SLOVENIA MARKET IN FINANCIAL INSTRUMENTS ACT Important Disclaimer This translation has been generously provided by the Ministry of Finance of the Republic of Slovenia. This does not constitute an official translation and the translator and the EBRD cannot be held responsible for any inaccuracy or omission in the translation. The text should be used for information purposes only and appropriate legal advice should be sought as and when appropriate.
Market in Financial Instruments Act (ZTFI) Legal notice All effort has been made to ensure the accuracy of this translation, which is based on the original Slovenian text. All translations of this kind may, nevertheless, be subject to a certain degree of linguistic discord. In case of any uncertainties regarding the English translation the questions may be addressed to: Ministry of Finance Financial System Department Župančičeva 3 1502 Ljubljana Slovenia Phone: +386 1 369 66 92 Fax: +386 1 369 66 99 E-mail: gp.mf@gov.si The original text of this act is written in the Slovenian language; in case of any doubt or misunderstanding, the Slovenian text shall therefore prevail. Original text can be found in Official Journal of Republic of Slovenia, no: 67/07, or on web page http://www.uradni-list.si/1/ulonline.jsp?urlid=200767&dhid=90885 3699. Market in Financial Instruments Act (ZTFI), page 9429. Pursuant to the second indent of the first paragraph of Article 107 and the first paragraph of Article 91 of the Constitution of the Republic of Slovenia, I hereby issue the following D E C R E E on the promulgation of the Market in Financial Instruments Act (ZTFI) I hereby promulgate the Market in Financial Instruments Act (ZTFI), adopted by the National Assembly of the Republic of Slovenia at its session held on 12 July 2007. No. 001-22-92/07 Ljubljana, 20 July 2007 Dr. Janez Drnovšek President 1
of the Republic of Slovenia MARKET IN FINANCIAL INSTRUMENTS ACT (ZTFI) Chapter 1: GENERAL PROVISIONS 1.1 Contents of the Act Article 1 (Contents of the Act) This Act regulates: 1. the conditions for the offering of securities to the public and the admission of securities to trading on a regulated market, 2. the obligations concerning the disclosure of information related to the securities admitted to trading on a regulated market, 3. the terms and conditions for founding, operation, supervision and winding-up of investment firms, market operators and settlement systems with the registered office in the Republic of Slovenia, 4. the terms and conditions under which the persons with the registered office outside the Republic of Slovenia may provide investment services in the Republic of Slovenia, 5. the rules of trading on a regulated markets, prohibited acts of market abuse and the rules for settling transactions concluded on a regulated markets, 6. the rules of operation of the Securities Market Agency in the performance of its competences and responsibilities hereunder and under any other acts. Article 2 (Transposition and implementation of the EU regulations) (1) This Act shall transfer the following Directives into the legislation of the Republic of Slovenia: 1. Council Directive 89/117/EEC of 13 February 1989 on the obligations of branches established in a Member State of credit institutions and financial institutions having their head offices outside that Member State regarding the publication of annual accounting documents (OJ L 44, 16.2.1989, p. 40; hereinafter: Directive 89/117/EEC); 2. Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investorcompensation schemes (OJ L 84, 26.3.1997 p. 22, hereinafter: Directive 97/9/EC); 3. Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems (OJ L 166, 11.6.1998 p. 45; hereinafter: Directive 98/26/EC); 2
4. Directive 2001/34/EC of the European Parliament and of the Council of 28 May 2001 on the admission of securities to official stock exchange listing and on information to be published on those securities (OJ L 184, 6.7.2001, p.1; hereinafter: Directive 2001/34/EC); 5. Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse) (OJ L 96, 12.4.2003 p. 16; hereinafter: Directive 2003/6/EC); 6. Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and the amended Directive 2001/34/EC (OJ L 345, 31.12.2003 p. 64, hereinafter: Directive 2003/71/EC); 7. Commission Directive 2003/124/EC of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards the definition and public disclosure of inside information and the definition of market manipulation (UL L 339, 24. 12. 2003, p. 70; hereinafter: Directive 2003/124/EC); 8. Commission Directive 2003/125/EC of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards the fair presentation of investment recommendations and the disclosure of conflicts of interest (UL L 339, 24.12.2003, p. 73; hereinafter: Directive 2003/125/EC); 9. Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC (OJ L 145, 30.4.2004 p. 1; hereinafter: Directive 2004/39/EC); 10. Commission Directive 2004/72/EC of 29 April 2004 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards accepted market practices, the definition of inside information in relation to derivatives on commodities, the drawing up of lists of insiders, the notification of managers' transactions and the notification of suspicious transactions (OJ L 162, 30.4.2004 p. 70; hereinafter: Directive 2004/72/EC); 11. Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390/38, 30.12.2004 p. 38; hereinafter: Directive 2004/109/EC); 12. Directive 2006/48/EC of the European Parliament and of the Council of 14 June 1997 relating to the taking up and pursuit of the business of credit institutions (OJ L 177, 30.6.2006 p. 1, hereinafter: Directive 2006/48/EC), within the scope applying to the brokerage company; and 13. Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions (OJ L 177, 30.6.2006 p. 201, hereinafter: Directive 2006/49/EC). (2) This Act shall in greater detail regulate the implementation of the following European Community Regulations: 1. Commission Regulation (EC) 2273/2003 of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back programmes and stabilisation of financial instruments (UL L 336, 23.12.2003, p. 33; hereinafter: Regulation 2273/2003); 2. Commission Regulation (EC) 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and 3
