Changes from report parliamentary committee draft to plenary report

Added2. The supervisory measures referred to in paragraph 1 shall be effective, proportionate, and dissuasive.

Added3. When taking the supervisory measures referred to in paragraph 1, ESMA shall take into account the nature and seriousness of the infringement, having regard to the following criteria:

Added(a) the duration and frequency of the infringement;

Added(b) whether financial crime has been occasioned, facilitated or otherwise attributable to the infringement;

Added(c) whether the infringement has been committed intentionally or negligently;

Added(d) the degree of responsibility of the person responsible for the infringement;

Added(e) the financial strength of the ESG rating provider, as indicated by its total annual net turnover;

Added(f) the impact of the infringement on retail investors’ interests and on other ESG rating users;

Added(g) the importance of the profits gained and losses avoided by the ESG rating provider or the losses for third parties derived from the infringement, insofar as such profits and losses can be determined;

Added(h) the level of cooperation of the ESG rating provider with ESMA, without prejudice to the need to ensure disgorgement of profits gained or losses avoided by that ESG rating provider;

Added(i) previous infringements by the ESG rating provider;

Added(j) measures taken after the infringement by the ESG rating provider to prevent its repetition.

Added4. ESMA shall notify any action taken pursuant to paragraph 1 to the person responsible for the infringement without undue delay. ESMA shall publish any such action on its website within 5 working days from the date when it was adopted.

AddedThe publication referred to in the first subparagraph shall contain all of the following:

Added(a) a statement affirming the right of the ESG rating provider to appeal the decision;

Added(b) where relevant, a statement affirming that an appeal has been lodged and specifying that such an appeal does not have suspensive effect;

Added(c) a statement asserting that it is possible for ESMA to suspend the application of the contested decision in accordance with Article 60(3) of Regulation (EU) No 1095/2010.

Added4a. Where an ESG rating provider has committed material infringements of this Regulation in respect of the development of an ESG rating, ESMA may require the infringing ESG rating provider to inform the ESG rating subscribers and users that the ESG rating is no longer valid. ESMA shall publish on its website its decision to that effect on the day following the adoption of that decision.

AddedFines

Added1. Where ESMA finds that an ESG rating provider, or, where applicable, its legal representative, has, intentionally or negligently, infringed this Regulation, it shall adopt a decision imposing a fine. The maximum amount of the fine shall be 10 % of the total annual net turnover of the ESG rating provider, calculated on the basis of the most recent available financial statements approved by the management body of the ESG rating provider. An infringement shall be considered to have been committed intentionally if ESMA finds objective elements which demonstrate that a person acted deliberately to commit the infringement.

Added2. Where the ESG ratings provider is a parent undertaking or a subsidiary of a parent undertaking which is required to prepare consolidated financial accounts pursuant to Directive 2013/34/EU, the relevant total annual net turnover shall be either the total annual net turnover, or the corresponding type of income in accordance with the relevant Union law in the area of accounting, according to the most recent available consolidated accounts approved by the management body of the ultimate parent undertaking.

Added3. When determining the level of a fine pursuant to paragraph 1, ESMA shall take into account the criteria set out in Article 33(3).

Added4. Notwithstanding paragraph 3, where the ESG rating provider has directly or indirectly benefited financially from the infringement, the amount of the fine shall be at least equal to that benefit.

Added5. Where an act or omission of a ESG rating provider constitutes more than one infringement to this Regulation, only the higher fine calculated in accordance with paragraph 2 and relating to one of those infringements shall apply.

AddedPeriodic penalty payments

Added1. ESMA shall, by decision, impose periodic penalty payments to compel:

Added(a) an ESG ratings provider to put an end to an infringement in accordance with a decision taken pursuant to Article 33;

Added(b) the persons referred to in Article 30(1):

Added(1) to supply complete information which has been requested by a decision taken pursuant to Article 30;

Added(2) to submit to an investigation and in particular to produce complete records, data, procedures or any other material required and to complete and correct other information provided in an investigation launched by a decision taken pursuant to Article 30;

Added(3) to submit to an on-site inspection ordered by a decision taken pursuant to Article 32.

Added2. A periodic penalty payment shall be effective and proportionate. ESMA shall impose the periodic penalty payment on a daily basis until the ESG rating provider or person concerned complies with the relevant decision referred to in paragraph 1.

Added3. Notwithstanding paragraph 2, the amount of the periodic penalty payments shall be 3 % of the average daily turnover in the preceding business year, or, in the case of natural persons, 2 % of the average daily income in the preceding calendar year. It shall be calculated from the date stipulated in the decision imposing the periodic penalty payment.

