Malta Financial Services Authority Act (Cap. 330), article 31

31. (1) Any decision taken by the Co-ordination Committee, the Supervisory Council and the Board of Management and Resources, prior to the date of entry into force of this articl e, shall continue to apply: P r o v i d e d t h a t , f o r p u r p o s e s o f t h i s a r t i c l e , t h e t e r m "decision" shall, in the case of the Supervisory Council, inclu de licences issued, approvals and authorisations granted, and regulatory action taken. (2) Any reference in any law to the Director General or Chief Operations Officer of the Authority shall be read and construed as a reference to the Chief Executive Officer of the Authority as so defined in article 2. (3) Any reference in any law to the Co-ordination Committee, the Supervisory Council, or the Board of Management and Resources shall be read and c onstrued as a reference to the Executive Committee and shall include a reference to any sub- committees, directorates, functions or units established under this Act, as the case may require. MALTA FINANCIAL SERVICES AUTHORITY [CAP. 330. 33 Added by: XXI. 2015.9. Amended by: LXII.2020.6. LXXI.2021.4; LXXII.2021.3. FIRST SCHEDULE RECOVERY AND RESOLUTION Article 7B. Interpretation. 1. (1) In this Schedule, unless the context otherwise requires: "the CRR " means 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, as amended from time to time, and includes any im plementing measures that have been or may be issued thereunder; "the CRD " means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions, amending Directive 2002/87/EC and repealing Direc tives 2006/48/EC and 2006/49/EC, as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "European resolution authority" means an authority which is situated in a country or territory outside Malta that is in a M ember State or an EEA State, and which exercises any function corresponding to the functions of the Resolution Committee under this Act and the Recovery and Resolution Regulations; "investment firm" means an investment firm as defined in point (2) of Article 4(1) of the CRR, that is subject to the initial capital requirement laid down in Article 28(2) of the CRD; "resolution" means the structuring of a credit institution or investment firm through the application of a resolution measure or measures in order to achieve one or more of the objectives refe rred to in paragraph 3(2); "resolution measures" means one or more of the following: (a) sale of business; (b) bridge institutions; (c) asset separation; and (d)b a i l i n ; "resolution powers" means the powers conferred on the Resolution Committee in terms o f the Recovery and Resolution Regulations; "third-country resolution authority" means an authority in a country or territory that is not a Member State or EEA State wh ich is responsible for carrying out functions comparable or equival ent to those of the Resolution Committee pursuant to this Act. (2) Words and expressions used in this Schedule, but which are not defined herein, shall be interpreted within the meaning of the BRRD . 34 CAP. 330.] MALTA FINANCIAL SERVICES AUTHORITY The Resolution Committee. 2. (1) The Resolution Committ ee shall ensure full and complete adherence to the require ments and obligations prescrib ed by regulations made under this Act, either directly or in collaboration with European and third-country resolution authorities, and may, for such purposes, exercise any of its po wers under this Act and any regulations made thereunder. (2) The Resolution Committee shall be composed of three persons, who shall be a person appointed by the Central Bank of Malta, a person appointed by the Authority, and a person appoin ted by the Ministry responsible for Finance, who have distinguished themselves in banking and financial related matters or have the relevant experience in financial supervision, regulation, resol ution and insolvency of institutions. (3) The appointment of such persons shall be for such term, being a period of not more than three years, as may be specifie d in the letter of appointment, and s hall be eligible for reappointm ent for a maximum period of two terms or otherwise for a maximum period of six years, whichever is the higher. Such persons shal l receive such remuneration as the Authority may from time to tim e determine. (4) The provisions of article 6(3) to (6) of the Act shall, as f ar as applicable, mutatis mutandis apply to the eligibility, term of office, termination and resignation of the Resolution Committee. The objectives of the Resolution Committee. 3. (1) In discharging its general functions, the Resolution Committee shall, as far as is reasonably possible, act in a way which: (a) is compatible with the resolution objectives; and (b) minimises the cost of resolution and avoids the destruction of value of the institution. (2) The resolution objectives o f the Resolution Committee are: (a) safeguarding the continui ty of critical functions; (b) minimising risks to financial stability; (c) protecting public funds by reducing reliance on extraordinary public financial support; (d) protecting depositors and investors; (e) protecting clients’ funds and clients’ assets. (3) ( a) The Resolution Committee shall have the power to require the full assistance and collaboration of any institution, as may be necessa ry to enable it to fulfil its functions under this Schedule. (b) Any institution as may be required by the Resolution Committee to provide its assistance and collaboration MALTA FINANCIAL SERVICES AUTHORITY [CAP. 330. 