What is Decree No. 117 / 2012 Coll.?

Decree No. 117 / 2012 Coll., on a more detailed regulation of the activity of the pension company, participating fund and supplementary pension savings intermediary — Decree on a more detailed regulation of the activities of the pension company, the participating fund and the supplementary pension savings intermediary.

When it became Decree No. 117 / 2012 Coll. effectiveness?

Decree No. 117 / 2012 Coll. became effective 06.04.2012.

Is Decree No. 117 / 2012 Coll. still valid?

Yes, Decree No. 117 / 2012 Coll. is still valid and effective.

Decree No. 117 / 2012 Coll. - Decree on a more detailed regulation of...

117

DECLARATION

of 29 March 2012

on a more detailed regulation of the activities of the pension company, the participating fund and the supplementary pension savings intermediary

The Czech National Bank provides pursuant to § 170 (1) of Act No. 427 / 2011 Coll., on supplementary pension savings, for implementation of § 52, § 54 (2), § 59, § 77h (e), § 100 (6), § 102 (6), § 118 (3), § 130 (3), § 133 (3) and § 189 of the Act on supplementary pension savings:

ČÁST PRVNÍ

BASIC PROVISIONS

§ 1

Subject matter

This decree regulates

(a) the way in which the various rules of activity of the pension company are complied with under Sections 49 and 50 of the supplementary pension savings law;

(b) requirements for entrustment to the activity of the pension company by another person and requirements for the pursuit of the activity of the pension company by another person under Section 51 of the supplementary pension savings law;

(c) the way in which the rules of conduct of the pension company are complied with under Paragraph 54 (1) of the supplementary pension savings law;

(d) the content and manner of submission of information to a participant in a pension company in the cases provided for in Section 130 (3) of the supplementary pension savings law;

(e) the time limits within which the pension company is obliged to inform the participants of the facts referred to in Section 133 (1) of the supplementary pension savings law;

(f) the types, limits, method of use and requirements for qualitative criteria of techniques and instruments which the participating fund may use for the efficient management of assets under Section 102 (6) (a) of the supplementary pension savings law;

(g) the procedure for assessing the level of risk associated with financial derivatives under Section 102 (6) (b) of the supplementary pension savings law;

(h) the content of the register of brokered supplementary pension savings contracts pursuant to § 77h (e) of the supplementary pension savings law;

(i) requirements for qualitative criteria for investment vehicles in which the participating fund may invest pursuant to Sections 100 (2) and (4) of the Supplementary Pension Savings Act;

(j) the scope, structure, form, periodicity, time limits and manner of publication of information pursuant to Articles 59 and 118 (1) of the supplementary pension savings law;

(k) the rules for calculating the capital requirement to cover the risks associated with the assets and liabilities of the transformed fund under Section 189 of the supplementary pension savings law.

§ 2

Definition of terms

For the purposes of this decree:

(a) an information system of a functional unit ensuring the acquisition, processing, transmission, sharing and storage of information in whatever form;

(b) the organisational body of the person or group of persons responsible for carrying out a particular activity of the pension company, including the body or committee of the pension company, if established;

(c) a person with a special relationship with a pension company

1. its head person,

2. its employee, who is involved in activities under § 29 (1), § 35 or § 74 of the supplementary pension savings law,

3. a natural person other than those referred to in point 1 or 2 who is involved in the activities referred to in § 29 (1), § 35 or § 74 of the supplementary pension savings law under the instructions of the pension company,

4. a natural person who is directly involved in activities whose performance has been entrusted by the pension company to another person in connection with activities under § 29 (1), § 35 or § 74 of the supplementary pension savings law;

(d) a reversal of the transfer of securities for cash with a current commitment to take over those securities at a specified date for an amount equal to the original funds and interest; repo also means selling with a simultaneous buy-back agreement or providing a loan of securities secured by cash,

(e) reverse repo of the acquisition of securities for cash with a current commitment to transfer those securities at a specified date for an amount equal to the transferred funds and interest; reverse repo also means purchase with a simultaneous repurchase agreement or acceptance of a loan of securities secured by cash,

(f) repos or reverse repos; and

(g) a highly liquid asset of an asset whose conversion into cash takes no more than five working days and the price achieved corresponds to the fair value of the asset.