dissemination of advertisements (OJ L 149, 30.4.2004, p. 1) as amended by Commission Regulation 1787/2006 of 4 December 2006 (OJ L 337, 5.12.2006, p. 17); hereinafter: Regulation 809/2004). 1.2. Definitions of terms and abbreviations 1.2.1 General Provisions Article 3 (Purpose of the definition of terms) (1) The Subsection 1.2.1 of this Act defines the terms as they are used herein, unless it is specified in connection with each individual term that the purpose of its definition is narrower. (2) The subsection 1.2.2 of this Act defines the terms as they are used in Section 1.3 and Chapters 4 to 12, and other provisions of this Act, referring to the provisions of the specified Chapters, unless it is specified in connection with each individual term that the purpose of its definition is narrower. (3) The Subsection 1.2.3 of this Act defines the terms as they are used in Chapters 2, 3 and 9 to 11, and other provisions of this Act, referring to the provisions of the specified Chapters, unless it is specified in connection with each individual term that the purpose of its definition is narrower. (4) The Section 2.1 of this Act defines the terms as they are used in Chapter 2 and the other provisions hereof, referring to the provisions of the specified Chapter. (5) The Section 3.1 of this Act defines the terms as they are used in Chapter 3 and the other provisions hereof, referring to the provisions of the specified Chapter. (6) Chapter 5 of this Act defines the terms as they are used in Chapter 5 and other provisions of this Act, referring to the provisions of the specified Chapter, unless it is specified in connection with each individual term that the purpose of its definition is narrower. (7) The Section 10.1 of this Act defines the terms as they are used in Chapter 10 and the other provisions hereof, referring to the provisions of the specified Chapter. Article 4 (Abbreviations of other laws and EU regulations) (1) The following abbreviations of other acts are used in this Act: 1. ZBan-1 is the Banking Act (Official Gazette of the Republic of Slovenia, no. 131/06); 2. ZFK is the Financial Conglomerates Act (Official Gazette of the Republic of Slovenia, no. 43/06); 3. ZGD-1 is the Companies Act (Official Gazette of the Republic of Slovenia, no. 42/06 and 60/06 amend.); 4. ZISDU-1 is the Investment Funds and Management Companies Act (Official Gazette of the Republic of Slovenia, No. 26/05 official consolidated text); 5. ZIN is the Inspection Act (Official Gazette of the Republic of Slovenia, No. 56/02); 4
6. ZNVP is the Book-entry Securities Act (Official Gazette of the Republic of Slovenia, No. 2/07 - official consolidated text); 7. ZPre-1 is the Takeovers Act (Official Gazette of the Republic of Slovenia, no. 79/06); 8. ZUP is the General Administrative Procedure Act (Official Gazette of the Republic of Slovenia, No. 24/06 - official consolidated text, 105/06 ZUS-1); 9. ZUS-1 is the Administrative Disputes Act (Official Gazette of the Republic of Slovenia, no. 105/06). (2) Besides the abbreviated titles, stated in Article 2 hereof, the following are also used for the EU regulations: 1. Directive 78/660/EEC is the Fourth Council Directive 78/660/EEC of 25 July 1978 based on Article 54 (3) (g) of the Treaty on the annual accounts of certain types of companies (OJ L 222, 14.8.1978, p. 11, with amendments); 2. Directive 83/349/EEC) is the Seventh Council Directive 83/349/EEC of 13 June 1983 on consolidated accounts (OJ L 193, 18.7.1983, with amendments); 3. Directive 85/611/EEC is the Council Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 375, 31.12.1985, p. 3, with amendments); 4. Directive 94/19/EC is the Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes (OJ L 135, 31.5.1994 p. 5); 5. Directive 2001/24/EC is the Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions (OJ L 125, 5.5.2001 p. 15); and 6. Regulation 1606/2002/EC is the Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (OJ L No. 243, 11.9.2002; p. 1). Article 5 (Definition of the contents of terms) (1) The terms used in this Act shall have the same meaning as the terms defined in the following provisions of the ZFK; 1. insurance company in Point 2 of Article 2, 2. reinsurance company in Point 3 of Article 2, 3. pension company in Point 4 of Article 2, 4. management company in Point 6 of Article 2, 5. group in Point 14 of Article 2, and 6. mixed-activity holding company in Article 7. (2) The terms used in this Act shall have the same meaning as the terms defined in the following provisions of ZBan-1, unless otherwise specified for each individual case: 1. financial services in Article 6, 2. banking services in Article 7, 3. ancillary services in Article 9, 5
4. mutually recognized financial services in Article 10, 5. auxiliary financial services in Article 11, 6. other financial services in Article 12, 7. bank in the first and the fourth paragraphs of Article 13, 8. credit institution in the third paragraph of Article 13, 9. local company in the second paragraph of Article 14, 10. institution in the third paragraph of Article 14, 11. financial institution in the first paragraph of Article 15, 12. special financial institution in the second paragraph of Article 15, 13. financial company in the fifth paragraph of Article 15, 14. ancillary services company in Article 17, 15. Member State in the first paragraph of Article 18, 16. third country in the second paragraph of Article 18, 17. Member State or third country entity in the third paragraph of Article 18, 18. regulated financial company in the first paragraph of Article 19, 19. country of registered office of the financial company and host country in Article 20, 20. central bank in Article 21, 21. Commission in Article 22, 22. qualifying holding in Article 23, 23. participation in Article 24, 24. parent undertaking and subsidiary in Article 25, 25. control in Article 27, 26. close links in Article 28, 27. jointly managed companies in Article 29, 28. group of related persons in the first paragraph of Article 30, 29. close relative in the second paragraph of Article 30, 30. banking group in Article 31, and 31. indirect holding in Article 32. (3) For the purpose of defining the terms financial holding, mixed-activity financial holding, parent financial holding of a Member State and EU parent financial holding, the first and the second paragraphs of Article 16 and the second and the fourth paragraphs of Article 26 of ZBan-1 shall apply mutatis mutandis. (4) The term institution shall be used instead of credit institution in the mutatis mutandis application of the provisions of the ZBan-1 from the third paragraph hereunder. (5) The term insurance holding shall have the meaning defined in the act regulating insurance activity. 6