35 in terms of sub-paragraph (3)( a) shall comply with such request fully, without delay and in such detail as may be required. Functions and powers of the Resolution Committee. 4. (1) Without prejudice to any other function or power conferred to it by this Act or any other law or regulations, it shall be the function of the Resolution Committee to: (a) review and decide upon th e recommendations made to it by the Resolution Unit established in terms of this Schedule, in relation to resolution decisions; (b) liaise and consult, on matters relating to budgets and resources, with the Authority; (c) exchange information, where necessary, with the Authority; (d) carry out such other functions which are assigned to it by this Act or any regula tions made thereunder; (e) apply resolution measures when an institution is failing or is likely to fail; (f) cooperate closely with and consult the Authority in the preparation, planning and application of resolution decisions, and in all other instances where any such cooperation or consultation is required by the CRD, by the BRRD or by the CRR; (g) cooperate closely with and consult authorities, both local or overseas, in orde r to coordinate resolution measures to protect financial stability in all affected Member States and EEA States and, when a cr oss-border group is failing or likely to fail, to achieve the most effective outcome for the group as a whole, and in all other instances where any such cooperation or consultation is required by the CRD, by the BRRD or by the CRR. (h) cooperate with European resolution authorities and third country resolution authorities on matters relating to resolution; (i) set up a resolution financing arrangement through mandatory contributions from institutions; (j) communicate to the Resolution Authority its resolution decisions which necessitate implementation; (k) implement the resolution decisions mentioned under point ( j); (l) assist the Resolution Authority on any matter falling under this Part, on which the Resolution Authority seeks assistance. (2) In carrying out its general functions, the Resolution Committee shall: (a) ensure that no conflict of i n te r e s t ma y a r i s e w i th t he supervisory functions of the Authority; 36 CAP. 330.] MALTA FINANCIAL SERVICES AUTHORITY (b) seek the approval in writing of the Minister, after informing the Resolution Authority and the Central Bank of Malta, prior to taking any decisions that may have a direct fiscal impact or which have systemic implications; (c) notify the Minister, after having informed the Resolution Authority, of any decisions taken by it pursuant to this Act. (3) The Resolution Committee shall have all the powers that are necessary to enable it to perform its functions under this paragraph and to ensure the eff ective implementa tion of the pro visions of the BRRD . (4) The Resolution Committee sh all also have the power to: (a) collect the contributions from institutions towards the resolution financing arrangements; (b) determine the administrative penalties payable by institutions for failure to comply with the decisions addressed to them; (c) impose administrative penalties on any person whose conduct, in the opinion of the Resolution Committee, amounts to a breach of any of the provisions of this Act or any regulations or Rules issued thereunder transposing the BRRD ; (d) impose an administrative penalty on any person who has failed to comply with a directive issued by the Resolution Committee under this Act or any regulations or Rules issued thereunder transposing the BRRD ; and (e) publish, collect and recover any administrative penalties imposed by it in terms of this paragraph. (5) (a) In exercising its power under sub-paragraphs (4)( c) and (d), the Resolution Committee may, by notice in writing and without recourse to a court hearing, impose on such person an administrative penalty of: (i) up to twice the amount of the benefit derived from the breach, where that benefit can be determined; (ii) in the case of a natural person, up to five million euro (€5,000,000); or (iii) in the case of a legal person, up to 10% of the total annual net turnover of the undertaking in the preceding business year including the gross income consisting of interest receivable and similar income, income from shares and other variable or fixed-yi eld securities, and commissions or fees receivable in accordance with Article 316 of the CRR. In the case of a subsidiary of a parent undertaking, the relevant turnover shall be turnover resulting from the MALTA FINANCIAL SERVICES AUTHORITY [CAP. 330. 