THE CROATIAN PARLIAMENT

1390

Pursuant to Article 88 of the Constitution of the Republic of Croatia, I hereby promulgate

THE SECURITIES MARKET LAW

passed by the Croatian Parliament in its session of 2 July 2002.

No.: 01-081-02-2614/2

Zagreb, 8 July 2002

President

of the Republic of Croatia

(Sgd.) Stjepan Mesić

This Law shall regulate the organization, scope and powers of the Croatian Securities Exchange Commission (hereinafter: «the Commission»), the issuance of securities and transactions with securities and persons and individuals authorised to conduct transactions with securities, the conditions for organized public trade in securities, protection of the investor and the securities-right holder, dematerialised securities, and the organization, scope and powers of the central depository agency, exchanges and regulated public markets.

(1) “security” shall mean shares, bonds, finance papers, treasury notes, commercial papers, certificates of deposit and other series securities;

(2) “series securities” shall mean securities issued by the same issuer, issued simultaneously and giving the same rights;

(3) “debt securities” shall mean bonds, treasury notes, finance papers, commercial papers, certificates of deposit, and other securities with resulting money obligations;

(4) “short-dated securities” shall mean securities with maturity period up to one year;

(6) “authorised companies” shall mean brokerage companies and banks that have obtained the Commission's license to conduct transactions with securities;

(7) “public offering of securities" shall be an invitation to subscribe securities addressed to an indefinite number of persons via the mass media;

(8) “private offering of securities” shall mean issuance of securities in which the invitation to subscribe securities is addressed only to institutional investors, or issuer's shareholders or employees, and up to 20 external investors;

(9) “institutional investor” shall mean a domestic or foreign investment fund, pension fund, bank, insurance company, and legal person whose status of institutional investor pursuant to the provision of Article 102 paragraph 3 of this Law has been approved by the Commission;

(10) “external investor” shall mean a person or entity that is neither an issuer's shareholder nor employee nor an institutional investor, and can be a domestic or foreign individual or legal person;

(11) “issuance of securities” shall mean the issuance of securities through a public or private offering of securities in the Republic of Croatia or abroad;

(12) “foreign issuer” shall mean an issuer of securities whose head office is registered outside the territory of the Republic of Croatia;

(13) “foreign brokerage company” shall mean a company that is set up and registered outside the territory of the Republic of Croatia and authorised by the authorised body for transactions with securities;

(14) "negotiated transaction" shall mean a transaction with debt securities between two institutional investors performed on their own behalf and for their account;

(15) “owner’s position” shall mean the quantity of securities kept on a securities account.

(1) The Commission is a legal person with public authority performing independently and self-sufficiently the functions within the scope and powers established by this Law, for which it shall be accountable to the Croatian Parliament.

(4) General regulations on employment shall apply to persons employed in the specialised staff services and departments.

(5) The organization and activities of the Commission shall be regulated by bylaws, which shall be subject to the consent of the Government of the Republic of Croatia.

(1) The Commission shall consist of five members, one of whom shall be the Commission's Chairman.

(2) The Chairman and the members of the Commission shall be nominated by the Government of the Republic of Croatia and appointed or relieved of their duty by the Croatian Parliament.

(4) The Chairman of the Commission shall appoint the deputy chairman from among the members.

(1) To be appointed a member of the Commission, an individual must be a citizen of Croatia and a University graduate, with ten years of service in the profession, appropriate professional knowledge and worthy of being a member of the Commission.

(2) The members of the Commission shall be appointed for terms of six years from the date of their appointment and may be re-appointed.

(4) The members of the Commission must behave so as not to damage their reputation or that of the Commission and so as not to jeopardize their independence and self-sufficiency in making decisions as well as that of the Commission.

(5) Every form of influence on the work of the Commission shall be prohibited, in particular the use of public authority and the media and any public effort to influence the course of the Commission's work.

(1) During their term of office, the members of the Commission shall be entitled to a salary and other material rights in accordance with the bylaws of the Commission.

(2) The members of the Commission shall be authorised to write and publish professional and scientific papers and to participate in the proceedings of professional or scientific meetings.

(3) The members of the Commission and persons employed in the specialised staff services and departments may not be members of the board, supervisory boards or other bodies of issuers of securities.

(4) The members of the Commission may not be employed either in brokerage companies or companies for managing investment funds during a period of one year from the date of relief of their duty.

(5) The members of the Commission shall be entitled to remuneration in the amount of the salary paid in the month before they were relieved of their duty until they find new employment, but for no longer than one year from the date on which they ceased to perform their duty.

(1) The Croatian Parliament may relieve a member of the Commission of his/her duty before the end of the term of his/her appointment at the proposal of the Government of the Republic of Croatia if:

3. a member should commit an offence against property, safety of payment and business operations, his/her official duty or an offence against this Law,

4. a member should violate his/her obligation of confidentiality concerning the performance of his/her duty,

5. a member should perform a service, business operations or activities incompatible with his/her duty as a member of the Commission,

6. a member of the Commission should fail to perform his/her duty in the Commission for a considerable period of time without a justified reason.

(2) The Commission shall notify the President of the Government of the Republic of Croatia of reasons for dismissing a member of the Commission before the end of the term of his appointment.

(3) Before the decision is rendered to relieve a member of the Commission of his/her duty, the member shall be given the opportunity to make a statement on the reasons for his/her relief.

(1) The Commission shall render decisions on all general and individual acts at sessions, by a majority of at least three votes, and no member of the Commission may abstain from voting.

(2) Three members of the Commission shall constitute a quorum. Every session of the Commission must be attended by the Chairman or, in his absence, his deputy.

(3) The Commission shall publish general acts in the Official Gazette of the Republic of Croatia before they enter into force.

(4) The Commission shall publish individual acts in the Official Gazette of the Republic of Croatia after they take effect.

(5) If the Commission should consider that the publishing of an individual act would have no essential influence on the issuance of or trade in securities or the protection of investors, the Commission is not obliged to publish such an act and can publish only its proclamation.

(1) Once a year the Commission shall submit to the Government of the Republic of Croatia and to the Croatian Parliament a report on its work and on the conditions on the securities market in the previous calendar year.

(2) At the request of the Government of the Republic of Croatia, the Commission shall also produce a report for a period shorter than a year.

(1) The Commission shall be financed from the State Budget of the Republic of Croatia and from its own revenues from charges collected by the Commission.

(2) Revenues from administrative fees that the Commission collects for its services shall be the revenue of the State Budget of the Republic of Croatia.

