Legal provisions of COM(2021)582 - Framework for the recovery and resolution of insurance and reinsurance undertakings

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dossier COM(2021)582 - Framework for the recovery and resolution of insurance and reinsurance undertakings.
document COM(2021)582 EN
date September 22, 2021


TITLE I
SUBJECT MATTER AND SCOPE, DEFINITIONS AND DESIGNATION OF RESOLUTION AUTHORITIES

Contents

Article 1 - Subject matter and scope

1. This Directive lays down rules and procedures for the recovery and resolution of the following entities:

(a)insurance and reinsurance undertakings that are established in the Union and fall within the scope of Article 2 of Directive 2009/138/EC;

(b)parent insurance and reinsurance undertakings established in the Union;

(c)insurance holding companies and mixed financial holding companies that are established in the Union;

(d)parent insurance holding companies and parent mixed financial holding companies established in a Member State;

(e)Union parent insurance holding companies and Union parent mixed financial holding companies;

(f)branches of insurance and reinsurance undertakings that are established outside the Union and that fulfil the conditions laid down in Articles 72 to 77.

Resolution authorities and supervisory authorities shall, when establishing and applying the requirements laid down in this Directive and when using the different tools at their disposal in relation to an entity referred to in the first subparagraph, take account of the nature of the business of that entity, its shareholding structure, legal form, risk profile, size, legal status, interconnectedness to other institutions or to the financial system in general, and the scope and complexity of the entity’s activities.

2. Member States may adopt or maintain rules that are stricter or additional to those laid down in this Directive and in the delegated and implementing acts adopted on the basis of this Directive, provided that those rule are of general application and do not conflict with this Directive and with the delegated and implementing acts adopted on its basis.

Article 2 - Definitions

1. For the purposes of this Directive, the definitions laid down in Article 212, points (a) to (d) and (f) to (h), of Directive 2009/138/EC shall apply.

2. For the purposes of this Directive, the following definitions shall apply:

(1) ‘resolution’ means the application of a resolution tool or a tool referred to in Article 26(3) to achieve one or more of the resolution objectives referred to in Article 18(2);

(2) ‘parent insurance holding company in a Member State’ means an insurance holding company as defined in Article 212(1), point (f), of Directive 2009/138/EC which is established in a Member State and which is not a subsidiary undertaking of an insurance or reinsurance undertaking, insurance holding company or mixed financial holding company authorised or set up in the same Member State;

(3) ‘Union parent insurance holding company’ means a parent insurance holding company in a Member State which is not a subsidiary undertaking of an insurance or reinsurance undertaking, another insurance holding company or mixed financial holding company authorised or set up in any Member State;

(4) ‘parent mixed financial holding company in a Member State’ means a mixed financial holding company as defined in Article 212(1), point (h), of Directive 2009/138/EC which is established in a Member State, which is not itself a subsidiary undertaking of an insurance or reinsurance undertaking, an insurance holding company or mixed financial holding company authorised or set up in that same Member State;

(5) ‘Union parent mixed financial holding company’ means a parent mixed financial holding company in a Member State that is not a subsidiary undertaking of an undertaking authorised in any Member State or of another insurance holding company or mixed financial holding company set up in any Member State;

(6) ‘resolution objectives’ means the resolution objectives referred to in Article 18(2);

(7) ‘resolution authority’ means an authority designated by a Member State in accordance with Article 3;

(8) ‘supervisory authority’ means a supervisory authority as defined in Article 13, point (10), of Directive 2009/138/EC;

(9) ‘resolution tool’ means a resolution tool referred to in Article 26(3);

(10) ‘resolution power’ means a power referred to in Articles 40 to 52;

(11) ‘competent ministries’ means finance ministries or other ministries of the Member States which are responsible for economic, financial and budgetary decisions at the national level in accordance with national competencies and which have been designated pursuant to Article 3(7);

(12) ‘senior management’ means those natural persons who exercise executive functions within an undertaking and who are responsible, and accountable to the administrative, management or supervisory body, for the day-to-day management of the undertaking;

(13) ‘cross-border group’ means a group having group entities established in more than one Member State;

(14) ‘extraordinary public financial support’ means State aid within the meaning of Article 107(1) TFEU, or any other public financial support at supra-national level, which, if provided for at national level, would constitute State aid that is provided to preserve or restore the viability, liquidity or solvency of an insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e), or of a group of which such an undertaking or entity forms part;

(15) ‘group entity’ means a legal person that is part of a group;

(16) ‘pre-emptive recovery plan’ means a pre-emptive recovery plan drawn up and maintained by an insurance or reinsurance undertaking in accordance with Article 5;

(17) ‘group pre-emptive recovery plan’ means a group pre-emptive recovery plan drawn up and maintained in accordance with Article 7;

(18) ‘significant cross-border activities’ means insurance and reinsurance activities carried out under the right of establishment and those carried out under the freedom to provide services in a given host Member State for which the annual gross written premium exceeds 5 % of the annual gross written premium of the undertaking, measured with reference to the last available financial statement of the undertaking;

(19) ‘critical functions’ means activities, services or operations performed by an insurance or reinsurance undertaking for third parties that cannot be substituted within a reasonable time or at a reasonable cost, and where the inability of the insurance and reinsurance undertaking to perform the activities, services or operations would be likely to have a significant impact on the financial system and the real economy in one or more Member States, including by affecting the social welfare of a large number of policy holders, beneficiaries or injured parties or by giving rise to systemic disruption or by undermining general confidence in the provision of insurance services;

(20) ‘core business lines’ means business lines and associated services which represent material sources of revenue, profit or franchise value for an insurance or reinsurance undertaking or for a group of which an insurance or reinsurance undertaking forms part;

(21) ‘financing arrangement’ means an arrangement officially recognised by a Member State providing financing through contributions from insurance and reinsurance undertakings in the territory of that Member State to ensure the effective application by the resolution authority of the resolution tools referred to in Article 26(3) and the powers referred to in Articles 40 to 52;

(22) ‘own funds’ means own funds as defined in Article 87 of Directive 2009/138/EC;

(23) ‘resolution action’ means the decision to place an insurance or reinsurance undertaking or an entity as referred to in Article 1(1), points (b) to (e), under resolution pursuant to Article 19 or 20, the application of a resolution tool as referred to in Article 26(3), or the exercise of one or more resolution powers as referred to in Articles 40 to 52;

(24) ‘resolution plan’ means a resolution plan for an insurance or reinsurance undertaking drawn up in accordance with Article 9;

(25) ‘group resolution’ means either of the following:

(a)the taking of resolution action at the level of a parent undertaking or of an insurance or reinsurance undertaking subject to group supervision, or

(b)the coordination of the application of the resolution tools referred to in Article 26(3) and the exercise of the resolution powers referred to in Articles 40 to 52 by resolution authorities in relation to group entities that meet the conditions for resolution referred to in Article 19(1) or Article 20(3);

(26) ‘group resolution plan’ means a plan for group resolution drawn up in accordance with Articles 10 and 11;

(27) ‘group resolution authority’ means the resolution authority in the Member State in which the group supervisor is situated;

(28) ‘group resolution scheme’ means a plan drawn up for the purposes of group resolution in accordance with Article 70;

(29) ‘resolution college’ means a college established in accordance with Article 68 to carry out the tasks referred to in paragraph 1 of that Article;

(30) ‘normal insolvency proceedings’ means collective insolvency proceedings which entail the partial or total divestment of a debtor and the appointment of a liquidator or an administrator normally applicable to insurance and reinsurance undertakings under national law and either specific to those undertakings or generally applicable to any natural or legal person;

(31) ‘debt instruments’ means bonds and other forms of transferrable debt, instruments creating or acknowledging a debt, and instruments giving rights to acquire debt instruments;

(32) ‘insurance claims’ means insurance claims as defined in Article 268(1), point (g), of Directive 2009/138/EC;

(33) ‘parent undertaking in a Member State’ means a parent undertaking as defined in Article 13, point (15), of Directive 2009/138/EC established in a Member State;

(34) ‘college of supervisors’ means a college of supervisors as defined in Article 212(1) point (e), of Directive 2009/138/EC and established in accordance with Article 248 of Directive 2009/138/EC;

(35) ‘Union State aid framework’ means the framework established by Articles 107, 108 and 109 TFEU and regulations and all Union acts, including guidelines, communications and notices, made or adopted pursuant to Article 108(4) or Article 109 TFEU;

(36) ‘winding-up’ means the realisation of assets of an insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e);

(37) ‘asset and liability separation tool’ means the mechanism for effecting a transfer by a resolution authority of assets, rights or liabilities of an undertaking under resolution to an asset and liability management vehicle in accordance with Article 30;

(38) ‘asset and liability management vehicle’ means a legal person that meets the requirements laid down in Article 30(2);

(39) ‘write-down or conversion tool’ means the mechanism for effecting the exercise by a resolution authority of the write-down or conversion powers in relation to liabilities of an undertaking under resolution in accordance with Article 34;

(40) ‘sale of business tool’ means the mechanism for effecting a transfer by a resolution authority of shares or other instruments of ownership issued by an undertaking under resolution, or assets, rights or liabilities, of an undertaking under resolution to a purchaser that is not a bridge undertaking, in accordance with Article 31;

(41) ‘bridge undertaking’ means a legal person that meets the requirements laid down in Article 32(2);

(42) ‘bridge undertaking tool’ means the mechanism for transferring shares or other instruments of ownership issued by an undertaking under resolution or assets, rights or liabilities of an undertaking under resolution to a bridge undertaking, in accordance with Article 32;

(43) ‘solvent run-off tool’ means the mechanism for withdrawing the authorisation of an undertaking under resolution to conclude new insurance or reinsurance contracts and for limiting its activity to the exclusive administration of its existing portfolio until its termination and liquidation under normal insolvency proceedings in accordance with Article 27;

(44) ‘instruments of ownership’ means shares, other instruments that confer ownership, instruments that are convertible into or give the right to acquire shares or other instruments of ownership, and instruments representing interests in shares or other instruments of ownership;

(45) ‘shareholders’ means shareholders or holders of other instruments of ownership;

(46) ‘transfer powers’ means the powers specified in Article 40(1), points (d) or (e), to transfer shares, other instruments of ownership, debt instruments, assets, rights or liabilities, or any combination of those items from an undertaking under resolution to a recipient;

(47) CCP a CCP as defined in Article 2, point (1), of Regulation (EU) No 648/2012 26 ;

(48) ‘write-down or conversion powers’ means the powers referred to in Article 34(2) and in Article 40(1), points (f) to (j);

(49) ‘secured liability’ means a liability where the right of the creditor to payment or other form of performance is secured by a charge, pledge or lien, or collateral arrangements including liabilities arising from repurchase transactions and other title transfer collateral arrangements;

(50) ‘Tier 1 instruments’ means basic own-fund items that meet the conditions laid down in Article 94(1) of Directive 2009/138/EC;

(51) ‘Tier 2 instruments’ means basic and ancillary own-fund items that meet the conditions laid down in Article 94(2) of Directive 2009/38/EC;

(52) ‘Tier 3 instruments’ means basic and ancillary own-fund items that meet the conditions laid down in Article 94(3) of Directive 2009/38/EC;

(53) ‘eligible liabilities’ means the liabilities and capital instruments that do not qualify as Tier 1, Tier 2 or Tier 3 instruments of an insurance and reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e), and that are not excluded from the scope of the write-down or conversion tool pursuant to Article 34, paragraphs 5 or 6;

(54) ‘insurance guarantee scheme’ means a scheme officially recognised by a Member State and financed through contributions from insurance and reinsurance undertakings guaranteeing the payment of eligible insurance claims, in part or in full, to eligible policy holders, insured parties and beneficiaries where an insurance undertaking is unable or likely to become unable to fulfil its obligations and commitments resulting from its insurance contracts;

(55) ‘relevant capital instruments’ means Tier 1, Tier 2 and Tier 3 instruments;

(56) ‘conversion rate’ means the factor that determines the number of shares or other instruments of ownership into which a liability of a specific class will be converted, by reference either to a single instrument of the class in question or to a specified unit of value of a debt claim;

(57) ‘affected creditor’ means a creditor whose claim relates to a liability that is reduced or converted to shares or other instruments of ownership by the exercise of the write-down or conversion power pursuant to the use of the write-down or conversion tool;

(58) ‘recipient’ means the entity to which shares, other instruments of ownership, debt instruments, assets, rights or liabilities, or any combination of those items are transferred from an undertaking under resolution;

(59) ‘business day’ means a day other than a Saturday, a Sunday or a public holiday in the Member State concerned;

(60) ‘termination right’ means a right to terminate a contract, a right to accelerate, close out, set-off or net obligations or any similar provision that suspends, modifies or extinguishes an obligation of a party to the contract or a provision that prevents an obligation under the contract from arising that would otherwise arise;

(61) ‘undertaking under resolution’ means any of the entities referred to in Article 1, points (a) to (e), in respect of which a resolution action is taken;

(62) ‘Union subsidiary undertaking’ means an insurance or reinsurance undertaking which has its head office in a Member State and which is a subsidiary undertaking of a third-country insurance or reinsurance undertaking or a third-country parent undertaking;

(63) ‘ultimate parent undertaking’ means a parent undertaking in a Member State of a group which is subject to group supervision in accordance with Article 213(2), points (a) or (b), of Directive 2009/138/EC, which is not a subsidiary undertaking of another insurance or reinsurance undertaking, an insurance holding company or a mixed financial holding company that is authorised and set up in any Member State;

(64) ‘third-country insurance or reinsurance undertaking’ means a third-country insurance undertaking or a third-country reinsurance undertaking as defined in Article 13, points (3) and (6), of Directive 2009/138/EC;

(65) ‘third-country resolution proceedings’ means an action under the law of a third country to manage the failure of a third-country insurance or reinsurance undertaking or a third-country parent undertaking that is comparable, in terms of objectives and anticipated results, to resolution actions under this Directive;

(66) ‘Union branch’ means a branch located in a Member State of a third-country insurance or reinsurance undertaking;

(67) ‘relevant third-country authority’ means a third-country authority responsible for carrying out functions comparable to those of resolution authorities or supervisory authorities pursuant to this Directive;

(68) ‘title transfer financial collateral arrangement’ means a title transfer financial collateral arrangement as defined in Article 2(1), point (b), of Directive 2002/47/EC of the European Parliament and of the Council 27 ;

(69) ‘netting arrangement’ means an arrangement under which a number of claims or obligations can be converted into a single net claim, including close-out netting arrangements under which, on the occurrence of an enforcement event (however or wherever defined) the obligations of the parties are accelerated so as to become immediately due or are terminated, and in either case are converted into or replaced by a single net claim, including ‘close-out netting provisions’ as defined in Article 2(1), point (n)(i), of Directive 2002/47/EC and ‘netting’ as defined in Article 2, point (k), of Directive 98/26/EC;

(70) ‘set-off arrangement’ means an arrangement under which two or more claims or obligations owed between the undertaking under resolution and a counterparty can be set off against each other;

(71) ‘financial contracts’ means financial contracts as defined in Article 1(1), point (100), of Directive 2014/59/EU;

(72) ‘crisis prevention measure’ means the exercise of powers to direct the removal of deficiencies or impediments to recoverability under Article 6(5) of this Directive, the exercise of powers to address or remove impediments to resolvability under Article 15 or 16 of this Directive, the application of any measures under Article 137, Article 138, paragraphs 3 and 5, Article 139(3) and Article 140 of Directive 2009/138/EC and the application of a preventive measure under Article 141 of Directive 2009/138/EC;

(73) ‘crisis management measure’ means a resolution action, the appointment of a special manager under Article 42 or the appointment of a person under Article 52(1);

(74) ‘designated national macroprudential authority’ means the authority entrusted with the conduct of macroprudential policy referred to in Recommendation B1 of the Recommendation of the European Systemic Risk Board of 22 December 2011 on the macroprudential mandate of national authorities (ESRB/2011/3);

(75) ‘regulated market’ means a regulated market as defined in Article 4(1), point (21), of Directive 2014/65/EU of the European Parliament and of the Council 28 .

(76) ‘insurance undertaking’ means an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC;

(77) ‘reinsurance undertaking’ means reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC;

(78) ‘credit institution’ means a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 of the European Parliament and of the Council 29 ;

(79) ‘investment firm’ means an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013;

(80) ‘low risk profile undertaking’ means a low risk profile undertaking as defined in Article 13, point (10a), of Directive 2009/138/EC;

(81) ‘subsidiary undertaking’ means a ‘subsidiary undertaking’ as defined in Article 13, point (16), of Directive 2009/138/EC;

(82) ‘parent undertaking’ means a parent undertaking as defined Article 13, point (15), of Directive 2009/138/EC;

(83) ‘branch’ means a branch as defined in Article 13, point (11), of Directive 2009/138/EC;

(84) ‘administrative, management or supervisory body’ means an administrative, management or supervisory body as defined in Article 1, point (43), of Commission Delegated Regulation (EU) 2015/35 30 .

Article 3 - Designation of resolution authorities and competent ministries

1. Each Member State shall designate one or, exceptionally, more resolution authorities that are empowered to apply the resolution tools and exercise the resolution powers.

2. Resolution authorities shall be national central banks, competent ministries, public administrative authorities or authorities entrusted with public administrative powers.

3. Where a resolution authority is entrusted with other functions, adequate structural arrangements shall be in place to avoid conflicts of interest between the functions entrusted to the resolution authority pursuant to this Directive and all other functions entrusted to that authority, without prejudice to the exchange of information and cooperation obligations required by paragraph 6.

In order to achieve the goals referred to in subparagraph 1, arrangements shall be put in place to ensure effective operational independence, including separate staff, reporting lines and decision making processes of the resolution authority from any supervisory or other functions of that resolution authority.

4. The requirements laid down in paragraph 3 shall not preclude that:

(a)reporting lines converge at the highest level of an organisation that subsumes different functions or authorities;

(b)staff may, under predefined conditions, be shared between the other functions entrusted to the resolution authority to meet temporarily high workloads, or for the resolution authority to be able to avail itself of the expertise of shared staff.

5. Resolution authorities shall adopt and make public the internal rules they have in place to ensure compliance with the requirements set out in paragraphs 3 and 4, including rules regarding professional secrecy and information exchanges between the different functional areas.

6. Member States shall require that authorities exercising supervision and resolution functions and persons exercising those functions on their behalf cooperate closely in the preparation, planning and application of resolution decisions, both where the resolution authority and the supervisory authority are separate entities and where the functions are carried out in the same entity.

7. Each Member State shall designate a single ministry which is responsible for exercising the functions entrusted to the competent ministry under this Directive.

8. Where the resolution authority in a Member State is not the competent ministry, the resolution authority shall inform the competent ministry of the decisions taken pursuant to this Directive without undue delay and, unless otherwise laid down in national law, not implement any decisions that have a direct fiscal impact without having obtained the approval of that competent ministry.

9. A Member State that designates more than one resolution authority shall provide EIOPA with a fully reasoned notification for doing so and shall clearly allocate functions and responsibilities between those authorities, ensure adequate coordination between them and designate a single authority as a contact authority for the purposes of cooperation and coordination with the relevant authorities of other Member States.

10. Member States shall inform EIOPA of the national authority or authorities designated as resolution authorities and, where relevant, the contact authority and, where relevant, their specific functions and responsibilities. EIOPA shall publish the list of those resolution authorities and contact authorities.

11. Without prejudice to Article 65, Member States may limit the liability of the resolution authority, the supervisory authority and their respective staff in accordance with national law for their acts and omissions in the course of discharging their functions under this Directive.

TITLE II
PREPARATION

CHAPTER I
Pre-emptive recovery and resolution planning

Section 1
General provisions

Article 4 - Simplified obligations for certain undertakings

1. Taking into account the impact that the failure of the insurance or reinsurance undertaking could have, due to the nature of its business, its shareholding structure, its legal form, its risk profile, size and legal status, its interconnectedness to other regulated undertakings or to the financial system in general, the scope and the complexity of its activities, and whether its failure and subsequent winding up under normal insolvency proceedings would be likely to have a significant negative effect on financial markets, on other undertakings, on policy holders, on funding conditions, or on the wider economy, supervisory and resolution authorities shall determine whether simplified obligations can apply for certain insurance and reinsurance undertakings and groups with respect to:

(a)the contents and details of pre-emptive recovery and resolution plans provided for in Articles 5 to 7;

(b)the date by which the first pre-emptive recovery and resolution plans are to be drawn up and the frequency for updating recovery and resolution plans, which may be lower than the frequency provided for in Article 5(4), Article 7(5), Article 9(5) and Article 11(3);

(c)the content and level of detail of the information required from undertakings pursuant to Article 5(6), Article 10(2) and Article 12(1);

(d)the level of detail for the assessment of resolvability provided for in Articles 13 and 14.

2. EIOPA shall, by [PO – add 18 months after entry into force], issue guidelines in accordance with Article 16 of Regulation (EU) No 1094/2010 to specify the eligibility criteria referred to in paragraph 1.

3. Member States shall require the supervisory authorities or the resolution authorities, as applicable, to provide EIOPA, on an annual basis and for each Member State separately, with all of the following information:

(a)the number of insurance and reinsurance undertakings and groups subject to pre-emptive recovery planning and resolution planning pursuant to Articles 5, 7, 9 and 10;

(b)the number of insurance and reinsurance undertakings and groups benefitting from simplified obligations referred to in paragraph 1 of this Article;

(c)quantitative information on the application of the criteria referred to in paragraph 1;

(d)a description of the simplified obligations applied on the basis of the criteria referred to in paragraph 1 as compared to the full obligations, together with the volume of capital requirements, premiums, technical provisions and assets, respectively measured as percentages of the total volume of capital requirements, premiums, technical provisions and assets of the insurance and reinsurance undertakings of the Member States or of all the groups, as applicable.

4. EIOPA shall publicly disclose, on an annual basis and for each Member State separately, all of the following information:

(a)the number of insurance and reinsurance undertakings and groups subject to pre-emptive recovery planning and resolution planning pursuant to Articles 5, 7, 9 and 10;

(b)the number of insurance and reinsurance undertakings and groups benefitting from simplified obligations referred to in paragraph 1 of this Article;

(c)quantitative information on the application of the criteria referred to in paragraph 1 of this Article;

(d)a description of the simplified obligations applied on the basis of the eligibility criteria referred to in paragraph 1 as compared to the full obligations, together with the volume of capital requirements, premiums, technical provisions and assets, respectively measured as percentages of the total volume of capital requirements, premiums, technical provisions and assets of the insurance and reinsurance undertakings of the Member States or of all the groups, as applicable;

(e)and an assessment of any divergences regarding the implementation of paragraph 1 of this Article at national level.

Section 2
Pre-emptive recovery planning

Article 5 - Pre-emptive recovery plans

1. Member States shall ensure that insurance and reinsurance undertakings that are not part of a group subject to pre-emptive recovery planning pursuant to Article 7 and that meet the criteria laid down in paragraphs 2 or 3, draw up and keep updated a pre-emptive recovery plan. Such pre-emptive recovery plan shall contain measures to be taken by the undertaking concerned to restore its financial position where that position has significantly deteriorated.

The drawing up, the keeping up-to-date and application of pre-emptive recovery plans shall be considered to be part of the system of governance within the meaning of Article 41 of Directive 2009/138/EC.

2. The supervisory authority shall subject insurance and reinsurance undertakings to pre-emptive recovery planning requirements on the basis of their size, business model, risk profile, interconnectedness, substitutability and, in particular, cross-border activity.

Supervisory authorities shall ensure that at least 80% of the Member State’s life and non-life and reinsurance market respectively, where the non-life market share is based on gross written premiums and the life market share is based on gross technical provisions, shall be subject to pre-emptive recovery planning requirements pursuant to this Article.

In the calculation of the market coverage level referred to in subparagraph 2, the subsidiary insurance or reinsurance undertakings of a group may be taken into account where those subsidiary insurance or reinsurance undertakings are part of a group for which the ultimate parent undertaking is drawing up and maintaining a group pre-emptive recovery plan referred to in Article 7.

3. Any insurance or reinsurance undertaking which is subject to a resolution plan pursuant to Article 9 shall be subject to pre-emptive recovery planning requirements.

Low risk profile undertakings, however, shall not be subject to pre-emptive recovery planning requirements on an individual basis.

