S.L. 330.9 Art. 41Operation of a bridge institution.

(1) The operation of a bridge institution shall respect the following requirements:

(a) the contents of the bridge institution’s constitutional documents are approved by the Resolution Committee;

(b) subject to the bridge institution’s ownership structure, the Resolution Committee either appoints or approves the board of directors of the bridge institution;

(c) the Resolution Committee approves the remuneration of the directors and determines their appropriate responsibilities;

(d) the Resolution Committee approves the strategy and risk profile of the bridge institution;

(e) the bridge institution is licenced in accordance with the CRD or Directive 2014/65/EU, as applicable, and has the necessary licence to carry out the activities or services that it acquires by virtue of a transfer made pursuant to regulation 63;

(f) the bridge institution complies with the requirements of, and is subject to supervision in accordance with the CRD, CRR and Directive 2014/65/EU, as applicable;

(g) the operation of the bridge institution shall be in accordance with the Union State aid framework and the Resolution Committee may specify restrictions on its operations accordingly: Provided that, notwithstanding the provisions referred to in paragraphs (e) and (f) and where necessary to meet the resolution objectives, the bridge institution may be established and licensed without complying with the CRD or Directive 2014/65/EU for a short period of time at the beginning of its operation. To that end, the Resolution Committee shall submit a request in that sense to the Authority. If the Authority decides to grant such a licence, it shall indicate the period for which the bridge institution is waived from complying with the requirements of those Directives.

(2) Subject to any restrictions imposed in accordance with European Union or Maltese competition rules, the management of the bridge institution shall operate the bridge institution with a view to maintaining access to critical functions and selling the institution or entity referred to in paragraphs (b), (c) or (d) of the definition "entity" in regulation 2(1), its assets, rights or liabilities, to one or more private sector purchasers when conditions are appropriate and within the period specified in sub-regulation (4) or, where applicable, sub-regulation (6).

(3) The Resolution Committee shall take a decision that the bridge institution is no longer a bridge institution within the meaning of regulation 40(2) in any of the following cases, whichever occurs first:

(a) the bridge institution merges with another entity;

(b) the bridge institution ceases to meet the requirements of regulation 40(2);

(c) the sale of all or substantially all of the bridge institution’s assets, rights or liabilities to a third party;

(d) the expiry of the period specified in sub-regulation (5) or, where applicable, sub-regulation (6);

(e) the bridge institution’s assets are completely wound down and its liabilities are completely discharged.

(4) Where the Resolution Committee seeks to sell the bridge institution or its assets, rights or liabilities, the bridge institution or the relevant assets or liabilities shall be marketed openly and transparently, and the sale shall not materially misrepresent the institution or the relevant assets or liabilities or unduly favour or discriminate between potential purchasers. Any such sale shall be made on commercial terms, having regard to the circumstances and in accordance with the Union State aid framework.

(5) If none of the outcomes referred to in paragraphs (a), (b),

(c) and (e) of sub-regulation (3) applies, the Resolution Committee shall terminate the operation of a bridge institution as soon as possible and in any event two years after the date on which the last transfer from an institution under resolution pursuant to the bridge institution tool was made.

(6) The Resolution Committee may extend the period referred to in sub-regulation (5) for one or more additional one-year periods where such an extension:

(a) supports the outcomes referred to in sub-regulation (3)(a), (b), (c) or (e); or

(b) is necessary to ensure the continuity of essential banking or financial services.

(7) Any decision of the Resolution Committee to extend the period referred to in sub-regulation (5) shall be reasoned and shall contain a detailed assessment of the situation, including of the market conditions and outlook that justifies the extension.

(8) Where the operations of a bridge institution are terminated in the circumstances referred to in sub-regulation (3)(c) or (d), the bridge institution shall be wound up under normal insolvency proceedings: Provided that, subject to regulation 37(7), any proceeds generated as a result of the termination of the operation of the bridge institution shall benefit the shareholders of the bridge institution.

(9) Where a bridge institution is used for the purpose of transferring assets and liabilities of more than one institution under resolution, the obligation referred to in sub-regulation (8) shall refer to the assets and liabilities transferred from each of the institutions under resolution and not to the bridge institution itself.