ČÁST DRUHÁ

RULE AND REVIEW PERFORMANCE OF THE PENSION COMPANY

(The Act on Supplementary Pension Savings)

HLAVA I

GENERAL RULES ON THE RURAL AND REVIEW PERFORMANCE OF THE PENSION COMPANY

§ 3

Basic requirements for the proper and prudent performance of the activity of the pension company

(1) The pension company shall ensure that the requirements laid down for the management and control system and procedures of the pension company for their fulfilment and in the conduct of other activities are reflected in the organisation and other internal principles, statutes, plans, rules or procedures (hereinafter referred to as "internal rules") of the pension company. The pension company shall establish a procedure for the adoption, modification, introduction and application of internal rules.

(2) In order to fulfil the presumption of sound management and governance, the pension company will choose and reflect in its internal rules the selected accepted principles and procedures used in activities of a similar nature (hereinafter "recognised standards"). The pension company shall regularly check whether internal rules and recognised standards are up to date and proportionate to the nature, scale and complexity of its activity.

(3) The pension company will ensure that all approval and decision-making processes and control activities, including related internal rules, can be reconstructed. In order to ensure this requirement, the information storage system established by the pension company shall also be maintained and applied as part of its information system.

§ 4

Exercise of activities of a pension company through another person

Where a pension company entrusts another person to perform the activity ("outsourcing '), it shall ensure that:

(a) these activities have been carried out in accordance with the relevant legal and internal rules and the possibility of their control by the pension companies, the fulfilment of the information obligations to the Czech National Bank, the exercise of supervision, including, where appropriate, the control of the facts subject to supervision by the outsourcing provider, and the auditing of the accounts and other verifications provided for by law;

(b) the conditions for the proper and prudent exercise of the activities of the pension company are not jeopardised;

(c) the rights of the funds managed and their participants are not compromised; and

(d) rules are laid down for the control of such activities, including, where appropriate, the control of the facts relating to outsourcing with its pension company provider.

§ 5

Organisation of the activity of the pension company

The pension company shall provide for the work of the organisational services in such a way as to promote sound, efficient and prudent management and the pursuit of other activities and to enable effective communication and cooperation at all levels.

§ 6

Management of conflicts of interest

(1) The pension company shall ensure that:

(a) areas of conflict of interest and areas of potential origin identified in a timely manner;

(b) organisational services and staff at all levels of management and organisation shall lay down the powers and responsibilities in such a way as to adequately avoid a potential conflict of interest;

(c) the procedures for the identification and management of conflicts of interest referred to in paragraphs 21 to 23 are properly respected;

(d) the area of conflict of interest and the area of its possible establishment subject to continuous independent monitoring.

(2) The pension company operates independently of the business of the property in the fund (hereinafter referred to as "business activity")

(a) the valuation of assets and liabilities in the fund managed by it and the determination of the actual value of the pension unit of the participating fund;

(b) settlement of transactions negotiated on financial markets;

(c) checking the conformity of transaction data agreed on financial markets with the actual situation and the removal of irregularities detected (reclassification);

(d) risk management;

(e) approval and monitoring of compliance with risk management limits;

(f) the approval of valuation systems and models related to commercial activities; and

(g) the creation of quantitative and qualitative information on the risks reported to senior management and board of pension companies.

(3) The pension company will ensure, up to the level of senior management (Section 10), the separation of responsibility for business management from responsibility for risk management and settlement and the reclassification of transactions negotiated on financial markets.

(4) The development of the information system is ensured separately from the operation of the system. The management of the information system shall be carried out separately from the evaluation of the security audit records, the control of the allocation of access rights and the development and updating of the security rules for that system.