(3) The kinds and amounts of charges referred to in paragraph 1 of this Article and administrative fees referred to in paragraph 2 of this Article shall be prescribed by the Commission's bylaw.

(4) Every budget year funds shall be appropriated in the state budget of the Republic of Croatia for employment, work and education, and the fulfilment of technical and other conditions necessary for the Commission’s work.

(5) The Republic of Croatia shall be liable for the obligations of the Commission.

The members and employees of the Commission shall not be liable for any damage arising from the performance of duty pursuant to this Law unless it is proven that a certain act or omission was committed on purpose or due to gross negligence.

1. issue regulations to implement this Law and other laws when authorised to do so by law,

2. supervise the observance of rules of customary trade and loyal competition on the securities market,

3. supervise operations in exchanges, regulated public markets, authorised companies, issuers of securities, investment and privatisation investment funds, companies for managing investment and privatisation investment funds, brokers, investment advisors, institutional investors, central depository agency, pursuant to this Law, the Law on the Takeover of Joint-Stock Companies, the Investment Funds Law, the Privatisation Investment Funds Law, regulations adopted pursuant to these Laws and other legal acts that regulate these matters,

4. order what measures shall be taken to eliminate the unlawfulness or irregularities established,

5. issue or suspend licences, permits and approvals when authorised to do so by law,

6. organise, undertake and supervise measures to guarantee the effective functioning of the securities market and the protection of investors,

8. start initiatives for the adoption of laws and other regulations concerning the issuance of and trade in securities, comments and drafts of laws and other regulations in this area, participate in the preparation of other laws and regulations of interest to participants in the securities market, and inform the public about the principles of the securities market functioning,

9. prescribe the mandatory content of information that issuers must release when securities are issued with a public offering,

10. lay down the general conditions that must be met by all those who are professionally engaged in trading in securities,

12. give its opinion on the implementation of this Law, the Law on the Takeover of Joint Stock Companies, the Investment Funds Law, the Privatisation Investment Funds Law, and regulations adopted pursuant to these Laws at the request of parties to proceedings or persons who have proven their legal interest.

(1) The Commission and bodies responsible for the supervision of other financial institutions in the Republic of Croatia shall, at the request of an individual supervisory body, deliver to that body all the data and information on the entity being supervised that are necessary when carrying out supervision and issuing licenses.

(2) The supervisory bodies referred to in paragraph 1 of this Article shall notify one another about any irregularities found during supervision if these findings are essential for the work of another supervisory body.

(3) The Commission shall co-operate and exchange information referred to in this Article with similar institutions of the EU member states that are needed in the course of the implementation of supervision and in the process of issuing licenses.

(4) Supervisory bodies shall not make available to unauthorised persons the data and information exchanged pursuant to the provisions of this Article.

(5) Exchange of data and information under the provisions of this Article shall not be considered disclosure of confidential business information.

(1) The Commission shall perform supervision by analysing and inspecting financial and business reports, business documentation, and other data and records which the persons under supervision are obliged to keep pursuant to the provisions of this Law and regulations adopted in accordance with it, and by taking statements or declarations from responsible persons and other employees of the legal person under supervision, as well as from other natural persons who have information that is of interest for the supervision.

(2) The supervision referred to in paragraph 1 of this Article shall be performed by either professional authorised persons by analysis of delivered documentation, or by authorised persons of the Commission through direct inspection in the premises of the supervised person or of the legal person with whom the supervised person is directly or indirectly connected through business, management or capital, by inspection of documentation.

(3) After authorised persons of the Commission have delivered to a supervised person the decision to initialise the procedure of supervision, such supervised persons shall give access to authorised persons of the Commission to their premises, provide appropriate rooms and personnel, and deliver and present for inspection the required papers and documentation, make statements or declarations and ensure all other conditions have been met necessary for supervision.

(4) Authorised persons of the Commission may temporarily seize, upon the issuance of a receipt, the documentation and books referred to in paragraph 1 of this Article, securities, money or objects which can be used as evidence in criminal or misdemeanour proceedings, but only until the institution of these proceedings, when they shall be given over to the body authorised for conducting the proceedings.

(1) Supervisory measures shall be used to order the elimination of illegal acts and irregularities established and to undertake activities necessary for their elimination.

(2) If illegal acts or irregularities have been found, the Commission shall, by rendering a decision, order that action be taken to contribute to the establishment of law and compliance of work with laws and other regulations, or the Commission shall pronounce the appropriate measure prescribed pursuant to this Law.

(3) In the decision referred to in paragraph 2 of this Article, the Commission shall set the deadline for the implementation of the decision that shall not exceed 60 days, and the obligation to produce to the Commission proof of the elimination of the illegal act or irregularity. If the Commission should establish that the illegal act or irregularity has not been eliminated, the Commission can render a decision pronouncing new measures.

(4) When the Commission finds illegal acts and irregularities endangering the functioning of the entire capital market, the position of individual participants on the capital market or a possibility for a considerable damage, the Commission shall:

1. cancel a transaction made on a stock exchange, regulated public market or through any other legal operation if it is found that one or more elements of the transaction are not correct or indicate manipulation of the price or quantity of securities,

2. cease all activities related to the transfer of ownership from the account of the transferor to the account of the transferee at the central depository agency or in the issuer’s register of shareholders if the Commission disposes of information that lead to the suspicion that the securities have been obtained in an illegal manner,

3. order a modification or amendment to or suspend the application of provisions of the general or individual acts of a stock exchange, regulated public market and the central depository agency, or order the writing of new general and individual acts in the cases when the Commission finds that it is necessary to guarantee the effective functioning of the securities market and the protection of participants,

4. dispossess the authorised company of the management of the owner’s position of the securities account when the Commission finds that it disposed of them in the manner contrary to the instructions of the owner of dematerialises securities,

5. admonish participants in the capital market when the Commission finds frequent violations of the provisions of this Law,

6. order the implementation of other measures necessary for the elimination of consequences of acts or omissions committed by participants on the capital market which could affect the market as a whole.

(5) In cases where this Law or bylaws based on this Law are violated, or if the continuation of business of the supervised entity is uncertain, the Commission can order the implementation of the following special measures:

1. to ban the performance of certain activities arising from this Law that are given approval by the Commission,

Where the Commission finds that there is a reasonable suspicion that a criminal act or offence has been committed, the Commission shall report as appropriate to a competent authority.

(1) The provisions of the General Administrative Procedure Law apply to the procedures that the Commission implements within its power, unless otherwise prescribed by law.