Article 6 (Management, management or supervisory body and registered office) (1) The term management: 1. shall have the meaning defined in Article 10 of the ZGD-1 for the companies with the registered office in the Republic of Slovenia; 2. shall, in the case of other legal entities, mean the body of the legal entity competent and authorised to manage the entity s operations pursuant to the act or the rules of such legal entity. (2) Supervisory body of the legal entity shall be the body competent and authorised to supervise the management the entity s operations pursuant to the act or the rules of such legal entity. (3) Management or supervisory body of the legal entity shall be the body performing the tasks and competences of the management or the supervisory body of the legal entity. (4) Unless specified otherwise for each individual case, a legal entity shall hereunder be deemed to have its registered office in a country, provided that it is entered in the public register of legal entities kept by such country (hereinafter: registered office). (5) Place of business shall be the place in which the management of the legal entity or an undertaking not counting as legal entity performs its tasks and competences, if it is not the same as registered office. 1.2.2 Terms related to investment services and activities Article 7 (Financial instruments) (1) Financial instruments are defined hereunder for the purpose of defining investment services and activities. (2) Financial instruments are: 1. transferable securities; 2. money-market instruments, 3. units in collective investment undertakings, 4. options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields as the underlying instruments or other derivatives, financial indices or other financial measures which can be settled physically, with the transfer of the underlying instrument, or in cash, 5. options, futures, swaps, forward rate agreements and any other derivative contracts relating to commodities as the underlying instrument, which: - either must be settled in cash or - they may be settled in cash at the option of one of the parties (otherwise than by reason of a default of the opposite contracting party or other contract termination event), 6. options, futures, swaps, and any other derivative contract relating to commodities as the underlying instrument that can be settled physically, with the transfer of the underlying instrument (commodity), provided that they are traded on a regulated market and/or a multilateral trading facility (hereinafter: MTF), 7
7. options, futures, swaps, forward rate agreements and any other derivative contracts relating to commodities as the underlying instrument: - which can be settled physically and are not stated in Point 6 of this paragraph, - which do not have commercial purposes and - which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are cleared and settled through recognised clearing houses or are subject to the provision of regular (daily) cover; 8. derivative instruments for the transfer of credit risk; 9. financial contracts for differences, 10. options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight rates, emission allowances or inflation rates or other official economic statistics, which: - either must be settled in cash or - they may be settled in cash at the option of one of the parties (otherwise than by reason of a default of the opposite contracting party or other contract termination event), 11. as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned in Points 1 to 10 of this paragraph, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, - they are traded on a regulated market and/or an MTF and - they are cleared and settled through recognised clearing houses or are subject to the provision of regular (daily) cover; (3) Transferable securities shall be all types of securities, with the exception of payment instruments, which can be traded on capital markets, such as: 1. shares in public limited companies and other securities equivalent to shares, which represent a holding in the equity or membership rights of legal entities, and depositary receipts related to shares, 2. bonds and other types of securities involving the obligation of the issuer, including depositary receipts related to these securities, 3. any other security, containing: - a unilaterally defined entitlement of the holder to acquire or sell the transferable security, or - a right of the holder to demand cash payment, which is determined on the basis of the value of transferable securities, currencies, interest rates or yields, commodities or other indices or measures. (4) Money-market instruments are those classes of instruments which are normally dealt in on the money market, with the exception of payment instruments, such as treasury bills, certificates of deposit and commercial papers. (5) Derivatives are financial instruments referred to in Points 4 to 11 of the second paragraph hereunder. Article 8 (Investment services and activities) 8
