Private pensions, AMF prepares the new regulation for the licensing of administrative companies

After the entry into force of the new law "On private pension funds", the Financial Supervision Authority (AMF) has started drafting new regulations in support of this law.

AMF has submitted for consultation the draft regulation "Licensing and additional licensing rules of the management company of private pension funds and the depository of private pension funds established in the Republic of Albania".

The minimum capital for licensing the Pension Fund management company is at least 15.8 million ALL and the company applying for the license must submit documents proving that the initial minimum capital has been fully paid in cash and that the capital is derived from legal sources, together with documentation for the fulfillment of other legal and financial criteria for licensing.

The company applying for a license must also submit a business plan for a minimum of five years, which describes the activity the applicant intends to develop, how the capital adequacy requirements will be met and how the envisaged business will be developed.

The authority conducts the review within three months from the completion of all documentation required for licensing. In case of rejection of the application for licensing, the management company of private pension funds cannot apply again for licensing without passing one year from the date of rejection of the previous application.

Any individual or legal entity, which intends to directly or indirectly acquire or increase participation in a private pension fund management company, which reaches or exceeds the threshold of 10%, 20%, 30%, 50% or 75% of the capital shares or voting rights, must obtain the prior approval of the Authority. AMF approves or rejects the request of the individual or legal entity to become an influential shareholder to increase or decrease the participation in the company within 3 months from the date of full notification.

The authority in the decision on the approval of influential participation in the management company of private pension funds may determine the maximum limit of interest, which is allowed to reach this individual or legal entity, justifying the decision.

The private pension fund management company may acquire and own shares in another private pension fund management company provided that it acquires and owns 100% of the shares of this acquired company. The acquisition of all shares of the private pension fund management company by another private pension fund management company requires the prior written approval of the Authority. Private pension fund management companies may only merge with the prior written approval of the Authority.

The private pension fund management company for each private pension fund must appoint a depository, which must be licensed by the Authority.

Only a bank or a branch of a foreign bank, registered in the Republic of Albania and licensed by the Bank of Albania for the custody and administration of financial instruments on behalf of the client, including custody and depository and trust services, may be licensed to act as a depository of private pension funds in the Republic of Albania. The custodian is responsible for safeguarding all assets of private pension funds.

The legal entity applying for a license to exercise the activity of a depository must submit documents proving the possession of the necessary infrastructure for the custody of assets that can be registered in a financial instrument account opened in the depository's books.

The current licenses for private pension funds and depositories will continue to be valid even after the entry into force of the new law and the new regulation of their licensing. These entities will have a time limit of 18 months to adapt their activity in accordance with all the requirements of the new law and the regulations supporting it.