(2) The acts of the Commission shall be final, and an administrative dispute may be instituted against them.

(1) The members of the Commission, employees and associates must preserve the secrecy of information which they learn either as they carry out their obligations and perform their tasks in the Commission, or in some other way, regardless from whom, unless they are in a particular case authorised otherwise by law. This information shall be considered an official secret.

(2) The persons referred to in paragraph 1 of this Article shall not give advice concerning trade in securities and investment in securities or furnish opinions on whether it is favourable or unfavourable to obtain or sell securities.

(3) The ban of activities enumerated in paragraphs 1 and 2 of this Article shall expire six months from the date of termination of the performance of duties or tasks in the Commission.

(4) Whenever they obtain or sell securities, the members and employees of the Commission shall report it by giving such information to HINA and the media within two days from the date of purchase or sale, and shall state the kind of the security, the issuer, the date and legal grounds for obtaining or selling them.

(5) The obligation from the above Paragraph also applies to the purchase and sale of securities by the spouse, child, adoptive child, parent or adoptive parent and other persons who live with the member or employee in a common household, and to purchase and sale by legal persons in which such persons have a majority interest. The term for the report starts on the day when the employee, the chairman or the member of the Commission has learned of or, due to the circumstances of the case, could not be ignorant of the fact that securities have been obtained or sold.

(1) All data and information published under the provisions of this Law, the Law on the Takeover of Joint Stock Companies, the Investment Funds Law, the Privatisation Investment Funds Law must be presented to the Commission before their publication.

(2) The Commission may also require persons referred to in Article 12, Paragraph 1, Subparagraph 3 of this Law to give other information and data besides those enumerated in paragraph 1 of this Article, in which case the Commission shall specify the mode and time in which they are to be presented.

(1) When issuing securities in the Republic of Croatia, the issuer shall publish a prospectus (public offering) or deliver to potential investors a prospectus of issues of the securities (private offering). In addition to an invitation to subscribe securities, the prospectus shall obligatorily contain complete, accurate and objective information of the property and obligations, profit or loss, financial position and prospects of the issuer, the purpose of raising funds, risk factors and the rights contained in the securities to which the prospectus pertains, on the basis of which a potential investor can make an objective assessment of the prospects and risks of the investments and make a decision about the investment.

(2) Issuance of new securities documents to replace those declared to be invalid shall not be considered issuance of securities.

A) the data on the securities to which the prospects pertains and on the manner and conditions of their issuance as follows:

1. indication of the type and description of the characteristics of the securities, their total number, and description of the rights contained in these securities,

3. description of the manner of the securities distribution if more securities are subscribed than issued,

5. name, seat and business addresses of persons guaranteeing the obligations of the issuer with respect to the security,

6. names and addresses of institutions through which the issuers shall meet their financial obligations to owners of securities,

8. the procedure for exercising the right of priority in subscription and payment,

1. company, seat, business address, date of establishment, legal form, name of the court keeping the register in which the issuer is entered and the entry number in that register,

2. the amount of subscribed and/or authorised capital and paid-in capital, details on securities constituting the initial capital in the case of a joint stock company, and if the initial capital has not been entirely paid in, the amount of the unpaid portion and the reasons why it has not been paid, the number of convertible securities or rights to subscribe securities issued and conditions for their conversion or subscription,

4. a list of shareholders with 5% or more of the total number of votes in the issuer’s assembly and the percentage of votes belonging to each of them.

1. description of the issuer’s business activities and possible extraordinary circumstances which have influenced or are influencing the performance of some of those activities,

2. dependence on patents and licences belonging to others or other contracts with third parties, which are of major significance to the conduct of business,

4. basic data on current court or other disputes or other legal proceedings that may have a significant effect on the issuer’s financial position,

5. when the securities to which the prospectus pertains are exchangeable or have been issued along with rights of purchase or subscription, and the issuer of securities whose acquisition gives the right or for which they may be exchanged is not the issuer of securities to which the prospectus pertains, the data covered by this article must also be furnished concerning the other issuer,

6. risk factors (risk factors to which the issuer is exposed and which can influence the exercise of rights from securities to which the prospectus pertains and their price on the market).

D) The following data on property and debt, the financial position and profit or loss of the issuer, specifically for the previous three years and for the current year including the last quarter preceding the filing of the application for approval of the prospectus, unless the issuer has not been in business that long:

1. own statements and consolidated financial statements if they exist; if the issuer prepares only consolidated statements, they must be included in the prospectus, and if the issuer prepares both its own and consolidates financial statements, he/she shall include them in the prospectus, except when the statement omitted does not contain essential additional data. The data in the various statements shall be shown in tables, which makes it possible to compare the various items for successive financial years,

2. name or corporate name of the person responsible for the audit of financial statements, and if that person has refused to carry out an audit or sign it or has given a qualified opinion, those facts must also be given, including the reasons that caused them to do so.

1. full names, personal identification numbers (JMBG) and addresses of members of the board of directors and supervisory board or other corresponding body of the issuer, and their posts held in those bodies,

2. if the prospectus pertains to shares, the curricula vitae of members of the board of directors and supervisory board or other corresponding body of the issuer, and earnings which they receive from the issuer,

"To the best of our belief and in keeping with all our knowledge and the data we possess, we declare that all the data in this prospectus constitute a full and truthful presentation of the assets and liabilities, profits and losses, the financial position and operations of the issuer, the rights contained in the securities to which they pertain, and that facts have not been omitted which might influence the completeness and truthfulness of this prospectus."

(2) The prospectus shall be signed by the issuer, or by all the members the board of directors and supervisory board or other corresponding body of the issuer. It is sufficient that the prospectus is signed only by the person authorised to represent the issuer, or several of them if they represent the issuer jointly if reasons are stated in the prospectus for which other members have not signed the prospectus. The prospectus may also be signed by other persons who participated in its production or in the preparation of data for the prospectus.

(3) If a member of the board of directors or supervisory board refuses to sign the prospectus on the issuance of securities, he shall state the reasons for his refusal in writing, and this statement shall be published as an integral part of the prospectus.

(4) In the case that persons referred to in paragraph 3 of this Article should refuse to state the reasons of their refusal to sign the prospectus, the issuer shall state this fact in the prospectus.

(5) If one or several persons have issued a guarantee to meet obligations under the securities to which the prospectus pertains, the prospectus must also contain the data enumerated in paragraph 1 subparagraph B) of this Article concerning the issuer of that guarantee.