4. EIOPA shall issue guidelines in accordance with Article 16 of Regulation (EU) No 1094/2010 to further specify the methods to be used when determining the market shares referred to in paragraph 2, and the criteria, in particular as regards cross-border activity, referred to in paragraph 2, first subparagraph.

5. Supervisory authorities shall ensure that insurance and reinsurance undertakings update their pre-emptive recovery plans at least annually and after a change to the legal or organisational structure of the undertaking concerned, or to its business or its financial situation, which could have a material effect on, or necessitates a material change to, the pre-emptive recovery plan.

6. Pre-emptive recovery plans shall not assume any access to or receipt of extraordinary public financial support.

7. Member States shall require that pre-emptive recovery plans contain all of the following:

(a)a summary of key elements of the plan, including material changes to the most recently filed plan;

(b)a description of the undertaking or the group;

(c)a framework of indicators referred to in paragraph 8;

(d)a description of how the pre-emptive recovery plan has been drawn-up, how it will be updated and how it will be applied;

(e)a range of remedial actions;

(f)a communication strategy.

8. Member States shall require that insurance and reinsurance undertakings as referred to in paragraph 1 assess the credibility and feasibility of pre-emptive recovery plans, in particular the framework of indicators referred to in paragraph 8 and the remedial actions, against a range of scenarios of severe macroeconomic and financial stress relevant to the insurance or reinsurance undertaking’s specific conditions, including system-wide events, idiosyncratic stress events likely to materially affect their asset and liability profile, and combinations of such stress events.

9. Member States shall require that insurance and reinsurance undertakings ensure that their pre-emptive recovery plans contain a framework of qualitative and quantitative indicators that identify the points at which remedial actions should be considered. Those indicators may include criteria relating to, inter alia, capital, liquidity, asset quality, profitability, market conditions, macro-economic conditions and operational events. Indicators relating to the capital position shall as a minimum contain any breach of the Solvency Capital Requirement laid down in Title I, Chapter VI, Section 4, of Directive 2009/138/EC.

Member States shall require that supervisory authorities ensure that insurance and reinsurance undertakings put in place appropriate arrangements for the regular monitoring of the indicators referred to in the first subparagraph.

An insurance or reinsurance undertaking as referred to in paragraph 1 that decides to take a remedial action contained in the pre-emptive recovery plan or decides to refrain from taking such remedial action although an indicator as referred to in the first subparagraph has been met, shall notify such decision to the supervisory authority without delay.

10. The administrative, management or supervisory body of an insurance and reinsurance undertaking as referred to in paragraph 1 shall assess and approve the pre-emptive recovery plan before submitting it to the supervisory authority for review.

11. EIOPA shall, by [PO – add 18 months after entry into force], issue guidelines in accordance with Article 16 of Regulation (EU) No 1094/2010 to specify further the minimum list of qualitative and quantitative indicators referred to in paragraph 7, first subparagraph, point (c) and, in cooperation with the European Systemic Risk Board (ESRB), the range of scenarios referred to in paragraph 8.

12. EIOPA shall develop draft regulatory technical standards further specifying, without prejudice to Article 4, the information that an insurance or reinsurance undertaking as referred to in paragraph 1 is to include in the pre-emptive recovery plan, including the remedial actions referred to in paragraph 7, first subparagraph, point (e) and their implementation.

EIOPA shall submit those draft regulatory technical standards to the Commission by [PO – add 18 months after entry into force].

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

Article 6 - Review and assessment by supervisory authorities of pre-emptive recovery plans

1. Supervisory authorities shall, within six months of the submission of each pre-emptive recovery plan as referred to in Article 5 and Article 7, review that plan and assess the extent to which it satisfies the requirements laid down in Article 5 and, where applicable, Article 7, and all of the following :

(a)whether the implementation of the arrangements proposed in the plan is reasonably likely to maintain or restore the viability and financial position of the insurance or reinsurance undertaking or of the group;

(b)whether the plan and specific options within the plan are reasonably likely to be implemented quickly and effectively in situations of financial stress;

(c)whether the plan and specific options within the plan are reasonably likely to avoid to the maximum extent possible any significant adverse effect on the financial system, including in scenarios which would lead other insurance and reinsurance undertakings to implement pre-emptive recovery plans within the same period.

2. Supervisory authorities shall provide resolution authorities with all pre-emptive recovery plans they have received. Resolution authorities may examine the pre-emptive recovery plan to identify any actions in the pre-emptive recovery plan which may adversely impact the resolvability of the insurance or reinsurance undertakings concerned and make recommendations to the supervisory authority with regard to those matters.

3. Where an insurance or reinsurance undertaking carries out significant cross-border activities, the home supervisory authority shall, upon the request of a host supervisory authority, provide the pre-emptive recovery plan to that host supervisory authority. The host supervisory authority may examine the pre-emptive recovery plan to identify any actions in the pre-emptive recovery plan which may adversely impact policy holders, the real economy or the financial stability in its Member State and make recommendations to the home supervisory authority with regard to those matters.

4. Supervisory authorities that, after having assessed the pre-emptive recovery plan, conclude that there are material deficiencies in that plan, or material impediments to its implementation shall notify the insurance or reinsurance undertaking concerned, or the ultimate parent undertaking concerned, of the content of their assessment and require the undertaking concerned to submit, within two months, a revised plan demonstrating how those deficiencies or impediments are addressed. The period of two months may be extended by one month where the supervisory authority so agrees.

Before requiring an insurance or reinsurance undertaking to resubmit a pre-emptive recovery plan, the supervisory authority shall give the undertaking the opportunity to state its opinion on that requirement.

A supervisory authority that finds that the deficiencies and impediments have not been adequately addressed in the revised plan may instruct the undertaking to make specific changes to the plan.

5. Where the insurance or reinsurance undertaking fails to submit a revised pre-emptive recovery plan, or where the supervisory authority comes to the conclusion that the revised pre-emptive recovery plan does not adequately remedy the deficiencies or potential impediments identified in its original assessment, and where it is not possible to adequately remedy the deficiencies or impediments through a direction to make specific changes to the plan, the supervisory authority shall require the undertaking to identify within a reasonable timeframe changes the undertaking can make to its business in order to address the deficiencies in the pre-emptive recovery plan or impediments to the implementation of that plan.

Where the insurance or reinsurance undertaking fails to identify such changes within the timeframe set by the supervisory authority, or where the supervisory authority concludes that the actions proposed by the undertaking would not adequately address the deficiencies or impediments, the supervisory authority may take a reasoned decision to direct the undertaking to take any measures it considers to be necessary and proportionate, taking into account the seriousness of the deficiencies and impediments and the effect of the measures on the undertaking’s business.

The reasoned decision referred to in the second subparagraph shall be notified in writing to the insurance or reinsurance undertaking and shall be subject to a right of appeal.

Article 7 - Group pre-emptive recovery plans

1. Member States shall ensure that ultimate parent undertakings draw up and submit to the group supervisor a group pre-emptive recovery plan.

Group pre-emptive recovery plans shall consist of a pre-emptive recovery plan for the group headed by the ultimate parent undertaking. The group pre-emptive recovery plan shall identify remedial actions that may be required to be implemented at the level of that ultimate parent undertaking and individual subsidiaries.

2. The group pre-emptive recovery plan contain remedial actions to achieve the stabilisation of the group, or of any insurance or reinsurance undertaking of the group, when the group or any of its insurance or reinsurance undertakings is in a situation of stress so as to address or remove the causes of the distress and restore the financial position of the group or the undertaking that is part of the group in question, at the same time taking into account the financial position of other group entities.

The group pre-emptive recovery plan shall contain arrangements to ensure the coordination and consistency of proportionate measures to be taken at the level of the group and the group entities.

3. The group pre-emptive recovery plan, and any plan drawn up for an individual subsidiary insurance or reinsurance undertaking, shall contain the elements specified in Article 5.

The group pre-emptive recovery plan shall identify whether there are obstacles to the implementation of remedial actions within the group, including at the level of individual entities covered by the plan, and whether there are substantial practical or legal impediments to the prompt transfer of own funds or the repayment of liabilities or assets within the group.

4. Supervisory authorities may require subsidiary insurance or reinsurance undertakings or the entities referred to in Article 1(1), points (c) and (d), to draw up and submit pre-emptive recovery plans in the following situations:

(a)no group pre-emptive recovery plan exists;

(b)the supervisory authority concerned demonstrates that the concerned entity is not sufficiently considered by a group pre-emptive recovery plan in light of the significance of the entity in question in the Member State concerned and in light of the obligations that comparable undertakings in that Member State are subject to.

5. The group supervisor shall, provided that the confidentiality requirements laid down in Articles 64 are in place, transmit the group pre-emptive recovery plans to:

(a)EIOPA;

(b)the relevant supervisory authorities which are members of or participate in the supervisory college as referred to in Article 248(3) of Directive 2009/138/EC;

(c)the group resolution authority;

(d)the resolution authorities of the subsidiaries.

6. The administrative, management or supervisory body of the entity drawing up the group pre-emptive recovery plan pursuant to paragraph 1 or paragraph 4 shall assess and approve the group pre-emptive recovery plan before submitting it to the group supervisor for review.

Article 8 - Review and assessment by the group supervisor of group pre-emptive recovery plans

1. The group supervisor shall, after having consulted the relevant supervisory authorities which are members of or participate in the supervisory college as referred to in Article 248(3) of Directive 2009/138/EC, review the group pre-emptive recovery plan and assess the extent to which it satisfies the requirements and criteria laid down in Articles 6 and this Article. That assessment shall be made in accordance with the procedure established in Article 6 and with this Article and shall take into account the potential impact of the remedial actions on policy holders, the real economy and financial stability in all the Member States where the group operates.

2. The group supervisor shall endeavour to reach a joint decision, as referred to in Article 17, within the college of supervisors on:

(a)the review and assessment of the group pre-emptive recovery plan and whether a recovery plan on an individual basis is to be drawn up for insurance and reinsurance undertakings that are part of the group, as laid down in Article 7(3);

(b)the application of the measures referred to in Article 6, paragraphs (3) and (4).

Section 3
Resolution planning

Article 9 - Resolution plans

1. Member States shall ensure that resolution authorities, after having consulted the supervisory authority, draw up a resolution plan for each insurance and reinsurance undertaking that meets the criteria laid down in paragraph 2, that is not part of a group subject to resolution planning pursuant to Articles 10 and 11. The resolution plan shall provide for the resolution actions which the resolution authority may take where the insurance or reinsurance undertaking meets the conditions for resolution referred to in Article 19(1) or Article 20(3).

2. Resolution authorities shall draw up resolution plans for insurance and reinsurance undertakings to be selected on the basis of their size, business model, risk profile, interconnectedness, substitutability and the likely impact of the failure on policy holders. When selecting the insurance and reinsurance undertakings subject to resolution planning, the resolution authority shall in particular take into account the cross-border activity of the insurance or reinsurance undertaking and the existence of critical functions.

Resolution authorities shall ensure that at least 70% of the Member State’s life and non-life and reinsurance market respectively, where the non-life market share is based on gross written premiums and the life market share is based on gross technical provisions, shall be subject to resolution planning. In the calculation of the market coverage level, the subsidiaries of a group may be taken into account where those subsidiaries are covered in the group resolution plan referred to in Article 10.

Low risk profile undertakings shall not be subject to resolution planning requirements on an individual basis.

3. Where the insurance or reinsurance undertaking concerned carries out significant cross-border activities, home resolution authorities shall, upon the request of a host supervisory or resolution authority, provide the draft resolution plan to that host supervisory or resolution authority. The host supervisory or resolution authority may examine the draft resolution plan to identify any actions in the draft resolution plan which may adversely impact policy holders, the real economy or the financial stability in its Member State and make recommendations to the home resolution authority with regard to those matters.

4. When specifying the options for application of resolution tools and powers, resolution plans shall take into consideration relevant resolution scenarios, including the scenario where the failure of the insurance and reinsurance undertaking is idiosyncratic or occurs at a time of broader financial instability or system wide events.

Resolution plans shall not assume any extraordinary public financial support besides, where available, the use of insurance guarantee schemes or of any financing arrangements.

5. Resolution authorities shall review, and where necessary update, resolution plans at least annually and after any material change to the legal or organisational structure of the insurance or reinsurance undertaking or to its business or its financial position that could have a material effect on the effectiveness of the plan or otherwise necessitate a revision of the resolution plan.

Insurance and reinsurance undertakings and supervisory authorities shall promptly communicate to the resolution authorities any event that necessitates a revision or update of the resolution plan.

6. Without prejudice to Article 4, resolution plans shall set out options for applying the resolution tools and resolution powers to the insurance or reinsurance undertaking. Resolution plans shall contain, quantified whenever appropriate and possible, all of the following:

(a)a summary of the key elements of the plan;

(b)a summary of the material changes to the undertaking that have occurred after the latest resolution-related information was filed;

(c)a demonstration of how critical functions and core business lines could be legally and economically separated, to the extent necessary, from other functions so as to ensure continuity upon the failure of the undertaking;

(d)an identification of those assets which would be expected to qualify as collateral;

(e)an estimation of the timeframe for executing each material aspect of the plan;

(f)a detailed description of the assessment of resolvability carried out in accordance with Article 13;

(g)a description of any measures required pursuant to Article 15 to address or remove impediments to resolvability identified as a result of the assessment carried out in accordance with Article 13;

(h)an explanation as to how the resolution options could be financed without the assumption of any extraordinary public financial support besides, where available, the use of insurance guarantee schemes or of any financing arrangements;

(i)a detailed description of the different resolution strategies that could be applied in light of the different possible scenarios and the applicable timescales;

(j)a description of critical interdependencies;

(k)an analysis of the impact of the resolution plan on the employees of the undertaking, including an assessment of any associated costs, and a description of envisaged procedures to consult staff during the resolution process, taking into account national systems for dialogue with social partners where applicable;

(l)a plan for communicating with the media and the public;

(m)a description of essential operations and systems necessary for maintaining the continuous functioning of the undertaking’s operational processes;

(n)where applicable, any opinion expressed by the undertaking in relation to the resolution plan.

Information referred to in point (a) shall be disclosed to the insurance and reinsurance undertaking concerned.

7. The resolution authority shall transmit the resolution plans and any changes thereto to the supervisory authorities concerned.

8. EIOPA shall develop draft regulatory technical standards further specifying, without prejudice to Article 4, the contents of the resolution plan.

EIOPA shall submit those draft regulatory technical standards to the Commission by [PO – add 18 months after entry into force].

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

9. EIOPA shall, by [PO – add 18 months after entry into force], issue guidelines in accordance with Article 16 of Regulation (EU) No 1094/2010 to specify further criteria for the identification of critical functions.

Article 10 - Group resolution plans

1. Member States shall ensure that group resolution authorities draw up group resolution plans.

2. The group resolution plan shall:

(a)set out the resolution actions that are to be taken in respect of each entity where measures will be necessary to ensure the continuity of critical functions;

(b)examine the extent to which the resolution tools referred to in Article 26(3) could be applied and the resolution powers exercised in a coordinated manner and identify any potential impediments to a coordinated resolution;

(c)where a group contains entities incorporated in third countries, identify appropriate arrangements for cooperation and coordination with the relevant authorities of those third countries and the implications for resolution within the Union;

(d)identify measures, including the legal and economic separation of particular functions or business lines, that are necessary to facilitate group resolution, taking into account intra-group interdependencies;

(e)identify available sources of funding to finance the group resolution actions and, where the use of insurance guarantee schemes or of any financing arrangement would be required, set out principles for sharing responsibility for that financing between sources of funding in different Member States. The group resolution plan shall not assume any extraordinary public financial support;

(f)contain the elements laid down in Article 9(6).

3. The group resolution authority shall transmit group resolution plans and any changes thereto to the supervisory authorities concerned.

4. EIOPA shall develop draft regulatory technical standards specifying the contents of group resolution plans, taking into account the diversity of business models of groups in the internal market.

EIOPA shall submit those draft regulatory technical standards to the Commission by [PO – add 18 months after entry into force].

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

Article 11 - Requirements and procedure for group resolution plans

1. Member States shall ensure that ultimate parent undertakings shall submit to the group resolution authority the information that may be required by Article 12. That information shall concern the ultimate parent undertaking and to the extent required each of the group entities including the entities referred to in Article 1(1), points (b) to (e).

The group resolution authority shall, provided that the confidentiality requirements laid down in this Directive are in place, transmit the relevant information provided in accordance with this paragraph to:

(a)EIOPA;

(b)the resolution authorities which are members of the resolution college;

(c)the relevant supervisory authorities which are members of or participate in the supervisory college as referred to in Article 248(3) of Directive 2009/138/EC.

2. Member States shall ensure that in resolution colleges, group resolution authorities, acting jointly with the resolution authorities referred to in paragraph 1, second subparagraph, point (b), and after having consulted the supervisory authorities concerned which are members of or participate in the supervisory college as referred to in Article 248(3) of Directive 2009/138/EC, draw up and maintain group resolution plans. Group resolution authorities may, at their discretion, and subject to them meeting the confidentiality requirements laid down in Article 77 of this Directive, involve in the drawing up and maintenance of group resolution plans third-country resolution authorities of jurisdictions in which the group has established subsidiary insurance or reinsurance undertakings or insurance holding companies or significant branches.

3. Member States shall ensure that group resolution plans are reviewed, and where appropriate updated, at least annually, and after any change to the legal or organisational structure, to the business or to the financial position of the group including any group entity, that could have a material effect on or require a change to the plan.

4. The adoption of the group resolution plan shall take the form of a joint decision, as referred to in Article 17, of the group resolution authority and the resolution authorities of the subsidiary insurance and reinsurance undertakings and of the entities referred to in Article 1(1), points (b) to (e).

Article 12 - Information for the purpose of resolution plans and cooperation from the insurance or reinsurance undertaking

1. Member States shall ensure that resolution authorities have the power to require insurance and reinsurance undertakings or the ultimate parent undertaking, as applicable, to:

(a)cooperate as much as necessary in the drawing up of resolution plans or group resolution plans;

(b)provide them, either directly or through the supervisory authority, with all of the information necessary to draw up and implement resolution plans or group resolution plans.

2. Supervisory authorities in the Member States concerned shall cooperate with resolution authorities to verify whether some or all of the information referred to in paragraph 1 is already available and shall provide that information to those resolution authorities. Resolution authorities shall obtain all relevant information from supervisory authorities before requesting information from insurance and reinsurance undertakings.

3. EIOPA shall develop draft implementing technical standards to specify procedures and a minimum set of standard forms and templates for the provision of the information referred to in this Article, and to specify the content of such information.

EIOPA shall submit those draft implementing technical standards to the Commission by [PO – add 18 months after entry into force].

Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1094/2010.

CHAPTER II
Resolvability

Article 13 - Assessment of resolvability

1. Member States shall ensure that resolution authorities, after having consulted the supervisory authority, assess the extent to which insurance or reinsurance undertakings that are not part of a group are resolvable without the assumption of any extraordinary public financial support besides, where available, the use of insurance guarantee schemes or of any financing arrangements.

An insurance or reinsurance undertaking shall be deemed resolvable where it is feasible and credible for that undertaking to be liquidated under normal insolvency proceedings, or for the resolution authority to resolve that undertaking by applying to it the different resolution tools referred to in Article 26(3) and resolution powers referred to in Articles 40 to 52.

2. Resolution authorities shall make the resolvability assessment referred to in paragraph 1 at the same time as, and for the purposes of, the drawing up and updating of the resolution plan in accordance with Article 9.

3. EIOPA shall develop draft regulatory technical standards to specify the matters and criteria for the assessment of the resolvability of insurance and reinsurance undertakings or groups provided for in paragraph 1 and in Article 14.

EIOPA shall submit those draft regulatory technical standards to the Commission by [PO – add 18 months after entry into force].

Power is conferred on the Commission to adopt the draft regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

Article 14 - Assessment of resolvability for groups

1. Member States shall ensure that group resolution authorities, together with the resolution authorities of subsidiaries, after having consulted the group supervisor and the supervisory authorities of such subsidiaries, assess the extent to which groups are resolvable without the assumption of any extraordinary public financial support besides, where available, the use of insurance guarantee schemes or of any financing arrangements.

2. A group shall be deemed resolvable where it is feasible and credible for the resolution authorities either to wind up group entities under normal insolvency proceedings, to resolve that group by applying resolution tools to, and exercising resolution powers with respect to, group entities where they can be easily separated in a timely manner, or by any other means provided for under national law.

The resolution colleges referred to in Article 68 shall take into account the assessment of group resolvability when discharging their functions.

3. Group resolution authorities shall make the resolvability assessment of groups at the same time as, and for the purposes of, the drawing up and updating of the group resolution plans in accordance with Article 10. The assessment shall be made under the decision-making procedure laid down in Article 11.

Article 15 - Power to address or remove impediments to resolvability

1. Member States shall ensure that where the assessment carried out in accordance with Articles 13 or 14 reveals that there are substantive impediments to the resolvability of the insurance or reinsurance undertaking concerned, the resolution authority shall notify that insurance or reinsurance undertaking and the supervisory authority concerned thereof in writing.

2. The requirement for resolution authorities to draw up resolution plans and for the relevant resolution authorities to reach a joint decision in accordance with Article 17 on group resolution plans referred to in Article 9(1) and Article 11(4) respectively shall be suspended following the notification referred to in paragraph 1 of this Article until the measures to remove the substantive impediments to resolvability have been accepted by the resolution authority pursuant to paragraph 3 of this Article or decided upon pursuant to paragraph 4 of this Article.

3. Within four months of the date of receipt of a notification referred to in paragraph 1, the insurance or reinsurance undertaking shall propose to the resolution authority possible measures to address or remove the substantive impediments identified in the notification.

The timeline for the implementation of the measures referred to in the first subparagraph prepared by the undertaking concerned shall take into account the reasons for the substantive impediment.

The resolution authority, after having consulted the supervisory authority, shall assess whether the measures referred to in the first subparagraph effectively address or remove the substantive impediment concerned.

4. Resolution authorities that find that the measures proposed by an insurance or reinsurance undertaking in accordance with paragraph 3, first subparagraph, do not effectively reduce or remove the impediments concerned, shall, either directly, or indirectly through the supervisory authority, require the insurance or reinsurance undertaking concerned to take any of the alternative measures referred to in paragraph 5, and notify such measures in writing to that entity, which shall propose a plan to comply with those requirements within one month after having received such notification.

When identifying alternative measures, resolution authorities shall demonstrate how the measures proposed by the insurance or reinsurance undertaking would not be able to remove the impediments to resolvability and how the alternative measures proposed are proportionate in removing those impediments. Resolution authorities shall take into account the effect of the measures on the business of the insurance or reinsurance undertaking, its stability and its ability to contribute to the economy.

5. The alternative measures referred to in paragraph 4 shall be any of the following:

(a)require the insurance or reinsurance undertaking to revise any intra-group financing agreements or review the absence thereof, or draw up service agreements, whether intra-group or with third parties;

(b)require the insurance or reinsurance undertaking to limit its maximum individual and aggregate exposures;

(c)impose specific or regular additional information requirements relevant for resolution purposes;

(d)require the insurance or reinsurance undertaking to divest specific assets or to restructure liabilities;

(e)require the insurance or reinsurance undertaking to limit or cease specific existing or proposed activities;

(f)restrict or prevent the development of new or existing business lines or sale of new or existing products;

(g)require the insurance or reinsurance undertaking to change the reinsurance strategy;

(h)require changes to legal or operational structures of the insurance or reinsurance undertaking or any group entity, either directly or indirectly under its control, so as to reduce complexity to ensure that critical functions may be legally and operationally separated from other functions through the application of the resolution tools;

(i)require an insurance or reinsurance undertaking or a parent undertaking to set up a parent insurance holding company in a Member State or a Union parent insurance holding company;

(j)where an insurance or reinsurance undertaking is the subsidiary of a mixed-activity insurance holding company, require that the mixed-activity insurance holding company sets up a separate insurance holding company to control the insurance or reinsurance undertaking, where necessary to facilitate the resolution of the insurance or reinsurance undertaking and to avoid that the application of resolution tools and the exercise of resolution powers has an adverse effect on the non-financial part of the group.