Added4. A periodic penalty payment shall be imposed for a maximum period of six months following the notification of ESMA’s decision. Following the end of that period, ESMA shall review the measure.

AddedDisclosure, nature, enforcement and allocation of fines and periodic penalty payments

Added1. ESMA shall disclose to the public every fine and every periodic penalty payment that it has imposed pursuant to Articles 34 and 35, unless such disclosure to the public would seriously jeopardise the Union financial markets or cause disproportionate damage to the parties involved. Such disclosure shall not contain personal data within the meaning of Regulation (EU) 2018/1725 of the European Parliament and of the Council.

Added2. Fines and periodic penalty payments imposed pursuant to Articles 34 and 35 shall be of an administrative nature.

Added3. Fines and periodic penalty payments imposed pursuant to Articles 34 and 35 shall be enforceable.

AddedEnforcement of the fines and periodic payments shall be governed by the rules of procedure in force in the Member State or third country in which it is carried out.

Added4. The fines and periodic penalty payments shall be allocated to the general budget of the European Union.

AddedProcedures and review

AddedProcedural rules for taking supervisory measures and imposing fines

Added1. Where ESMA finds that there are serious indications of a possible infringement of this Regulation, ESMA shall appoint an independent investigation officer within ESMA to investigate the matter. That appointed officer shall not be involved or have been directly or indirectly involved in the supervision of the ESG ratings to which the infringement relates and shall perform his or her functions independently from ESMA’s Board of Supervisors.

Added2. The investigation officer referred to in paragraph 1 shall investigate the alleged infringements, take into account any comments submitted by the persons who are subject to the investigation, and shall submit a complete file with his or her findings to ESMA’s Board of Supervisors.

Added3. The investigation officer shall have the power to request information in accordance with Article 30 and to conduct investigations and on-site inspections in accordance with Articles 31 and 32.

Added4. When carrying out his or her tasks, the investigation officer shall have access to all documents and information that have been gathered by ESMA in its supervisory activities.

Added5. The rights of defence of the persons subject to the investigation shall be fully respected during investigations under this Article.

Added6. Upon submission of the file with his or her findings to ESMA’s Board of Supervisors, the investigation officer shall notify the persons who are subject to the investigation.

Added7. On the basis of the file containing the investigation officer’s findings and, where requested by the persons concerned after having heard those persons in accordance with Article 38, the Board of Supervisors of ESMA shall assess whether one or more persons subject to the investigation have committed the infringements concerned and shall, where it comes to the conclusion that such infringements have been committed, take a supervisory measure as referred to in Article 33 and impose a fine in accordance with Article 34.

Added8. The investigation officer shall not participate in the deliberations of ESMA’s Board of Supervisors or in any other way intervene in the decision-making process of ESMA’s Board of Supervisors.

Added9. The Commission shall supplement this Regulation by adopting further rules of procedure for the exercise of ESMA’s power to impose fines or periodic penalty payments, including provisions on rights of defence, temporal provisions, and the collection of fines or periodic penalty payments, and by adopting detailed rules on the limitation periods for the imposition and enforcement of penalties.

AddedThe rules referred to in the first subparagraph shall be adopted by means of delegated acts in accordance with Article 45.

Added10. ESMA shall refer matters for criminal prosecution to the national authorities concerned where, in carrying out its tasks under this Regulation, it finds that there are serious indications of the possible existence of facts liable to constitute criminal offences. ESMA shall refrain from imposing fines or periodic penalty payments where a prior acquittal or conviction arising from an identical fact or facts which are substantially the same has already acquired the force of res judicata as the result of criminal proceedings under national law.

AddedHearing of the persons subject to investigations

Added1. Before taking any decision pursuant to Article 33, 34 and 35, ESMA shall give the persons subject to the proceedings the opportunity to be heard on its findings. ESMA shall base its decisions only on findings on which the persons subject to the proceedings have had an opportunity to comment.

AddedThe first subparagraph shall not apply where urgent action pursuant to Article 33 is needed to prevent significant and imminent damage to the financial system. In such a case, ESMA may adopt an interim decision and shall give the persons concerned the opportunity to be heard as soon as possible after taking its decision.

Added2. The rights of defence of the persons subject to the proceedings shall be fully respected in the investigations. They shall be entitled to have access to ESMA’s file, subject to the legitimate interest of other persons in the protection of their business secrets. The right of access to the file shall not extend to confidential information or ESMA’s internal preparatory documents.

AddedReview by the Court of Justice

AddedThe Court of Justice shall have unlimited jurisdiction to review decisions whereby ESMA has imposed a fine or a periodic penalty payment. It may annul, reduce, or increase the fine or periodic penalty payment imposed.

AddedFees and delegation