(1) Before publishing the prospectus or delivering it to potential investors, the issuer shall file an application with the Commission for approval of the prospectus. The issuer shall include the prospectus, the decision of issuance of securities and other prescribed documentation with the application.

(2) The prospectus shall not be published or delivered to potential investors before it has been approved by the Commission.

(3) In the procedure following the receipt of application, the Commission shall verify that the prospectus contains all the data enumerated in Article 21 of this Law. The Commission shall neither check whether the information stated in the prospectus is full and truthful nor the lawfulness of the decision to issue securities nor the content of other attached documents.

(4) If all the prescribed documentation have been attached to the application and if the prospectus contains all the data pursuant to the provisions laid down in Article 21 of this Law, the Commission shall approve the prospectus by rendering a decision.

(5) By way of an derogation from the provisions laid down in paragraph 4 of this Article, if it is evident from the application or attached documentation, or if it is public knowledge or otherwise known to the Commission that significant facts and circumstances exist which should undoubtedly be stated in the prospectus pursuant to the provisions of Articles 20 and 21 of this Law, the Commission shall conclude to invite the issuer to supplement the prospectus accordingly.

(6) If within 30 days from the date of filing a correct and full application referred to in paragraph 1 of this Article the Commission does not reach the decision to approve or reject the prospectus, it shall be considered that the Commission has approved the prospectus.

(7) The Commission shall prescribe by a bylaw the form, kind and number of mandatory attachments to the application referred to in paragraph 1 of this Article and the mandatory content of the application.

(1) The Commission shall not be liable for the truthfulness of the data given in the prospectus. Through its decision, the Commission shall confirm that the prospectus contains all the data prescribed by law and that it can be published.

(2) The issuer and persons who were determined to have used the prospectus for the covering up or false presentation of important facts shall be held completely liable for the fullness and truthfulness of the data contained in the prospectus. The persons who have signed the prospectus shall be liable for the truthfulness and fullness of the data contained in the prospectus within the limits of their knowledge or assumed knowledge.

(1) Within 30 days of receipt of the decision approving the prospectus for the issuance of securities by a public offering, the issuer shall publish the prospectus either in the form of an insert in a daily newspaper regularly sold throughout the whole territory of the Republic of Croatia, or so that along with the invitation to subscribe securities, the places are published in the same daily newspaper where the prospectus can be obtained free of charge and the address from where it can be ordered free of charge.

(2) If the invitation to subscribe securities is addressed only to certain potential investors in the case of a private offering, the issuer shall within 15 days deliver the prospectus to those potential investors and is not under obligation to publish it.

(3) In the case that securities are issued by a public offering, the prospectus shall be available to investors at the issuer’s headquarters and in all the places where the subscription for securities is performed.

(4) The prospectus must be published (public offering) or made available to potential investors (private offering) before a possible acceptance of the obligation to subscribe and before the subscription of securities. The investor shall not be liable for a possible acceptance of the obligation to subscribe or for performance of the subscription of securities before the publishing or delivery of the prospectus.

(5) If the issuer should not publish the prospectus within the term referred to in paragraph 1 of this Article or if he should not deliver it to potential investors within the term referred to in paragraph 2 of this Article, the decision of approval of the prospectus referred to in Article 22 paragraph 4 of this Law shall cease to be valid.

(1) The issuer shall state or correct in the modification of the prospectus every fact that arises or which the issuer learns after the Commission has approved the prospectus up to the end of the period for subscription of the securities and that has to be given in the prospectus pursuant to the provisions of Articles 20 and 21, as well as every inaccuracy in the prospectus. The issuer shall without delay file with the Commission an application for approval of the modification of the prospectus and attach to it the modified prospectus.

(2) Within three working days of receipt of the application for approval of the modification of the prospectus, the Commission shall render a decision concerning the application, under appropriate application of the provisions of Article 22 of this Law.

(3) If the Commission approves the modification of the prospectus or does not render a decision about the application within the term referred to in paragraph 2 of this Article, the issuer shall publish the modification of the prospectus on the next working day in the same way as the prospectus was published.

(1) If securities are offered by a private offering of securities, the issuer shall, in the decision of issuance of securities, name potential investors to whom he will send the invitation to subscribe securities as well as the form and the amount of their investments.

(2) In the case of a private offering of securities, the prospectus shall contain the data referred to in Article 21 of this Law, and the data concerning property and debt, the financial position and profit or loss referred to in Article 21, Paragraph 1 Subparagraph D) shall relate only to the previous and the current year, to the last quarter inclusive that precedes the filing of the application for approval of the prospectus.

(3) In the case of a private offering of securities, the issuer of securities shall neither communicate with potential investors through the mass media nor publish the prospectus.

(1) Subscription and payment of securities in a public offering shall not exceed three months, and in the case of a private offering it shall not exceed thirty days, from the day of on which the decision of approval of the prospectus made by the Commission has become final.

(2) In the period of the payment of securities, the issuer shall not dispose of the paid-in deposits and shall deposit them in a special account opened at the bank in which the investor has an account opened for his current operations.

(3) If within the time for subscription and payment of securities in a public offering at least 75% of the securities remains unsubscribed and unpaid, and in the case of private offering 90% of the securities remains unsubscribed and unpaid, the issuer shall not be allowed to issue the securities and shall return to the investors their paid-in deposits within seven days upon the expiry of the period for payment of securities.

(4) Within seven days upon the expiry of the period for payment, the issuer shall notify the Commission of the number and percentage of the securities subscribed and paid for and of the persons who have subscribed and paid for the securities. The Commission is also authorised to require from the issuer other data concerning the subscription and payments pertaining to that particular issue of securities.

(5) Upon expiration of the period for subscription and payment, neither the issuer nor the issuing agent shall either offer or enable the subscription of securities or receive payments.

(6) The subscription and payment of securities upon the expiration of periods referred to in paragraph 1 of this Article shall be null and void.

(1) The provisions of this Law shall apply to the issuance of short-dated securities.

(2) Short-dated securities shall not be issued with a maturity deferment clause through the issuance of a new series of securities.

(3) Issuers of short-dated securities are not obliged to produce the prospectus, but they shall notify the Commission in writing of the issue and the main characteristics of short-dated securities within seven days upon the execution of the issue.

(4) The time limit referred to in the above paragraph shall begin at the end of the last day of the period within which the payment of securities in question had to be made.

The issuer shall issue the securities that are issued by a public offering for subscription in the form of dematerialised securities pursuant to the provision of Article 124 paragraph 3 of this Law and list them in a stock exchange quotation or a regulated public market within one month from the day of issuance of the securities.

