E-2/23 - A Ltd v Finanzmarktaufsicht
EFTA-case
Klik hier voor het dossier van het EVA-hof (voor zover beschikbaar). Deadline: 14 August 2023 Keywords: acquisitions, suitability
Summary of the Case:
The appellant, A Ltd, is a joint-stock company established under foreign law. Its registered office is not in an EEA Member State. Its sole shareholder is B Inc, a company also established under foreign law. B Inc’s registered office is not in an EEA Member State. She is the sole managing director of both A Ltd and B Inc. Ms C does not reside in an EEA Member State, nor does she have the nationality of an EEA Member State. A Ltd proposes to acquire all the shares in Z AG, a joint-stock company established under Liechtenstein law with a registered office in Liechtenstein. The Financial Market Authority (hereinafter: FMA) opposed the proposed acquisition by A Ltd in accordance with Article 93(5) and Article 94(2) of the Insurance Supervision Act. In support of the contested decision, the FMA reasoned that although A Ltd is intended as the immediate acquirer of all the shares in Z AG, by reason of Ms C’s exclusive control, the assessment of the proposed acquisition by the FMA against the criteria set out in Article 94(1) of the Insurance Supervision Act has to be carried out in relation to Ms C personally as the proposed acquirer. The FMA has concerns regarding the suitability, financial soundness, and personal integrity of Ms C pursuant to Article 94(1), first sentence, and Article 94(1)(a) of the Insurance Supervision Act, and indicates that Ms C does not comply with the statutory requirement(s). A Ltd brought an appeal against the contested decision of FMA to the Appeals Board. It disputes the argument that the professional competence of Ms C is open to an assessment of any kind and considers the financial soundness of Ms C to be adequate.
Request for an advisory opinion:
1. How must the terms “suitability” and “reputation” be interpreted for the purposes of Article 59(1)(a) of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), OJ L 335, 17.12.2009, p. 1, incorporated into the EEA Agreement by Decision No 78/2011 of the EEA Joint Committee of 27 November 2012, LGBl. 2012/384? Is it thereby intended to refer only to the integrity or also to the professional suitability of the proposed acquirer?
2. In the appraisal of the financial soundness of the proposed acquirer within the meaning of Article 59(1)(c) of the Directive mentioned may it also be taken into account that any necessary supply of funds by that person to the insurance undertaking is ensured through the provision of a bank guarantee or the making available of funds on a trust account which may be drawn on by the insurance undertaking at any time?
3. How must the words “reasonable grounds” be interpreted for the purposes of Article 59(2) of the Directive mentioned? Is for these purposes certainty of non-compliance with the statutory requirements necessary or are substantiated doubts sufficient?
4. Does a declaration made by the competent authority, here: by the Financial Market Authority Liechtenstein, pursuant to Article 16(3) of Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), OJ L 331, 15.12.2010, p. 48, incorporated into the EEA Agreement by Decision No 200/2016 of the EEA Joint Committee of 30 September 2016, LGBl. 2016/303, to make every effort to comply with the guidelines, here: Joint Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector, JC/GL/2016/01, have binding effect on the courts of the Member States so that the latter are also obliged to make every effort to comply with these guidelines?
Submission of the parties:
Liechtenstein submits that the questions referred should be answered as follows:
1. When assessing whether the requirement of ‘the suitability of the proposed acquirer’ for the purposes of Article 59(1)(a) of Directive 2009/138/EC (Solvency II) is fulfilled, national supervisory authorities have to consider the reputation of the proposed acquirer. The term ‘reputation of the proposed acquirer’, however, consists of two criteria: the integrity and the professional competence. In a case like the one at hand, when one undertaking intends to acquire all shares of an insurance undertaking in an EEA State, both criteria have to be applied.
2. It depends on the concrete circumstances of the individual case whether for the appraisal of the financial soundness of the proposed acquirer within the meaning of Article 59(1)(c) of Solvency II it may also be taken into account that any necessary supply of funds by that person to the insurance undertaking is ensured through the provision of a bank guarantee or the making available of funds on a trust account which may be drawn on by the insurance undertaking at any time.
For the purposes of Article 59(2) of Solvency II, the words ‘reasonable grounds’ must be interpreted as meaning that substantiated doubts are sufficient.
4. A declaration made by the competent authority, here: by the Financial Market Authority Liechtenstein, pursuant to Article 16(3) of Regulation (EU) No 1094/2010, to make every effort to comply with guidelines, here: Joint Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector, JC/GL/2016/01, results in the national courts being obliged to take the Joint Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector into consideration with a view to resolving the disputes submitted to them, in particular as they are intended to supplement binding provisions of EEA law.
Iceland submits that the fourth question should be answered as follows:
A declaration made by the competent authority to make every effort to comply with guidelines issued by a European Supervisory Authority does not have a binding effect on a national court so that the latter is also obliged to make every effort to comply with those guidelines. National courts interpreting provisions of the EEA Agreement should take into consideration any available guidelines issued by a European Supervisory Authority where those guidelines may be of relevance and use to the interpretation of those provisions. Furthermore, towards that aim of interpreting applicable provisions of the EEA Agreement, national courts should also take into consideration any declaration by the competent authority confirming its compliance with those guidelines or, as the case may be, its non-compliance and the reasons therefore.
ESA (the EFTA Surveillance Authority) submits that the questions referred should be answered as follows:
1. For the purposes of Article 59(1)(a) of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), the terms “suitability” and “reputation” must be interpreted as referring to the integrity and professional competence of the proposed acquirer.
2. In the appraisal of the financial soundness of the proposed acquirer within the meaning of Article 59(1)(c) and (d) of the Directive, the national supervisory authority may take into account the supply of funds by that person to the insurance undertaking through the provision of a bank guarantee or by the
making available of funds on a trust account which may be drawn on by the insurance undertaking at any time.
3. For the purposes of Article 59(2) of the Directive, the term “reasonable grounds” must be interpreted as not requiring certainty.
4. Guidelines issued by the European Insurance and Occupational Pensions Authority under Article 16(3) of Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), do not have binding legal effect on the national courts of the EFTA States.
The European Commission submits that the questions referred should be answered as follows:
1. Article 59(1)(a) of Directive 2009/138 must be interpreted as meaning that the assessment of the reputation of the proposed acquirer should cover both integrity and professional competence.
2. Article 59(1)(c) of Directive 2009/138 does not preclude national rules according to which an assessment must take into account all relevant information, including, as the case may be, the provision of a bank guarantee or the making available of funds on a trust account.
3. Article 59(2) of the Solvency II Directive must be interpreted as meaning that, in order to oppose a proposed acquisition, it is not necessary for a supervisory authority to establish actual non-compliance with one of the criteria listed in paragraph 1 of that provision.
4. It is for national courts in the EEA EFTA States to take into consideration EIOPA Guidelines in order to resolve disputes before them. This is particularly the case when the national authority of an EEA EFTA State has confirmed its intention to comply with those guidelines.
Policy Area: FIN/EZK