37 consolidated accounts of the ultimate parent undertaking in the pr eceding business year. (b) Where the Resolution Comm ittee decides to impose an administrative penalty, it shall notify the person on whom the penalty is being imposed by means of a notice in writing. (c) Where the person upon whom the notice referred to in point ( b) is served: (i) fails to pay to the Resolution Committee the amount of the administrative penalty within a p e r i o d o f t h i r t y d a y s f r o m t h e s e r v i c e o f t h e notice, and fails to appeal from the decision of the Resolution Committee to the Court of Civil Jurisdiction; or ( i i ) a p p e a l s t o t h e C o u r t o f C i v i l J u r i s d i c t i o n a n d fails within a period of fifteen days from the decision of the said Court to pay the administrative penalty a s confirmed or as varied by that Court; then, in every case, the amount of the administrative penalty, as originally imposed or as reduced or increased, as the case may be, shall be due to the Resolution Committee as a civil debt, and the provisions of point (d) shall apply. (d) A notice as is referred to in point ( b), or the decision of the Court of Civil Jurisdiction, as the case may be, shall upon the service by judi cial act of a copy thereof on the person indicated in the notice, constitute an executive title for all effects and purposes of Title VII of Part I of Book Second of the Code of Organization and Civil Procedure. (6) The imposition by the Resolution Committee of an administrative penalty in terms of this article shall be withou t prejudice to any other consequences of the act or omission of t he offender under civil or criminal law: Provided that in all cases where the Resolution Committee imposes an administrative penalty in respect of anything done o r omitted to be done by any person and such act or omission also constitutes a criminal offence, no proceedings may be taken or continued against the said person in respect of such criminal offence. (7) The Resolution Committee sh all designate an official forming part of the Resolution Unit to act as a secretary for s uch period of time and under such terms as the Resolution Committee shall deem appropriate. (8) The Resolution Committee may invite any person and may require any officer of the Resolution Unit or of the Authority to attend a meeting of the Resolutio n Committee and to take part i n the discussion. 38 CAP. 330.] MALTA FINANCIAL SERVICES AUTHORITY Publication of administrative penalties. 5. (1) The Authority shall publish, on its official website and in any other media as it considers appropriate, any administrat ive penalty or penalties for any br eaches of the provisions of the BRRD imposed by the Resolution Committee under the provisions of thi s Act and of any regulations made or Rules issued thereunder. Suc h publications shall include infor mation on the type and nature o f the breach and the identity of the person on whom the administrativ e penalty is imposed, without undue delay after that person is informed of those penalties: Provided that in cases where an appeal has been filed by the person on whom such administrative penalty or penalties hav e been imposed, the Authority shall, without undue delay, also publish on its official website and in any other media as it considers appropriate, information on th e status of the appeal and the outcome thereof. (2) The Authority shall publish the administrative penalties for any breaches of the provisions of the BRRD , imposed by the Resolution Committee under the provisions of this Act and of an y regulations made or Rules issued thereunder, on an anonymous basis, in any of the following circumstances: (a) where the administrative penalty is imposed on a natural person and, following an obligatory prior assessment, publication of personal data is found to be disproportionate; (b) where publication would jeopardise the stability of financial markets or an on-going criminal investigation; (c) where publication would cause, insofar as can be determined, disproportionate damage to the institutions, to the entities referred to in point ( b), ( c) or ( d) of Article 1(1) of the BRRD o r t o t h e n a t u r a l persons involved: Provided that publication on an anonymous basis in any such circumstances shall be an e xceptional measure which needs to be justified by a detailed report compiled by the Resolution Committee: Provided further that where the circumstances referred to in this sub-article are likely to cease within a reasonable per iod of time, publication under this article may be postponed for such a period of time. (3) Information published in terms of this article shall remain on the official website of the A uthority for a period of not le ss than five years. Personal data shall be retained on the official web site of the Authority and in any other media it considers appropriate o nly for the period necessary, in acco rdance with the provisions of Maltese legislation on data protection. Power to recover debt. MALTA FINANCIAL SERVICES AUTHORITY [CAP. 330. 39 6. The Resolution Committee ma y bring proceedings before the Court of Civil Jurisdiction to recover as a debt an amount of administrative penalty due to it under this Part. Power to issue directives. 