(1) A foreign issuer may issue securities in the Republic of Croatia with a public offering only through an authorised company that the foreign issuer has engaged to act as agent or underwriter.

(2) The application for approval of the prospectus of the issue of securities of a foreign issuer shall be filed on behalf of the foreign issuer by the authorised company referred to in paragraph 1 of this Article. The application shall be accompanied by a contract on agency or underwriting between the foreign issuer and the authorised company. The authorised company shall also perform other tasks on behalf of the foreign issuer in the procedure of issuing securities.

(3) The Commission may approve publication of the prospectus of a foreign issuer although the application is not accompanied by all the prescribed attachments or the application does not contain all the prescribed data if:

- the authorised company referred to in paragraph 1 of this Article should prove that pursuant to legislation of the issuer’s country, these attachments and data cannot be furnished, and if the Commission considers that will not lessen the potential investor’s possibilities of making an objective assessment of the prospects and risks of the investment and of making a decision concerning the investment,

- the authorised company referred to in paragraph 1 of this Article should prove that pursuant to legislation of the member-state of the European Union in which the issuer of securities is domiciled, these attachments and data are not required for approval of publication of a prospectus under the condition of reciprocity, which is assumed. The condition of reciprocity shall not apply to foreign issuers seated in member-states of the World Trade Organization.

(4) By way of an exception from the provisions of Article 22 of this Law, the Commission may approve the publication of a prospectus to a foreign issuer issuing securities with a public offering simultaneously in the Republic of Croatia and in a member-state of the European Union if the publication in that particular member-state of the European Union has been approved by the appropriate body of that state, and the Commission may condition the approval by supplementing the prospectus with certain data referred to in Article 21 of this Law.

(5) The authorised company referred to in paragraph 1 of this Article shall also jointly and severally guarantee that the data contained in the prospectus of a foreign investor is correct and complete.

(1) A domestic issuer that intends to issue securities on a foreign market shall previously notify the Commission of the characteristics of the intended issue of securities.

(2) The notice referred to in paragraph 1 of this Article shall contain the data enumerated in Article 21 paragraph 1 subparagraphs A) and B) of this Law.

(3) Within eight days of the expiration of the period for subscription and payment of securities issued exclusively outside the Republic of Croatia, the issuer shall inform the Commission about the number of securities subscribed and paid for.

(1) The issuer is not obliged to produce a prospectus in the following cases when he/she issues shares in order to:

- increase the initial capital by converting capital profit, reserves and retained earnings into the initial capital of the company,

- increase the initial capital so that all the shares are subscribed and paid for by the issuer’s shareholder who owes more than 75 % of voting rights in the issuer’s general assembly,

- increase the initial capital in which only institutional investors participate,

- convert convertible bonds into shares, and at the moment of the issuance of convertible bonds he/she has already produced and published or delivered the prospectus to investors,

(2) The issuer that has not produced a prospectus pursuant to the provision of paragraph 1 of this Article shall within seven days after the last day of the period for payment of securities submit to the Commission information about the issuance of securities.

(3) The information referred to in paragraph 2 of this Article shall contain data referred to in Article 21 paragraph 1 subparagraphs A) and B) and the data on investors and number of shares subscribed and paid for.

(4) By way of an exception from the provision of paragraph 1 of this Article, the issuer shall produce a prospectus on the issuance of securities by a private offering, when the invitation to subscribe is addressed only to institutional investors, so that one or more institutional investors subscribe and pay in all the securities of that issue, with the intention of offering them for sale to persons that are not institutional investors within a period shorter than one year.

(5) The issuer referred to in paragraph 4 of this Article shall file with the Commission the application referred to in Article 22 paragraph 1 of this Law before the institutional investor starts offering securities for sale, and the institutional investor shall make this prospectus available to potential customers before the sale.

The provisions of this Chapter of the Law do not apply either to the issuance of shares when setting up a joint stock company or to the issuance of securities when they are issued by the Republic of Croatia and the Croatian National Bank.

TRANSACTIONS WITH SECURITIES AND PERSONS AUTHORISED TO CONDUCT TRANSACTIONS WITH SECURITIES

1. purchases and sales by order of a customer (in one’s own name and on behalf of the customer),

2. trade for speculative purposes – the purchase and sale of securities on one’s own behalf and for one’s own account,

3. management of a securities portfolio on behalf of a customer – the owner of the portfolio,

4. transactions in special stock exchange trade – simultaneous bid-ask of securities, on one’s own behalf and for one’s own account, to maintain constant demand for certain security,

5. performance of the business of an issuing agent - organization, preparation and implementation of subscription and payment of securities, and performance of other activities for the issuer related to issuance of securities, preparation for the listing of securities on an exchange and regulated public market including the filing of the listing on behalf of the issuer,

6. sponsorship of an issue - organization, preparation and implementation of issuance of securities for the issuer and related subscription and payment of all securities or of only unsubscribed securities, for their further sale to potential investors, to ensure the success of the subscription and payment,

(1) Transactions with securities as a business activity may be performed exclusively by brokerage companies and banks that have been authorised by the Commission to conduct such transactions and have entered such transactions as their business activities in the court register.

(2) Persons who do not have a licence of the Commission shall not conduct transactions with securities as their business activity.

(1) A brokerage company is a private limited company or a joint stock company seated in the Republic of Croatia, whose sole business shall be the transactions with securities enumerated in Article 34 paragraph 1 subparagraph 1 to 7 of this Law, for which it has received authorization from the Commission.

(2) The provisions of the Company Law shall apply to brokerage companies, unless otherwise prescribed by this Law.

(3) The provisions of this Law that relate to shares and shareholders of brokerage companies shall appropriately apply also to business stakes and members of a brokerage company organized as a limited liability company.

(2) A brokerage company established as a joint stock company may issue only registered shares.

(2) Shares of a brokerage company shall be paid in money and must be paid in full before the entry in the court register of the establishment or the initial capital increase.

(1) A bank may conduct the transactions with securities enumerated in Article 34 of this Law for which they have been authorised by the Commission.

(2) The provisions of this Law that apply to brokerage companies shall appropriately apply also to banks that conduct transactions with securities.

(3) A bank may start conducting the transactions referred to in paragraph 1 of this Article when, after being authorised by the Commission for each individual transaction, the bank enters these transactions as one of its activities in the court register.

(1) The bank shall separate operations related to securities from other banking activities in terms of structure, organization and accounting.

