituted in respect of administrative decisions given in the exercise of the penalty jurisdiction referred to in Article 30, is required by the competent administrative or judicial authorities.

e) The information that the Accounting and Audit Institute of Accounts publishes in accordance with the provisions of Articles 7 and 38.

(f) The results of the quality control actions carried out on an individual basis to the auditors and audit firms.

7. By way of derogation from paragraphs 4 to 6 of this Article, confidential information may be provided by the Accounting and Audit Institute to the following persons and entities to facilitate the fulfilment of their respective functions, which shall in turn be obliged to keep the duty of secrecy regulated in this article:

(a) Those who are appointed by judicial resolution.

b) Those who are authorized by law.

(c) The Banco de España, the National Securities Market Commission and the General Directorate of Insurance and Pension Funds, as well as the regional bodies with the responsibility for the management and supervision of insurance institutions.

(d) The authorities responsible for the fight against money laundering and the financing of terrorism, as well as communications which can be made in exceptional circumstances under the provisions of Section 3 of Chapter I of Title III of Law 58/2003 of 17 December, General Tax.

(e) The competent authorities of the Member States of the European Union and of third countries in the terms referred to in Articles 42 and 43 respectively. "

Two. A paragraph is added after point (c) of the final Disposition first with the following literal tenor:

" Unless significant and justified reasons prevent this, this communication shall be extended simultaneously to the management body of the entity. In any event, it shall be understood that such communication is not possible where the said management body has been or may have been or may have been involved in the facts of that communication. '

Final disposition ninth. Amendment of Royal Decree-Law 16/2011 of 14 October establishing the Deposit Insurance Fund of Credit Entities.

Article 7 of Royal Decree-Law 16/2011 of 14 October establishing the Deposit Insurance Fund for Credit Entities is hereby worded as follows:

" Article 7. Gestora Commission.

1. The Fund shall be governed and administered by a Management Committee composed of 11 members, a representative of the Ministry of Economy and Competitiveness, one of the Ministry of Finance and Public Administrations, four designated by the Bank of Spain and five by the representative associations of the credit institutions adhered to, in the terms provided for in regulation.

2. The representative of the Ministry of Economy and Competitiveness shall be the Secretary General of the Treasury and Financial Policy, who will hold the Vice-Presidency of the Gestora Commission and replace the President in his duties in case of vacancy, absence or illness.

The representative of the Ministry of Finance and Public Administration will be the State Controller.

The representatives of the Banco de España will be appointed by its executive committee. One of them will be the Deputy Governor who will hold the Presidency of the Commission.

The representatives of the attached entities will be designated three by the representative associations of banks, one by the savings banks and one by the Credit Union, in the terms that will be regulated.

Persons designated by the attached entities shall be persons of recognized commercial and professional repute and shall possess adequate knowledge and experience for the performance of their duties. The criteria referred to in Article 2 of Royal Decree 1245/1995 of 14 July 1995 on the establishment of banks, cross-border activity and other matters relating to the legal framework of credit institutions shall be met in the determination of these conditions.

The holders of the respective ministerial departments will appoint an alternate representative of the Ministry of Economy and Competitiveness and one of the Ministry of Finance and Public Administration. In addition, two alternates will be appointed by the Bank of Spain and one by each of the designated entities, which will replace the holders in case of vacancy, absence or illness. In the case of the representatives of the entities, they shall also be replaced by the President of the Management Committee of the Fund, when the Gestora Commission is to deal with matters directly affecting an entity or group of entities with which it is linked as an administrator, manager, labor, civil or commercial contract or any other relationship that could undermine the objectivity of its decisions, determining its abstention.

3. The term of office of the members of the Gestora Commission shall be four years renewable.

4. The representatives of the credit institutions attached to the Fund shall cease to be responsible for the following

:

a) Expiration from the term of your term.

b) Renunciation.

c) Separation agreed by the Gestora Commission for serious non-compliance with its obligations, permanent incapacity for the exercise of its function or lack of good repute.

