S.L. 330.6 Art. 6Capital adequacy.

(1) Without prejudice to the sectoral rules, supplementary supervision of the capital adequacy of the regulated entities in a financial conglomerate shall be exercised in accordance with the rules laid down in these regulations.

(2) Regulated entities forming part of a financial conglomerate shall maintain own funds at the level of the financial conglomerate at least equal to the capital adequacy requirements as calculated in accordance with the First Schedule.

(3) Regulated entities authorised in Malta which form part of a financial conglomerate shall ensure that adequate capital adequacy policies are in place at the level of the financial conglomerate.

(4) The requirements in sub-regulations (2) and (3) shall be subject to supervisory overview by the Authority when acting as coordinator or by another coordinator in accordance with the provisions of regulations 11 to 15 and regulations 18 to 21.

(5) Where the Authority is the coordinator, it shall ensure that the calculation referred to in sub-regulation (2) shall be carried out once a year, either by the regulated entities or by the mixed financial holding company.

(6) The results of the calculation referred to in sub-regulation

(2) and the relevant data for such calculation shall be submitted to the Authority when acting as coordinator or to another coordinator:

(a) by the regulated entity which is at the head of the financial conglomerate; or

(b) where the financial conglomerate is not headed by a regulated entity, by the mixed financial holding company or by a regulated entity in the financial conglomerate which has been identified by the Authority or by another coordinator as the case may be, after consultation with the other relevant competent authorities and with the financial conglomerate.

(7) For the purposes of calculating the capital adequacy requirements referred to in sub-regulation (2), the following entities shall be included within the scope of supplementary supervision in the manner and to the extent provided in the First Schedule:

(a) a credit institution, a financial institution or an ancillary services undertaking;

(b) an insurance undertaking, a reinsurance undertaking or an insurance holding company;

(c) an investment firm; and

(d) a mixed financial holding company.

(8) When calculating the supplementary capital adequacy requirements with regard to a financial conglomerate by applying method 1 (Accounting Consolidation) as provided for in the First Schedule, the own funds and the solvency requirements of the entities in the group shall be calculated by applying the corresponding sectoral rules on the form and extent of consolidation as laid down in Article 18 of Regulation (EU) No. 575/2013 and Article 221 of Directive 2009/138/EC.

(9) When applying method 2 (Deduction and Aggregation) referred to in the First Schedule, the calculation shall take account of the proportion of the subscribed capital which is directly or indirectly held by the parent undertaking or undertaking which holds a participation in another entity of the group.

(10) The Authority when acting as coordinator or another coordinator may decide not to include a particular entity when calculating the supplementary capital adequacy requirements in the following cases:

(a) if the entity is situated in a third country where there are legal impediments to the transfer of the necessary information, without prejudice to the sectoral rules regarding the obligation of competent authorities to refuse authorisation where the effective exercise of their supervisory functions is prevented;

(b) if the entity is of negligible interest with respect to the objectives of the supplementary supervision of regulated entities in a financial conglomerate; or

(c) if the inclusion of the entity would be inappropriate or misleading with respect to the objectives of supplementary supervision: Provided that, if several entities are to be excluded pursuant to paragraph (b), the Authority when acting as coordinator or another coordinator must include them when collectively they are of non-negligible interest: Provided further that, in the case referred to in paragraph ( ), the Authority when acting as coordinator or another c coordinator shall, except in cases of urgency, consult the other relevant competent authorities before taking a decision.

(11) When a coordinator does not include a regulated entity authorised in Malta when calculating the supplementary capital adequacy requirement on the basis of sub-regulation (10)(b) or (c), the Authority may ask the entity which is at the head of the financial conglomerate for information which may facilitate their supervision of the regulated entity concerned: Provided that, in the event such a request is made to a regulated entity authorised in Malta which is at the head of a financial conglomerate, such regulated entity shall provide such information.