(2) The bank may perform the transactions enumerated in Article 34 paragraphs 1 to 7 of this Law through a brokerage company it owns.

(2) A brokerage company, shareholder or member of a brokerage company, a natural or legal person connected with a brokerage company by having shares or stakes in a legal person that is a shareholder or member of that brokerage company, shall have neither shares nor business stakes in another brokerage company.

(3) A brokerage company shall furnish information on every change in its ownership structure to the Commission within eight days from the day when the change occurred.

(1) A license to conduct transactions with securities issued by the Commission shall be valid for an indefinite time.

(2) The Commission shall revoke licenses to conduct transactions with securities under the conditions set out in this Law.

1. on the day of the opening of bankruptcy or compulsory liquidation proceedings,

3. on delivery of a decision to revoke the license to conduct transactions with securities,

4. on delivery of a decision to revoke the approval to provide banking services, pursuant to provisions of the Banking Act.

(1) Before making an entry of the establishment of an authorised company in the court register, and before each next entry of business activities in the court register, the authorised company shall obtain from the Commission a license to conduct transactions with securities. The application for the issuance of a license to conduct transactions with securities shall be filed with the Commission by the founders or the management of the authorised company.

(2) The Commission shall prescribe the content of the application for the issuance of a license by a bylaw, setting forth the conditions and the procedure for issuing licenses to authorised companies and persons authorised for conducting transactions with securities.

(3) Certified copies of the following documents shall be attached to the application referred to in paragraph 2 of this Article:

1. the company’s bylaw and/or articles of association, or articles of incorporation of a limited liability company,

2. an extract from the court register, when an authorised company, which already has a license for the performance of individual transactions, files the application,

4. statements of each member or shareholders of the brokerage company that they do not have stakes or shares of another brokerage company,

5. proof that the authorised company has permanently employed at least one broker and/or investment advisor,

6. documentation prescribed by the bylaw referred to in paragraph 2 of this Article on the basis of which it can be determined if the personnel, technical and organizational conditions exist for providing services to which the application for issuance of a license relates,

The Commission’s Decision-Making on the Issuance of a License to Conduct Transactions with Securities

(1) Within 60 days from the day of the filing of a correct application, the Commission shall render a decision on the application and notify the applicant of the decision.

(2) If the applicant that filed the application should fail to eliminate defects specified in the received notice of the Commission within the time set by the Commission, it shall be considered that the applicant has waived his application.

(3) The Commission shall issue a license to conduct transactions with securities to the authorised company which has been established to fulfil the conditions prescribed by this Law.

(4) In the decision on the issuance of a license to conduct transactions with securities, the Commission shall specify for which particular transactions referred to in Article 34 of this Law the license is issued.

(5) The Commission shall keep a register of companies authorised for conducting transactions with securities.

The Commission shall refuse to issue a license to conduct transactions with securities if:

1. provisions of the bylaw, articles of association or articles of incorporation of an authorised company are contrary to provisions of this Law or regulations based on this Law,

2. it follows from the bylaw, articles of association or articles of incorporation of the authorised company that the authorized company is not organized in accordance with this Law, or that conditions have not been ensured for its operations pursuant to this Law and regulations based on this Law,

3. a brokerage company, shareholder or member of a brokerage company has directly or indirectly shares or stakes in another brokerage company,

4. an authorised company does not have at least one permanently employed broker and/or investment advisor,

6. it follows from the application and attached documentation that the authorised company does not fulfil other conditions for conducting transactions to which the application for issuance of a license relates.

(1) In the case of a merger of one authorised company into another company, the license to conduct transactions with securities of the merged authorised company shall cease to be valid.

(2) In the case of the consolidation of authorised companies, the licenses to conduct transactions with securities of all the consolidated companies shall cease to be valid.

(3) Authorised companies that are consolidating shall file an application with the Commission for the brokerage company that will be formed by consolidation before the entry of the new authorised company in the court register.

(1) For conducting transactions specified in Article 34 Paragraph 1 Subparagraphs 1 and 7 of this Law, the initial capital of the brokerage company shall not be less than HRK 200,000.00.

(2) For conducting transactions specified in Article 34 paragraph 1 subparagraphs 2, 3 and 4 of this Law, the initial capital of the brokerage company shall not be less than HRK 400,000.00.

(3) For conducting transactions specified in Article 34 paragraph 1 subparagraphs 5 and 6 of this Law, the initial capital of the brokerage company shall not be less than HRK 4,000,000.00.

(1) To ensure its obligations to creditors, the brokerage company shall balance its liquid funds and liabilities.

(2) The balance referred to in paragraph 1 of this Article shall be expressed by the net liquid funds indicator, which shall be the quotient of total liquid funds and total short-term obligations of the brokerage company.

(3) The net liquid funds indicator of a brokerage company shall not be less than 1.00 (one).

(4) The brokerage company shall fulfil its obligations enumerated in paragraphs 2 and 3 of this Article daily, and every month it shall inform the Commission about the calculation of the net liquid funds indicator.

(5) The Commission shall prescribe by a bylaw the manner of balancing the liquidity of the capital and reporting to the Commission.

Nobody can at the same time be an employee, member of the board of directors or supervisory board in several brokerage companies.

Conducting Transactions with Securities of Brokerage Company Branch Offices Abroad

(1) A brokerage company may establish a branch office abroad to conduct transactions with securities in accordance with the laws of the country in which it intends to perform the business.

(2) Before the establishment of a branch office abroad, the brokerage company shall advise the Commission of its intention to establish a branch office.

(3) The brokerage company shall notify the Commission of the established branch office within 10 days from the day of the entry of the branch office in the foreign register or from the obtaining of a license to conduct transactions with securities abroad. The notice shall be accompanied with copies of the following:

1. a translation of and the original extract from the foreign register in which the branch office has been entered,

2. a translation of and the original license to conduct transactions with securities issued by the authorised foreign body,

3. a list of persons authorised to represent the brokerage company in business activities of the branch office and persons in the branch office who conduct transactions with securities.

Conducting Transactions with Securities by Branch Offices of Foreign Brokerage Companies in the Republic of Croatia

(1) A foreign brokerage company authorised to conduct transactions with securities can establish a branch office in the Republic of Croatia with the view to conducting transactions specified in Article 34 paragraph 1 subparagraphs 1 to 7 of this Law, on the basis of a license issued by the Commission.