(1) Investment services and activities are the following services and activities related to financial instruments: 1. reception and transmission of orders in relation to one or more financial instruments; 2. execution of orders on behalf of clients; 3. dealing on own account; 4. portfolio management; 5. investment advice; 6. initial or subsequent underwriting and /or placing of financial instruments on a firm commitment basis; 7. initial or subsequent placing of financial instruments without a firm commitment basis; 8. operation of multilateral trading facilities (hereinafter: operation of an MTF). (2) Execution of orders on behalf of clients means acting to conclude agreements to buy or sell one or more financial instruments on behalf of clients. (3) Dealing on own account means trading against proprietary capital resulting in the conclusion of transactions for own account in one or more financial instruments; (4) Portfolio management means managing portfolios including one or more financial instruments in accordance with mandate given by clients on a discretionary client by client basis. (5) Investment advice means the provision of personal recommendations to a client, either upon its request or at the initiative of the investment firm, in respect of one or more transactions relating to financial instruments. Article 9 (Order and execution of a client s order) (1) Client s order is the order issued by the client to the investment firm to buy or sell financial instruments on behalf of the client. (2) Limit order is the client s order to buy or sell a certain amount of financial instruments at the price, specified in the order, or under conditions that are favourable for the client. (3) Discretion order is the client s order which does not specify the price at which the investment firm is to execute the order but rather authorises the investment firm to execute it at its own discretion. (4) Execution of the client s order shall mean acting to conclude agreement to buy or sell financial instrument which was the subject of the client s order, on behalf of client. (5) The order for trading shall mean the client s order and the offer published by the investment firm or another entity in respect of the purchase or sale of a financial instrument in the trading system of the regulated market or MTF, or outside such system. Article 10 (Ancillary investment services) (1) Ancillary investment services shall include: 1. safekeeping and administration of financial instruments for the account of the clients, including: 9
- custodianship and similar services, such as cash and other collateral management, - the services of keeping accounts of book-entry securities of the clients; 2. providing loans to investors so that they can perform one or more transactions in financial instruments, if the investment firm that provided the loan participates in such transactions; 3. advice to companies on capital structure, business strategy and related matters and advice and services relating to mergers and acquisitions of companies; 4. foreign exchange services, if provided by the investment firm in relation to investment services; 5. investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments; 6. services related to underwriting of financial instruments on a firm commitment basis; 7. services and activities of the same type as the investment or ancillary investment services relating to the underlying instruments of derivatives referred to in Points 5, 6, 7, 10 or 11 of the second paragraph of Article 7 hereof, if they are related to investment or ancillary investment services. (2) Notwithstanding the first paragraph hereunder, the term ancillary investment services in the meaning defined in the second paragraph of Article 9 of the ZBan-1 shall be used in the application of provisions specified in Chapters 5, 6 and 8 hereof. Article 11 (Investment firm, brokerage company, small brokerage company, broker and exchange members association) (1) Investment firm is a legal entity whose regular occupation or business is the provision of investment services for third parties or investment activities. (2) A brokerage company is an investment firm with the registered office in the Republic of Slovenia that is not a bank and that has obtained an authorisation from the agency to provide investment services and activities. (3) Notwithstanding the first paragraph hereunder, the term investment firm in the meaning defined in the first paragraph of Article 14 of the ZBan-1 shall be used in the application of provisions specified in Chapters 5, 6 and 8 hereof. (4) Broker shall mean a natural person with the authorisation from the agency to provide broker activities who provides activities for the brokerage company comprised in the investment services provided by the brokerage company for its clients on the basis of employment or any other legal basis. (5) Exchange members association shall mean an association established as an economic interest grouping according to the ZGD-1 which associates brokerage companies and banks that provide investment services and activities hereunder. (6) Small brokerage company shall mean a brokerage company: 1. which only provides the following investment services: - transmission of orders in relation to transferable securities or the units of a collective investment undertakings to persons referred to in Article 32 of this Act or to the management companies; or - investment advice; and 2. whose annual income does not exceed 750,000 euros. 10
Article 12 (Client) (1) Client means any natural or legal person or total assets without legal personality for whom or which an investment firm provides investment and/or ancillary investment services. (2) Professional client means a client with adequate expertise and experience to adopt own investment decisions and assess the related risks, which is considered a professional client in accordance with Articles 207 to 209 hereof. (3) Non-professional client means any other client which is not a professional client. Article 13 (Multilateral Trading Facility MTF) (1) Multilateral trading facility means a multilateral facility managed or operated by an investment firm or an market operator (hereinafter: MTF operator) which combines the interests concerning the sale and purchase of financial instruments of many third persons in accordance with the predefined rules, by concluding legal transactions concerning the financial instrument in accordance with the Subsection 7.3.2 hereof. (2) The international abbreviation MTF is used for the multilateral trading facility in this Act. Article 14 (Regulated market and market operator) (1) Regulated market of financial instruments (hereinafter: the regulated market) is a multilateral system managed or operated by a certain entity with the following characteristics: 1. this system combines or facilitates the combination of the interests concerning the sale or purchase of financial instruments of