5. For the validity of the meetings of the Gestora Commission, the assistance of half of its members will be necessary. Its agreements shall be adopted by a majority of its members.

However, a two-thirds majority will be required to agree on the performance of those branches that establish the obligation to make additional payments to the ordinary annual contributions or to advance the payment of the latter, as well as for the measures envisaged in the framework of the resolution plans referred to in Article 11.

6. The Management Committee shall establish its own rules of operation for the proper exercise of its functions.

7. Membership of the Gestora Commission shall not entitle any kind of economic compensation. '

Final disposition tenth. Amendment of Law 26/2013, of 27 December, of savings banks and bank foundations.

Law 26/2013, of December 27, of savings banks and bank foundations is amended as follows:

One. The following paragraphs 12 and 2 of paragraph III of the Explanatory Memorandum are amended, which are worded as follows:

" Within the control system, the protectorate of the banking foundations is regulated, which will be the responsibility of the State or the Autonomous Communities, taking into account its main scope and the participation it has in the credit institution.

With regard to the scope of action, the peculiarity of this type of foundations is that, according to article 32.2, its main activity is defined by the attention and development of the social work as well as by the proper management of its participation in a credit institution. Being the second of the new and specific criteria of the banking foundations with respect to the ordinary foundations, it is appropriate to clarify in the Law, in order to avoid any interpretative doubt, when this scope of action is considered to exceed that of an Autonomous Community. As the defining activity of banks is the collection of repayable funds from the public, it seems that the most natural criterion is the territorial distribution of the deposits, avoiding at the same time that any excess over the scope of an Autonomous Community, however small, may lead to the protectorate being considered as state-wide. It is considered that the criterion of 40% of deposits outside the Autonomous Community clearly determines a supra-regional main scope of action.

As for the criterion corresponding to the social work, since it is not novel in the strict sense with respect to criteria that have already been applied in general on the subject of foundations, there seems to be no need to make any additional precision for the banking foundations. In addition, as set out in Article 45, the Ministry of Economy and Competitiveness-if it is the competent authority to exercise the protectorate-must necessarily obtain in this matter the report of the Autonomous Communities in which the foundations carry out their social work.

In any case, exceeding its main scope of action of an Autonomous Community, it will be necessary, for the State to exercise the protectorate, that the participation of the banking foundation in the credit institution should be at least 10 percent or, being less than that percentage, be the first shareholder of the same.

On the other hand, and for the purpose of ensuring stability in the exercise of the functions of protectorate, avoiding that, due to specific modifications of the conditions described in Article 45, the competition is altered, it is anticipated that this will be maintained unless there is a substantial modification of the same.

Additionally, and for the assumptions in which the protectorate is assumed by the Ministry of Economy and Competitiveness, certain specialties are regulated with respect to the functions provided for in Article 35.1 of Law 50/2002, of December 26, of Foundations.

Finally, the Law includes a series of provisions among which the establishment of a special regime in the event of capital increase in banking entities participated by bank foundations, as well as for the distribution of dividends. As regards, in particular, the extension of the participation of bank foundations with the control of a credit institution, the Additional Provision 8 prevents the exercise of the political rights of the shares subscribed to in the capital increases of the credit institution. At the same time, however, it is guaranteed that those foundations that acquire shares in an enlargement may exercise the necessary political rights to not dilute beyond the indispensable for their participation to be below 50 percent or the entity's position of control.

The transitional provision provides, for its part, for the conversion of cash savings banks into bank foundations within one year of the entry into force of the Law and the second transitional provision provides for the transitional arrangements for the incompatibility provided for in the second paragraph of Article 40.3.

In the final provisions, it is specified which articles are of a basic character, the necessary regulations are made for the development of the Law, and the tax legislation is modified, in order to extend the tax treatment of savings banks to future banking foundations. "

Two. Article 26 (1) (g) is worded as follows:

"(g) Require the president to convene the general assembly on an extraordinary basis, in the case referred to in (c)."

Three. Article 45 is worded as follows:

" 1. It will be up to the protectorate to ensure the legality of the establishment and functioning of the banking foundations, without prejudice to the functions that correspond to the Banco de España.