6. Before identifying any alternative measure referred to in paragraph 5, the resolution authority, after having consulted the supervisory authority, shall duly consider the potential effect of such measure on the soundness and stability of that particular insurance or reinsurance undertaking’s ongoing business and on the internal market.

7. A notification or decision made pursuant to paragraph 1 or 4:

(a)shall contain the reasons for the assessment or determination in question;

(b)shall indicate how the notification or decision complies with the requirement for proportionate application laid down in paragraph 4, second subparagraph;

(c)shall be subject to a right of appeal.

8. EIOPA shall, by [PO – add 18 months after entry into force], issue guidelines in accordance with Article 16 of Regulation (EU) No 1094/2010 to specify further details on the measures provided for in paragraph 5 and the circumstances in which each measure may be applied.

Article 16

Power to address or remove impediments to resolvability: group treatment

1. A group resolution authority, together with the resolution authorities of subsidiaries, after having consulted the supervisory college, shall consider the assessment referred to in Article 14 within the resolution college and shall take all reasonable steps to reach a joint decision as referred to in Article 17 on the application of measures identified in accordance with Article 15(4) in relation to all relevant group entities.

2. The group resolution authority, in cooperation with the group supervisor and with EIOPA, in accordance with Article 25(1) of Regulation (EU) No 1094/2010, shall prepare and submit a report to the ultimate parent undertaking and to the resolution authorities of subsidiaries, which shall provide that report to the subsidiaries within their remit. The report shall be prepared after having consulted the supervisory authorities, and shall analyse the substantive impediments to the effective application of the resolution tools referred to in Article 26(3) and the exercise of the resolution powers referred to in Articles 40 to 52 in relation to the group. The report shall recommend any proportionate and targeted measures that, in the view of the group resolution authority, are necessary or appropriate to remove those impediments, considering the impact of those measures on the group's business model.

3. Within four months of the date of receipt of the report, the ultimate parent undertaking may submit observations and propose to the group resolution authority alternative measures to remedy the impediments identified in the report.

The resolution authority, after having consulted the supervisory authority, shall assess whether those measures effectively address or remove the substantive impediment.

4. The group resolution authority shall communicate any measure proposed by the ultimate parent undertaking to the authorities that are members of or participate in the resolution college. The group resolution authorities and the resolution authorities of the subsidiaries, after having consulted the supervisory authorities, shall do everything within their power to reach a joint decision, as referred to in Article 17, within the resolution college regarding the identification of substantive impediments, and where necessary, regarding the assessment of the measures proposed by the ultimate parent undertaking and the measures required by the authorities in order to address or remove the impediments. When doing so, they shall take into account the potential impact of the measures in all Member States where the group operates.

CHAPTER III
Joint decisions

Article 17 - Joint decisions

1. Group supervisors, supervisory authorities, group resolution authorities and resolution authorities shall endeavour to reach the joint decisions referred to in Article 8(2), Article 11(4) and Article 16(4), as applicable, within 4 months of the date of:

(a)the transmission by the group supervisor of the group pre-emptive recovery plan in accordance with Article 7(4);

(b)the transmission by the group resolution authority of the information referred to in the Article 11(1), second subparagraph;

(c)the submission of any observations by the ultimate parent undertaking or at the expiry of the four-month period referred to in Article 16(3), whichever the earlier.

EIOPA may, at the request of a supervisory authority or a resolution authority, assist the group supervisors, supervisory authorities, group resolution authorities and resolution authorities in reaching a joint decision in accordance with Article 31(2), point (c), of Regulation (EU) No 1094/2010.

2. In the absence of a joint decision within the period referred to in paragraph 1 on any of the matters listed in the second subparagraph, the group supervisor or the group resolution authority, as applicable, shall make its own decision on those matters.

The matters referred to in the first subparagraph are the following:

(a)the review and assessment of the group pre-emptive recovery plan referred to in Article 8;

(b)any measures the ultimate parent undertaking is required to take in accordance with Article 6, paragraphs 3 and 4;

(c)the group resolution plan referred to in Article 10;

(d)the measures referred to in Article 16.

The decision made by the group supervisor or the group resolution authority, as applicable, shall be fully reasoned and shall take into account the views and reservations of other supervisory authorities or resolution authorities, as applicable, expressed during the four-month period. The decision shall be provided to the ultimate parent undertaking and to the other authorities concerned.

3. In the absence of a joint decision within the period referred to in paragraph 1 between the supervisory authorities or resolution authorities on any of the matters listed in the second subparagraph, each supervisory authority or resolution authority, as applicable, of a subsidiary shall make its own decision on those matters.

The matters referred to in the first subparagraph are the following:

(a)whether a recovery plan on an individual basis is to be drawn up for the insurance or reinsurance undertakings under its jurisdiction as referred to in Article 8(2);

(b)the application at subsidiary level of the measures referred to in Article 6, paragraphs 3 and 4;

(c)the identification of the material impediments, and where necessary, the assessment of the measures proposed by the ultimate parent undertaking and the measures required by the authorities in order to address or remove the impediments, as referred to in Article 16(1).

4. In the absence of a joint decision between the resolution authorities on the adoption of the group resolution plan, as referred to Article 11(4), within the four month period referred to in paragraph 1, each resolution authority responsible for a subsidiary shall make its own decision and shall draw up and keep updated a resolution plan for the entities under its jurisdiction. Each resolution authority shall notify its decision to the other members of the resolution college.

5. Each of the decisions of supervisory or resolution authorities in accordance with paragraphs 3 or 4 shall be fully reasoned and shall take into account the views and reservations of the other supervisory authorities, resolution authorities or group authorities, as applicable.

6. The supervisory authorities or resolution authorities that do not disagree with a decision as referred to in paragraphs 3 and 4 may reach a joint decision on a group pre-emptive recovery plan or group resolution plan covering group entities under their jurisdictions.

7. Where, by the end of the four-month period referred to in paragraph 1, any of the supervisory authorities or resolution authorities concerned has referred a matter to EIOPA in accordance with Article 19 of Regulation (EU) No 1094/2010, the group supervisor, the group resolution authority, the supervisory authority or the resolution authority concerned, as applicable, shall defer its decision under paragraphs 2, 3 and 4, await any decision that EIOPA may take in accordance with Article 19(3) of that Regulation, and take its decision in accordance with the decision of EIOPA. The four-month period referred to in paragraph 1 shall be deemed to be the conciliation phase as referred to in Article 19(2) of that Regulation. EIOPA shall take its decision within one month. The matter shall not be referred to EIOPA after the end of the four-month period referred to in paragraph 1 or after a joint decision has been reached. In the absence of an EIOPA decision within one month after the referral to EIOPA was made, the decision of the group supervisor, group resolution authority, supervisory authority or resolution authority for the group or the subsidiary at an individual level, as applicable, shall apply.

8. The joint decision referred to in Articles 8(2), Article 11(4), Article 16(4) and paragraph 6 of this Article and the decisions referred to in paragraphs 2, 3 and 4 of this Article shall be recognised as conclusive and applied by the other supervisory authorities or resolution authorities concerned in the Member States concerned.

9. Where joint decisions are taken pursuant to Article 11(4) and, in respect of group resolution plans, paragraph 6 of this Article and where a resolution authority assesses that the subject matter of a disagreement regarding group resolution plans impinges on the fiscal responsibilities of its Member State, the group resolution authority shall initiate a reassessment of the group resolution plan.

TITLE III
RESOLUTION

CHAPTER I
Resolution objectives, conditions for resolution and general principles

Article 18 - Resolution objectives

1. Member States shall ensure that resolution authorities, when applying the resolution tools referred to in Article 26(3) and exercising the resolution powers referred to in Articles 40 to 52, have regard to the resolution objectives listed in paragraph 2, and choose the tools and powers that best achieve the objectives that are relevant in the circumstances of the case.

2. The resolution objectives referred to in paragraph 1 are:

(a)protecting policy holders, beneficiaries and claimants;

(b)maintaining financial stability, in particular, by preventing contagion and by maintaining market discipline;

(c)ensuring the continuity of critical functions;

(d)protecting public funds by minimising reliance on extraordinary public financial support.

Member States shall ensure that resolution authorities, when pursuing the resolution objectives, seek to minimise the cost of resolution and avoid destruction of value unless necessary to achieve those resolution objectives.

3. The resolution objectives referred to in paragraph 2 are of equal significance, and Member States shall ensure that resolution authorities balance them as appropriate to the nature and circumstances of each case.

Article 19 - Conditions for resolution

1. Member States shall ensure that resolution authorities take a resolution action in relation to an insurance or reinsurance undertaking only where all of the following conditions are met:

(a)the supervisory authority, after having consulted the resolution authority, or subject to the conditions laid down in paragraph 2, the resolution authority after having consulted the supervisory authority, has determined that the insurance or reinsurance undertaking is failing or likely to fail;

(b)there is no reasonable prospect that any alternative private sector measures or supervisory action, including preventive and corrective measures, would prevent the failure of the undertaking within a reasonable timeframe;

(c)resolution action is necessary in the public interest.

2. Member States shall provide that resolution authorities, after having consulted the supervisory authority, have the necessary tools for making the determination under paragraph 1, point (a) including, in particular, adequate access to any relevant information. The supervisory authority shall provide the resolution authority without delay with any relevant information that the latter requests in order to perform its assessment.

3. For the purposes of paragraph 1, point (a), an insurance or reinsurance undertaking shall be failing or likely to fail in any of the following circumstances:

(a)the insurance or reinsurance undertaking is in breach or likely to be in breach of the Minimum Capital Requirement referred to in Title I, Chapter VI, Section 5, of Directive 2009/138/EC and there is no reasonable prospect of compliance being restored;

(b)the insurance or reinsurance undertaking no longer fulfils the conditions for authorisation or fails seriously in its obligations under the laws and regulations to which it is subject, or there are objective elements to support that the undertaking will, in the near future, seriously fail its obligations in a way that would justify the withdrawal of the authorisation;

(c)the insurance or reinsurance undertaking is unable to pay its debts or other liabilities, including payments to policy holders or beneficiaries, as they fall due, or there are objective elements to support a determination that the undertaking will, in the near future, be in such a situation;

(d)extraordinary public financial support is required.

4. For the purposes of paragraph 1, point (c), a resolution action shall be in the public interest where such action is necessary for the achievement of, and is proportionate to, one or more of the resolution objectives listed in Article 18(2) and winding up the institution under normal insolvency proceedings would not meet those objectives to the same extent.

Article 20 - Conditions for resolution with regard to parent undertakings and holding companies

1. Member States shall ensure that resolution authorities may take resolution action in relation to an entity referred to in Article 1(1), points (b) to (e), where that entity meets the conditions laid down in Article 19(1).

2. Where the subsidiary insurance or reinsurance undertakings of a mixed-activity insurance holding company are held directly or indirectly by an intermediate insurance holding company, Member States shall ensure that resolution actions for the purposes of group resolution are taken in relation to the intermediate insurance holding company, and shall not take resolution actions for the purposes of group resolution in relation to the mixed-activity insurance holding company.

3. Subject to paragraph 2, resolution authorities may take resolution action with regard to any of the entities referred to in Article 1(1), points (c) to (e), even where those entities do not meet the conditions laid down in paragraph 1, where all of the following conditions apply:

(a)one or more of the subsidiary insurance or reinsurance undertakings comply with the conditions established in Article 19(1);

(b)the assets and liabilities of the subsidiary insurance or reinsurance undertakings are such that their failure threatens another insurance or reinsurance undertaking of the group or the group as a whole, or the insolvency law of the Member State requires that groups be treated as a whole;

(c)resolution action with regard to the entities referred to in Article 1(1), points (c) to (e) is necessary for the resolution of the subsidiary insurance or reinsurance undertakings or for the resolution of the group as a whole.

Article 21 - Insolvency proceedings in respect of undertakings that are not subject to resolution action

Member States shall ensure that insurance or reinsurance undertakings that meet the conditions laid down in Article 19(1), points (a) and (b), but not the condition laid down in Article 19(1), point (c), and that meet the Minimum Capital Requirement laid down in Title I, Chapter VI, Section 5, of Directive 2009/138/EC, are wound up in an orderly manner in accordance with normal insolvency proceedings which ensure an orderly exit from the market.

Article 22 - General principles governing resolution

1. Member States shall ensure that resolution authorities, when they apply resolution tools referred to in Article 26(3) and exercise resolution powers referred to in Articles 40 to 52, take all appropriate measures to ensure that the resolution action is taken in accordance with the following principles:

(a)the shareholders of the undertaking under resolution bear first losses;

(b)creditors of the undertaking under resolution bear losses after the shareholders in accordance with the order of priority of their claims under normal insolvency proceedings, save as expressly provided for otherwise in this Directive;

(c)the administrative, management or supervisory body and the senior management of the undertaking under resolution are replaced, except where the retention, in whole or in part, of that body or the senior management is considered necessary for the achievement of the resolution objectives;

(d)the administrative, management or supervisory body and the senior management of the undertaking under resolution provide all assistance necessary for the achievement of the resolution objectives;

(e)natural and legal persons are made liable under civil or criminal law for their responsibility for the failure of the undertaking under resolution;

(f)except where otherwise provided for in this Directive, creditors of the same class are treated in an equitable manner;

(g)no shareholder or creditor incurs greater losses than they would have incurred if the insurance or reinsurance undertaking had been wound up under normal insolvency proceedings in accordance with the safeguards in Articles 53 to 55;

(h)resolution action is taken in accordance with the safeguards in this Directive.

2. Where the insurance or reinsurance undertaking is part of a group, resolution authorities shall apply the resolution tools referred to in Article 26(3) and exercise the resolution powers referred to in Articles 40 to 52 in a way that minimises, in particular in the countries where the group operates:

(a)the impact on other group entities and on the group as a whole;

(b)the adverse effects on policy holders, the real economy and financial stability in the Union and in its Member States..

3. When applying the resolution tools referred to in Article 26(3) and exercising the resolution powers referred to in Articles 40 to 52, Member States shall ensure that they comply with the Union State aid framework, where applicable.

4. Where the resolution tools referred to in Article 26(3) are applied, the entity to which those tools are applied shall be considered the subject of bankruptcy proceedings or analogous insolvency proceedings for the purposes of Article 5(1) of Council Directive 2001/23/EC 31 .

5. When applying the resolution tools referred to in Article 26(3) and exercising the resolution powers referred to in Articles 40 to 52, resolution authorities shall inform and consult employee representatives of the undertaking concerned where appropriate.

6. Resolution authorities shall apply the resolution tools referred to in Article 26(3) and exercise the resolution powers referred to in Articles 40 to 52 without prejudice to provisions on the representation of employees in management bodies as provided for in national law or practice.

CHAPTER II
Valuation

Article 23 - Valuation for the purposes of resolution

1. Resolution authorities shall ensure that any resolution action is taken on the basis of a valuation ensuring a fair, prudent and realistic assessment of the assets, liabilities, rights and obligations of insurance or reinsurance undertakings.

2. Before the resolution authority places an insurance or reinsurance undertaking under resolution, it shall ensure that a first valuation is carried out to determine whether the conditions for resolution under Article 19(1) or Article 20(3) are met.

3. After the resolution authority has decided to place an insurance or reinsurance undertaking under resolution, it shall ensure that a second valuation is carried out to:

(a)inform the decision on the appropriate resolution action to be taken;

(b)ensure that any losses of the insurance or reinsurance undertaking are fully recognised at the moment the resolution tools are applied;

(c)inform the decision on the extent of the cancellation or dilution of instruments of ownership;

(d)inform the decision on the extent of the write-down or conversion of any unsecured liabilities, including debt instruments;

(e)where the bridge undertaking tool referred to in Article 32 is applied, inform the decision on the assets, liabilities, rights and obligations or instruments of ownership that may be transferred to the bridge undertaking, and inform the decision on the value of any consideration that may be paid to the insurance or reinsurance undertaking under resolution or, where relevant, to the holders of the instruments of ownership;

(f)where the sale of business tool referred to in Article 31 is applied, inform the decision on the assets, liabilities, rights and obligations or instruments of ownership that may be transferred to the third party purchaser and to inform the resolution authority’s understanding of what constitutes commercial terms for the purposes of Article 31.

4. The valuations referred to in paragraphs 2 and 3 of this Article may be subject to an appeal in accordance with Article 65 only together with the decision to apply a resolution tool or to exercise a resolution power.

Article 24 - Requirements for valuation

1. Member States shall ensure that the valuations referred to in Article 23 are carried out by any of the following:

(a)a person independent from any public authority and from the insurance or reinsurance undertaking;

(b)the resolution authority, where those valuations cannot be carried out by a person as referred to in point (a).

2. The valuations referred to in Article 23 shall be considered definitive where they have been carried out by the person referred to in paragraph 1, point (a), of this Article and all the requirements laid down in paragraphs 3 to 5 of this Article are fulfilled.

3. Without prejudice to the Union State aid framework, where applicable, a definitive valuation shall be based on prudent assumptions and shall not assume any potential provision of extraordinary public financial support from the point in time at which resolution action is taken.

4. A definitive valuation shall be supplemented by the following information held by the insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e):

(a)an updated financial statement and an updated Solvency II economic valuation of the balance sheet of the insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e);

(b)a report on the financial position of the insurance or reinsurance undertaking, including an evaluation by an independent actuarial function of the technical provisions referred to in Title I, Chapter VI, Section 2 of Directive 2009/138/EC of insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e);

(c)any additional information on the market and accounting values of the assets, technical provisions, referred to in Title I, Chapter VI, Section 2 of Directive 2009/138/EC, and other liabilities of insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e).

5. A definitive valuation shall indicate the subdivision of the creditors in classes in accordance with their priority levels under the applicable insolvency law. The definitive valuation shall also contain an estimation of the treatment that each class of shareholders and creditors would have been expected to receive if the insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e), were wound up under normal insolvency proceedings.

The estimate referred to in the first subparagraph shall not prejudice the valuation referred to in Article 54.

6. EIOPA shall develop draft regulatory technical standards to specify:

(a)the circumstances in which a person is deemed to be independent from both the resolution authority and the insurance or reinsurance undertaking for the purposes of paragraph 1 of this Article;

(b)the methodology for assessing the value of the assets and liabilities of the insurance or reinsurance undertaking in the context of resolution;

(c)the separation of the valuations under Articles 23 and 54 of this Directive.

EIOPA shall submit those draft regulatory technical standards to the Commission by [PO – add 18 months after entry into force].

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

Article 25 - Provisional and definitive valuations

1. Valuations as referred to in Article 23 that do not meet the requirements laid down in Article 24(2) shall be considered provisional valuations.

Provisional valuations shall contain a buffer for additional losses and an appropriate justification for that buffer.

2. Resolution authorities that take resolution action on the basis of a provisional valuation shall ensure that a definitive valuation is carried out as soon as possible.

The resolution authority shall ensure that the definitive valuation referred to in the first subparagraph:

(a)allows for full recognition of any losses of the insurance or reinsurance undertaking in its books;

(b)informs a decision to write back creditors’ claims or to increase the value of the consideration paid, in accordance with paragraph 3.

3. Where the definitive valuation’s estimate of the net asset value of the insurance or reinsurance undertaking is higher than the provisional valuation’s estimate of the net asset value of the insurance or reinsurance undertaking, the resolution authority may:

(a)increase the value of the claims of affected creditors which have been written down or restructured;

(b)require a bridge undertaking to make a further payment of consideration in respect of the assets, liabilities, rights and obligations to the insurance or reinsurance undertaking under resolution or, as the case may be, to the owners of the instruments of ownership.

4. EIOPA shall develop draft regulatory technical standards to specify, for the purposes of paragraph 1 of this Article, the methodology for calculating the buffer for additional losses to be included in provisional valuations.

EIOPA shall submit those draft regulatory technical standards to the Commission by [PO – add 18 months after entry into force].

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

CHAPTER III
Resolution tools

Section 1
General principles

Article 26 - General provisions on resolution tools

1. Member States shall ensure that resolution authorities have the necessary powers to apply the resolution tools to insurance and reinsurance undertakings and to entities referred to in Article 1(1), points (b) to (e), that meet the conditions for resolution referred to in Article 19(1) or Article 20(3).

2. Where a resolution authority decides to apply a resolution tool to an insurance or reinsurance undertaking or an entity referred to in Article 1(1), points (b) to (e), and that resolution action would result in losses being borne by creditors, in particular policy holders, or would result in their claims being restructured or converted, the resolution authority shall exercise the power to write down or convert capital instruments and eligible liabilities in accordance with Article 34 immediately before or together with the application of the resolution tool.

The conversion of eligible liabilities into capital instruments shall not apply to insurance claims.

3. The resolution tools referred to in paragraph 1 are the following:

(a)the solvent run-off tool;

(b)the sale of business tool;

(c)the bridge undertaking tool;

(d)the asset and liability separation tool;

(e)the write-down or conversion tool.

Subject to paragraph 5, resolution authorities may apply the resolution tools individually or in any combination, except for the asset and liability separation tool, which may only be used together with another resolution tool.

4. Where only the sale of business and the bridge undertaking tool are used, and where those tools are used to transfer only part of the assets, rights or liabilities of the undertaking under resolution, the residual insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e), from which the assets, rights or liabilities have been transferred, shall be wound up under normal insolvency proceedings. Such winding up shall be done within a reasonable timeframe, having regard to any need for that residual insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e), to provide services or support pursuant to Article 43 to enable the recipient to carry out the activities or services acquired by virtue of that transfer, and any other reason that the continuation of the residual insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e), is necessary to achieve the resolution objectives referred to in Article 18 or comply with the principles referred to in Article 22.

Where the solvent run-off tool is used and where the net asset value of the undertaking under resolution in solvent run-off has become negative, the residual insurance or reinsurance undertaking shall be wound up under normal insolvency proceedings.

5. The resolution authority may recover any reasonable expenses properly incurred in connection with the use of the resolution tools or exercising the resolution powers in one or more of the following ways:

(a)as a deduction from any consideration paid by a recipient to the undertaking under resolution or, as the case may be, to the owners of the shares or other instruments of ownership;

(b)from the undertaking under resolution, as a preferred creditor;

(c)from any proceeds generated as a result of the termination of the operation of the bridge undertaking, the asset and liability management vehicle or the insurance or reinsurance undertaking in solvent run-off, as a preferred creditor.

6. Member States shall ensure that rules of national insolvency law on the voidability or unenforceability of legal acts detrimental to creditors do not apply to transfers of assets, rights or liabilities from an undertaking under resolution to another entity by virtue of the application of a resolution tool or the exercise of a resolution power.

7. Member States may confer upon resolution authorities additional tools and powers exercisable where an insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e), meets the conditions for resolution referred to in Article 19(1) or Article 20(3), provided that:

(a)when applied to a cross-border group, those additional tools and powers do not pose obstacles to effective group resolution;

(b)those tools and powers are consistent with the resolution objectives referred to in Article 18 and the general principles governing resolution laid down in Articles 18 and 22.

Section 2
The solvent run-off tool

Article 27 - The solvent run-off tool

1. Member States shall ensure that resolution authorities have the power to withdraw the authorisation of the undertaking under resolution to write new insurance or reinsurance contracts and place the undertaking under resolution in a solvent run-off procedure to terminate the activities of that undertaking.

2. Resolution authorities shall ensure that an insurance or reinsurance undertaking under resolution in a solvent run-off is capable of retaining adequately trained and competent staff to ensure the orderly continuation of its insurance activities in run-off until its liquidation.

3. Resolution authorities shall monitor, in close cooperation with supervisory authorities, the costs and expenses of an insurance or reinsurance undertaking under resolution to preserve its value and marketability.

4. Resolution authorities shall, in close cooperation with supervisory authorities, assess intended changes to the composition of assets, monitor closely reinsurance arrangements and require, at least on a quarterly basis, independent actuarial reviews of the technical provisions and reserves.

5. In application of the solvent run-off tool, resolution authorities shall restrict or prohibit any remuneration of equity and instruments treated as equity, including dividend payments, and shall restrict or prohibit any payments of variable remuneration and discretionary pension benefits.