(5) The pension company shall ensure adequate independence of internal control due to the nature, object and importance of the control and the avoidance of conflicts of interest in the provision of all control mechanisms, including compliance function (§ 17 (2)); the internal audit function shall be independent of all executive activities.

§ 7

Supervisory Board

(1) The Supervisory Board of the Pension Society oversees and assesses at least once a year whether the management and control system is functional and effective. Within the framework of the fulfilment of this obligation, the Supervisory Board shall also regularly discuss matters relating to the overall strategy of the pension company, including the way in which the funds managed by it are invested and the risk direction to which the pension company or funds managed by it are or could be exposed.

(2) The Supervisory Board is involved in directing, planning and evaluating internal audit and compliance activities (§ 17).

(3) The Board of Supervisors shall give its views in advance on the Board's proposal to delegate a natural or legal person to a risk management function, internal audit function or compliance function and on the proposal for its appeal. In the event that the performance of a risk management function, internal audit function or compliance function is provided by several natural persons, the Supervisory Board shall only comment on the proposal for delegation or removal of the head of the organisation responsible.

(4) The Supervisory Board shall lay down the principles governing the remuneration of the members of the Board and of the person to whom it shall give notice in advance in accordance with paragraph 3, where this is not within the competence of the General Assembly.

Board of Directors

§ 8

The Board of Directors shall ensure the establishment and evaluation of the management and control system and the continued maintenance of its functionality and efficiency in its whole and parts. In order to fulfil this requirement, the Board shall always ensure:

(a) compliance of the management and control system with the legislation;

(b) the adequacy of information and effective communication in the performance of the activities of the pension company;

(c) establishing an overall strategy, including its assumptions and sufficiently specific principles and objectives for its implementation;

(d) the functioning of the internal control system;

(e) laying down rules which formulate and enforce ethical principles and the envisaged models of employee behaviour and behaviour in accordance with those principles;

(f) the establishment of human resources management principles, including principles for the selection, remuneration, evaluation and motivation of staff;

(g) setting out the knowledge and experience requirements of the persons by which the pension company carries out its activities and the way in which the required knowledge and experience is demonstrated;

(h) the application of sound operating procedures and management procedures which lead to the avoidance of adverse activities, in particular the prioritisation of short-term results and objectives that are not consistent with the implementation of the overall strategy, and a remuneration system that is unduly dependent on short-term performance, or procedures that allow the misuse of resources or the concealment of deficiencies.

§ 9

(1) The Board approves and regularly evaluates:

(a) overall strategy;

(b) organisational arrangements;

(c) the method of investing the funds managed;

(d) risk management strategy;

(e) capital and capital adequacy strategies;

(f) an information system development strategy;

(g) the principles of the internal control system, including the principles for avoiding potential conflicts of interest and compliance principles;

(h) security principles including security principles for the information system;

(i) the system of limits that the pension company will use to limit risks; and

(j) the strategic and periodic internal audit plan.

(2) The Board shall supervise the implementation of its approved strategies, principles and objectives and other activities, in particular the activities of senior management and its members. The Board shall evaluate the regular reports and exceptional findings in due time, including the information submitted to it by the auditors (1), the supervisory authorities or other relevant persons. On the basis of these evaluations, the Board shall take appropriate measures which shall be implemented without undue delay.

(3) The Board shall regularly discuss matters relating to the management and control system, with senior management, and shall evaluate, at least once a year, the overall functionality and effectiveness of the management and control system and shall ensure that any measures are taken to remedy the deficiencies thus identified.

§ 10

Top line

(1) Top management means:

(a) the head of the organisational bodies directly subordinate to the members of the board;

(b) members of the board who also carry out the activities referred to in paragraph 2; and

(c) other persons who are included in the senior management by the pension company.

(2) The senior management shall in particular:

(a) the implementation by the board of approved strategies, principles and objectives, including the development of procedures for their implementation and day-to-day management of the pension company;

(b) maintaining a functional and effective organisational structure, including separation of incompatible functions and avoiding potential conflicts of interest; and

(c) the establishment, maintenance and application of a functioning and effective system for the acquisition, use and storage of information.

