The Amendment Act contains two material amendments relating to (i) the introduction of a designated account (kwaliteitsrekening) for client money of certain financial undertakings and (ii) the opening of the AIFMD sub-threshold registration regime to managers from other EU Member States who wish to offer units to professional investors in the Netherlands.
In addition, the Amendment Act contains several other amendments relating to the cost of supervision, auditing requirement for financial states (financiële staten), management of Dutch UCITS and reputational supervision in connection with the declaration of no objection (verklaring van geen bezwaar) requirement.
We will discuss these amendments below.
1. Designated account (kwaliteitsrekening) for client money
After the Dutch Central Bank (De Nederlandsche Bank, DNB) and the Financial Markets Authority (Autoriteit Financiële Markten, AFM), as well as the financial sector itself, advocated the introduction of a statutory designated account (kwaliteitsrekening) for client funds, this phenomenon is now being introduced by the Amendment Act. In the current situation, financial undertakings in the Netherlands often use a foundation for clients' funds (stichting derdengelden) to create separate funds, but this construction is not always well known outside the Netherlands.
Therefore, the Amendment Act now introduces the possibility for settlement agents, payment institutions, Electronic Money Institutions (ELMIs) and investment firms to hold funds belonging to clients or third parties and to separate these funds from their own funds. This is done by means of a payment account in the name of the financial enterprise, whereby it becomes clear in the name that this account is held for the benefit of one or more third parties and what the capacity of the financial enterprise is (the Designated Account).
The funds in the Designated Account constitute legally segregated assets1 from the funds of the financial undertaking itself and serve exclusively to settle claims of third parties whose funds have been deposited in the segregated account and the bank where the segregated account is held, insofar as these claims relate to the management of the account (the Stakeholders) and insofar as these claims relate to the entrustment of the funds to the account holder.
The regulation of the Designated Account implies that a trustee in bankruptcy of the financial company must respect the segregated assets and cooperate in their distribution.
Finally, this also means that only Stakeholders can seize the balance of the Designated Account from the bank where this account is held.
2. AIFMD registration regime for foreign managers
The current registration regime for managers of investment institutions as contained in Article 2:66a of the Act on the financials supervision (Wet op het financieel toezicht, AFS) is accessible to Dutch managers of investment institutions whose legal entity has its statutory seat in the Netherlands. Under this regime, it is possible for these managers to offer units in the investment institution they manage to professional investors and, subject to certain conditions, to non-professional investors. The Amendment Act adds2 the possibility for managers with a statutory seat in another Member State to also offer units in the investment institution they manage in the Netherlands. However, this may only be offered to professional investors within the meaning of the AFS.
3. Other amendments
The Amendment Act also contains the following amendments:
- It offers the Dutch supervisory authorities the possibility, in the context of financing their supervision, to (i) maintain a reserve from the penalties and administrative fines imposed and (ii) charge the operating balance or part thereof to the supervised persons spread over several years, provided that the Ministers have given their approval.
- In addition to the existing requirement for banks, administrators and insurers, among others, the Amendment Act introduces the requirement for an audit of the financial statements of payment institutions and ELMIs.
- With regard to the management of a UCITS with its registered office in the Netherlands, the Amendment Act provides that this may also be managed by an administrator with its registered office in another Member State, provided that the administrator's license in the home Member State allows for the management of this type of UCITS.
- Within the framework of an application for a certificate of no objection, the competent supervisory authority (DNB or ECB) assesses the applicant's reputation in terms of both reliability and suitability, pursuant to Article 3:100 (1) (a) and (b) AFS. Unlike reliability (see Article 3:99 AFS), suitability is currently not a continuous requirement. The Amendment Act inserts a new Article 3:99a AFS that makes the suitability of the holder of the qualifying holding a continuous requirement as well.