6. Resolution authorities shall take a decision that an undertaking under resolution in solvent run-off has to be liquidated in any of the following cases, whichever occurs first:

(a)the undertaking under resolution in solvent run-off merges with another entity;

(b)all or substantially all of the assets, rights or liabilities of the undertaking under resolution in solvent run-off are sold to a third party purchaser;

(c)the assets of the undertaking under resolution in solvent run-off are completely wound down and its liabilities are completely discharged;

(d)the net asset value of the undertaking under resolution in solvent run-off has become negative.

7. Where the operations of an undertaking under resolution in solvent run-off are terminated in the circumstances referred to in paragraph 6, point (b), the residual insurance or reinsurance undertaking shall be wound up under normal insolvency proceedings.

Subject to Article 26(6), any proceeds generated as a result of the termination of the operation of the insurance or reinsurance undertaking in run-off shall benefit its shareholders.

Section 3
the asset and liability separation tool, the sale of business tool, and the bridge undertaking tool

Article 28 - Principles for the application of the asset and liability separation tool, the sale of business tool, and the bridge undertaking tool

1. Member States shall ensure that, subject to Article 31, paragraphs 5 and 6 and Article 65 , resolution authorities have the power to use the asset and liability separation tool, the sale of business tool, and the bridge undertaking tool without obtaining the consent of the shareholders of the undertaking under resolution or any third party, other than the purchaser or the bridge undertaking, and without complying with any procedural requirements under company or securities law, other than those laid down in Article 29.

2. Subject to Article 26(7), any consideration paid by the purchaser or the bridge undertaking shall benefit:

(a)the owners of the shares or of other instruments of ownership, where such shares or such other instruments of ownership issued by the undertaking under resolution have been transferred from the holders of those shares or instruments to the purchaser or the bridge undertaking;

(b)the undertaking under resolution, where some or all of the assets or liabilities of the undertaking under resolution have been transferred to the purchaser or the bridge undertaking.

3. Subject to Article 26(7), any consideration paid by an asset and liability management vehicle as referred to in Article 30(2) in respect of the assets, rights or liabilities acquired directly from the undertaking under resolution shall benefit the undertaking under resolution. Consideration may be paid in the form of debt issued by the asset and liability management vehicle.

4. Transfers made by using the asset and liability tool, the sale of business tool or the bridge undertaking tool shall be subject to the safeguards referred to in Title III, Chapter V.

5. Resolution authorities may use the asset and liability separation tool, the sale of business tool and the bridge undertaking tool more than once to make supplemental transfers where necessary to achieve the resolution objectives referred to in Article 18.

6. Member States shall ensure that the purchaser or the bridge undertaking referred to in paragraph 1 may continue to exercise the rights of membership and access to, where relevant, payment, clearing and settlement systems, stock exchanges and insurance guarantee schemes of the undertaking under resolution, provided that it meets the membership and participation criteria for participation in such systems.

In cases where not all criteria listed in the first subparagraph are met, Member States shall ensure that:

(a)membership or participation in payment, clearing and settlement systems, stock exchanges and insurance guarantee schemes is not denied on the ground that the purchaser or the bridge undertaking does not possess a rating from a credit rating agency, or that such rating is not commensurate with the rating levels required to be granted access to such systems or schemes;

(b)where the purchaser or the bridge undertaking does not meet the membership or participation criteria of a payment, clearing or settlement system, stock exchange or insurance guarantee scheme, the rights referred to in the first subparagraph are exercised for a period of time specified by resolution authorities, not exceeding 24 months, and renewable on application by the purchaser or the bridge undertaking to the resolution authority.

7. Without prejudice to Title III, Chapter V, shareholders or creditors of the undertaking under resolution and other third parties whose assets, rights or liabilities are not transferred by using the asset and liability tool, the sale of business tool or the bridge undertaking tool, shall not have any rights or claims over or in relation to the assets, rights or liabilities transferred or over or in the administrative, management or supervisory body or senior management of the bridge undertaking or the assets and liabilities management vehicle.

Article 29 - Procedural requirements regarding sales of business, assets, rights or liabilities in resolution

1. Subject to paragraph 3 of this Article, Member States shall ensure that, where resolution authorities seek to apply the sale of business tool, or sell a bridge undertaking, or its assets, rights or liabilities, the undertaking under resolution, the bridge undertaking or the assets, rights, liabilities, shares or other instruments of ownership concerned are marketed in accordance with the criteria set out in paragraph 2. Pools of rights, assets, and liabilities may be marketed separately.

2. Without prejudice to the Union State aid framework, where applicable, the marketing criteria referred to in paragraph 1 are the following:

(a)marketing shall be as transparent as possible and shall not materially misrepresent the assets, rights, liabilities, shares or other instruments of ownership of the undertaking or bridge undertaking that a resolution authority intends to transfer;

(b)marketing shall not unduly favour, or discriminate between, potential purchasers;

(c)marketing shall be free from any conflict of interest;

(d)marketing shall not confer any unfair advantage on a potential purchaser;

(e)marketing shall take account of the need to effect a rapid resolution action;

(f)marketing shall aim at maximising, as far as possible, the sale price for the shares or other instruments of ownership, assets, rights or liabilities involved.

The principles referred to in this paragraph shall not prevent resolution authorities from soliciting particular potential purchasers.

Any public disclosure of the marketing of the undertaking under resolution or entity referred to in Article 1(1), points (b) to (e), or of the bridge undertaking that would otherwise be required in accordance with Article 17(1) of Regulation (EU) No 596/2014 may be delayed in accordance with Article 17, paragraph 4 or 5 of that Regulation.

3. Resolution authorities may decide not to comply with the requirement to market a sale where they determine that compliance with the requirements laid down in paragraph 2 would be likely to undermine one or more of the resolution objectives referred to in Article 18.

Article 30 - The asset and liability separation tool

1. Member States shall ensure that resolution authorities have the power to transfer assets, rights or liabilities of an undertaking under resolution or a bridge undertaking to one or more asset and liability management vehicles.

2. For the purposes of the asset and liability separation tool, an asset and liability management vehicle shall be a legal person that meets all of the following requirements:

(a)it is wholly or partially owned by one or more public authorities which may include the resolution authority and is controlled by the resolution authority;

(b)it has been created for the purpose of receiving some or all of the assets, rights and liabilities of one or more undertakings under resolution or a bridge undertaking.

3. The asset and liability management vehicle shall manage the portfolios transferred to it with a view to maximise their value through a sale of those portfolios or an orderly wind down.

4. Member States shall ensure that the operation of an asset and liability management vehicle respects the following requirements:

(a)the resolution authority concerned has approved the asset and liability management vehicle’s constitutional documents;

(b)subject to the asset and liability management vehicle’s ownership structure, the resolution authority concerned either appoints or approves the vehicle’s administrative, management or supervisory body;

(c)the resolution authority concerned approves the remuneration of the members of the administrative, management or supervisory body and specifies their responsibilities;

(d)the resolution authority concerned approves the strategy and risk profile of the asset and liability management vehicle.

5. Resolution authorities may exercise the power specified in paragraph 1 to transfer assets, rights or liabilities only in conjunction with other resolution tools as referred to in Article 26(3) and where any of the following situations occurs:

(a)the situation of the particular market for those assets, rights or liabilities is such that the liquidation of those assets, rights or liabilities under normal insolvency proceedings could have an adverse effect on one or more financial markets;

(b)such a transfer is necessary to facilitate the use of the solvent run-off tool or to ensure the proper functioning of the undertaking under resolution or a bridge undertaking;

(c)such a transfer is necessary to maximise liquidation proceeds.

6. When applying the asset and liability separation tool, resolution authorities shall, in accordance with Article 23 and in accordance with the Union State aid framework, determine the consideration for which assets, rights and liabilities are transferred to the asset and liability management vehicle. This paragraph shall not prevent the consideration having nominal or negative value.

7. Where resolution authorities have applied the bridge undertaking tool, asset and liability management vehicles may, subsequent to the application of the bridge undertaking tool, acquire assets, rights or liabilities from the bridge undertaking.

8. Resolution authorities may transfer assets, rights or liabilities from the undertaking under resolution to one or more asset and liability management vehicles on more than one occasion and transfer assets, rights or liabilities back from one or more asset and liability management vehicles to the undertaking under resolution in any of the following situations:

(a)the possibility that the assets, rights or liabilities might be transferred back is stated expressly in the instrument under which the transfer was made;

(b)the assets, rights or liabilities do not fall within the classes of, or meet the conditions for transfer of, assets, rights or liabilities specified in the instrument under which the transfer was made.

In either of the cases referred in points (a) and (b), the transfer back may be made within any period, and shall comply with any other conditions, stated in that instrument for the relevant purpose.

The undertaking under resolution shall be obliged to take back any assets, rights or liabilities transferred in accordance with points (a) and (b).

9. The objectives of an asset and liability management vehicle shall not imply any duty or responsibility to shareholders or creditors of the undertaking under resolution. The members of the administrative, management or supervisory body or senior management of the asset and liability management vehicle shall have no liability to such shareholders or creditors for acts and omissions in the discharge of their duties, unless such acts or omissions implied gross negligence or serious misconduct under national law which have directly affected the rights of such shareholders or creditors.

Member States may further limit the liability of an asset and liability management vehicle, and of the members of its administrative, management or supervisory body or senior management for acts and omissions in the discharge of their duties.

Article 31 - The sale of business tool

1. Member States shall ensure that resolution authorities have the power to transfer to a purchaser other than a bridge undertaking:

(a)shares or other instruments of ownership issued by an undertaking under resolution;

(b)all or any assets, rights or liabilities of an undertaking under resolution.

2. A transfer made pursuant to paragraph 1 shall be made on commercial terms, having regard to the circumstances, and in accordance with the Union State aid framework.

Resolution authorities shall take all reasonable steps to obtain commercial terms for the transfer that are conform with the valuation conducted under Article 23, having regard to the circumstances of the case.

3. Resolution authorities may, with the consent of the purchaser, revert the executed transfers where justified by the circumstances of the case. The undertaking under resolution or the original owners shall be obliged to take back any transferred shares or other instruments of ownership, or assets, rights or liabilities.

4. Purchasers shall be required to have the appropriate authorisation to carry out the business they acquire when a transfer as referred to in paragraph 1 is made. Supervisory authorities shall ensure that any application for such authorisation shall be considered, in conjunction with the transfer, in a timely manner.

5. By way of derogation from Articles 57 to 62 of Directive 2009/138/EC, where a transfer of shares or of other instruments of ownership by virtue of an application of the sale of business tool would result in the acquisition of or increase in a qualifying holding in an insurance or reinsurance undertaking as referred to in Article 57(1) of Directive 2009/138/EC, the supervisory authority of that insurance or reinsurance undertaking shall carry out the assessment required under those Articles in a timely manner that does not delay the application of the sale of business tool and prevent the resolution action from achieving the resolution objectives referred to in Article 18 of this Directive.

6. Member States shall ensure that where the supervisory authority has not completed the assessment referred to in paragraph 5 from the date of the transfer, the following shall apply:

(a)such a transfer of shares or other instruments of ownership to the acquirer shall have immediate legal effect;

(b)during the assessment period and during any divestment period provided for in point (f), the acquirer’s voting rights attached to such shares or other instruments of ownership shall be suspended and vested solely in the resolution authority, which shall have no obligation to exercise any such voting rights and which shall have no liability whatsoever for exercising or refraining from exercising any such voting rights;

(c)during the assessment period and during any divestment period provided for in point (f), the penalties and other measures for infringing the requirements for acquisitions or disposals of qualifying holdings laid down in Article 62 of Directive 2009/138/EC shall not apply to such a transfer of shares or other instruments of ownership;

(d)promptly upon completion of its assessment, the supervisory authority shall notify the resolution authority and the acquirer in writing of whether it approves or, in accordance with Article 58(4) of Directive 2009/138/EC, opposes such a transfer of shares or other instruments of ownership to the acquirer;

(e)where the supervisory authority approves such a transfer of shares or other instruments of ownership to the acquirer, the voting rights attached to such shares or other instruments of ownership shall be deemed to be fully vested in the acquirer immediately upon receipt by the resolution authority and the acquirer of such an approval from the supervisory authority;

(f)where the supervisory authority opposes such a transfer of shares or other instruments of ownership to the acquirer:

(i)the voting rights attached to such shares or other instruments of ownership as provided for in point (b) shall remain in full force and effect;

(ii)the resolution authority may require the acquirer to divest such shares or other instruments of ownership within a divestment period determined by the resolution authority having taken into account prevailing market conditions;(iii)where the acquirer does not comply with the request provided for in point (ii), the supervisory authority, with the consent of the resolution authority, may impose on the acquirer penalties and other measures for infringing the requirements for acquisitions or disposals of qualifying holdings laid down in Article 62 of Directive 2009/138/EC.

7. For the purposes of exercising the rights to provide services or to establish itself in another Member State in accordance with Directive 2009/138/EC, the purchaser shall be considered to be a continuation of the undertaking under resolution, and may continue to exercise any such right that was exercised by the undertaking under resolution in respect of the assets, rights or liabilities transferred.

Article 32 - Bridge undertaking tool

1. Member States shall ensure that resolution authorities have the power to transfer to a bridge undertaking:

(a)shares or other instruments of ownership issued by one or more undertakings under resolution;

(b)all or any assets, rights or liabilities of one or more undertakings under resolution.

2. The bridge undertaking shall be a legal person that meets all of the following requirements:

(a)it is wholly or partially owned by one or more public authorities which may include the resolution authority or, where applicable, an insurance guarantee scheme and is controlled by the resolution authority;

(b)it is created for the purpose of receiving and holding some or all of the shares or other instruments of ownership issued by an undertaking under resolution or some or all of the assets, rights and liabilities of one or more undertakings under resolution with a view to achieve the resolution objectives and selling the undertaking or entity referred to in Article 1(1), points (b) to (e).

3. When applying the bridge undertaking tool, resolution authorities shall ensure that the total value of liabilities transferred to the bridge undertaking does not exceed the total value of the rights and assets transferred from the undertaking under resolution.

4. Following an application of the bridge undertaking tool, resolution authorities may, where justified by the circumstances, revert the executed transfers, and the undertaking under resolution or the original owners shall be obliged to take back any transferred assets, rights or liabilities, or shares or other instruments of ownership, where justified by the circumstances of the case, in any of the following situations:

(a)the possibility that the specific shares or other instruments of ownership, assets, rights or liabilities might be transferred back is stated expressly in the instrument by which the transfer was made;

(b)the specific shares or other instruments of ownership, assets, rights or liabilities do not fall within the classes of, or meet the conditions for transfer of shares or other instruments of ownership, assets, rights or liabilities specified in the instrument by which the transfer was made.

A transfer back as referred to in the first subparagraph may be made within any period and shall comply with any other conditions stated in the instrument by which the transfer was made.

5. Following an application of the bridge undertaking tool, resolution authorities may transfer shares or other instruments of ownership, or assets, rights or liabilities from the bridge undertaking to a third party purchaser.

6. A bridge undertaking shall be considered to be a continuation of the undertaking under resolution, and be able to continue to exercise any right that was exercised by the undertaking under resolution in respect of the assets, rights or liabilities transferred.

A bridge institution shall not conclude new insurance contracts or change existing insurance contracts in a way that could increase the insurance claims of the bridge undertaking.

7. The objectives of a bridge undertaking shall not imply any duty or responsibility to shareholders or creditors of the undertaking under resolution, and the members of the administrative, management or supervisory body or senior management shall have no liability to such shareholders or creditors for acts or omissions in the discharge of their duties, unless the act or omission implies gross negligence or serious misconduct in accordance with national law which have directly affected the rights of such shareholders or creditors.

Member States may further limit the liability of a bridge undertaking and of the members of its administrative, management or supervisory body or senior management in accordance with national law for acts and omissions in the discharge of their duties.

Article 33 - Operation of a bridge undertaking

1. Member States shall ensure that the operation of a bridge undertaking respects the following requirements:

(a)the resolution authority has approved the bridge undertaking’s constitutional documents;

(b)subject to the bridge undertaking’s ownership structure, the resolution authority either appoints or approves the bridge undertaking’s administrative, management or supervisory body;

(c)the resolution authority approves the remuneration of the members of the administrative, management or supervisory body and determines their responsibilities;

(d)the resolution authority approves the strategy and risk profile of the bridge undertaking;

(e)the bridge undertaking is authorised in accordance with Directive 2009/138/EC and has the necessary authorisation under the applicable national law to carry out the activities or services that it acquires by virtue of a transfer made pursuant to Article 40 of this Directive;

(f)the bridge undertaking complies with the requirements of, and is subject to supervision in accordance with Directive 2009/138/EC;

(g)the operation of the bridge undertaking complies with the Union State aid framework and the resolution authority may specify restrictions on its operations accordingly.

Notwithstanding the provisions referred to in points (d) and (e) of the first subparagraph and where necessary to meet the resolution objectives referred to in Article 18, a bridge undertaking may be established and authorised without complying with Directive 2009/138/EC for a short period of time at the beginning of its operation. To that end, the resolution authority shall submit a request in that sense to the supervisory authority. Where the supervisory authority decides to grant such an authorisation, it shall indicate the period for which the bridge undertaking is waived from complying with the requirements of Directive 2009/138/EC.

2. Subject to any restrictions imposed by Union or national competition rules, the management of the bridge undertaking shall operate the bridge undertaking to achieve the resolution objectives referred to in Article 18 and to sell the undertaking under resolution and its assets, rights or liabilities to one or more private sector purchasers as soon as market conditions are appropriate.

3. Resolution authorities shall decide that an entity is no longer a bridge undertaking in any of the following situations, whichever occurs first:

(a)the bridge undertaking merges with another entity;

(b)the bridge undertaking ceases to meet the requirements of Article 32(2);

(c)all or substantially all of the bridge undertaking’s assets, rights or liabilities are sold to a third party purchaser;

(d)the bridge undertaking’s assets are completely wound down and its liabilities are completely discharged.

4. Where the operations of a bridge undertaking are terminated in the situation referred to in paragraph 3, point (c), the bridge undertaking shall be wound up under normal insolvency proceedings.

Subject to Article 26(7), any proceeds generated as a result of the termination of the operation of the bridge undertaking shall benefit the shareholders of the bridge undertaking.

Section 4
The write-down or conversion tool

Article 34 - Objective and scope of the write-down or conversion tool

1. Member States shall ensure that resolution authorities may apply the write-down or conversion tool to meet the resolution objectives referred to in Article 18 for any of the following purposes:

(a)to recapitalise an insurance or reinsurance undertaking or an entity as referred to in Article 1(1), points (b) to (e), that meets the conditions for resolution referred to in Articles 19(1) and 20(3) to the extent sufficient to apply the solvent run-off tool referred to in Article 27 and to maintain its authorisation under Directive 2009/138/EC;

(b)to convert to equity or reduce the principal amount of claims, including insurance claims, or debt instruments that are transferred:

(i)to a bridge undertaking to provide capital for that bridge institution; or

(ii)under the asset and liability separation tool referred to in Article 30 or the sale of business tool referred to in Article 31.

When applying the write-down or conversion tool to insurance claims, resolution authorities may also restructure the terms of the related insurance contracts to achieve the resolution objectives referred to in Article 18 more effectively.

2. Member States shall ensure that resolution authorities determine the amount by which capital instruments, debt instruments and other eligible liabilities must be written down or converted for the purposes in paragraph 1 on the basis of the valuation carried out in accordance with Article 23.

3. Member States shall ensure that resolution authorities may apply the write-down or conversion tool to all liabilities of insurance or reinsurance undertakings or entities referred to in Article 1(1), points (b) to (e), maintaining their current legal form or considering a change of their legal form where necessary.

4. Member States shall ensure that the write-down or conversion tool may be applied to all capital instruments and all liabilities of an insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e), that are not excluded from the scope of that tool pursuant to paragraphs 5 or 6 of this Article.

5. Resolution authorities shall not apply the write-down or conversion tool in relation to the following liabilities whether they are governed by the law of a Member State or of a third country:

(a)secured liabilities;

(b)liabilities to credit institutions, investment firms and insurance or reinsurance undertakings, except for entities that are part of the same group, with an original maturity of less than seven days;

(c)liabilities with a remaining maturity of less than seven days, owed to either systems or operators of systems designated in accordance with Directive 98/26/EC or to their participants and arising from the participation in such a system, or to CCPs authorised in the Union pursuant to Article 14 of Regulation (EU) No 648/2012 of the European Parliament and of the Council 32 and third-country CCPs recognised by ESMA pursuant to Article 25 of that Regulation;

(d)a liability to any one of the following:

(i)an employee, in relation to accrued salary, pension benefits or other fixed remuneration, except for the variable component of remuneration that is not regulated by a collective bargaining agreement;

(ii)a commercial or trade creditor arising from the provision to the insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to (e), of goods or services that are critical to the daily functioning of its operations, including IT services, utilities and the rental, servicing and upkeep of premises;

(iii)tax and social security authorities, provided that those liabilities are preferred under the applicable law;

(iv)insurance guarantee schemes arising from contributions due in accordance with applicable national laws.

Point (a) of the first subparagraph shall not prevent resolution authorities, where appropriate, from applying the write-down or conversion tool to any part of a secured liability or a liability for which collateral has been pledged that exceeds the value of the assets, pledge, lien or collateral against which it is secured.

6. In exceptional circumstances, where the write-down or conversion tool is applied, resolution authorities may exclude or partially exclude certain liabilities from the application of the write-down or conversion tool in any of the following situations:

(a)it is not possible to write down or convert that liability within a reasonable time, notwithstanding the good faith efforts of the resolution authority;

(b)the exclusion is strictly necessary and is proportionate to achieve the continuity of critical functions and core business lines in a manner that maintains the ability of the undertaking under resolution to continue key operations, services and transactions;

(c)the exclusion is strictly necessary and proportionate to avoid giving rise to widespread contagion, in a manner that could cause a serious disturbance to the economy of a Member State or of the Union; or

(d)the application of the write-down or conversion tool to those liabilities would cause a destruction in value such that the losses borne by other creditors would be higher than if those liabilities were excluded from the application of the write-down or conversion tool.

Article 35 - Treatment of shareholders and holders of other instruments of ownership when applying the write-down or conversion tool

1. Member States shall ensure that, when applying the write-down or conversion tool referred to in Article 34, resolution authorities take, in respect of shareholders and holders of other instruments of ownership, one or both of the following actions:

(a)cancel existing shares or other instruments of ownership, or transfer them to creditors whose claims have been converted;

(b)provided that the valuation carried out under Article 23 shows that the undertaking under resolution has a positive net value, dilute existing shareholders and holders of other instruments of ownership by converting relevant capital instruments or debt instruments issued by the undertaking under resolution, or other eligible liabilities of the undertaking under resolution ,into shares or other instruments of ownership pursuant to the application of the write-down or conversion tool.

With regard to point (b) of the first subparagraph, the conversion shall be conducted at a rate of conversion that severely dilutes existing holdings of shares or other instruments of ownership.

2. When considering which of the actions referred to in paragraph 1 to take, resolution authorities shall have regard to:

(a)the valuation carried out in accordance with Article 23;

(b)the amount by which the resolution authority has assessed that Tier 1 items must be reduced and relevant capital instruments must be written down or converted pursuant to Article 37(1).

3. By way of derogation from Articles 57 to 62 of Directive 2009/138/EC, where the conversion of capital instruments, debt instruments issued by the undertaking under resolution, or other eligible liabilities of the undertaking under resolution, would result in the acquisition of or increase in a qualifying holding in an insurance or reinsurance undertaking as referred to in Article 57(1) of Directive 2009/138/EC, supervisory authorities shall carry out the assessment required under those Articles in a timely manner that does not delay the conversion of capital instruments, or prevent resolution action from achieving the relevant resolution objectives referred to in Article 18.

4. Where the supervisory authority of the that undertaking has not completed the assessment required under paragraph 3 on the date of the conversion of the capital instruments, Article 31(6) shall apply to any acquisition of or increase in a qualifying holding by an acquirer resulting from the conversion of capital instruments.

Article 36 - Rate of conversion of debt to equity

Member States shall ensure that, when resolution authorities exercise the tools specified in Article 34(1) and the powers specified in Article 40(1), point (g), they may apply a different conversion rate to different classes of capital instruments and liabilities in accordance with one or both of the following principles:

(a)the conversion rate represents appropriate compensation to the affected creditor for any loss incurred by virtue of the exercise of the write-down or conversion powers;

(b)the conversion rate applicable to liabilities that are considered to be senior under applicable insolvency law are higher than the conversion rate applicable to subordinated liabilities.

