Financial activities: amendment of Sovereign Order no. 1.284 (February 2023)

Sovereign Order no. 9.737 of 2 February 2023 (JDM no. 8629 of 10 February 2023) inserts new provisions into Sovereign Order no. 1.284 of 10 September 2007 implementing Act no. 1.338 of 7 September 2007 on financial activities, as amended.

SUMMARY

The following provisions are added to Sovereign Order no. 1.284:

• Definition of "professional investors" "by nature" or "at their own request".
• Approaches (solicited or unsolicited) on the territory of the Principality by any non-authorised person/entity to a client of an authorised firm domiciled in the Principality: obligation for a representative of the authorised firm to be present during the meeting between its client and the non-authorised person or entity.
• Modalities of the professional certifications "internal control of financial activities" and "banking, financial and environmental, societal and governance (ESG)".

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IN DETAIL

— Definition of "professional investors":

The new Article 9-1 of Ordinance no. 1.284 determines the criteria according to which clients are considered, within the meaning of Law no. 1.338 on financial activities, as professional investors ("by nature"), as well as the conditions according to which investors considered as non-professional may request to be treated as professional investors ("at their own request").

Professional investors "by nature" :

1°) entities authorised or regulated in Monaco or abroad to carry out financial activities;

2°) companies meeting at least two of the following criteria: a balance sheet total equal to or greater than €20 million, a turnover equal to or greater than €40 million and equity capital equal to or greater than €2 million;

3°) institutional investors;

4°) governments, central banks, international institutions.

Professional investors "at their own request":

Other investors, including natural persons, may be considered as professional investors if their investment skills, experience and knowledge enable them to assess the merits and risks involved in the services or transactions under consideration. The investor must meet one of the following criteria:

• the value of the investor's portfolio of financial instruments plus bank deposits exceeds €1 million;
• the investor has been in a professional position in the financial sector for at least one year or has been in such a position for at least one year, which requires knowledge of the services or transactions envisaged.

In order to be treated as professional investors, investors who meet one of the above criteria must notify the authorised firm in writing of their wish to be treated as such, either for all future operations or for the service or transaction envisaged.

The criteria in Article 9-1 correspond to those set out in Annex II of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiF2).

— Approaches (sollicited ou unsollicited) on the territory of the Principality:

Pursuant to Article 29 of Law no. 1.338, in principle, all approaches (solicited or unsolicited) on the territory of the Principality, with a view to offering services, instruments or financial products to persons domiciled in the Principality, regardless of the place or means used, are prohibited to any person/entity not authorised under the conditions provided for by Monegasque law.

However, this provision does not apply when the person domiciled in the Principality is a client of an authorised company, provided that the procedures are carried out by its intermediary.

The new Article 9-2 of the Ordinance no. 1.284 thus specifies that all approaches (solicited or unsolicited) on the territory of the Principality by any person/entity not authorised under the conditions of Law no. 1.338 to a client of an authorised company domiciled in the Principality, requires the presence of a representative of the authorised company during the meeting between its client and the non-authorised person or entity.

— Modalities of the professional certifications:

Article 23 of Law no. 1.338 of 7 September 2007, as amended, obliges authorised companies to ensure that the persons who perform certain functions within them obtain a professional certification following training, intended to guarantee the protection of investors and the regularity of operations.

Prior to this reform, Ministerial Order no. 2014-168 of 19 March 2014 set out the minimum knowledge required of natural persons under the authority of a licensed company or institution (managers, salespersons, financial analysts, trading room operators, and the direct managers of these persons), and set out the Regulations relating to the Professional Certification of Financial Activities in Monaco Ministerial Order no. 2023-67 of 2 February 2023 repealed Ministerial Order 2014-168.

From now on, the functions concerned and the conditions under which training and certification are issued are defined in Articles 9-3 to 9-6 of Sovereign Order no. 1.284 of 10 September 2007. The regulations specifying the examination procedures are drawn up by the Association Monégasque des Activités Financières (AMAF) in consultation with the Commission de Contrôle des Activités Financières (CCAF) after consultation with the Professional Certifications Commission [1] set up, and published on their websites.

The "internal control of financial activities" professional certification is reserved for persons designated as responsible for internal control, as well as persons placed under their authority.

The "banking, finance and environmental, societal and governance" professional certification (in short "banking, finance and ESG") is reserved for persons occupying the functions of manager, salesperson, financial analyst, trading room operator as well as their direct supervisors, with the exception of those who have relations with clients limited to the sale of standard products (passbook accounts, term accounts), namely receptionists, counter clerks and retail banking client advisers up to and including class 3 of the national collective agreement for banking personnel.

The final provisions of Sovereign Order no. 9.737 specify which persons are concerned by this new scheme, depending on their seniority / the date of occupation of their function.

[1] Composition of the Professional Certifications Commission: - President of the AMAF or any person he/she designates to represent him/her, President of the Commission; - Vice-Presidents of the AMAF; - Secretary General of the AMAF; - Secretary General of the CCAF or any person he/she designates to represent him/her; - a maximum of 6 members designated each year by the Bureau of the AMAF on the basis of their competencies in the field of education and their knowledge of the Monegasque economic fabric.