7. (1) Without prejudice to any of the powers conferred in this Act, the Resolution Committee may, whenever it deems necessary, give, by notice in wri ting, such directives as it ma y deem appropriate in the circumstances in order to carry out the func tions and duties prescribed by this Act, and any regulations made or Rules issued thereunder transposing the BRRD . (2) The power to give directives under this article shall includ e the power to vary, alter, add to or withdraw any directive, as well as the power to issue new or further d irectives. (3) Any person to whom a notice is given in accordance with sub-paragraph (1) shall obey, comply with and otherwise give effect to any such directive within the time and in the manner stated in the directive. (4) Where the Resolution Committee is satisfied that the circumstances so warrant, it may at any time make public any directive which it has issued in terms of this paragraph. The Resolution Unit 8. (1) There shall be a Resolution Unit which shall carry out the functions assigned to it under this Act, and as may be assi gned to it by the Resolution Committee. (2) The Resolution Unit shall periodically report to the Resolution Committee on the activities and developments within its area of competence. (3) The Resolution Unit shall be composed of the Director of the Office, and any number of employees as may be required in order to carry out its functions properly. (4) It shall be the function of the Resolution Unit to: (a) assess whether an institution is failing or is likely to fail, after consulting the Authority; (b) draw up resolution plans, after consulting the Authority, on how to deal with financial stress or failure of institutions, including at group level; (c) carry out resolvability assessment of institutions; (d) cooperate, liaise and exchange information, as necessary, with the Units r espectively responsible for supervision of credit institutions and investment firms within the Authority. Remedies for a wrongful decision or action. 9. Where it is necessary to protect the interests of third parti es acting in good faith who have ac quired shares, other instrument s of ownership, assets, rights or liabilities of an institution unde r 40 CAP. 330.] MALTA FINANCIAL SERVICES AUTHORITY resolution by virtue of the use of resolution tools or exercise of resolution powers by the Resolution Committee, the annulment of a decision of the Resolution Committee shall not affect any subsequent administrative acts or transactions concluded by the Resolution Committee which were based on the annulled decision. In that case, remedies for a wrongful decision or action by the Resolution Committee shall be limited to compensation for the loss suffered by the applicant as a result of the d ecision or act. Issuing of precautionary warrant. 10. Notwithstanding any other law, no precautionary warrant or other order under any other la w shall be issued by any Court or Tribunal restraining the Resolution Committee from taking any action, including a crisis prevention measure or a crisis management measure, under this Act, or under any regulations issued thereunder or any other law. Functions and powers of the Authority. 11. (1) In addition to the powers assigned to the Authority under this Act, the Banking Act, and the Investment Services Ac t, the Authority shall have the power to: (a) determine the administrative penalties payable by institutions for failure to comply with any decisions issued by the Authority and addressed to them; (b) impose administrative penalties on any person whose conduct, in the opinion of the Authority, amounts to a breach of any of those provisions of this Act or any regulations or Rules issued thereunder transposing the BRRD in which an institution has an obligation towards the Authority; (c) impose an administrative penalty on any person who has failed to comply with a directive issued by the Authority under this Act or any regulations or Rules issued thereunder transposing the BRRD ; (d) publish, collect and recover any administrative penalties imposed by it in terms of this paragraph: Provided that in exercising the powers listed in sub- paragraphs ( a) to ( d), the provisions of paragraphs 4(5), 4(6) and 5 of this Schedule shall apply mutatis mutandis , and provided further that any reference to ''the Resolution Committee'' shall be deemed to be a reference to ''the Authority'', and any reference to ''the Court of Civil Jurisdiction'' or ''the Court'' shall be deemed to be references to ''the Tribunal''; (e) issue, by notice in writing, such directives on any person as it may deem appropriate in the circumstances in order to carry out the functions and duties prescribed by this Act and any regulations or Rules issued thereunder transposing the BRRD , and in exercising such power, the provisions of paragraph 7 of this Schedule shall apply mutatis mutandis , and any MALTA FINANCIAL SERVICES AUTHORITY [CAP. 330. 41 reference to ''the Resolution Committee'' shall be deemed to be a reference to ''the Authority''; and (f) bring proceedings befor e the Court of Civil Jurisdiction to recover as a debt an amount of administrative penalty due to it under this Schedule. (2) The Authority shall have all the powers that are necessary to enable it to perform its functions under this paragraph to e nsure the effective implementation of the provisions of the BRRD imposing rights and obligations on competent authorities, and, accordingly the powers of the Au thority in terms of this paragr aph shall be interpreted a nd applied in accordance with the provisi ons of the BRRD .