Article 37 - Additional provisions governing the write-down or conversion tool

1. Resolution authorities shall apply the write-down or conversion tool in accordance with the priority of claims applicable under normal insolvency proceedings, in a way that produces the following results:

(a)Tier 1 items are reduced first in proportion to the losses and to the extent of their capacity and the resolution authority takes one or both of the actions specified in Article 35(1) in respect of holders of Tier 1 instruments;

(b)the principal amount of Tier 2 instruments is written down or converted into Tier 1 instruments or both, to the extent required to achieve the resolution objectives referred to in Article 18 or to the extent of the capacity of the relevant capital instruments, whichever is lower;

(c)the principal amount of Tier 3 instruments is written down or converted into Tier 1 instruments or both, to the extent required to achieve the resolution objectives referred to in Article 18 or to the extent of the capacity of the relevant capital instruments, whichever is lower;

(d)the principal amount of, or outstanding amount payable in respect of, the rest of eligible liabilities in accordance with the hierarchy of claims in normal insolvency proceedings, including the ranking of insurance claims provided for in Article 275(1) of Directive 2009/138/EC, is written down or converted into Tier 1 instruments or both, to the extent required to achieve the resolution objectives referred to in Article 18.

Where the level of write-down based on the provisional valuation as referred to in Article 25 is found to exceed requirements when assessed against the definitive valuation as referred to in Article 24(2), a write-up mechanism may be applied to reimburse creditors and, subsequently, shareholders to the extent necessary.

When deciding on whether liabilities are to be written down or converted into equity, resolution authorities shall not convert one class of liabilities, while a class of liabilities that is subordinated to the class remains unconverted into equity or not written down.

Member States shall ensure that all claims resulting from own funds items have, in national laws governing normal insolvency proceedings, a lower priority ranking than any claim that does not result from an own funds item. For the purposes of this subparagraph, to the extent that an instrument is only partly recognised as an own funds item, the whole instrument shall be treated as a claim resulting from an own funds items and shall rank lower than any claim that does not result from an own funds item.

2. Where the principal amount of a relevant capital instrument or the principal amount of a debt instrument or other eligible liability is written down, the following shall apply:

(a)the reduction resulting from the application of the write-down or conversion tool shall be permanent, subject to any write up in accordance with the reimbursement mechanism referred to in paragraph 1;

(b)no liability to the holder of the relevant capital instrument, the debt instrument or other eligible liability shall remain under or in connection with that amount of the instrument, which has been written down, except for any liability already accrued, and any liability for damages that may arise as a result of an appeal challenging the legality of the exercise of the write-down power;

(c)no compensation shall be paid to any holder of the relevant capital instrument, the debt instrument or other eligible liability other than in accordance with paragraph 3.

3. In order to effect a conversion of the capital instruments, debt instruments or other eligible liabilities concerned in accordance with paragraph 1, points (b) and (c), resolution authorities may require insurance or reinsurance undertakings and entities referred to in Article 1(1), points (b) to (e), to issue Tier 1 instruments to the holders of the capital instruments, debt instruments or other eligible liabilities concerned.

The capital instruments, debt instruments or other eligible liabilities concerned may only be converted where all of the following conditions are met:

(a)the Tier 1 instruments are issued by the insurance or reinsurance undertaking, by the entity referred to Article 1(1), points (b) to (e), or by the parent undertaking with the agreement of the relevant resolution authority;

(b)the Tier 1 instruments are issued prior to any issuance of shares or other instruments of ownership by that insurance or reinsurance undertaking or that entity referred to in Article 1(1), points (b) to (e), for the purposes of provision of own funds by the State or a government entity;

(c)the Tier 1 instruments are awarded and transferred without delay following the exercise of the conversion power;

(d)the conversion rate that determines the number of Tier 1 instruments that are provided in respect of each relevant capital instrument, debt instrument or other eligible liability complies with Article 36.

4. For the purposes of the provision of Tier 1 instruments in accordance with paragraph 3, the resolution authority may require insurance or reinsurance undertakings and entities referred to in Article 1(1), points (b) to (e), to maintain at all times the necessary prior authorisation to issue the relevant number of Tier 1 instruments.

Article 38 - Effect of write-down or conversion

1. Member States shall ensure that, where a resolution authority applies the write-down or conversion tool and powers in accordance with Article 34(1) and Article 40(1), points (f) to (j), the reduction of principal or outstanding amount due, conversion or cancellation takes effect and is immediately binding on the undertaking under resolution and affected creditors and shareholders.

2. The resolution authority shall complete or require the completion of all the administrative and procedural tasks necessary to give effect to the application of the write-down or conversion tool, including:

(a)the amendment of all registers concerned;

(b)the delisting, or removal from trading of shares or other instruments of ownership or debt instruments;

(c)the listing, or admission to trading of new shares or other instruments of ownership;

(d)the relisting or readmission of any debt instruments which have been written down, without having to issue a prospectus as required by Regulation (EU) 2017/1129 of the European Parliament and of the Council 33 .

3. Where a resolution authority reduces to zero the principal amount of, or outstanding amount payable in respect of, a liability by means of the power referred to Article 40(1), point (f), that liability and any obligations or claims arising in relation to it that are not accrued at the time when the power is exercised shall be treated as discharged for all purposes, and shall not be provable in any subsequent proceedings in relation to the undertaking under resolution or any successor entity in any subsequent winding up.

4. Where a resolution authority reduces in part, but not in full, the principal amount of, or outstanding amount payable in respect of, a liability by means of the power referred to in Article 40(1), point (f):

(a)the liability shall be discharged to the extent of the amount reduced;

(b)the instrument concerned or the agreement that created the original liability shall continue to apply in relation to the residual principal amount of, or outstanding amount payable in respect of the liability, subject to any modification of the amount of interest payable to reflect the reduction of the principal amount, and any further modification of the terms that the resolution authority might make by means of the power referred to in Article 40(1), point (k).

Article 39 - Removal of procedural obstacles for write-down or conversion

1. Where the write-down or conversion tool is applied, Member States shall, where applicable, require the insurance and reinsurance undertakings and entities referred to in Article 1(1), points (b) to (e), to maintain at all times a sufficient amount of authorised share capital or of other Tier 1 instruments to ensure that those undertakings and entities are not prevented from issuing sufficient new shares or other instruments of ownership to ensure that the conversion of liabilities into shares or other instruments of ownership can be carried out effectively.

Resolution authorities shall assess compliance with the requirement laid down in paragraph 1 in the context of the development and maintenance of the resolution plans in accordance with Article 9 and Article 10.

2. Member States shall ensure that there are no procedural impediments to the conversion of liabilities to shares or other instruments of ownership that exist by virtue of their instruments of incorporation or statutes, including pre-emption rights for shareholders or requirements for the consent of shareholders to an increase in capital.

CHAPTER IV
Resolution powers

Article 40 - General powers

1. Member States shall ensure that resolution authorities have all the powers necessary to apply the resolution tools referred to in Article 26(3) to insurance and reinsurance undertakings and to entities referred to in Article 1(1), points (b) to (e), that meet the conditions for resolution laid down in Articles 19(1) or 20(3), as applicable. In particular, resolution authorities shall have the following resolution powers, which they may exercise individually or in any combination:

(a)the power to require any person to provide any information required for the resolution authority to decide upon and prepare a resolution action, including updates and supplements of information provided in the resolution plans and including information to be provided through on-site inspections;

(b)the power to take control of an undertaking under resolution and exercise all the rights and powers conferred upon the shareholders, other owners and the administrative, management or supervisory body of the undertaking under resolution;

(c)the power to withdraw the authorisation to write new insurance or reinsurance contracts and to place an undertaking under resolution into an orderly solvent run-off procedure and terminate its activities;

(d)the power to transfer shares or other instruments of ownership issued by an undertaking under resolution;

(e)the power to transfer to another entity, with the consent of that entity, rights, assets or liabilities of an undertaking under resolution;

(f)the power to restructure insurance claims or reduce, including to reduce to zero, the principal amount of or outstanding amount due in respect of debt instruments and eligible liabilities, including insurance claims, of an undertaking under resolution;

(g)with the exception of insurance claims, the power to convert debt instruments and eligible liabilities of an undertaking under resolution into ordinary shares or other instruments of ownership of that undertaking or entity referred to in Article 1(1), points (b) to (e), of a relevant parent undertaking or of a bridge undertaking to which assets, rights or liabilities of the insurance or reinsurance undertaking or the entity referred to in Article 1(1), points (b) to (e), are transferred;

(h)the power to cancel debt instruments issued by an undertaking under resolution, except for secured liabilities subject to Article 34(5);

(i)the power to reduce, including to reduce to zero, the nominal amount of shares or other instruments of ownership of an undertaking under resolution and to cancel such shares or other instruments of ownership;

(j)the power to require an undertaking under resolution or a relevant parent undertaking to issue new shares or other instruments of ownership or other capital instruments, including preference shares and contingent convertible instruments;

(k)the power to amend or alter the maturity of debt instruments and other eligible liabilities issued by an undertaking under resolution or amend the amount of interest payable under such instruments and other eligible liabilities, or the date on which the interest becomes payable, including by suspending payment for a temporary period;

(l)the power to close out and terminate financial contracts, or derivatives as defined in Article 2 point (5), of Regulation (EU) No 648/2012 of the European Parliament and of the Council;

(m)the power to remove or replace the administrative, management or supervisory body and senior management of an undertaking under resolution;

(n)the power to require the supervisory authority to assess the buyer of a qualifying holding in a timely manner by way of derogation from the time-limits laid down in Article 58 of Directive 2009/138/EC.

2. Member States shall take all necessary measures to ensure that, when applying the resolution tools referred to in Article 26(3) and exercising the resolution powers referred to in paragraph 1 of this Article, resolution authorities are not subject to any of the following requirements that would otherwise apply by virtue of national law or contract or otherwise:

(a)subject to Article 3(8) and Article 65(1), requirements to obtain approval or consent from any person either public or private, including the shareholders, the creditors or the policy holders of the undertaking under resolution;

(b)prior to the exercise of the power, procedural requirements to notify any person, including any requirement to publish any notice or prospectus or to file or register any document with any other authority.

Point (b) of the first subparagraph is without prejudice to the requirements laid down in Articles 61 and 63 and any notification requirements under the Union State aid framework.

3. Member States shall ensure that, to the extent that any of the powers listed in paragraph 1 of this Article are not applicable to an entity within the scope of Article 1(1) of this Directive as a result of its specific legal form, resolution authorities shall have powers which are as similar as possible, including in terms of their effects.

4. Member States shall ensure that, when resolution authorities exercise the powers laid down in paragraph 3, the safeguards provided for in Chapter V of this Directive, or safeguards that deliver the same effect, shall be applied to the persons affected, including shareholders, creditors, policy holders and counterparties.

Article 41 - Ancillary powers

1. Member States shall ensure that resolution authorities, when exercising a resolution power, have the power to do all of the following:

(a)subject to Article 58, provide for a transfer to take effect, free from any liability or encumbrance affecting the financial instruments, rights, assets or liabilities transferred;;

(b)remove rights to acquire any additional shares or other instruments of ownership;

(c)require the authority concerned to discontinue or suspend the admission to trading on a regulated market or the official listing of financial instruments pursuant to Directive 2001/34/EC of the European Parliament and of the Council 34 ;

(d)provide for the recipient to be treated as if that recipient were the undertaking under resolution for the purposes of any rights or obligations of, or actions taken by, the undertaking under resolution, including, subject to the application of the sale of business tool and the bridge undertaking tool referred to in Articles 31 and 32, any rights or obligations relating to participation in a market infrastructure;

(e)require the undertaking under resolution or the recipient to provide each other with information and assistance;

(f)cancel or modify the terms of a contract to which the undertaking under resolution is a party, or substitute a recipient as a party;

(g)transfer any reinsurance rights covering transferred insurance claims without the consent of the reinsurance undertaking where the resolution authority transfers assets and liabilities of the undertaking under resolution in whole or in part to another entity.

For the purposes of point (a), any right of compensation provided in accordance with this Directive shall not be considered to be a liability or an encumbrance.

2. Resolution authorities shall exercise the powers specified in paragraph 1 where they consider such exercise to be appropriate to ensure that a resolution action is effective or to achieve one or more resolution objectives.

3. Member States shall ensure that resolution authorities exercising a resolution power have the power to provide for continuity arrangements necessary to ensure that the resolution action is effective and, where relevant, to ensure that the business transferred may be operated by the recipient. Such continuity arrangements shall include, in particular:

(a)the continuity of contracts entered into by the undertaking under resolution, so that the recipient assumes the rights and liabilities of the undertaking under resolution relating to any financial instrument, right, asset or liability that has been transferred and is substituted for the undertaking under resolution, expressly or implicitly in all relevant contractual documents;

(b)the substitution of the recipient for the undertaking under resolution in any legal proceedings relating to any financial instrument, right, asset or liability that has been transferred.

4. The powers referred to in paragraph 1, point (d), and paragraph 3, point (b), shall not affect the following:

(a)the right of an employee of the undertaking under resolution to terminate a contract of employment;

(b)subject to Articles 47, 48 and 49, any right of a party to a contract to exercise rights under the contract, including the right to terminate, where entitled to do so in accordance with the terms of the contract by virtue of an act or omission by the undertaking under resolution prior to the relevant transfer, or by the recipient after the completion of the transfer concerned.

Article 42 - Special management

1. Member States shall ensure that resolution authorities may appoint a special manager to replace the administrative, management or supervisory body of the undertaking under resolution. Member States shall further ensure that the special manager has the qualifications, ability and knowledge to carry out his or her functions.

2. The special manager shall have all the powers of the shareholders and of the administrative, management or supervisory body of the insurance or reinsurance undertaking. The special manager shall only exercise those powers under the control of the resolution authority. The resolution authority may limit the actions of the special manager or require prior consent for certain acts.

The resolution authority shall make public the appointment referred to in paragraph 1 and the terms and conditions attached to that appointment.

3. The special manager shall have the statutory duty to take all the measures necessary to promote the resolution objectives referred to in Article 18 and implement resolution actions taken by the resolution authority. In the event of inconsistency or conflict with any other duty of management laid down in the statutes of the undertaking or in national law, that statutory duty shall override such other duty.

4. Member States shall require that the special manager shall draw up reports for the appointing resolution authority that appointed them at regular intervals set by the resolution authority and at the beginning and the end of their mandate. Those reports shall describe in detail the financial situation of the undertaking under resolution and state the reasons for the measures taken.

5. The resolution authority may remove the special manager at any time.

Article 43 - Power to require the provision of operational services and facilities

1. Member States shall ensure that resolution authorities have the power to require an undertaking under resolution, or any of its group entities, to provide any operational services or facilities that are necessary to enable a recipient to operate effectively the business transferred to it effectively, including where the undertaking under resolution or relevant group entity has entered into normal insolvency proceedings.

2. Member States shall ensure that their resolution authorities have powers to enforce obligations imposed, pursuant to paragraph 1, on group entities established in their territory by resolution authorities established in other Member States.

3. The operational services and facilities provided in accordance with paragraphs 1 and 2 shall be on the following terms:

(a)where the operational services and facilities were provided to the undertaking under resolution under an agreement before resolution action was taken and for the duration of that agreement, on the same terms;

(b)where there is no agreement or where the agreement has expired, on reasonable terms.

Article 44 - Power to enforce crisis management measures by other Member States

1. Member States shall ensure that, where a transfer of shares, other instruments of ownership, or assets, rights or liabilities includes assets that are located in a Member State other than the State of the resolution authority, or includes rights or liabilities under the law of a Member State other than the State of the resolution authority, the transfer has effect in or under the law of that other Member State.

2. Member States shall provide the resolution authority that has made, or intends to make, the transfer, with all reasonable assistance to ensure that the shares or other instruments of ownership or assets, rights or liabilities are transferred to the recipient in accordance with any applicable requirements of national law.

3. Member States shall ensure that shareholders, creditors and third parties that are affected by a transfer of shares, other instruments of ownership, assets, rights or liabilities as referred to in paragraph 1, are not entitled to prevent, challenge, or set aside the transfer under any provision of law of the Member State where the assets are located or of the law governing the shares, other instruments of ownership, rights or liabilities.

4. Member States shall ensure that the principal amount of capital instruments, debt instruments or other eligible liabilities is reduced, or that such liabilities or instruments are converted, in accordance with the exercise of write-down or conversion powers by a resolution authority of another Member State to an undertaking under resolution, where the relevant liabilities or instruments:

(a)are governed by the law of the Member State other than the Member State of the resolution authority that exercised the write-down or conversion powers;

(b)are owed to creditors located in the Member State other than the Member State of the resolution authority that exercised the write-down or conversion powers.

5. Member States shall ensure that creditors that are affected by the exercise of write-down or conversion powers referred to in paragraph 4 are not entitled to challenge the reduction of the principal amount of the instrument or liability or its conversion, as the case may be, under any provision of law of the Member State other than the Member State of the resolution authority that exercised the write-down or conversion powers.

6. Each Member State shall ensure that all of the following is determined in accordance with the law of the Member State of the resolution authority:

(a)the right for shareholders, creditors and third parties to challenge, by way of appeal as laid down in Article 65, a transfer of shares, other instruments of ownership, assets, rights or liabilities referred to in paragraph 1 of this Article;

(b)the right for creditors to challenge, by way of appeal as laid down in Article 65, the reduction of the principal amount, or the conversion, of an instrument or liability covered by paragraph 4 points (a) or (b), of this Article;

(c)the safeguards for partial transfers, as referred to in Chapter V, in relation to the assets, rights or liabilities referred to in paragraph 1.

Article 45 - Power in respect of assets, rights, liabilities, shares and other instruments of ownership located in or governed by the law of third countries

1. Member States shall provide that, in cases in which resolution action involves action taken in respect of assets located in a third country or shares, other instruments of ownership, rights or liabilities governed by the law of a third country, resolution authorities may require that:

(a)the person exercising control over the undertaking under resolution and the recipient take all steps necessary to ensure that the resolution action becomes effective;

(b)the person exercising control over the undertaking under resolution hold the shares, other instruments of ownership, assets or rights or discharge the liabilities on behalf of the recipient until the resolution action becomes effective;

(c)the reasonable expenses of the recipient properly incurred in carrying out any action required under points (a) and (b) are met in any of the ways referred to in Article 26(5).

2. In order to facilitate potential action pursuant to paragraph 1 of this Article, Member States shall require insurance or reinsurance undertakings and entities referred to in Article 1(1), points (b) to (e), to include into the related agreements contractual terms by which shareholders, creditors or parties to the agreement creating the liability recognise that the liability may be subject to write-down or conversion powers and agree to be bound by any reduction of the principal or outstanding amount due, conversion or cancellation that is effected by the exercise of those powers by a resolution authority.

Member States shall ensure that resolution authorities may require insurance or reinsurance undertakings and entities as referred to in Article 1(1), points (b) to (e), to provide those resolution authorities with a reasoned legal opinion by an independent legal expert confirming the legal enforceability and effectiveness of such contractual terms.

3. Where a resolution authority assesses that, in spite of all the necessary steps taken by the person exercising control over the undertaking under resolution in accordance with paragraph 1, point (a), it is highly unlikely that the resolution action will become effective in relation to certain assets located in a third country or certain shares, other instruments of ownership, rights or liabilities governed by the law of a third country, the resolution authority shall not proceed with the resolution action. Where the resolution authority has already ordered the resolution action, that order shall be void in relation to the assets, shares, instruments of ownership, rights or liabilities concerned.

Article 46 - Exclusion of certain contractual terms

1. A crisis prevention measure or a crisis management measure taken in relation to an entity, including the occurrence of any event directly linked to the application of such a measure, shall not, per se, under a contract entered into by the entity concerned, be deemed to be an enforcement event within the meaning of Directive 2002/47/EC or insolvency proceedings within the meaning of Directive 98/26/EC, provided that the substantive obligations under that contract, including payment and delivery obligations and the provision of collateral, continue to be performed.

In addition, a crisis prevention measure or a crisis management measure shall not, per se, be deemed to be an enforcement event within the meaning of Directive 2002/47/EC or insolvency proceedings within the meaning of Directive 98/26/EC under a contract entered into by:

(a)a subsidiary, where the parent undertaking or any group entity guarantees or otherwise supports the obligations under that contract; or

(b)any entity of a group, where the contract contains cross-default provisions.

2. Where third country resolution proceedings are recognised pursuant to Article 73, or, in the absence of such recognition, where a resolution authority so decides, third country resolution proceedings shall for the purposes of this Article constitute a crisis management measure.

3. Provided that the substantive obligations under the contract, including payment and delivery obligations, and provision of collateral, continue to be performed, a crisis prevention measure, or a crisis management measure, including any event directly linked to the application of such a measure, shall not, per se, make it possible for anyone to:

(a)exercise any termination, suspension, modification, netting or set-off rights, including in relation to a contract entered into by:

(i)a subsidiary, where the obligations under the contract are guaranteed or otherwise supported by a group entity;

(ii)any group entity, where the contract contains cross-default provisions;

(b)obtain possession, exercise control or enforce any security over any property of the insurance or reinsurance undertaking or the entity referred to in Article 1(1), points (b) to (e), concerned or any group entity in relation to a contract which contains cross-default provisions;

(c)affect any contractual rights of the insurance or reinsurance undertaking or the entity referred to in Article 1(1), points (b) to (e), concerned or any group entity in relation to a contract which contains cross-default provisions.

4. Paragraphs 1, 2 and 3 shall not affect the right of a person to take an action as referred to in paragraph 3, points (a), (b) or (c) where that right arises by virtue of an event other than the crisis prevention measure, the crisis management measure, or by virtue of any event directly linked to the application of such a measure.

5. A suspension or restriction under Articles 47 or 48 shall not constitute non-performance of a contractual obligation for the purposes of paragraphs 1 and 3 of this Article and of Article 49(1).

6. The provisions contained in this Article shall be considered to be overriding mandatory provisions within the meaning of Article 9 of Regulation (EC) No 593/2008 of the European Parliament and of the Council 35 .

Article 47 - Power to suspend certain obligations

1. Member States shall ensure that resolution authorities have the power to suspend any payment or delivery obligations pursuant to any contract to which an undertaking under resolution is a party from the publication of a notice of the suspension in accordance with Article 63(3) until midnight in the Member State of the resolution authority of the undertaking under resolution at the end of the business day following that publication.

2. A payment or delivery obligation that would have been due during the suspension period referred to in paragraph 1 shall be due immediately upon expiry of the suspension period.

3. Where an undertaking under resolution’s payment or delivery obligations under a contract are suspended in accordance with paragraph 1, the payment or delivery obligations of the undertaking under resolution’s counterparties under that contract shall be suspended for the same period of time.

4. Any suspension under paragraph 1 shall not apply to payment and delivery obligations owed to the following:

(a)systems and operators of systems designated in accordance with Directive 98/26/EC;

(b)CCPs authorised in the Union pursuant to Article 14 of Regulation (EU) No 648/2012 and third-country CCPs recognised by ESMA pursuant to Article 25 of that Regulation.

5. When exercising a power under this Article, resolution authorities shall have regard to the impact the exercise of that power might have.

The resolution authorities shall set the scope of that power having regard to the circumstances of each case.

Article 48 - Power to restrict the enforcement of security interests

1. Member States shall ensure that resolution authorities have the power to restrict secured creditors of an undertaking under resolution from enforcing security interests in relation to any assets of that undertaking from the publication of a notice of the restriction in accordance with Article 63(3) until midnight in the Member State of the resolution authority of the undertaking under resolution at the end of the business day following that publication.

2. Any restriction under paragraph 1 shall not apply to:

(a)security interest of systems or operators of systems designated for the purposes of Directive 98/26/EC;

(b)CCPs authorised in the Union pursuant to Article 14 of Regulation (EU) No 648/2012 and third-country central counterparties recognised by ESMA pursuant to Article 25 of that Regulation.

3. Where Article 60 applies, resolution authorities shall ensure that any restrictions imposed pursuant to the power referred to in paragraph 1 of this Article are consistent for all group entities in relation to which a resolution action is taken.

