Changes from report parliamentary committee draft to plenary report

AddedA 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.

Added5. 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.

Added6. 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.

AddedA 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.

Added7. 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.

AddedMember 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.

AddedOperation of a bridge undertaking

Added1. Member States shall ensure that the operation of a bridge undertaking respects the following requirements:

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

Added(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;

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

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

Added(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;

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

Added(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.

AddedNotwithstanding 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. That period shall not exceed 24 months.

Added2. 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.

Added3. Resolution authorities shall decide that an entity is no longer a bridge undertaking in any of the following situations, whichever occurs first:

Added(a) the bridge undertaking merges with another entity;

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

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

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

Added4. 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.

AddedSubject 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.

AddedTransfer to Existing National Protection Schemes

AddedBy way of derogation from Articles 32 and 33 Member States may provide that an appropriate national protection scheme is assigned with the duties and powers of a bridge undertaking. While ensuring the interests of policy holders, Member States may provide for a transfer of portfolios to this national protection scheme, while ensuring continuity of insurance relationships and that the objectives of this Directive are still adequately met. No public funds shall be used to facilitate this transfer. Member States may require the establishment, maintenance or modification of an appropriate national protection scheme for that purpose.

AddedObjective and scope of the write-down or conversion tool

Added1. 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:

Added(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;

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

Added(ba) to ensure the continuity of critical functions:

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

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

AddedWhen 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. When doing so, resolution authorities shall take into account the impact on policy holders.

Added2. 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.

Added3. 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.

Added4. 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.

Added5. 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:

Added(a) secured liabilities;

Added(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;

Added(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 and third-country CCPs recognised by ESMA pursuant to Article 25 of that Regulation;

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

Added(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;

Added(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;

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

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

Added(e) liabilities arising from compulsory insurance against civil liability in respect of the use of motor vehicles in accordance with Directive 2009/103/EC.

AddedPoint (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.

Added6. 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:

Added(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;

Added(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;

Added(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

Added(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.

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

Added1. 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:

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

Added(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.

AddedWith 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.

Added2. When considering which of the actions referred to in paragraph 1 to take, resolution authorities shall have regard to:

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