(2) The foreign brokerage company that establishes a branch office in the Republic of Croatia shall attach to the application for the issuance of a license to conduct transactions with securities the following certified copies:

1. a translation and the original of the authorization to conduct transactions with securities in the country of its domicile,

2. a translation and the original of the receipt proving that the notice of establishment of a branch office in the Republic of Croatia has been delivered to a competent regulatory body abroad.

(3) The provisions of this Law that relate to the issuance and revocation of licenses to brokerage companies and to the business of brokerage companies shall also apply as appropriate to the branch offices referred to in paragraph 1 of this Article, unless otherwise prescribed by individual provisions.

(1) Authorised companies shall file annual business reports and revised financial statements with the Commission within 60 days from the end of the business year, and quarterly business reports and financial statements within 30 days from the end of the quarter.

(2) The Commission shall prescribe by a bylaw the content of statements that brokerage companies shall file with the Commission.

(3) The authorised company shall notify the Commission within eight days of every change in the data given in the application for the issuance of a license to an authorised company, broker or investment advisor.

Revocation of a License of an Authorised Company to Conduct Transactions with Securities

(1) The Commission shall by a decision revoke the license of a brokerage company to conduct one or more transactions with securities if:

1. within six months from the issuance of the license, the brokerage company fails to be entered in the court register, or if within six months it fails to enter in the court register as its business activity the transactions with securities for which it has obtained a subsequent license by the Commission,

2. within six months from the issuance of the license, the brokerage company fails to commence conducting transactions with securities or if it does not conduct such transactions for more than 6 (six) months,

3. it conducts transactions with securities for which it does not have a license from the Commission,

5. it fails to bring its business operations into conformity with the provisions of Article 47 of this Law,

6. it obtains shares or stakes in brokerage companies contrary to the provisions of Article 40 of this Law,

7. it does not keep its order book or custodial book pursuant to the provisions of Articles 63 and 72 of this Law, or fails to issue at a customer’s request the listing of orders from the order book or from the custodial book,

9. it does not keep the money remitted by customers in a separate account, or disposes of the customer’s funds in a manner contrary to the provisions of Article 64 of this Law,

10. it loans securities without the written permission of the owner of those securities,

11. it has no employed broker or investment advisor in the cases when this is so prescribed or when transactions with securities for the customer’s account are conducted by persons who are neither brokers not investment advisors,

12. it fails to provide the Commission with the data that it is obliged to file within prescribed deadlines and in the prescribed manner,

13. it does not allow authorised persons of the Commission to carry out supervision in accordance with Article 14 of this Law,

14. it fails to execute a decision by which the Commission orders it to discharge an obligation within the time prescribed by this Law or by the Commission’s decision,

15. by acting contrary to provisions of this Law and regulations founded on, it endangers or thwarts the functioning of an exchange, regulated public market or the central depository agency,

16. it does not conduct transactions referred to in Article 34 of this Law in accordance with provisions of this Law and bylaws of the Commission, in accordance with customer’s orders and instructions, or with due professional care,

17. the license for conducting transactions with securities has been obtained on the basis of false data stated in the application for issuance of a license or in the attachments to the application,

18. it no longer fulfils the conditions on the basis of which it has obtained the license to conduct transactions with securities, and fails to fulfil the same conditions within the time set by the Commission.

(2) Apart form the cases specified in paragraph 1 of this Article, the Commission shall also revoke the license to conduct transactions with securities of a branch office of a foreign brokerage company, for the following reasons:

1. if the foreign brokerage company should lose its license to conduct these transactions in the country of its domicile,

(3) By the decision referred to in paragraph 1 of this Article, the Commission shall set a time period in which the authorised company cannot re-apply for the issuance of a license to conduct transactions with securities, which however cannot be longer than one year.

(4) By the decision referred to in paragraph 1 of this Article, the Commission may order that unexecuted orders and other documents of customers of an authorised company whose license has been revoked by the Commission be transferred to another authorised company, with the consent of that other authorised company.

(5) From the day on which the decision of the revocation of the license to conduct transactions with securities becomes final, or from the day on which the license becomes invalid under compulsion, the authorised company shall not conclude, start performing or perform any new transaction related to the performance of the business activities for which the license was issued.

(6) When the Commission establishes that reasons exist for the revocation of the license enumerated in paragraph 1 subparagraphs 7, 8, 11, 12, 13 and 14 of this Article, the Commission may decide, in the decision of the revocation of the license, that the license of an authorised company will not be revoked if the brokerage company eliminates the illegality within the time set by the Commission, and during that time, which cannot be longer than one year from the day on which the decision of revocation of the license becomes final, no reasons appear for the revocation of the license referred to in paragraph 1 of this Article.

(7) The Commission shall notify the exchange, regulated public market and the central depository agency of the revocation of the licence.

(1) For the purposes of this Law, a broker is an employee of an authorised company who is authorised to trade with securities.

(3) The Commission is authorised to organize and implement a program of training and examinations for brokers and to issue appropriate certificates.

(5) Persons who do not have a license from the Commission shall not provide broker services.

(1) Investment advisors are employees of authorised companies who are authorised for advising on investments in securities.

(2) The Commission shall issue and revoke investment advisors’ operating licenses.

(3) The Commission is authorised to organize and implement a program of training and examinations for investment advisors and to issue appropriate certificate.

(5) Persons who do not have a license issued by the Commission shall not provide investment advisor services.

(1) The person filing an application for the issuance of a broker or investment advisor license shall attach to the application the following certified copies:

2. proof of the applicant’s qualifications; in the case of a foreign document, the original and a certified translation of that document,

3. proof that no charge has been brought against him/her that has become legally effective, that he/she has not been condemned for criminal acts against security of payment operations and business, authenticity of documents or criminal acts under this Law, that no safety measures have been pronounced against him/her or are in effect in terms of prohibition to perform the profession that is partly or fully covered by the business activities of a brokerage company; in the case of a foreign applicant, also the original and translation of the clearance issued by the authorised body of the country whose citizen he/she is,

4. a certificate of citizenship - a citizen of a foreign country shall attach a copy of his/her passport,

6. proof of fulfilment of the conditions pursuant to regulations for the employment of foreign persons,

(2) The Commission can accept the license referred to in Paragraph 1 Subparagraph 1 of this Article issued by authorised regulatory bodies of the European Union and OECD countries.

Commission’s Decision-Making on the Basis of Applications for the Issuance of Broker and Investment Advisor Licenses

(1) If the Commission establishes that an applicant fulfils all the conditions referred to in Article 55 of this Law and that the application has been filed in accordance with Article 42 paragraph 2 of this Law, the Commission shall issue the license to the applicant authorizing him/her to perform the work of a broker or an investment advisor as an employee of an authorised company.