Article 49 - Power to temporarily suspend termination rights

1. Member States shall ensure that resolution authorities have the power to suspend the termination rights of any party to a contract with an undertaking under resolution from the publication of the notice in accordance with Article 63(3) until midnight in the Member State of the resolution authority of the undertaking under resolution at the end of the business day following that publication, provided that the payment and delivery obligations and the provision of collateral continue to be performed.

2. Member States shall ensure that resolution authorities have the power to suspend the termination rights of any party to a contract with a subsidiary of an undertaking under resolution where any of the following applies:

(a)the obligations under that contract are guaranteed or are otherwise supported by the undertaking under resolution;

(b)the termination rights under that contract are based solely on the insolvency or financial condition of the undertaking under resolution;

(c)in the case of a transfer power that has been or may be exercised in relation to the undertaking under resolution, either:

(i)all the assets and liabilities of the subsidiary relating to that contract have been or may be transferred to and assumed by the recipient; or

(ii)the resolution authority provides in any other way adequate protection for such obligations.

The suspension of the termination rights shall take effect from the publication of the notice in accordance with Article 63(3) until midnight in the Member State where the subsidiary of the undertaking under resolution is established on the business day following that publication.

3. Any suspension under paragraph 1 or 2 shall not apply to:

(a)systems or operators of systems designated for the purposes of Directive 98/26/EC; or

(b)CCPs authorised in the Union pursuant to Article 14 of Regulation (EU) No 648/2012 and third-country central counterparties recognised by ESMA pursuant to Article 25 of that Regulation.

4. A person may exercise a termination right under a contract before the end of the period referred to in paragraph 1 or 2 where that person receives notice from the resolution authority that the rights and liabilities covered by the contract shall not be:

(a)transferred to another entity; or

(b)subject to write-down or conversion in accordance with Article 34(1), point (a).

5. Where a resolution authority exercises the power specified in paragraph 1 or 2 of this Article to suspend termination rights, and where no notice has been given pursuant to paragraph 4 of this Article, those termination rights may be exercised on the expiry of the period of suspension, subject to Article 46, as follows:

(a)where the rights and liabilities covered by the contract have been transferred to another entity, a counterparty may exercise those termination rights in accordance with the terms of that contract only on the occurrence of any continuing or subsequent enforcement event by the recipient;

(b)where the rights and liabilities covered by the contract remain with the undertaking under resolution and the resolution authority has not applied the write-down or conversion tool to that contract for the purpose laid down in Article 34(1), point (a) , a counterparty may exercise those termination rights in accordance with the terms of that contract on the expiry of a suspension referred to in paragraph 1 of this Article.

Article 50 - Contractual recognition of resolution stay powers

1. Member States shall require insurance and reinsurance undertakings and entities referred to in Article 1(1), points (b) to (e), to include in any financial contract which they enter into and which is governed by third-country law, terms by which the parties recognise that the financial contract may be subject to the exercise of powers by the resolution authority to suspend or restrict rights and obligations under Articles 47, 48, and 49, and recognise that they are bound by the requirements of Article 46.

2. Member States may also require that ultimate parent undertakings ensure that their third-country subsidiaries which are insurance and reinsurance undertakings or entities referred to in Article 1(1) points (b) to (e), include, in the financial contracts referred to in paragraph 1, terms to exclude that the exercise of the power of the resolution authority to suspend or restrict rights and obligations of the ultimate parent undertaking, in accordance with paragraph 1, constitutes a valid ground for early termination, suspension, modification, netting, exercise of set-off rights or enforcement of security interests on those contracts.

3. Paragraph 1 shall apply to any financial contract which:

(a)creates a new obligation, or materially amends an existing obligation after the entry into force of the provisions adopted at national level to transpose this Article;

(b)provides for the exercise of one or more termination rights or rights to enforce security interests to which Article 46, 47, 48 or 49 would apply if the financial contract were governed by the laws of a Member State.

4. The fact that an insurance or reinsurance undertaking or an entity as referred to in Article 1(1), points (b) to (e), does not include in its financial contracts the contractual terms referred to in paragraph 1 of this Article shall not prevent the resolution authority from applying the powers referred to in Articles 46, 47, 48 or 49 in relation to that financial contract.

5. EIOPA shall develop draft regulatory technical standards to specify the contents of the contractual term referred to in paragraph 1, taking into account the different business models of insurance and reinsurance undertakings and entities.

EIOPA shall submit those draft regulatory technical standards to the Commission by [PO – add 18 months after entry into force].

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

Article 51 - Power to temporarily suspend redemption rights

1. Member States shall ensure that resolution authorities have the power to temporarily restrict or suspend redemption rights of policy holders in relation to life insurance contracts written by the undertaking under resolution, provided that the substantive obligations under the contracts, and in particular payment obligations for the benefit of policy holders, beneficiaries or injured parties, continue to be performed.

2. The power referred to in paragraph 1 shall only be used as long as necessary to facilitate the application of one or more of the resolution tools referred to in Article 26(3). That power shall be valid for the period of time specified in the notice of suspension published in accordance with Article 63(3).

Article 52 - Exercise of the resolution powers

1. Member States shall ensure that resolution authorities are able to exercise control over the undertaking under resolution, so as to:

(a)operate and conduct the activities and services of the undertaking under resolution with all the powers of its shareholders and administrative, management or supervisory body;

(b)manage and dispose of the assets and property of the undertaking under resolution.

The control referred to in the first subparagraph may be exercised directly by the resolution authority or indirectly by a person or persons appointed by the resolution authority. Member States shall ensure that voting rights conferred by shares or other instruments of ownership of the undertaking under resolution cannot be exercised during the period of resolution.

2. Member States shall ensure that resolution authorities, subject to the right of appeal referred to in Article 65(1), are able to take a resolution action through executive order in accordance with national administrative competences and procedures, without exercising control over the undertaking under resolution.

3. Resolution authorities shall decide in each particular case whether it is appropriate to carry out the resolution action through the means specified in paragraph 1 or in paragraph 2, having regard to the resolution objectives referred to in Article 18 and the general principles governing resolution referred to in Article 22, the specific circumstances of the undertaking under resolution in question and the need to facilitate the effective resolution of cross-border groups.

4. Resolution authorities shall not be deemed to be shadow directors or de facto directors under national law.

CHAPTER V
Safeguards

Article 53 - Treatment of shareholders and creditors in the case of partial transfers and application of the write-down or conversion tool

1. Member States shall ensure that, where one or more resolution tools as referred to in Article 26(3) have been applied, except in a situation described in the second subparagraph, and where resolution authorities transfer only parts of the rights, assets and liabilities of the undertaking under resolution, the shareholders and the creditors whose claims have not been transferred, receive in satisfaction of their claims at least as much as what they would have received if the undertaking under resolution had been wound up under normal insolvency proceedings at the time when the decision referred to in Article 62 was taken.

2. Member States shall ensure that, where one or more resolution tools as referred to in Article 26(3) have been applied and where resolution authorities apply the write-down or conversion tool, the shareholders and creditors whose claims have been written down or converted to equity do not incur greater losses than they would have incurred if the undertaking under resolution had been wound up under normal insolvency proceedings immediately at the time when the decision referred to in Article 62 was taken.

Article 54 - Valuation of difference in treatment

1. For the purposes of assessing whether shareholders and creditors would have received better treatment if the undertaking under resolution had entered into normal insolvency proceedings, Member States shall ensure that an independent person caries out a valuation as soon as possible after the resolution action or actions have been effected. That valuation shall be distinct from the valuation carried out under Article 23.

2. The valuation in paragraph 1 shall determine:

(a)the treatment that shareholders and creditors, or the relevant insurance guarantee schemes, would have received if the undertaking under resolution with respect to which the resolution action or actions have been effected had entered normal insolvency proceedings at the time when the decision referred to in Article 62 was taken;

(b)the actual treatment that shareholders and creditors have received, in the resolution of the undertaking under resolution;

(c)whether there is any difference between the treatment referred to in point (a) and the treatment referred to in point (b).

3. The valuation shall:

(a)assume that the undertaking under resolution with respect to which the resolution action or actions have been effected, would have entered normal insolvency proceedings at the time when the decision referred to in Article 62 was taken;

(b)assume that the resolution action or actions had not been effected;

(c)disregard any provision of extraordinary public financial support to the undertaking under resolution.

4. EIOPA shall develop draft regulatory technical standards specifying the methodology for carrying out the valuation in this Article, in particular the methodology for assessing the treatment that shareholders and creditors would have received if the undertaking under resolution had entered insolvency proceedings at the time when the decision referred to in Article 62 was taken.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

Article 55 - Safeguard for shareholders and creditors

Member States shall ensure that where the valuation carried out under Article 54 determines that any shareholder or creditor referred to in Article 53, or, where relevant, the insurance guarantee scheme in accordance with the applicable national law, has incurred greater losses than it would have incurred in a winding up under normal insolvency proceedings, it is entitled to payment of the difference.

Article 56 - Safeguard for counterparties in partial transfers

1. Member States shall ensure appropriate protection of the following arrangements and of the counterparties to the following arrangements:

(a)security arrangements, under which a person has by way of security an actual or contingent interest in the assets or rights that are subject to transfer, irrespective of whether that interest is secured by specific assets or rights or by way of a floating charge or similar arrangement;

(b)title transfer financial collateral arrangements, under which collateral to secure or cover the performance of specified obligations is provided by a transfer of full ownership of assets from the collateral provider to the collateral taker, on terms providing for the collateral taker to transfer assets where those specified obligations are performed;

(c)set-off arrangements, under which two or more claims or obligations owed between the undertaking under resolution and a counterparty can be set off against each other;

(d)netting arrangements;

(e)unit-linked policies or other ring-fenced portfolios;

(f)reinsurance agreements;

(g)structured finance arrangements, including securitisations and instruments used for hedging purposes which form an integral part of the cover pool and which according to national law are secured, and involve the granting and holding of security by a party to the arrangement or a trustee, agent or nominee.

The form of protection that is appropriate, for the classes of arrangements specified in points (a) to (g) of this paragraph and shall be chosen in accordance with Articles 57 to 60.

2. Member States shall ensure that the protections specified in paragraph 1 apply in the following circumstances:

(a)a resolution authority transfers some but not all of the assets, rights or liabilities of an undertaking under resolution to another entity or, in the exercise of a resolution tool as referred to in Article 26(3), from a bridge undertaking or asset and liability management vehicle to another person;

(b)a resolution authority exercises the powers specified in Article 41(1), point (f).

3. The requirement under paragraph 1 shall apply irrespective of the number of parties involved in the arrangements and of whether the arrangements:

(a)are created by contract, trusts or other means, or arise automatically by operation of law;

(b)arise under or are governed in whole or in part by the law of another Member State or of a third country.

Article 57 - Protection for financial collateral, set off and netting agreements, and reinsurance agreements

1. Member States shall ensure that there is appropriate protection for title transfer financial collateral arrangements, set-off and netting arrangements, and reinsurance agreements so as to prevent the transfer of some, but not all, of the rights and liabilities that are protected under a title transfer financial collateral arrangement, a set-off arrangement, a netting arrangement or a reinsurance agreement between the undertaking under resolution and another person and the modification or termination of rights and liabilities that are protected under such a title transfer financial collateral arrangement, a set-off arrangement, a netting arrangement or a reinsurance agreement through the use of ancillary powers.

For the purposes of the first subparagraph, rights and liabilities are to be treated as protected under a title transfer financial collateral arrangement, a set-off and netting arrangement and a reinsurance agreement where the parties to the arrangement or arrangement are entitled to set-off or net those rights and liabilities.

2. Notwithstanding paragraph 1, where necessary to better achieve the resolution objectives referred to in Article 18 and in particular to ensure a better protection of policy holders, resolution authorities may transfer, modify or terminate assets, rights or liabilities that are part of a title transfer financial collateral arrangement, a set-off and netting arrangement, or a reinsurance agreement.

Article 58 - Protection for security arrangements

1. Member States shall ensure that there is appropriate protection for liabilities secured under a security arrangement to prevent one or more of the following:

(a)the transfer of assets against which the liability is secured, unless that liability and benefit of the security are also transferred;

(b)the transfer of a secured liability, unless the benefit of the security are also transferred;

(c)the transfer of the benefit of the security, unless the secured liability is also transferred;

(d)the modification or termination of a security arrangement through the use of ancillary powers, where the effect of that modification or termination would be that the liability ceases to be secured.

2. Notwithstanding paragraph 1, where necessary in order to better achieve the resolution objectives referred to in Article 18 and in particular ensure a better protection of policy holders, resolution authority may transfer, modify or terminate assets, rights or liabilities that are part of the same arrangement.

Article 59 - Protection for structured finance arrangements and other ring-fenced portfolios

1. Member States shall ensure that there is appropriate protection for structured finance arrangements or other ring-fenced portfolios, including arrangements referred to in Article 56(1), points (e) and (g), to prevent either of the following:

(a)the transfer of some, but not all, of the assets, rights and liabilities which constitute or form part of a structured finance arrangement or other ring-fenced portfolios, including the arrangements referred to in Article 56(1), points (e) and (g), to which the undertaking under resolution is a party;

(b)the termination or modification through the use of ancillary powers of the assets, rights and liabilities which constitute or form part of a structured finance arrangement or other ring-fenced portfolios, including arrangements referred to in Article 56(1), points (e) and (g), to which the undertaking under resolution is a party.

2. Notwithstanding paragraph 1, where necessary to better achieve the resolution objectives referred to in Article 18 and in particular to ensure a better protection of policy holders, resolution authorities may transfer, modify or terminate assets, rights or liabilities that are part of the same arrangement.

Article 60

Partial transfers: protection of trading, clearing and settlement systems

1. Member States shall ensure that the application of a resolution tool as referred to in Article 26(3) does not affect the operation of systems and rules of systems covered by Directive 98/26/EC, where the resolution authority does either of the following:

(a)transfers some, but not all of the assets, rights or liabilities of an undertaking under resolution to another entity;

(b)uses the ancillary powers referred to in Article 41 to cancel or amend the terms of a contract to which the undertaking under resolution is a party or to substitute a recipient as a party.

2. A transfer, cancellation or amendment as referred to in paragraph 1 of this Article shall not:

(a)revoke a transfer order in contravention of Article 5 of Directive 98/26/EC;

(b)modify or negate the enforceability of transfer orders and netting as required by Articles 3 and 5 of Directive 98/26/EC, the use of funds, securities or credit facilities as required by Article 4 of that Directive or the protection of collateral security as required by Article 9 of that Directive.

CHAPTER VI
Procedural obligations

Article 61 - Notification requirements

1. Member States shall require the administrative, management or supervisory body of an insurance or reinsurance undertaking or any entity as referred to in Article 1(1), points (b) to (e), to notify the supervisory authority where those bodies consider that the insurance or reinsurance undertaking or the entity referred to in Article 1(1), points (b) to (e), is failing or likely to fail, within the meaning specified in Article 19(3).

2. Supervisory authorities shall inform the resolution authorities concerned of:

(a)any notifications received under paragraph 1 of this Article, under Articles 136, 138(1) and 139(1) of Directive 2009/138/EC;

(b)any actions the supervisory authority requires the insurance or reinsurance undertaking or any entity referred to in Article 1(1), points (b) to (e), to take pursuant to the exercise of the powers it has under Article 15 or 16 of this Directive, and under Article 137, Article 138, paragraphs 3 and 5, Article 139(3), and Articles 140, 141 and 144 of Directive 2009/138/EC;

(c)any extension of the recovery period pursuant to Article 138(4) of Directive 2009/138/EC.

The supervisory authorities shall also provide the resolution authorities with a copy of the recovery plan that the insurance or reinsurance undertaking or any entity referred to in Article 1(1), points (b) to (e), has submitted pursuant to Article 138(2) of Directive 2009/138/EC, a copy of the finance scheme submitted by the insurance or reinsurance undertaking, or any entity referred to in Article 1(1), points (b) to (e), pursuant to Article 139(2) of Directive 2009/138/EC and the supervisory authorities’ opinion on those documents, as applicable.

3. A supervisory authority or resolution authority that determines that the conditions referred to in Article 19(1), points (a) and (b), are met in relation to an insurance or reinsurance undertaking or an entity referred to in Article 1(1), points (b) to (e), shall communicate that determination without delay to the following authorities, if different:

(a)the resolution authority for that undertaking or entity;

(b)the supervisory authority for that undertaking or entity;

(c)the supervisory authority of any Member State where that undertaking or entity carries out significant cross border activities ;

(d)the resolution authority of any Member State where that undertaking or entity carries out significant cross border activities;

(e)the insurance guarantee scheme to which an insurance undertaking is affiliated, where applicable and where necessary to enable the functions of the insurance guarantee scheme to be discharged;

(f)where applicable, the group resolution authority;

(g)the competent ministry;

(h)where applicable, the group supervisor;

(i)the European Systemic Risk Board and the designated national macroprudential authority.

Article 62 - Decision of the resolution authority

1. On receiving a communication from the supervisory authority pursuant to Article 61(3), or on its own initiative, the resolution authority shall determine whether the conditions of Article 19(1) or Article 20(3) are met in respect of the insurance or reinsurance undertaking or the entity referred to in Article 1(1), points (b) to (e), in question.

2. A decision to take or not to take resolution action in relation to an insurance or reinsurance undertaking or an entity as referred to in Article 1(1), points (b) to (e), shall contain the following information:

(a)the reasons for that decision;

(b)the resolution action that the resolution authority intends to take, including, where appropriate, the determination to apply for winding up, the appointment of an administrator or any other measure under applicable normal insolvency proceedings or, subject to Article 26(8), under national law.

Article 63 - Procedural obligations of resolution authorities

1. Member States shall ensure that, as soon as reasonably practicable after taking a resolution action, resolution authorities comply with the requirements laid down in paragraphs 2 and 3.

2. Resolution authorities shall notify the undertaking under resolution and the following authorities, if different, of the resolution action referred to in paragraph 1:

(a)the supervisory authority for the undertaking under resolution;

(b)the supervisory authority of any branch of the undertaking under resolution;

(c)the central bank of the Member State in which the undertaking under resolution is established;

(d)where applicable, the insurance guarantee scheme to which the undertaking under resolution is affiliated;

(e)where applicable, the group resolution authority;

(f)the competent ministry;

(g)where applicable, the group supervisory authority;

(h)the designated national macroprudential authority and the European Systemic Risk Board ;

(i)the Commission, the European Central Bank, EIOPA, ESMA and EBA;

(j)where the undertaking under resolution is an institution as defined in Article 2, point (b), of Directive 98/26/EC, the operators of the systems in which it participates.

3. The resolution authority shall publish or ensure the publication of a copy of the order or instrument by which the resolution action is taken, or a notice summarising the effects of the resolution action, including the effects on policy holders and, where applicable, the terms and period of suspension or restriction referred to in Articles 47, 48 and 49, by the following means:

(a)on its official website;

(b)on the website of the supervisory authority, if different from the resolution authority, and on the website of EIOPA;

(c)on the website of the undertaking under resolution;

(d)where the shares, other instruments of ownership or debt instruments of the undertaking under resolution are admitted to trading on a regulated market, the means used for the disclosure of regulated information concerning the undertaking under resolution in accordance with Article 21(1) of Directive 2004/109/EC of the European Parliament and of the Council 36 .

4. Where the shares, instruments of ownership or debt instruments are not admitted to trading on a regulated market, the resolution authority shall ensure that the documents providing proof of the instruments referred to in paragraph 3 are sent to the shareholders and creditors of the undertaking under resolution that are known through the registers or databases of the undertaking under resolution and which are available to the resolution authority.

Article 64 - Confidentiality

1. Member States shall ensure that the requirements of professional secrecy shall be binding in respect of the following persons, authorities and bodies and that no confidential information is disclosed by any of them:

(a)resolution authorities;

(b)supervisory authorities and EIOPA;

(c)competent ministries;

(d)special managers appointed in accordance with Article 42 of this Directive;

(e)potential acquirers that have been contacted by the supervisory authorities or solicited by the resolution authorities, irrespective of whether that contact or solicitation was made as a preparation for the use of the sale of business tool, and irrespective of whether the solicitation resulted in an acquisition;

(f)auditors, accountants, legal and professional advisors, valuers and other experts directly or indirectly engaged by the resolution authorities, supervisory authorities, competent ministries or by the potential acquirers referred to in point (e);

(g)bodies which administer insurance guarantee schemes;

(h)the body in charge of the financing arrangements;

(i)central banks and other authorities involved in the resolution process;

(j)a bridge institution or an asset management vehicle;

(k)any other person who provides or has provided services directly or indirectly, permanently or occasionally, to persons referred to in points (a) to (j);

(l)senior management, members of the administrative, management and supervisory body, and employees of the bodies or entities referred to in points (a) to (j) before, during and after their appointment.

2. Without prejudice to the generality of the requirements under paragraph 1, Member States shall ensure that the persons referred to in paragraph 1 shall be prohibited from disclosing confidential information received during the course of their professional activities, or received from a supervisory authority or resolution authority in connection with that authority’s functions , to any person or authority, unless in the following situations:

(a)the disclosure is made in the exercise of their functions under this Directive;

(b)the disclosure is made in summary or collective form in such a way that individual insurance or reinsurance undertakings or any of the entities referred to in Article 1(1), points (b) to (e), cannot be identified;

(c)the disclosure is made with the express and prior consent of the authority, the insurance or reinsurance undertaking or the entity referred to in Article 1(1), points (b) to (e),which provided the information.

Member States shall ensure that the persons referred to in paragraph 1 assess the possible effects of disclosing information on the public interest in relation to financial, monetary or economic policy, on the commercial interests of natural and legal persons, on the purpose of inspections, on investigations and on audits.

The procedure for assessing the effects referred to in the second subparagraph shall include a specific assessment of the effects of any disclosure of the contents and details of recovery and resolution plan as referred to in Articles 5, 7, 9, 10 and 12 and the result of any assessment carried out under Articles 6, 8 and 13.

Member States shall ensure that any person or entity referred to in paragraph 1 shall be subject to civil liability in the event of an infringement of this Article.

3. Member States shall ensure that the persons referred to in paragraph 1, points (a), (b), (c), (g), (i) and (j) have internal rules in place to ensure compliance with the confidentiality requirements laid down in paragraphs 1 and 2, including rules to secure secrecy of information between persons directly involved in the resolution process.

4. Paragraphs 1 to 3 of this Article shall not prevent:

(a)employees and experts of the bodies or entities referred to in points paragraph 1, points (a) to (i), from sharing information among themselves within each body or entity;

(b)resolution authorities and supervisory authorities, including their employees and experts, from sharing information with each other and with other Union resolution authorities, other Union supervisory authorities, competent ministries, central banks, insurance guarantee schemes, authorities responsible for normal insolvency proceedings, authorities responsible for maintaining the stability of the financial system in Member States through the use of macroprudential rules, persons charged with carrying out statutory audits of accounts, EIOPA, or, subject to Article 77, third-country authorities that carry out functions that are equivalent to the functions carried out by resolution authorities, or, subject to strict confidentiality requirements, to a potential acquirer for the purposes of planning or carrying out a resolution action.

5. Member States may authorise the exchange of information with any of the following:

(a)subject to strict confidentiality requirements, any other person where necessary for the purposes of planning or carrying out a resolution action;

(b)parliamentary enquiry committees in their Member State, courts of auditors in their Member State and other entities in charge of enquiries in their Member State, under appropriate conditions;

(c)national authorities responsible for overseeing payment systems, the authorities responsible for normal insolvency proceedings, the authorities entrusted with the public duty of supervising other financial sector entities, the authorities responsible for the supervision of financial markets, credit institutions and investment firms and inspectors acting on their behalf, the authorities of Member States responsible for maintaining the stability of the financial system in Member States through the use of macroprudential rules, the authorities responsible for protecting the stability of the financial system, and persons charged carrying out statutory audits.

6. Paragraphs 1 to 5 of this Article shall be without prejudice to national law concerning the disclosure of information for the purpose of legal proceedings in criminal or civil cases.

7. EIOPA shall, by [PO – add 18 months after entry into force], issue guidelines in accordance with Article 16 of Regulation (EU) No 1094/2010 to specify how information should be provided in summary or collective form for the purposes of paragraph 2.