many third persons, in accordance with the predefined rules, by concluding legal transactions concerning the financial instrument, admitted to trading according to the existing rules or the systems of this market; 2. it has the license of the competent supervisory authority, 3. it operates regularly in accordance with the conditions laid down in Article 9 hereof. (2) Market operator is a person that manages or operates the regulated market. (3) The Member State of the registered office of the regulated market is: 1. the Member State in which such market is registered, or 2. if it has no registered office in accordance with the rules of this country, the Member State in which the head office of the regulated market is situated. Article 15 (Stock exchange market, stock exchange transaction and official stock exchange listing) (1) Stock exchange market means regulated market whose market operator has registered office in the Republic of Slovenia. 11
(2) Stock exchange means the market operator of the stock exchange market which obtained the license from the agency to operate this market. (3) Stock exchange transaction means transaction in financial instruments, concluded on the stock exchange market. (4) Official stock exchange listing means a segment of the stock exchange market in the scope of which dealing is performed in securities that meet the additional conditions significant for the protection of investors interests, regarding dispersion, market capitalisation and the contents of the rights they give the holders, and other characteristics. Article 16 (Market maker and systematic internaliser) (1) Market maker means a person who holds himself out on the financial markets on a continuous basis as being willing to deal on own account by buying and selling financial instruments against his proprietary capital at prices defined by him. (2) Systematic internaliser means an investment firm which, on an organised, frequent and systematic basis, deals on own account by executing client orders outside a regulated market or an MTF. Article 17 (Central register and central clearing and depository house) (1) Central register means central register of book-entry securities referred to in the first paragraph of Article 3 of the ZNVP with the function of the central depository. (2) Central clearing and depository house means public limited company that keeps the central register. (3) Book-entry security entered in the central register means book-entry security according to the first paragraph of Article 3 of ZNVP. (4) Account of book-entry securities entered in the central register means account of book-entry security according to Article 17 of ZNVP. Article 18 (Central depository and sub-depository) (1) Central depository means central register or other record of holders of book-entry financial instruments: 1. kept by an individual person (hereinafter; central depositary) in line with the provisions of the state in which the depository is established; and 2. the entries in which have legal effects directly related to the issuer of such financial instruments and to third persons, so that the holder of the account in which these financial instruments are entered counts as a legal holder of these financial instruments. (2) Sub-depository means record of the holders of book-entry financial instruments: 1. that is not the central depository, 12
2. kept by a brokerage company, bank, investment firm or another person (hereinafter; subdepositary) in line with the provisions of the state in which the depository is established; and 3. the entries in which do not have legal effects directly related to the issuer of such financial instruments and the central depositary; and 4. the entries in which have legal effects in relation to the sub-depositary, so that the relation with the entry in the sub-depository results in the right of the client to demand from the sub-depositary to exercise the rights arising from these financial instruments on behalf of client and to dispose of these financial instruments upon the client s order. (3) The first and second paragraphs hereunder shall apply mutatis mutandis to financial instruments issued as written documents kept as a collective deposit by the central depository or the sub-depository. Article 19 (Settlement of transactions in financial instruments) Settlement of transactions in financial instruments is a set of all actions needed for the fulfilment of liabilities arising from transactions the subject of which is financial instruments. Article 20 (Settlement system and central counterparty) (1) Settlement system means system: 1. managed or operated by the central counterparty or another person (hereinafter: the settlement system operator), 2. that enables the settlement of transactions in financial instruments concluded on a regulated market, in MTF or outside the regulated market and MTF in accordance with the pre-defined rules of such system, and 3. which comprises legal relationships between the members of the settlement system and the members of such system and its operator, the contents of which are their mutual rights and obligations related to the settlement of transactions in financial instruments. (2) Central counterparty means a person who assumes the responsibility to fulfil its clients obligations in relation to the counterparties of such transactions in order to settle the transactions in financial instruments concluded on a regulated market in MTF or outside the regulated market and MTF against its proprietary capital, by entering into each such transaction as the new seller in relationship with the buyer and as new buyer in relationship with the seller. Article 21 (Tied agent) Tied agent means a natural or legal person who provides or promotes the following services in the name of and for the account of the investment firm on the basis of unlimited and unconditional responsibility of that investment firm: 1. investment or ancillary investment services to clients or potential clients; 2. reception and transmission of instructions or orders of the clients in relation to investment services or financial instruments; 13