2. In the case of banking foundations whose main scope exceeds that of an Autonomous Community, the protectorate shall be exercised by the Ministry of Economy and Competitiveness, provided that they individually have a direct or indirect participation in the institution or credit institutions of at least 10 percent of the capital or voting rights or, having a lower percentage, the banking foundation is its largest shareholder. Otherwise, the protectorate shall be exercised by the corresponding Autonomous Community.

In any event, in relation to the provisions of Article 32.2, it is understood that the main scope of the banking foundation exceeds an Autonomous Community when 40 percent of the activity of the credit institutions in which it participates directly or indirectly, considering the territorial distribution of the deposits of its clients, is carried out outside the Autonomous Community in which the foundation has its headquarters.

3. The competence to exercise the protectorate shall be maintained while there is no substantial modification of the circumstances provided for in this article, the alteration being understood, for a period of nine consecutive months or alternate months within the same economic year, of the main scope of the banking foundation.

The attachment to the new protectorate will occur in the economic year following that in which the substantial modification of the circumstances has taken place.

4. When the Ministry of Economy and Competitiveness assumes the protectorate of banking foundations, it shall perform the functions provided for in Article 35.1 of Law 50/2002 of 26 December of Foundations, with the following specialties:

(a) For the purposes of the verification functions provided for in point (f) which are related to the application and distribution of funds which the banking foundation may allocate to its social work, it shall obtain prior and binding report from the Autonomous Community competent for the territorial scope of the verification. This report shall replace the expert report referred to in Article 35.1.f.

(b) When provisionally exercising the functions of the governing body of the banking foundation in accordance with point (g), it shall seek prior report from the Autonomous Communities in which the foundation develops its social work.

(c) Where, as provided for in point (h), new employers are to be appointed, it shall ensure that the Autonomous Communities in which the banking foundation develops its social work are represented. "

Four. The second paragraph of the Additional Provision is worded as follows:

" 2. The foundations which, at the entry into force of this Law, maintain a participation in a credit institution that reaches the levels provided for in Article 32, shall only be transformed into banking foundations in the event that they increase their participation in the credit institution and within six months of the date on which this increase occurs, or when they have their origin in a savings bank, within nine months of the entry into force of this Law. "

Five. Paragraph 3 of the First Transitional Provision is worded as follows:

" 3. Savings banks that have started the process of transformation into a special foundation, without being legally involved in this process, will continue the procedure and will be transformed into a bank foundation or ordinary foundation as appropriate, without the procedure being extended beyond six months after the entry into force of this Law. If the time limit has been exceeded without the processing being completed, the following paragraph shall apply. '

Six. Point (c) of the second transitional provision is worded as follows:

"(c) The compatibility of each member shall be maintained until 30 June 2016 at the latest."

Seven. The fourth final provision is worded as follows:

" Final disposition fourth. Amendment of Law 50/2002, of December 26, of Foundations. "

A new Additional Disposition is introduced in Law 50/2002 of December 26, of Foundations, with the following wording:

" Additional disposal octave. Banking foundations.

Banking foundations will be governed by the provisions of Law 26/2013 of 27 December, of savings banks and bank foundations. "

Final disposition 13th. Competence title.

1. This Law is dictated by the provisions of the rules 11. and 13. of article 149.1 of the Spanish Constitution, which attribute to the State the competence on the basis of the ordination of credit, banking and insurance and coordination of the general planning of economic activity, respectively.

2. However, the third and tenth additional provisions, the thirteenth transitional provision and the final provision of this Law, are also given in accordance with Rule 6 of Article 149.1 of the Spanish Constitution, which confers exclusive competence on the State on commercial law. Likewise, the additional Disposition first and the second transitory Disposition are dictated in accordance with the provisions of article 149.1.14. of the Spanish Constitution which attributes to the State the exclusive competence on the General Finance and Debt of the State.

3. The provisions of the above paragraphs are without prejudice to the powers conferred on the Autonomous Communities by the Autonomous Communities on the supervision of credit institutions and within the framework laid down by European Union law.

Final disposition twelfth. Incorporation of European Union law.

By this Law, Directive 2013 /36/EU of the European Parliament and of the Council of 26 June 2013 on access to the business of credit institutions and on the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006 /48/EC and 2006 /49/EC and Directive 2011 /89/EU of the European Parliament and of the Council of 16 November 2011 amending Directives 98 /78/EC, 2002 /87/EC, 2006 /48/EC and 2009 /138/EC in respect of the activity of credit institutions and the Council of 26 June 2013 the supplementary supervision of financial institutions which are part of a financial conglomerate.

Final disposition thirteenth. Regulatory development.

1. The Government may lay down the regulatory rules necessary for the development of the provisions of this Law.

2. The Minister of Economy and Competitiveness is hereby empowered to make the necessary provisions to amend the Annex to this Law in accordance with the law of the European Union.

3. Without prejudice to the provisions of this Law, the Banco de España and the National Securities Market Commission may make use, in accordance with their respective areas of competence, of the options attributed to the national competent authorities in Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012.

Final disposition fourteenth. Entry into force.

1. This Law shall enter into force on the day following that of its publication in the "Official Gazette of the State".

2. Without prejudice to the foregoing, the following provisions shall be required from the dates set out below, with the entities having to comply with all the legal or statutory requirements necessary to comply with the dates indicated:

a) From 31 October 2014:

1. (º) The provisions contained in Articles 26 (1) to (4), (4), (4), (1) (d), (g) and (i) and 38. 2 and 3 of this law and in Article 70b. Its.4 introduced in the Law 24/1988, of July 28, of the Stock Market, by this law.

2. (º) The provisions contained in Articles 67a and 70 ter.7.e) introduced in Law 24/1988 of 28 July of the Stock Market, by this Law, as well as Article 34.1 (d), (g) and (i) of this Law, in its application to investment firms, pursuant to Article 70b. Dos.5 also introduced in the Law 24/1988, of July 28, of the Stock Market, by this Law.

(b) The provisions contained in Articles 31, 36 of this Law and in Articles 70b. One and 70 ter. Dos.6 introduced in the Law 24/1988, of July 28, of the Market of Securities, by this law, from October 31, 2014, except for those entities that prior to the entry into force of this law were already obliged, in accordance with the previous regulations, to constitute a committee of appointments, a committee of remuneration or a joint committee of appointments and remuneration.

Therefore,

I command all Spaniards, individuals and authorities, to keep and keep this law.

Madrid, 26 June 2014.

FELIPE R.

The President of the Acting Government,

SORAYA SAENZ DE SANTAMARIA ANTON

ANNEX

List of mutual recognition object activities

1. Receipt of deposits or other repayable funds.

2. Loans, including, in particular, consumer credit, credit agreements relating to immovable property, factoring with or without recourse and financing of commercial transactions (including forfaiting).

3. Financial leasing.

4. Payment services as defined in Article 1 of Law 16/2009 of 13 November of payment services.

5. Issuance and management of other means of payment, such as credit cards, travel checks or bank cheques, where such activity is not covered by point 4.

6. Granting of guarantees and underwriting of commitments.

7. Transactions on own account or on behalf of clients having as their object any of the following instruments:

(a) Money market instruments (cheques, effects, certificates of deposit, etc.).

b) Foreign Exchange.

c) Financial futures and options.

d) Instruments on currencies or on interest rates.

e) marketable securities.

8. Participation in the emission of securities and the provision of services.

9. Advice to companies on the structure of capital, business strategy and related issues, as well as advice and services in the field of mergers and acquisitions of companies.

10. Intermediation in interbank markets.

11. Management or advice in the management of assets.

12. Custody and management of marketable securities.

13. Commercial reports.

14. Rental of safes.

15. Issuance of electronic money.

When the services and activities provided for in Article 63 of Law 24/1988 of 28 July 1988 on the Stock Market relate to financial instruments provided for in Article 2 of that Law, they shall be subject to mutual recognition in accordance with this Law.