CHAPTER VII
Right of appeal and exclusion of other actions

Article 65 - Ex-ante judicial approval and rights to challenge decisions

1. Member States may require that a decision to take a crisis prevention measure or a crisis management measure is subject to ex-ante judicial approval, provided that in respect of a decision to take a crisis management measure, in accordance with national law, the procedure relating to the application for approval and the court’s consideration is expeditious.

2. Member States shall provide in national law for a right of appeal against a decision to take a crisis prevention measure or a decision to exercise any power, other than a crisis management measure, under this Directive.

3. Member States shall ensure that all persons affected by a decision to take a crisis management measure, have the right to appeal against that decision.

Member States shall ensure that the review of a crisis management measure is expeditious and that national courts use the economic assessments of the facts carried out by the resolution authority as a basis for their own assessment.

4. The right to appeal referred to in paragraph 3, shall be subject to the following requirements:

(a)the lodging of an appeal shall not entail any automatic suspension of the effects of the challenged decision;

(b)the decision of the resolution authority shall be immediately enforceable and shall give rise to a rebuttable presumption that a suspension of its enforcement would be against the public interest.

Where it is necessary to protect the interests of third parties acting in good faith who have acquired shares, other instruments of ownership, assets, rights or liabilities of an undertaking under resolution by virtue of the use of resolution tools as referred to in Article 26(3) or through the exercise of resolution powers by a resolution authority, the annulment of a decision of a resolution authority shall not affect any subsequent administrative acts or transactions concluded by the resolution authority concerned which were based on the annulled decision. In that case, remedies for a wrongful decision or action by the resolution authorities shall be limited to compensation for the loss suffered by the applicant as a result of the annulled decision or act.

Article 66 - Restrictions on other proceedings

1. Without prejudice to Article 62(2), point (b), Member States shall ensure with respect to an undertaking under resolution or an insurance or reinsurance undertaking or an entity referred to in Article 1(1), points (b) to (e), in relation to which the conditions for resolution referred to in Article 19(1) or Article 20(3) have been determined to be met, that normal insolvency proceedings shall not be commenced except at the initiative of the resolution authority and that a decision placing an insurance or reinsurance undertaking or an entity referred to in Article 1(1), points (b) to (e), into normal insolvency proceedings shall be taken only with the consent of the resolution authority.

2. For the purposes of paragraph 1, Member States shall ensure that:

(a)supervisory authorities and resolution authorities are notified without delay of any application for the opening of normal insolvency proceedings in relation to an insurance or reinsurance undertaking or an entity referred to in Article 1(1), points (b) to (e), irrespective of whether that undertaking or entity is under resolution or whether a decision has been made public in accordance with Article 63, paragraphs 3 and 4;

(b)the application for the opening of normal insolvency proceedings is not determined unless the notifications referred to in point (a) have been made and either of the following occurs:

(i)the resolution authority has notified the authorities responsible for normal insolvency proceedings that it does not intend to take any resolution action in relation to the insurance or reinsurance undertaking or the entity referred to in Article 1(1), points (b) to (e);

(ii)a period of seven days beginning with the date on which the notifications referred to in point (a) were made has expired.

3. Without prejudice to any restriction on the enforcement of security interests imposed pursuant to Article 48, Member States shall ensure that, if necessary for the effective application of the resolution tools referred to in Article 26(3) and the resolution powers referred to in Chapter IV of Title III, resolution authorities may request a court to apply a stay for an appropriate period of time in accordance with the objective pursued, on any judicial action or proceeding in which an undertaking under resolution is or becomes a party.

TITLE IV
CROSS-BORDER GROUP RESOLUTION

Article 67 - General principles regarding decision-making involving more than one Member State

Member States shall ensure that, when making decisions or taking action pursuant to this Directive which may have an impact in one or more other Member States, their authorities have regard to the following general principles:

(a)when taking resolution action, decision-making shall be efficient and resolution costs shall be kept as low as possible;

(b)decisions shall be made and action shall be taken in a timely manner and with due urgency when required;

(c)resolution authorities, supervisory authorities and other authorities shall cooperate with each other to ensure that decisions are made and action is taken in a coordinated and efficient manner;

(d)the roles and responsibilities of relevant authorities within each Member State are defined clearly;

(e)due consideration shall be given to the interests, potential impact of any decisions, actions or inactions and negative effects on policy holders, financial stability, fiscal resources, insurance guarantee schemes and negative economic and social effects in all the Member States where the ultimate parent undertaking and its subsidiaries operate or where they carry out significant cross-border activities;

(f)due consideration shall be given to the objectives of balancing the interests of the various Member States involved and of avoiding unfairly prejudicing or unfairly protecting the interests of particular Member States;

(g)resolution authorities, when taking resolution actions, shall take into account and follow the group resolution plans referred to in Article 11, unless the resolution authorities consider, taking into account the circumstances of the case, that the resolution objectives referred to in Article 18 will be achieved more effectively by taking actions which are not provided for in the resolution plans;

(h)a proposed decision or action shall be transparent whenever that decision or action is likely to have implications on the policy holders, real economy, financial stability, fiscal resources, and, where relevant, insurance guarantee schemes and financing arrangements of any Member State concerned.

Article 68 - Resolution colleges

1. Group resolution authorities shall establish resolution colleges to carry out the tasks referred to in Articles 10, 11, 14, 16, 70 and 71, and, where appropriate, to ensure cooperation and coordination with third-country resolution authorities.

In particular, resolution colleges shall provide a framework for the group resolution authority, the other resolution authorities and, where appropriate, supervisory authorities and group supervisors concerned, to perform the following tasks:

(a)exchanging information that is relevant for the development of group resolution plans and for the application to groups of resolution powers;

(b)developing group resolution plans pursuant to Articles 10 and 11;

(c)assessing the resolvability of groups pursuant to Article 14;

(d)exercising powers to address or remove impediments to the resolvability of groups pursuant to Article 16;

(e)deciding on the need to establish a group resolution scheme as referred to in Article 70 or 71;

(f)reaching the agreement on a group resolution scheme proposed in accordance with Article 70 or 71;

(g)coordinating public communication of group resolution strategies and schemes;

(h)coordinating the use of any insurance guarantee schemes or financing arrangements.

In addition, resolution colleges may be used as a forum to discuss any issues relating to cross-border group resolution.

2. The following shall be members of the resolution college:

(a)the group resolution authority;

(b)the resolution authorities of each Member State in which a subsidiary covered by group supervision is established;

(c)the resolution authorities of Member States where a parent undertaking of one or more undertakings of the group that is an entity as referred to in Article 1(1), points (b), (d) or (e), are established;

(d)the group supervisor and the supervisory authorities of the Member States where the resolution authority is a member of the resolution college;

(e)the competent ministries, where the resolution authorities which are members of the resolution college are not the competent ministries;

(f)where relevant, the authority that is responsible for the insurance guarantee scheme of a Member State, where the resolution authority of that Member State is a member of the resolution college;

(g)EIOPA, subject to paragraph 4.

(h)the resolution authorities in Member States where the insurance or reinsurance undertakings of the group carry out significant cross-border activities.

For the purposes of point (g), EIOPA shall contribute to promoting and monitoring the efficient, effective and consistent functioning of resolution colleges and convergence across resolution colleges. EIOPA shall be invited to attend the meetings of the resolution college for that purpose. EIOPA shall not have any voting rights.

For the purposes of point (h), the participation of the resolution authorities shall be limited to achieving the objectives of an efficient exchange of information.

3. The resolution authorities of third countries where a parent undertaking or an undertaking established in the Union has a subsidiary insurance or reinsurance undertaking or a branch that would be considered to be significant were it located in the Union may be invited to participate in the resolution college as observers, provided that those authorities are subject to confidentiality requirements that are, in the opinion of the group resolution authority, equivalent to those laid down in Article 77.

4. The group resolution authority shall be the chair of the resolution college. In that capacity it shall:

(a)establish written arrangements and procedures for the functioning of the resolution college, after having consulted the other members of the resolution college;

(b)coordinate all activities of the resolution college;

(c)convene and chair all the meetings of the resolution college and keep all members of the resolution college fully informed in advance of the organisation of meetings of the resolution college, of the main issues to be discussed and of the items to be considered;

(d)notify the members of the resolution college of any planned meetings so that they can request to participate;

(e)decide which members and observers shall be invited to attend particular meetings of the resolution college, on the basis of specific needs, taking into account the relevance of the issue to be discussed for those members and observers;

(f)keep all of the members of the college informed, in a timely manner, of the decisions and outcomes of those meetings.

Notwithstanding point (e), resolution authorities shall be entitled to participate in resolution college meetings whenever matters subject to joint decision-making or relating to a group entity located in their Member State are on the agenda.

5. Group resolution authorities shall not be obliged to establish a resolution college if other groups or colleges perform the same functions and carry out the same tasks specified in paragraph 1 and comply with all the conditions and procedures, including those covering membership and participation in resolution colleges, laid down in this Article and in Article 69. In such a case, all references to resolution colleges in this Directive shall be understood as references to those other groups or colleges.

6. EIOPA shall develop draft regulatory standards to specify the operational functioning of the resolution colleges for the performance of the tasks referred to in paragraph 1.

EIOPA shall submit those draft regulatory technical standards to the Commission by [PO – add 18 months after entry into force].

Power is delegated to the Commission to adopt the regulatory standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

Article 69 - Information exchange

1. Subject to Article 64, resolution authorities and supervisory authorities shall provide one another on request with all the information relevant for the exercise of the other authorities’ tasks under this Directive.

2. The group resolution authority shall coordinate the flow of all relevant information between resolution authorities. In particular, the group resolution authority shall provide the resolution authorities in other Member States with all the relevant information in a timely manner to facilitate the exercise of the tasks referred to in Article 68(1), second subparagraph, points (b) to (h).

3. A resolution authority shall not transmit information that has been provided by a third-country supervisory or resolution authority unless that third-country supervisory or resolution authority has consented to such transmission.

Resolution authorities shall not be obliged to transmit such information if the third-country supervisory or resolution authority has not consented to its onward transmission.

Article 70 - Group resolution involving a subsidiary of the group

1. A resolution authority that decides that an insurance or reinsurance undertaking or any entity as referred to in Article 1(1), points (b) to (e), that is a subsidiary of a group, meets the conditions for resolution laid down in Article 19(1) or Article 20(3), shall notify the following information without delay to the group resolution authority, if different, to the group supervisor, and to the members of the resolution college for the group in question:

(a)the decision that the insurance or reinsurance undertaking or any entity referred to in Article 1(1), points (b) to (e), meets the conditions laid down in Article 19 or 20;

(b)the resolution actions or insolvency measures that the resolution authority considers to be appropriate for that insurance or reinsurance undertaking or that entity referred to in Article 1(1), points (b) to (e).

2. On receiving the notification referred to in paragraph 1, the group resolution authority, after having consulted the other members of the resolution college concerned, shall assess the likely impact of the resolution actions or other measures notified in accordance with paragraph 1, point (b), on the group and on group entities in other Member States, and whether the resolution actions or other measures would make it likely that the conditions for resolution referred to in Article 19(1) or Article 20(3) would be satisfied in relation to a group entity in another Member State.

3. Where the group resolution authority assesses that the resolution actions or other measures notified in accordance with paragraph 1, point (b), would not make it likely that the conditions laid down in Article 19(1) or Article 20(3) would be satisfied in relation to a group entity in another Member State, the resolution authority responsible for the insurance or reinsurance undertaking or the entity referred to in Article 1(1), points (b) to (e), may take the resolution actions or other measures that it notified in accordance with paragraph 1, point (b), of this Article.

4. Where the group resolution authority assesses that the resolution actions or other measures notified in accordance with paragraph 1, point (b), would make it likely that the conditions laid down in Article 19(1) or 20(3) would be satisfied in relation to a group entity in another Member State, the group resolution authority shall, no later than 24 hours after receiving the notification referred to in paragraph 1, propose a group resolution scheme and submit that scheme to the resolution college. That 24-hour period may be extended with the consent of the resolution authority which made the notification referred to in paragraph 1.

5. In the absence of an assessment by the group resolution authority within 24 hours, or a longer period that has been agreed, after having received the notification referred to in paragraph 1, the resolution authority which made the notification referred to in paragraph 1 may take the resolution actions or other measures that it notified in accordance with point (b) of that paragraph.

6. The group resolution scheme referred to in paragraph 4 shall:

(a)outline the resolution actions that the resolution authorities concerned should take in relation to the ultimate parent undertaking or particular group entities to meet the resolution objectives referred to in Article 18 and to comply with the general principles governing resolution referred to in Article 22;

(b)specify how the resolution actions referred to in point (a) should be coordinated;

(c)establish a financing plan which takes into account the group resolution plan and the principles for sharing responsibility laid down in that group resolution plan in accordance with Article 10(2), point (e).

7. Subject to paragraph 8, the group resolution scheme shall take the form of a joint decision of the group resolution authority and the resolution authorities responsible for the subsidiaries that are covered by the group resolution scheme.

EIOPA may, at the request of a resolution authority, assist the resolution authorities in reaching a joint decision in accordance with Article 31(2), point (c) of Regulation (EU) No 1094/2010.

8. A resolution authority that disagrees with the group resolution scheme proposed by the group resolution authority or that considers that, for reasons of protection of policy holders, the real economy and financial stability, it needs to take independent resolution actions or measures other than those proposed in the group resolution scheme in relation to an insurance or reinsurance undertaking or an entity referred to in of Article 1(1), points (b) to (e), shall:

(a)set out in detail the reasons for the disagreement or the reasons to depart from the group resolution scheme;

(b)notify the group resolution authority and the other resolution authorities that are covered by the group resolution scheme of the reasons referred to in point (a);

(c)inform the group resolution authority and the other resolution authorities that are concerned by the group resolution scheme about the resolution actions or measures it will take.

When setting out the reasons for its disagreement, a resolution authority shall take into consideration the group resolution plans referred to in Article 11, the potential impact of the actions or measures it will take on policy holders, the real economy and financial stability in the Member States concerned, and the potential effect of these resolution actions or measures on other parts of the group.

9. Resolution authorities that do agree with the group resolution scheme proposed by the group resolution authority may reach a joint decision on a group resolution scheme covering group entities in their respective Member States without the participation of the disagreeing resolution authorities.

10. The joint decisions referred to in paragraph 7 and 9 and the resolution actions or measures taken in accordance with paragraph 8 shall be recognised as conclusive and applied by the resolution authorities in the Member States concerned.

11. Authorities shall take all actions and measures referred to in this Article without delay, and with due regard to the urgency of the situation.

12. Where a group resolution scheme is not implemented, resolution authorities shall, when taking resolution actions in relation to any group entity, cooperate closely within the resolution college to achieve a coordinated resolution strategy for all the group entities that are failing or likely to fail.

13. Resolution authorities that take any resolution action in relation to any group entity shall inform the members of the resolution college regularly and fully about those actions or measures and their on-going progress.

Article 71 - Group resolution involving an ultimate parent undertaking

1. A group resolution authority that decides that an ultimate parent undertaking for which it is responsible meets the conditions referred to in Article 19(1) or Article 20(3) shall notify the information referred to in Article 70(1), points (a) and (b), to the group supervisor and to the other members of the resolution college of the group in question without delay.

The resolution actions or insolvency measures referred to in Article 70(1), point (b), may include the implementation of a group resolution scheme drawn up in accordance with Article 70(6) in any of the following circumstances:

(a)the resolution actions or other measures at parent level notified in accordance with Article 70(1), point (b), make it likely that the conditions laid down in Article 19(1) or Article 20(3) would be fulfilled in relation to a group entity in another Member State;

(b)resolution actions or other measures at parent level only are not sufficient to stabilise the situation or are not likely to provide an optimum outcome;

(c)the resolution authorities have determined that one or more subsidiaries for which they are responsible meet the conditions referred to in Article 19(1) or Article 20(3);

(d)resolution actions or other measures at group level will benefit the subsidiaries of the group in a way that makes a group resolution scheme appropriate.

2. Where the actions or measures proposed by the group resolution authority under paragraph 1 do not contain a group resolution scheme, the group resolution authority shall take its decision after having consulted the members of the resolution college.

3. Where the actions or measures proposed by the group resolution authority under paragraph 1 do contain a group resolution scheme, the group resolution scheme shall take the form of a joint decision of the group resolution authority and the resolution authorities responsible for the subsidiaries that are covered by the group resolution scheme.

EIOPA may, at the request of a resolution authority, assist the resolution authorities in reaching a joint decision in accordance with Article 31(2), point (c) of Regulation (EU) No 1094/2010.

4. A resolution authority that disagrees with or departs from the group resolution scheme proposed by the group resolution authority or considers that, for reasons of financial stability, it needs to take independent resolution actions or measures other than those proposed in the group resolution scheme in relation to an insurance or reinsurance undertaking or entity as referred to in Article 1(1), points (b) to (e) shall:

(a)set out in detail the reasons for the disagreement or the reasons to depart from the group resolution scheme;

(b)notify the group resolution authority and the other resolution authorities that are covered by the group resolution scheme of the reasons referred to in point (a);

(c)inform the group resolution authority and the other resolution authorities that are covered by the group resolution scheme about the actions or measures it intends to take.

When setting out the reasons for its disagreement, the resolution authority concerned shall give consideration to the group resolution plans referred to in Article 11, the potential impact of the actions or measures it will take on financial stability in the Member States concerned and the potential effect of the resolution actions or measures on other parts of the group.

5. Resolution authorities that do agree with the group resolution scheme proposed by the group resolution authority may reach a joint decision on a group resolution scheme covering group entities in their respective Member States without the participation of the disagreeing resolution authorities.

6. The joint decision referred to in paragraph 3 or 5 and the actions and measures referred to in paragraph 4 shall be recognised as conclusive and applied by the resolution authorities in the Member States concerned.

7. Authorities shall perform all actions and measures referred to in paragraphs 1 to 6 without delay, and with due regard to the urgency of the situation.

8. Where a group resolution scheme is not implemented, resolution authorities shall, when taking resolution action in relation to any group entity, cooperate closely within the resolution college to achieve a coordinated resolution strategy for all affected group entities.

9. Resolution authorities that take resolution action in relation to any group entity shall inform the members of the resolution college regularly and fully about those actions or measures and their on-going progress.

TITLE V
RELATIONS WITH THIRD COUNTRIES

Article 72 - Agreements with third countries

1. In accordance with Article 218 TFEU, the Commission may submit to the Council proposals for the negotiation of agreements with one or more third countries regarding the means of cooperation between the resolution authorities and the third country authorities concerned, amongst others to share information sharing in connection with recovery and resolution planning in relation to insurance and reinsurance undertakings, third country insurance and reinsurance undertakings, and groups.

2. The agreements referred to in paragraph 1 shall seek to ensure the establishment of processes and arrangements between resolution authorities and the third country authorities concerned for cooperation in carrying out some or all of the tasks and exercising some or all of the powers referred to in Article 76.

3. Member States may enter into bilateral agreements with a third country regarding the matters referred to in paragraphs 1 and 2 until the entry into force of an agreement referred to in paragraph 1 with the relevant third country to the extent that such bilateral agreements are not inconsistent with this Title.

Article 73 - Recognition and enforcement of third-country resolution proceedings

1. This Article shall apply in respect of third-country resolution proceedings unless and until an international agreement as referred to in Article 72(1) enters into force with the third country concerned. It shall also apply following the entry into force of an international agreement as referred to in Article 72(1) with the third country concerned to the extent that recognition and enforcement of third-country resolution proceedings is not governed by that agreement.

2. The resolution authority concerned shall decide whether to recognise and enforce, except as provided for in Article 74, third-country resolution proceedings relating to a Union subsidiary or a Union branch of a third-country insurance or reinsurance undertaking or a parent undertaking.

The decision shall give due consideration to the interests of each Member State where a third-country insurance or reinsurance undertaking or parent undertaking operates, and in particular on the other parts of the group and on the policy holders, the real economy and the financial stability in those Member States.

3. Member States shall ensure that resolution authorities are, as a minimum, empowered to do the following:

(a)exercise the resolution powers in relation to the following:

(i)assets of a third-country insurance or reinsurance undertaking or parent undertaking that are located in their Member State or governed by the law of their Member State;

(ii)rights or liabilities of a third-country insurance or reinsurance undertaking that are booked by the Union branch in their Member State or governed by the law of their Member State, or where claims in relation to such rights and liabilities are enforceable in their Member State;

(b)perfect, including to require another person to take action to perfect, a transfer of shares or other instruments of ownership in a Union subsidiary established in that Member State;

(c)exercise the powers in Article 47, 48 or 49 in relation to the rights of any party to a contract with an entity referred to in paragraph 1 of this Article, where such powers are necessary in order to enforce third-country resolution proceedings; and

(d)render unenforceable any right to terminate, liquidate or accelerate contracts, or affect the contractual rights, of entities referred to in paragraph 1 and other group entities, where such a right arises from resolution action taken in respect of the third-country insurance or reinsurance undertaking, parent undertaking of such entities or other group entities, whether by the third-country resolution authority itself or otherwise pursuant to legal or regulatory requirements as to resolution arrangements in that country, provided that the substantive obligations under the contract, including payment and delivery obligations, and provision of collateral, continue to be performed.

4. Resolution authorities may take, where necessary in the public interest, resolution action with respect to a parent undertaking where the relevant third-country authority determines that an insurance or reinsurance undertaking that is a subsidiary of that parent undertaking and that is incorporated in that third country meets the conditions for resolution under the law of that third country. To that end, Member States shall ensure that resolution authorities are empowered to use any resolution power in respect of that parent undertaking, and Article 46 shall apply.

5. The recognition and enforcement of third-country resolution proceedings shall be without prejudice to any normal insolvency proceedings under national law applicable, where appropriate, in accordance with this Directive.

Article 74 - Right to refuse recognition or enforcement of third-country resolution proceedings

The resolution authority may refuse to recognise or to enforce third-country resolution proceedings pursuant to Article 73 if it considers:

(a)that the third-country resolution proceedings would have adverse effects on financial stability in the Member State in which the resolution authority is based or that the proceedings would have adverse effects on financial stability in another Member State;

(b)that independent resolution action under Article 75 in relation to a Union branch is necessary to achieve one or more of the resolution objectives referred to in Article 18;

(c)that creditors would not receive the same treatment as third-country creditors with similar legal rights under the third-country home resolution proceedings;

(d)that recognition or enforcement of the third-country resolution proceedings would have material fiscal implications for the Member State; or

(e)that the effects of such recognition or enforcement would be contrary to the national law.

Article 75 - Resolution of Union branches

1. Member States shall ensure that resolution authorities have the powers necessary to act in relation to a Union branch that is not subject to any third-country resolution proceedings or that is subject to third-country proceedings and one of the circumstances referred to in Article 74 applies.

Member States shall ensure that Article 46 applies to the exercise of such powers.

2. Member States shall ensure that the powers required in paragraph 1 may be exercised by resolution authorities where the resolution authority considers that action is necessary in the public interest and one or more of the following conditions is met:

(a)the Union branch no longer meets, or is likely not to meet, the conditions imposed by national law for its authorisation and operation within that Member State and there is no prospect that any private sector, supervisory or relevant third-country action would restore the branch to compliance or prevent failure in a reasonable timeframe;

(b)the third-country insurance or reinsurance undertaking is, in the opinion of the resolution authority, unable or unwilling, or is likely to be unable, to pay its obligations to Union creditors, or obligations that have been created or booked through the branch, such as payments to policy holders or beneficiaries, as they fall due and the resolution authority is satisfied that no third-country resolution proceedings or insolvency proceedings have been or will be initiated in relation to that third-country insurance or reinsurance undertaking in a reasonable timeframe;

(c)the relevant third-country authority has initiated third-country resolution proceedings in relation to the third-country insurance or reinsurance undertaking, or has notified to the resolution authority its intention to initiate such a proceeding.

3. Where a resolution authority takes an independent action in relation to a Union branch, it shall have regard to the resolution objectives referred to in Article 18 and take the action in accordance with the following principles and requirements, insofar as they are relevant:

(a)the principles set out in Article 22;

(b)the requirements relating to the application of the resolution tools in Title III, Chapter II.