3. placement of financial instruments; or 4. advice to clients or potential clients concerning these financial instruments or investment services. Article 22 (Investment group) Investment group means a group according to Point 14 of Article 2 of the ZFK, which is not a banking group according to Article 31 of the ZBan-1 and in the scope of which at least one company is: 1. an investment firm which is a parent undertaking or holding a stake in at least one other credit or financial institution; or 2.parent undertaking of financial holding, - with at least one investment firm as subsidiary and - without credit institutions as subsidiaries. Article 23 (Parent investment firm of a Member State and EU parent investment firm) (1) Parent investment firm of a Member State means investment firm: 1. whose subsidiary is another institution or financial institution or which holds a participation in another institution or financial institution, and 2. which is itself not a subsidiary of another institution of the same Member State or financial holding established in this Member State. (2) EU parent investment firm means parent investment firm of an individual Member State which is not a subsidiary of an institution of any other Member State or a financial holding established in any of the other Member States. Article 24 (Supervisory authority and agency) (1) The term supervisory authority is used for the authority of an individual Member state which is, on the basis of its laws and other regulations, competent for the supervision over the investment firms and which the Member State set as a contact point under the first paragraph of Article 56 of the Directive 2004/39/EC, unless a provision hereunder stipulates that such provision relates to a supervisory authority authorised to perform other types of supervision. (2) Agency means Securities Market Agency which is the contact point of the Republic of Slovenia under the first paragraph of Article 56 of Directive 2004/39/EC. (3) All notifications, information exchanges and other types of co-operation with the supervisory authority of another Member State shall be performed by the agency via the contact point specified by such Member State according to the first paragraph of Article 56 of Directive 2004/39/EC. 1.2.3 Terms related to the offer of securities to the public and trading on a regulated market 14
Article 25 (Securities) (1) Securities are transferable securities referred to in the third paragraph of Article 7 hereof, with the exception of the money market instruments from the fourth paragraph of Article 7 hereof with maturity shorter than 12 months. (2) Equity securities are: 1. shares, 2. other securities equivalent to shares, which represent a holding in the equity or membership rights of legal entities, and 3. other securities: - that give the holder a unilaterally defined entitlement by the exercise of which they are entitled to acquire a security referred to in point 1 or 2 of this paragraph (hereinafter: the underlying security), and - the issuer of which is the issuer of the underlying security or the person belonging to the same group as the issuer of the underlying security. (3) Debt securities are bonds and other securities with the exception of equity securities. Regardless of the first sentence, the provisions of Chapter 3 hereof use the term debt securities in the narrow sense which excludes all securities from the first indent of Point 3 of the second paragraph hereunder, regardless of the issuer of the underlying security. (4) Securities that are issued in a continuous or repeated manner are securities of the same issuer from at least two separate issues of similar securities in a 12-month period. (5) The term security comprises: 1. the underlying security and 2. the derivative security the value of which depends on the price of the underlying security or the exchange rate or the index or the price of any other basic property (hereinafter: underlying instrument). (6) Option is a unilaterally defined entitlement by the exercise of which the option holder concludes a contract on the purchase, sale or swap of securities the object of which is the underlying instrument. (7) Convertible security is a security containing an option, by the exercise of which the holder achieves the exchange for another security, namely: 1. either by exchanging a debt security for an equity security 2. either by exchanging a debt security for another debt security with different content of rights concerning the exchange rate, maturity or other payment conditions. (8) A warrant is a security: 1. containing an option to purchase the underlying security at a fixed price before or on the day of expiry of the validity of the option, and 2. in which the obligation that arises with the exercising of the option can be fulfilled either by the delivery of the underlying instrument either by means of cash payment. (9) Subordinate security is a debt security which, in the event of insolvency or capital inadequacy of the issuer, entitles the holder to receive payment arising from such security only after other liabilities of the issuer towards the non-subordinated creditors have been satisfied. 15
Article 26 (Units of collective investment undertakings) (1) Collective investment undertaking other than the closed-end type undertaking means unit trusts or investment companies: 1. the object of which is the collective investment of capital provided by the public, and which operate on the principle of risk-spreading and 2. the units of which are, at the holder's request, repurchased or redeemed, directly or indirectly, out of the assets of these undertakings. (2) Investment company, apart from the closed-end type company means investment company: 1. the object of which is the collective investment of capital provided by the public, and which operates on the principle of risk-spreading and 2. the units of which are, at the holder's request, repurchased or redeemed, directly or indirectly, out of the assets of such company. (3) Redemption or repayment from Point 2 of the first paragraph and Point 2 of the second paragraph hereunder also includes the actions of the collective investment undertaking or the investment company that such undertaking or company provides in order to assure that the price of the units or shares do not differ considerably from the value determined on the basis of the net value of such undertaking or company. (4) Unit of a collective investment undertaking means security issued by a collective investment undertaking and representing the rights of the participants in such an undertaking over its assets. (5) Unit of a collective investment undertaking UCITS means unit issued by a collective investment undertaking under the Directive 85/611/EEC. Article 27 (Issuer and offeror) (1) Issuer means a person who issues or plans to issue securities. (2) Offeror means person that offers securities to the public. Article 28 (Investor) Investor is the buyer of securities or the person on which the offer for the purchase of securities is addressed. Article 29 (Financial intermediary) Financial intermediary is: 1. investment firm that provides investment services in relation with the first or any subsequent sale of securities for the issuer or another offeror, and 2. investment firm or another person providing ancillary services or activities in relation with the first or subsequent sale of securities, including accepting of payments. 16
Article 30 (Offer of securities to the public and the offering programme) (1) Offer of securities to the public means a communication in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe to these securities. (2) The first paragraph hereunder shall also be applicable to the placing of securities through financial intermediaries. (3) Offering programme is the plan that enables the issue of debt securities, including the warrants in any form, of a similar type or class, continuous or repeating in the period specified in the programme. Article 31 (Initial and subsequent offer of securities) (1) Initial offer of securities shall be the offer on the basis of the issuer's offer upon the issue. (2) Subsequent offer of securities is any other offer, apart from the initial offer. (3) Subsequent offer of securities is also the resale carried out by the financial intermediary who purchased the securities from the issuer during the initial offer. 1.3 Fundamental rules on the provision of investment services and activities Article 32 (Provision of investment services and activities) (1) In the Republic of Slovenia investment services and activities may be provided by: 1. a brokerage company that obtained the license from the agency; 2. an investment firm of a Member State that is not a bank or a special financial institution and that in accordance with this act establishes a branch within the Republic of Slovenia or is authorised in accordance with this act to directly provide investment services and activities within the Republic of Slovenia; 3. a branch of a third country investment firm that is not a bank and that has obtained the permit for establishment from the agency. (2) In the Republic of Slovenia investment services and activities may also be provided by: 1. a bank which has obtained an authorisation from the Bank of Slovenia; 2. a bank or a special financial institution of a Member State that in accordance with the ZBan-1 establishes a branch within the Republic of Slovenia or is authorised in accordance with the ZBan- 1 to directly provide investment services and activities within the Republic of Slovenia; 3. a branch of a third country bank which has obtained an authorisation from the Bank of Slovenia for establishment and is authorised in accordance with the ZBan-1 to directly provide investment services and activities. (3) In the Republic of Slovenia, investment services related to the operation of a MTF may also be provided by a market operator that meets the conditions from the first paragraph hereunder. 17
(4) With the exception of the entities in paragraphs one to three of this Article, nobody else may provide investment services and activities. (5) The fourth paragraph hereunder shall not apply to persons referred to in the first paragraph of Article 34 hereof concerning the services and activities to which the exceptions stated in the specified Article are related. Article 33 (Application of the Act to banks) (1) The following provisions of this Act shall apply mutatis mutandis to banks that provide investment services and activities in the Republic of Slovenia in accordance with Point 1 of the second paragraph of Article 32 hereof: 1. for the discontinuation of the provision of investment services and activities: the third and the fourth paragraphs of Article 159, 2. for the issue of the authorisation to provide investment services and activities: - Point 2 and Point 4 of Article 165, - Point 5. of the first and the third and the fourth paragraphs of Article 167, 3. provisions of Chapter 7, with the exception of Article 204, the fourth paragraph of Article 238, the third paragraph of Article 245 and the second paragraph of Article 267, 4. the fifth paragraph of Article 301, Articles 302 and 303, 5. provisions of Chapter 9, relating to stock exchange members, 6. provisions of Chapter 11, relating to members of the central clearing and depository house, and 7. provisions of Chapter 12. (2) The provisions of the second and the third paragraphs of Article 178 of this Act shall apply mutatis mutandis to banks and special financial institutions of Member States that provide investment services and activities in the Republic of Slovenia in accordance with Point 2 of the second paragraph of Article 32 hereof. (3) The provisions of the first and the second paragraphs of Article 184 of this Act shall apply mutatis mutandis to third country banks that provide investment services and activities in the Republic of Slovenia in accordance with Point 3 of the second paragraph of Article 32 hereof. (4) For a mutatis mutandis application of the provisions under Paragraphs 1, 2 and 3 of this Article: 1. the term bank or special financial institution shall be used instead of brokerage company, 2. the term Bank of Slovenia shall be used instead of agency, with the exception of: - the provisions that authorise the agency to issue such regulations, - the provisions of Chapter 7 hereof and - the fifth paragraph of Article 301, and Articles 302 and 303 of this Act. (5) Unless otherwise specified in paragraphs six to eight of this Article, the provisions of the ZBan-1 shall apply to the issue of the licences to provide investment services and activities and to the supervision over the provision of investment services and activities by a bank or a special financial institution from the second paragraph of Article 32 hereof. 18