Information and communication

§ 11

(1) The pension company shall ensure that the relevant organisational bodies and staff have up-to-date, reliable and comprehensive information available for their decision-making and other specified activities.

(2) The Board of Directors is informed without undue delay

(a) any facts which could significantly adversely affect the financial situation of the pension company or the fund managed, including the effects of changes in the internal or external environment; and

(b) any exceeding limits threatening compliance with the accepted level of risk taken.

(3) The Board of Directors shall be regularly informed of:

(a) compliance with the arrangements for investing the funds managed;

(b) the degree of risk taken; and

(c) compliance with capital requirements.

§ 12

(1) Pension company

(a) lay down the conditions for access to the information system and the data recorded therein, the scope of the access rights and the process for determining them, including how to decide on the extent of access rights of individual persons and decide on their changes;

(b) lay down the conditions under which data relating to the transactions and services carried out will be stored in the information system and their permissible adjustments, the conditions for handling such data and ensuring that their original content and modifications are easily detected; and

(c) ensure protection of the information system from damage and from access and interference by unauthorised persons; in the event of damage to the information system, ensure the reconstruction of data.

(2) The pension company makes available on request information and records from the information system to the Czech National Bank so that it can easily reconstruct all key stages of the processing of each business in the management of fund assets and determine their original content before repairs or changes.

§ 13

Provision of information for supervisory purposes

(1) The pension company will implement, maintain and implement a system for the creation, control and transmission of information to the Czech National Bank in such a way as to provide information up to date, reliably and comprehensively.

(2) The pension company shall establish, maintain and apply internal control mechanisms to ensure the completeness and correctness of all calculations, data, statements and other information provided to the Czech National Bank on a regular basis or at its request.

(3) The pension company will ensure that the process of creating and providing information to the Czech National Bank pursuant to paragraph 2 is recoverable for at least five years.

§ 14

Basic requirements for the risk management system

(1) The pension company shall ensure that risks are identified in such a way as to ensure that all activities and at all management and organisational levels are identified and allow for the detection of new, previously unidentified risks.

(2) The pension company will ensure that the risk management system provides an undistorted picture of the level of risk taken.

(3) The pension company shall take into account all relevant risks and risk factors to which the pension company or funds managed by it are or may be exposed. Risk management shall take into account internal and external factors, including the future business strategy of the pension company, the funds managed by it, the effects of the economic environment and the cycle and the effects of the regulatory environment. Risk management shall take into account the quantitative and qualitative aspects of risks, the real possibilities for their management and the costs and revenues resulting from risk management.

§ 15

Risk management strategy

(1) The pension company provides in its risk management strategy in particular:

(a) the definition of the risks to which a pension company or funds managed by it are or may be exposed;

(b) principles for assessing significance in risk management;

(c) risk management principles;

(d) risk management methods;

(e) accepted level of risk;

(f) principles for the establishment and modification of the liquidity crisis contingency plan;

(g) principles for the definition of authorised products, currencies, States, geographical areas, markets and counterparties;

(h) the principles of risk management control mechanisms, including monitoring compliance with the procedures and limits laid down for risk management and verification of risk measurement outputs; and

(i) the principles for reporting and managing risks to senior management, board of directors and supervisory board.

(2) The pension company shall ensure that all persons whose activities have an impact on risk management are familiar with the approved strategy to the extent necessary and comply with this strategy and the resulting procedures and limits.

§ 16

Essential requirements for internal control

(1) The pension company shall establish and maintain internal control rules which it applies at all management and organisational levels.

(2) The pension company will ensure that control activities are part of normal, generally day-to-day activities and include in particular:

(a) follow-up checks;

(b) adequate control mechanisms for each process, in particular monitoring compliance with legal and internal rules and limits, checking the approval and authorisation of transactions above the specified limits, checking the conduct of activities and transactions, verifying the details of transactions, verifying the outputs of the systems used and the risk management methods used, regular reconditioning; and

(c) physical checks; physical control shall aim in particular at limiting access to tangible assets, investment instruments and other financial assets and at periodic inventory of assets.

