At the beginning of September, a bill amending certain laws was submitted to the Sejm in connection with strengthening supervision and investor protection in the financial market.
first the reading of the project took place at the session of the Sejm on 12 September 2018 Currently, the project was welcomed by the Public Finance Commission, which on 26 September 2018 asked the Sejm to pass the bill in its current wording.
Introduction of the obligation to register and dematerialise bonds
The most important change is the introduction of the obligation to register and dematerialise bonds, investment certificates issued by closed investment funds and covered bonds in the National Securities Depository system, whether they were offered to the public or traded on any trading venue.
According to the current provisions of the Act of 29 July 2005 on the public offering and conditions for introducing financial instruments to organised trading and on public companies (Journal of Laws of 2005, item 1539 as amended), mandatory dematerialisation concerns only public or non-public offering securities to be admitted to trading on a regulated market or to an alternative trading venue (Article 12).
In addition, according to current disposition Article 123 Act of 27 May 2004 on investment funds and the management of alternative investment funds (Journal of Laws of 2018, item 1355), investment certificates of a closed investment fund which is not a closed public investment fund may not take the form of a document if the statutes of the fund so provide.
Introduction of an obligation to designate an emission agent
The draft provisions also provide for amendments to the provisions of the Act of 29 July 2005 on trading in financial instruments (Journal of Laws of 2017, item 1768), laying down the obligation to designate an issuer for issue by issuers not issuing securities by public tender or whose issuer does not intend to market on a regulated market or an alternative trading venue. The project also foresees that the aforementioned issuer will be obliged to enter into an agreement for the performance of the functions of a securities issue agent by an investment firm entitled to keep securities accounts or a trust bank, before proposing to acquire the aforementioned securities.
The obligations of the issuing agent will include, inter alia, verification of the issuer's compliance with the requirements for issuing securities, compliance of the issuer's activities with the requirements for offering securities, verification of compliance by the securities and by their issuer of the conditions for registration in the securities deposit as set out in the National Depository Regulations, creation of records of persons entitled to securities, intermediation of the issuer's conclusion of an agreement which is the subject of registration of securities in the securities depository.
The project rules also provide that the issue agent will be liable for damages for the damage caused by the failure or inadequate performance of the above obligations.
Extension of KNF
The draft also envisages a change in the composition of the Finance Supervision Commission by four new members, i.e.: a representative of the Prime Minister, a representative of the Bank Guarantee Fund, a representative of the Office for Competition and Consumer Protection, a representative of the Minister – a member of the Council of Ministers responsible for coordinating the activities of special services, and if not appointed – a representative of the Prime Minister. The members of the Commission referred to above will only attend the meetings of the Committee on Finance Supervision with an advisory vote.
Establishment of a fund to organise educational and information activities
In addition, the project envisages the creation of a Financial Education Fund at the National Securities Depository, whose funds are to be used to organise educational and information activities in the field of protecting the interests of clients and potential clients of financial market operators.
The funds of the Fund are to come from the proceeds of fines imposed by the Financial Supervision Commission, the President of the Office for Competition and Consumer Protection, the Audit Supervision Commission, the revenue from the placement of funds from the Fund and other receipts.
According to previous assumptions, the Financial Education Fund was to serve as compensation for natural persons purchasing bonds that were issued or disposed of in violation of the law. However, the proposal as it stands does not provide for regulation on this issue.
To sum up the above changes, there is no doubt that after the adoption of the project and after its entry into force, the process of issuing securities will become much more expensive, more complicated and time consuming. This may be important for entrepreneurs who have so far considered the possibility of raising capital through private securities issuance.
Source:
Draft law amending certain laws in connection with strengthening supervision and investor protection in the financial market (print no. 3460).