Article 76 - Cooperation with third-country authorities

1. This Article shall apply in respect of cooperation with a third country unless and until an international agreement as referred to in Article 72(1) enters into force with the relevant third country. It shall also apply following the entry into force of an international agreement provided for in Article 72(1) with the relevant third country to the extent that the subject matter of this Article is not governed by that agreement.

2. EIOPA may conclude non-binding framework cooperation arrangements with relevant third-country authorities. The framework cooperation agreements shall establish processes and arrangements between the participating authorities for sharing information necessary for and cooperation in carrying out some or all or the following tasks and exercising some or all of the following powers in relation to insurance or reinsurance undertakings or groups:

(a)the development of resolution plans in accordance with Articles 9 to 12 and similar requirements under the law of the relevant third countries;

(b)the assessment of the resolvability of such insurance and reinsurance undertakings and groups, in accordance with Articles 13 and 14 and similar requirements under the law of the relevant third countries;

(c)the application of powers to address or remove impediments to resolvability pursuant to Articles 15 and 16 and any similar powers under the law of the relevant third countries;

(d)the application of preventive measures pursuant to Article 141 of Directive 2009/138/EC and similar powers under the law of the relevant third countries;

(e)the application of resolution tools as referred to in Article 26(3) and exercise of resolution powers and similar powers exercisable by the relevant third-country authorities.

3. Supervisory or resolution authorities, where appropriate, may conclude cooperation arrangements in line with the EIOPA framework arrangement referred to in paragraph 2 with relevant third country authorities.

4. Member States shall notify EIOPA of any cooperation arrangements that resolution authorities and supervisory authorities have concluded in accordance with this Article.

Article 77 - Exchange of confidential information

1. Member States shall ensure that resolution authorities, supervisory authorities and competent ministries exchange confidential information, including pre-emptive recovery plans drawn up and maintained in accordance with Articles 5 and 7, with relevant third-country authorities only if the following conditions are met:

(a)those third-country authorities are subject to requirements and standards of professional secrecy at least considered to be equivalent, in the opinion of all the authorities concerned, to those imposed by Article 64.

(b)the information is necessary for the performance by the relevant third-country authorities of their resolution functions under national law that are comparable to those under this Directive and, subject to point (a), is not used for any other purposes.

For the purposes of point (a), in so far as the exchange of information relates to personal data, the handling and transmission of such personal data to third-country authorities shall be governed by the applicable Union and national data protection law.

2. Where confidential information originates in another Member State, resolution authorities, supervisory authorities and competent ministries shall not disclose that information to relevant third-country authorities unless the following conditions are met:

(a)the relevant authority of the Member State where the information originated (the originating authority) agrees to that disclosure;

(b)the information is disclosed only for the purposes permitted by the originating authority.

TITLE VI
PENALTIES

Article 78 - Administrative penalties and other administrative measures

1. Without prejudice to the powers of resolution and supervisory authorities laid down in this Directive and Directive 2009/138/EC and the right of Member States to provide for and impose criminal penalties referred to in the second subparagraph, Member States shall lay down rules on administrative penalties and other administrative measures applicable where the national provisions transposing this Directive have not been complied with, and shall take all measures necessary to ensure that they are implemented.

Member States that decide not to lay down rules for administrative penalties or other administrative measures for infringements which are subject to national criminal law shall communicate to the Commission the criminal law provisions concerned.

The administrative penalties and other administrative measures shall be effective, proportionate and dissuasive.

2. Member States shall ensure that in the event of an infringement, administrative penalties or other administrative measures can be applied, subject to the conditions laid down in national law, to the members of the administrative, management or supervisory body, and to other natural persons who under national law are responsible for the infringement.

3. The powers to impose administrative penalties and other administrative measures provided for in this Directive shall be attributed to resolution authorities or to supervisory authorities, depending on the type of infringement. Resolution authorities and supervisory authorities shall have all information-gathering and investigatory powers that are necessary for the exercise of their respective functions. In the exercise of their powers to impose administrative penalties or other administrative measures, resolution authorities and supervisory authorities shall cooperate closely to ensure that administrative penalties or other administrative measures produce the desired results and coordinate their action when dealing with cross-border cases.

4. Resolution authorities and supervisory authorities shall exercise their administrative powers to impose penalties and other administrative measures in accordance with this Directive and national law in any of the following ways:

(a)directly;

(b)in collaboration with other authorities;

(c)under their responsibility by delegation to other authorities;

(d)by application to the competent judicial authorities.

5. Member States shall ensure that decisions taken by the resolution authorities and supervisory authorities in accordance with this Title are subject to a right of appeal.

Article 79 - Specific provisions on administrative penalties and other administrative measures

1. Member States shall ensure that their laws, regulations and administrative provisions provide for administrative penalties and other administrative measures at least in respect of the following situations:

(a)an infringement of Articles 5 or 7 by failing to draw up, maintain and update pre-emptive recovery plans and group pre-emptive recovery plans;

(b)an infringement of Article 12 by failing to provide all the information necessary for the development of resolution plans;

(c)an infringement of Article 61(1) by the failure of the administrative, management or supervisory body of an insurance or reinsurance undertaking or an entity as referred to in Article 1(1), points (b) to (e), to notify the supervisory authority when that undertaking or that entity is failing or likely to fail.

2. Member States shall ensure that, in the cases referred to in paragraph 1, the administrative penalties and other administrative measures that can be applied include at least the following:

(a)a public statement indicating the natural person, insurance or reinsurance undertaking, the entity as referred to in Article 1(1), points (b) to (e), an ultimate parent undertaking or other legal person responsible for the infringement and the nature of the infringement;

(b)an order requiring the natural or legal person responsible to cease the conduct and to desist from a repetition of that conduct;

(c)a temporary ban on any member of the administrative, management or supervisory body or senior management of the insurance or reinsurance undertaking or an entity as referred to in Article 1(1), points (b) to (e), or any other natural person who is held responsible, to exercise functions in an insurance or reinsurance undertaking or an entity as referred to in Article 1(1), points (b) to (e);

(d)in the case of a legal person, administrative fines of up to 10 % of the total annual turnover of that legal person in the preceding business year;

(e)in the case of a natural person, administrative fines of up to EUR 5 000 000, or in the Member States where the Euro is not the official currency, the corresponding value in the national currency on [PO – please add date of entry into force of this Directive];

(f)administrative fines of up to twice the amount of the benefit derived from the infringement where that benefit can be determined.

For the purposes of point (d), where the legal person is a subsidiary of a parent undertaking, the relevant turnover shall be the total annual turnover resulting from the consolidated accounts of the ultimate parent undertaking in the preceding business year.

Article 80 - Publication of administrative penalties and other administrative measures

1. Member States shall ensure that resolution authorities and supervisory authorities publish on their official website at least any administrative penalties and other administrative measures imposed by those authorities for infringing the national provisions transposing this Directive where such administrative penalties or other administrative measures have not been the subject of an appeal or where the right of appeal has been exhausted. Such publication shall be made without undue delay after the natural or legal person is informed of that administrative penalty or other administrative measure. The publication shall contain information on the type and nature of the infringement and the identity of the natural or legal person on whom the administrative penalty or other administrative measure is imposed.

Where Member States permit publication of administrative penalties and other administrative measures against which there is an appeal, resolution authorities and supervisory authorities shall, without undue delay, publish on their official websites information on the status of that appeal and the outcome thereof.

2. Where the resolution authority or supervisory authority considers that the publication of the identity of the legal persons, or identity or personal data of natural persons would be disproportionate following a case-by-case assessment conducted on the proportionality of the publication of such data, or where such a publication would jeopardise the stability of financial markets or an ongoing investigation, the resolution authority or supervisory authority shall do any of the following:

(a)defer the publication of the decision imposing the administrative penalty or other administrative measures until the reasons for that deferral cease to exist;

(b)publish the decision imposing the administrative penalty or other administrative measures on an anonymous basis in accordance with national law where such anonymous publication would ensure the effective protection of the personal data concerned;

(c)not publish the decision imposing the administrative penalty or other administrative measures where the resolution authority or supervisory authority is of the opinion that publication in accordance with point (a) or (b) would be insufficient to ensure either of the following:

(i)that the stability of financial markets is not jeopardised;

(ii)the proportionality of the publication of such data with regard to measures which are deemed to be of a minor nature.

Resolution authorities and supervisory authorities shall ensure that any publication in accordance with this Article shall remain on their official website for a period of at least five years after its publication. Personal data contained in the publication shall only be kept on the official website of the resolution authority or the supervisory authority for the period which is necessary according to applicable data protection rules.

Article 81 - Maintenance of central database by EIOPA

1. Subject to the professional secrecy requirements referred to in Article 64, resolution authorities and supervisory authorities shall inform EIOPA of all administrative penalties and other administrative measures imposed by them under Article 79 and of the status of that appeal and outcome thereof.

EIOPA shall maintain and keep updated a central database of penalties and other administrative measures reported to it by resolution authorities, solely to enable those resolution authorities to exchange information, which shall be accessible to those resolution authorities only.

EIOPA shall maintain and keep updated a central database of penalties and other administrative measures reported to it by supervisory authorities, solely to enable those supervisory authorities to exchange information, which shall be accessible to those supervisory authorities only.

2. EIOPA shall maintain and keep updated a webpage with the following information or links to that information:

(a)each resolution authority’s publication of penalties;

(b)each supervisory authority’s publication of penalties under Article 80;

(c)the period for which each Member State publishes penalties.

Article 82 - Effective application of penalties and exercise of powers to impose penalties by supervisory authorities and resolution authorities

Member States shall ensure that when determining the type of administrative penalties or other administrative measures and the level of administrative fines, the supervisory authorities and resolution authorities take into account all relevant circumstances, including where appropriate:

(a)the gravity and the duration of the infringement;

(b)the degree of responsibility of the natural or legal person responsible;

(c)the financial strength of the natural or legal person responsible;

(d)the amount of profits gained or losses avoided by the natural or legal person responsible, insofar as those profits or losses can be determined;

(e)the losses for third parties, including policy holders, caused by the infringement, insofar those losses can be determined;

(f)the level of cooperation of the natural or legal person responsible with the supervisory authority and the resolution authority;

(g)previous infringements by the natural or legal person responsible.

For the purposes of point (c), the indicators of financial strength of a natural or legal person shall include the total turnover of the responsible legal person or the annual income of the responsible natural person.

TITLE VII
AMENDMENTS TO DIRECTIVES 2002/47/EC, 2004/25/EC, 2009/138/EC, (EU) 2017/1132 AND TO REGULATIONS (EU) No 1094/2010 AND (EU) No 648/2012

Article 83 - Amendments to Directive 2009/138/EC

Directive 2009/138/EC is amended as follows:

(1) Article 141 is replaced by the following:

‘Article 141

Supervisory powers in deteriorating financial conditions

1. Following a notification pursuant to Article 136 or following the identification of deteriorating financial conditions pursuant to Article 36(3), where the insurance or reinsurance undertaking’s decisions, including financial ones, would result in the following three months or already result in non-compliance with any of the items referred to in Article 36(2), points (a) to (e), the supervisory authorities shall have the power to take the necessary measures to restore compliance.

2. The measures referred to in paragraph 1 shall be proportionate to the risk and to the extent of non-compliance with regulatory requirements, and may contain the following:

(a)requiring the administrative, management, or supervisory body of the undertaking to update the pre-emptive recovery plan drawn up in accordance with Article 5 of Directive (EU) xx/xx of the European Parliament and of the Council*1, where the circumstances are different from the assumptions set out in that plan;

(b)requiring the administrative, management, or supervisory body of the undertaking to take measures set out in the pre-emptive recovery plan drawn up in accordance with Article 5 of Directive (EU) xx/xx [PO, please insert the number of the IRRD]. Where the plan is updated pursuant to point (a), the measures taken shall contain any updated measures;

(c)requiring the administrative, management, or supervisory body of an undertaking that does not have in place a pre-emptive recovery plan as referred to in Article 5 of Directive (EU) xx/xx [PO, please insert the number of the IRRD] , to identify the causes of the non-compliance or likely non-compliance with regulatory requirements and to identify suitable measures and a timeframe for the implementation of those regulatory requirements;

(d)requiring the administrative, management, or supervisory body of the undertaking to suspend or restrict variable remuneration and bonuses, distributions on own fund instruments or repayment or repurchase of own fund items.

3. Where the solvency position of the undertaking continues to deteriorate following a notification as referred to in Articles 138(1) or 139(1), the supervisory authorities shall have the power to take all measures, including those referred to in paragraph 2, which are necessary to safeguard the interests of policy holders in the case of insurance contracts, or the obligations arising out of reinsurance contracts.

Those measures shall be proportionate and thus reflect the level of the deterioration of the solvency position of the insurance or reinsurance undertaking concerned.

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*1    Directive (EU) xx/xx of the European Parliament and of the Council [PO, please insert reference to the IRRD].’;

(2) in Article 267, the following subparagraphs are added:

‘In the event of an application of the resolution tools referred to in Article 26(3) of Directive (EU) xx/xx [PO, please insert the number of the IRRD] and exercise of the resolution powers referred to in Chapter IV, Title III, of that Directive , this Title shall also apply to reinsurance undertakings and the entities referred to in Article 1(1), points (b) to (e), of that Directive.

Articles 270 and 272 of this Directive shall not apply where Article 63 of Directive (EU) xx/xx [PO, please insert the number of the IRRD] applies.

Article 295 of this Directive shall not apply where Article 64 of Directive (EU) xx/xx [PO, please insert the number of the IRRD] applies.’;

(3) Article 268(1) is amended as follows:

(a)point (a) is replaced by the following:

‘(a)    ‘competent authorities’ means either the administrative or judicial authorities of the Member States that are competent for reorganisation measures or for the winding-up proceedings, or a resolution authority as defined in Article 2(2), point (7), of Directive (EU) xx/xx [PO, please insert the number of the IRRD] in respect of reorganisation measures taken pursuant to that Directive;’;

(b)point (c) is replaced by the following:

‘(c)    ‘reorganisation measures’ means measures involving any intervention by the competent authorities which are intended to preserve or restore the financial situation of an insurance undertaking and which affect pre-existing rights of parties other than the insurance undertaking itself, including the suspension of payments or enforcement measures or the reduction of claims, the application of the resolution tools referred to in Article 26(3) of Directive (EU) xx/xx [PO, please insert the number of the IRRD] and the exercise of resolution powers referred to in Chapter IV, Title III, of Directive (EU) xx/xx [PO, please insert the number of the IRRD];’.

Article 84 - Amendments to Directive 2002/47/EC

Directive 2002/47/EC is amended as follows:

(1) in Article 1, paragraph 6 is replaced by the following:

‘6.    Articles 4 to 7 of this Directive shall not apply to any restriction on the enforcement of financial collateral arrangements or any restriction on the effect of a security financial collateral arrangement, any close out netting or set-off provision that is imposed by virtue of Title IV, Chapter V or VI of Directive 2014/59/EU of the European Parliament and of the Council*2, or of Title V, Chapter III, Section 3, or Chapter IV of Regulation (EU) 2021/23 of the European Parliament and of the Council*3, or of Title III, Chapter III, Section 4, or Chapter IV of Directive (EU) xx/xx of the European Parliament and of the Council*4, or to any such restriction that is imposed by virtue of similar powers in the law of a Member State to facilitate the orderly resolution of any entity as referred to in paragraph 2, point (d), of this Article which is subject to safeguards at least equivalent to those set out in Title IV, Chapter VII of Directive 2014/59/EU and in Title V, Chapter V of Regulation (EU) 2021/23;

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*2Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190).

*3Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/1132 (OJ L 22, 22.1.2021, p. 1).

*4[PO, please insert reference to the IRRD].’;

(2) Article 9a is replaced by the following:

‘Article 9a

Directive 2008/48/EC, Directive 2014/59/EU, Directive (EU) xx/xx and Regulation (EU) 2021/23

This Directive shall be without prejudice to Directive 2008/48/EC, Directive 2014/59/EU, Directive (EU) xx/xx of the European Parliament and of the Council*5 [PO, please insert the number of the IRRD] and Regulation (EU) 2021/23.

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*5    Directive xx/xx/EU of the European Parliament and of the Council [PO, please insert reference to the IRRD]’.

Article 85 - Amendment to Directive 2004/25/EC

In Article 4(5) of Directive 2004/25/EC, the following subparagraph is added:

‘Member States shall ensure that Article 5(1) of this Directive does not apply in the case of application of resolution tools, powers and mechanisms provided for in Title IV of Directive 2014/59/EU, in Title V of Regulation (EU) 2021/23 of the European Parliament and of the Council*6 or in Title III of Directive (EU) xx/xx of the European Parliament and of the Council*7 [PO, please insert the number of the IRRD].

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*6Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/1132 (OJ L 22, 22.1.2021, p. 1).

*7Directive xx/xx/EU of the European Parliament and of the Council [PO, please insert reference to the IRRD]’.

Article 86 - Amendments to Directive 2007/36/EC

In Article 1 of Directive 2007/36/EC, paragraph 4 is replaced by the following:

‘4.    Member States shall ensure that this Directive does not apply in the case of the use of resolution tools, powers and mechanisms provided for in Title IV of Directive 2014/59/EU of the European Parliament and of the Council*8, in Title V of Regulation (EU) 2021/23 of the European Parliament and of the Council*9 or in Title III of Directive (EU) xx/xx of the European Parliament and of the Council*10 [PO, please insert the number of the IRRD].

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*8Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190).

*9Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/1132 (OJ L 22, 22.1.2021, p. 1).

*10Directive XX/XX/EU of the European Parliament and of the Council [PO, please insert reference to the IRRD]’.’

Article 87 - Amendment to Directive (EU) 2017/1132

Directive (EU) 2017/1132 is amended as follows:

(1) in Article 84, paragraph 3 is replaced by the following:

‘3.    Member States shall ensure that Article 49, Article 58(1), Article 68(1), (2) and (3), the first subparagraph of Article 70(2), Articles 72 to 75, 79, 80 and 81 of this Directive do not apply in the case of application of the resolution tools, powers and mechanisms provided for in Title IV of Directive 2014/59/EU of the European Parliament and of the Council*11, in Title V of Regulation (EU) 2021/23 of the European Parliament and of the Council*12 or in Title III of Directive (EU) xx/xx of the European Parliament and of the Council*13.

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*11Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190).

*12Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/1132 (OJ L 22, 22.1.2021, p. 1).

*13Directive (EU) XX/XX of the European Parliament and of the Council [PO, please insert reference to the IRRD].’;

(2) Article 86a is amended as follows:

(a)in paragraph 3, point (b) is replaced by the following:

‘(b)    the company is subject to resolution tools, powers and mechanisms provided for in Title IV of Directive 2014/59/EU, in Title V of Regulation (EU) 2021/23 or in Title III of Directive (EU) xx/xx [PO, please insert the number of the IRRD].’;

(b)in paragraph 4, point (c) is replaced by the following:

‘(c)    the subject of crisis prevention measures as defined in point (101) of Article 2(1) of Directive 2014/59/EU, in point (48) of Article 2 of Regulation (EU) 2021/23 or in point (75) of Article 2(2) of Directive (EU) xx/xx [PO, please insert the number of the IRRD].’;

(3) in Article 87, paragraph 4 is replaced by the following:

‘4.    Member States shall ensure that this Chapter does not apply to companies which are the subject of the application of resolution tools, powers and mechanisms provided for in Title IV of Directive 2014/59/EU, in Title V of Regulation (EU) 2021/23 or in Title III of Directive (EU) xx/xx [PO, please insert the number of the IRRD].’;

(4) Article 120 is amended as follows:

(a)in paragraph 4, point (b) is replaced by the following:

‘(b)    the company is subject to resolution tools, powers and mechanisms provided for in Title IV of Directive 2014/59/EU, in Title V of Regulation (EU) 2021/23 or in Title III of Directive (EU) xx/xx [PO, please insert the number of the IRRD].’;

(b)in paragraph 5, point (c) is replaced by the following:

‘(c)    the subject of crisis prevention measures as defined in point (101) of Article 2(1) of Directive 2014/59/EU, in point (48) of Article 2 of Regulation (EU) 2021/23 or in point (75) of Article 2(2) of Directive (EU) xx/xx [PO, please insert the number of the IRRD].’;

(5) Article 160a is amended as follows:

(a)in paragraph 4, point (b) is replaced by the following:

‘(b)    the company is subject to resolution tools, powers and mechanisms provided for in Title IV of Directive 2014/59/EU, in Title V of Regulation (EU) 2021/23 or in Title III of Directive (EU) xx/xx [PO, please insert reference to the IRRD].’;

(b)in paragraph 5, point (c) is replaced by the following:

‘(c)    the subject of crisis prevention measures as defined in point (101) of Article 2(1) of Directive 2014/59/EU, in point (48) of Article 2 of Regulation (EU) 2021/23 or in point (75) of Article 2(2) of Directive (EU) xx/xx [PO, please insert reference to the IRRD].’.

Article 88 - Amendment to Regulation (EU) No 1094/2010

Regulation (EU) No 1094/2010 is amended as follows:

(1) in Article 4, in point (2), point (i) is replaced by the following:

‘(i)    supervisory authorities as defined in Article 13, point (10) of Directive 2009/138/EC, resolution authorities as defined in Article 2, point (7), of Directive (EU) xx/xx of the European Parliament and of the Council*14, and competent authorities as defined in Article 6, point (8), of Directive (EU) 2016/2341 of the European Parliament and of the Council*15 and as referred to in Directive (EU) 2016/97 of the European Parliament and of the Council*16;’

(2) in Article 40(6), the following subparagraph is added:

‘For the purposes of acting within the scope of Directive (EU) xx/xx [PO, please insert the number of the IRRD], the member of the Board of Supervisors referred to in point (b) of paragraph 1 may, where appropriate, be accompanied by a representative from the resolution authority in each Member State, who shall be non-voting.

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*14    [PO, please insert the reference to the IRRD].

*15    Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37).

*16    Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (OJ L 26, 2.2.2016, p. 19).’.

Article 89 - Amendment to Regulation (EU) No 648/2012

In Article 81(3) of Regulation (EU) No 648/2012, the following point is added:

‘(r)    the resolution authorities designated under Article 3 of Directive (EU) xx/xx of the European Parliament and of the Council*17.

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*17    [PO, please insert the reference to the IRRD].’.

TITLE VIII
FINAL PROVISIONS

Article 90 - EIOPA Resolution Committee

1. EIOPA shall create a permanent internal committee pursuant to Article 41 of Regulation (EU) No 1094/2010 to prepare EIOPA decisions as referred to in Article 44 of that Regulation, including decisions about draft regulatory technical standards and draft implementing technical standards concerning tasks that have been conferred on resolution authorities in accordance with this Directive. That internal committee shall be composed of the resolution authorities referred to in Article 3 of this Directive.

2. For the purposes of this Directive, EIOPA shall cooperate with EBA and ESMA within the framework of the Joint Committee of the European Supervisory Authorities established in Article 54 of Regulation (EU) No 1093/2010, of Regulation (EU) No 1094/2010 and of Regulation (EU) No 1095/2010.

3. For the purposes of this Directive, EIOPA shall ensure structural separation between the resolution committee and other functions referred to in Regulation (EU) No 1094/2010. The resolution committee shall promote the development and coordination of resolution plans and develop methods for the resolution of entities as referred to in Article 1(1) of this Directive that are failing.

Article 91 - Cooperation with EIOPA

1. Member States shall ensure that the supervisory and resolution authorities cooperate with EIOPA for the purposes of this Directive in accordance with Regulation (EU) No 1094/2010.

2. Member States shall ensure that the supervisory and resolution authorities, without delay, provide EIOPA with all the information necessary to carry out its duties in accordance with Article 35 of Regulation (EU) No 1094/2010.

Article 92 - Transposition

1. Member States shall adopt and publish, by [PO – add 18 months after entry into force] at the latest, the laws, regulations and administrative provisions necessary to comply with Articles 1 to 87, 90 and 91 of this Directive. They shall forthwith communicate to the Commission the text of those provisions. Articles 88 and 89 shall, however, be binding in their entirety and directly applicable in all Member States.

They shall apply Articles 1 to 87, 90 and 91 from [PO – add 18 months and one day after entry into force].

When Member States adopt Articles 1 to 87, 90 and 91, they shall include a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

2. Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.

Article 93 - Entry into force

This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Article 94 - Addressees

This Directive is addressed to the Member States.