§ 17

Compliance

(1) The pension company shall establish, maintain and apply the principles and procedures for ensuring compliance, in particular to ensure:

(a) compliance of internal rules with legislation;

(b) mutual compliance with internal rules; and

(c) compliance of all activities with the laws, regulations and administrative provisions.

(2) The pension company will ensure continuous monitoring of compliance with the legal obligations and obligations arising from its internal rules, including continuous monitoring of compliance with the obligations of the pension company arising from the statutes of the funds managed by it and contractual relations with the depositary and participants (compliance function).

(3) The pension company will ensure

(a) informing the senior management of the discrepancies found and of the board of directors and, where appropriate, of any significant discrepancies identified;

(b) informing senior management of the legislation being prepared or new and recognised standards relating to the activities of the pension company; and

(c) the provision of additional effective information related to compliance with the board and senior management, in particular whether adequate corrective measures have been taken in the event of significant discrepancies found.

(4) The pension company sets out the principles and procedures for ensuring compliance so as to cover all its activities in a coherent and interconnected manner.

§ 18

Internal audit

(1) The pension company shall ensure that the internal audit is carried out in such a way as to provide objective and independent assurance on the activities of the pension company.

(2) The pension company shall ensure that internal audit is carried out in particular:

(a) compliance with the rules governing the prudent exercise of the activities of the pension company;

(b) compliance with the defined principles, objectives and procedures of the pension company;

(c) a risk management and internal control system;

(d) financial management and valuation;

(e) the completeness, evidence and accuracy of the keeping of accounts;

(f) the reliability of accounting, statistical and other information, including that provided to the authorities of the pension company; and

g) functionality and security of the information system including the reliability of the system of compilation and submission of reports to the Czech National Bank.

(3) The pension company will ensure that the following activities are always carried out when carrying out an internal audit:

(a) the establishment of a risk analysis at least once a year;

(b) the establishment of a strategic and periodic internal audit plan;

(c) the establishment and maintenance of a system for monitoring corrective measures imposed on the basis of internal audit findings; and

(d) an evaluation of the functionality and effectiveness of the management and control system at least once a year.

(4) The head of the organisational unit of the internal audit shall inform the board and the supervisory board of the findings and, in the event of findings which may significantly affect the financial situation of the pension company or funds managed by it, shall initiate an extraordinary meeting of the supervisory board.

HLAVA II

OTHER RULES ON THE RURAL AND REVIEW PERFORMANCE OF THE PENSION COMPANY

§ 19

Communication records

(1) The pension company shall:

(a) rules on the use of communication equipment, at least by reserving certain telephone lines or other communication equipment, where appropriate, for activities related to executed transactions and services, including communication between a pension company and a depository and an outsourcing provider pursuant to Article 4, and the recording of communications on such telephone lines and, where appropriate, other communication facilities; and

(b) the details of the alert referred to in (a), which shall be at least the date and time of communication, the identity data of the person (2) of the consignor and the consignee, if available, and the content of the transmitted message; the pension company shall ensure the possibility of the acquisition of complete records of communications on dedicated telephone lines or other communication facilities, as appropriate, and the possibility of the acquisition of an output from the recording facility.

(2) The pension company shall keep records of the communications referred to in paragraph 1 at least within the time limits referred to in Section 55 (2) of the supplementary pension savings law.

Citation	Decree No. 117 / 2012 Coll., on a more detailed regulation of the activity of the pension company, participating fund and supplementary pension savings intermediary
Regulation Type	-
Author	-
Collection	Code of Laws

Date of Promulgation	06.04.2012
Effective from	06.04.2012
Effective until	-
Status	Valid

Decree No. 117 / 2012 Coll.

Decree on a more detailed regulation of the activities of the pension company, the participating fund and the supplementary pension savings intermediary

Contents