(6) Supervision over the operations of a bank, a Member State bank and special financial institution or a third country bank regarding the investment services and activities shall be provided by the agency in co-operation with the Bank of Slovenia. (7) The agency shall be authorised to issue the following control measures for the exercising of the supervision under the sixth paragraph of this Article: 1. order to terminate a violation, 2. impose additional control measures referred to in Article 302 of this Act. (8) If, during the exercise of supervision pursuant to the sixth paragraph of this Article, the agency establishes that there is reason to withdraw the license to provide investment services and activities, the agency shall be obliged to report this to the Bank of Slovenia. (9) Paragraphs one to eight hereunder shall not apply to a bank, a Member State bank and special financial institution or a third country bank counting as an entity specified in Article 34 of this Act. Article 34 (Exemptions) (1) The provisions of this Act concerning the provision of investment services and activities shall not apply to: 1. insurance companies and reinsurance companies, 2. persons which provide investment services exclusively for their parent undertakings, for their subsidiaries or for other subsidiaries of their parent undertakings, 3. persons which provide investment services occasionally, in the scope of their regular activity or profession, under the following conditions: - the pursuit of such activity or profession is regulated with the rules stipulated by law, other regulation or code of ethics and - the rules specified under the previous indent do not prohibit the provision of investment services, 4. persons which only deal for their own account, unless: - they act as market makers or - deal on own account outside a regulated market or an MTF on an organised, frequent and systematic basis by providing a system accessible to third parties in order to engage in transactions with them, 5. persons which provide investment services consisting exclusively in the administration of employee-participation schemes, 6. persons which provide investment services which only involve both administration of employeeparticipation schemes and the provision of investment services exclusively for their parent undertakings, for their subsidiaries or for other subsidiaries of their parent undertakings; 7. the members of the European System of Central Banks (hereinafter: the ESCB) and other national bodies performing similar functions and other public bodies charged with or intervening in the management of the public debt, 8. collective investment undertakings under the law regulating those undertakings and management companies and pension funds under the law regulating pension and disability insurance or other collective-investment undertakings and pension funds, regardless of whether 19
they are harmonized at the EU level or not, and the depositaries and managers of such undertakings, 9. persons dealing on own account in financial instruments, or providing investment services in commodity derivatives or derivative contracts included in Points 10 and 11 of the first paragraph of Article 7 hereof to the clients of their main business, provided that: - this is an ancillary activity to their main business, when considered on a group basis, and - the main business of these persons or the group in which they are included is not the provision of investment services under this act, 10. persons providing investment advice in the course of providing other services in the scope of their regular profession or activity, provided that: - no other provisions of this Act concerning the provision of investment services and activities apply to such other services and - the provision of such advice is not specifically remunerated, 11. persons whose main business consists of dealing on own account in commodities and/or commodity derivatives, unless they are part of a group the main business of which is the provision of investment services, 12. persons classified as local companies according to the second paragraph of Article 14 of the ZBan-1. (2) The rules on the provision of investment services and activities specified in this Act shall not apply to the provision of services in the capacity of a counterparty in transactions provided by state bodies or public bodies in relation to the management of public debt or the members of ESCB which perform their tasks in accordance with the Treaty establishing the European Community (Official Gazette of the Republic of Slovenia International Treaties, no. 7/04), the Statute of the ESCB and the European Central Bank (Official Gazette of the Republic of Slovenia International Treaties, no. 7/04) or which provide equivalent tasks in accordance with the provisions of other Member States. (3) The agency shall lay down more detailed criteria for determining when an activity specified in Points 3, 9 and 11 of the first paragraph hereunder is to be considered as ancillary to the main business on a group level as well as for determining when an activity is provided occasionally in the scope of another regular activity. Article 35 (Special rules for small brokerage companies) (1) The following shall not apply to small brokerage companies: 1. Articles 152 to 160, the second and the third paragraphs of Article 161, Points 2 and 3 of Article 165, Points 2 to 4 of the first and the second paragraphs of Article 167, 2. Sub-sections 4.2.3 and 4.2.4 and 3. Chapters 5, 6 and 12 hereof. (2) Notwithstanding the provisions of Article 149 hereof, a small brokerage company can also be organised as individual sole proprietor or as a personal company. (3) Small brokerage companies may not perform any activities other than investment services specified in the sixth paragraph of article 11 of this Act, or ancillary financial services specified in Point 1 of the first paragraph of article 11 of the ZBan-1. 20