(2) The provisions of Article 43 of this Law shall also apply as appropriate to the issuance of broker and investment advisor licenses.

(1) An authorised company may perform the transactions with securities only if it has at least one permanently employed broker.

(2) An authorised company may perform the transactions specified in Article 34 paragraph 1 and paragraphs 3 and 7 of this Law only if it has at least one permanently employed investment advisor.

(3) Authorised companies shall employ at least one broker or investment advisor in each of their branch offices or office in which they conduct transactions with securities or provide services of investment advising.

(1) The Commission shall revoke a broker or investment advisor license by a decision if:

1. it establishes that the data referred to in Article 55 of this Law were untrue,

2. the broker or the investment advisor has been condemned with legal effect for criminal acts against property, safety of payment operations and business, authenticity of documents or for criminal acts under this Law, or if a safety measure has been pronounced against him/her or is in effect prohibiting him/her to work in the profession that is partly or fully included in the business activities of an authorised company,

3. he/she has been condemned with legal effect for an offence referred to in Article 155 of this Law,

5. in spite of being warned, he/she repeatedly violates the rules of a stock exchange or regulated public market,

6. he/she performs tasks that are not within the job description of a broker or investment advisor,

7. he/she no longer fulfils the conditions on the basis of which the license was issued and fails to fulfil such conditions within the time set by the Commission.

(2) When the Commission establishes that reasons exist for revocation of the license specified in paragraph 1 Subparagraphs 4 to 6 of this Article, the Commission may decide, in the decision to revoke the license, that the license will not be revoked if within the period of one year from the day on which the decision of revocation of the license has become final no reasons appear to revoke the license referred to in paragraph 1 of this Article.

The Rights and Obligations of Persons in Conducting Transactions with Securities

(1) In conducting transactions with securities, authorised companies, members of the board, brokers and investment advisors shall in all respects take care of the customer’s interests and act with due professional care.

(2) Members of the board of directors, supervisory board, brokers, investment advisors and other employees of authorised companies shall keep secret information about customers, the balance and transactions on customers’ securities accounts, operations performed for the customer and other data and facts they learn in connection with conducting transactions with securities for the customer. These data are considered confidential, and the said persons shall neither use them nor divulge them to third parties nor enable their usage by third parties.

(3) Data referred to in paragraph 2 of this Article shall not be considered confidential if required by the Commission, a stock exchange, regulated public market, legal and administrative bodies in the execution of their supervisory capacity or other public authorities pursuant to this Law or other laws, or if their publication has been approved by the customer.

(1) Only authorised companies may publish advertisements offering transactions with securities.

(2) It is prohibited to publish advertisements whose content might mislead investors as to the rights and risks resulting from securities or transactions with securities conducted by a person authorised to conduct transactions with securities.

(3) Authorised companies shall file with the Commission the text of advertisements before publication. If within 24 hours from the filing of the text of the advertisement the Commission does not prohibit its publication, authorised companies may publish the advertisement. The burden of proof that the Commission has received the advertisement shall be on the authorised company.

(4) The Commission shall prohibit publication of advertisements whose content is contrary to the provisions of paragraph 2 of this Article, or is otherwise contrary to this Law, or to professional rules protecting the interests of the investor.

(5) Public advertising referred to in paragraph 1 of this Article means advertising in the mass media and public-access electronic media.

(6) The provisions of this Article do not apply when the purchase or sale of securities or public advertising is a part of the take-over of joint stock companies pursuant to the provisions of the Law on the Takeover of Joint Stock Companies.

(1) An authorised company is obliged to prescribe the general conditions of order contracts.

(2) General contract conditions and the price list must be exhibited in all the premises in which an authorised company does business with investors in a visible place easily accessible to the investor.

(3) General contract conditions shall contain provisions on the mutual rights and obligations of the authorised company and the investor and the description of risks connected with conducting specific transactions with securities.

(4) The authorised company shall inform the investor of all the circumstances that are necessary for making a decision about a purchase or sale or other transactions with securities, and in particular give the investor true information on supply and demand, trade in securities and trends in their prices.

(5) An authorised company shall inform the customer whether it is a member of a stock exchange, regulated public market and central depository agency.

(1) An order is a one-sided statement of the customer’s will given orally, in writing or as an electronic record that is addressed to the offeree, i.e. to the authorised company, to conduct a certain transaction with securities on the company’s own behalf and on the customer’s account.

(2) Entry of the order referred to in paragraph 1 of this Article in the order book shall mean that the brokerage company has accepted the order.

(3) The order referred to in paragraph 1 of this Article does not exclude the application of general contract conditions referred to in Article 61 of this Law.

(1) In relation to conducting the transactions enumerated in Article 34 paragraph 1 subparagraphs 1 to 4 of this Law, the authorised company shall keep the order book in electronic form. The order book for the purposes of this Law shall mean the sum of all individual orders referred to in Article 62 paragraph 2 of this Law.

(2) Every order enumerated in Article 62 paragraphs 1 and 2 of this Law shall be entered in the order book. Purchase and selling orders shall be entered in the order book in chronological order of the acceptance of that particular order, and each shall be given a reference in the form of an ordinal number. The sequence execution of orders is determined by the ordinal number and the price. If two or more orders have the identical price, the order to be executed first shall be the one with the lower ordinal number. If an order has been executed only partially, the remainder shall keep its place in the order book.

(3) Every modification, cancellation of an order and information about the execution of the order shall be entered in the order book. Only orders in which the quantity of securities has been lowered shall keep the same order reference and the same order of execution. Every other modification of quantity or price represents a new order.

(4) The authorised company shall immediately, without unnecessary delay, deliver to the customer at his request a listing of orders from the order book.

(5) The data in the order book and those in the order must be identical at all times.

(6) The Commission is authorised to prescribe by a bylaw the content of the order book and the manner it is kept.

(7) The order book shall be kept in a manner that will prevent any subsequent change of entered data.

(8) The order book shall be kept for at least five years from the end of the business to which it refers.

(1) An authorised company shall keep the funds remitted by customers for payments of securities or the money from sale of securities in a separate account or separate accounts (the customer account), which are opened with authorised institutions for that particular purpose.

(2) The funds in the customer account for the purchase of securities may be used only in accordance with the customer’s orders.

(3) The brokerage company shall remit the funds in the customer account earned by sale of securities exclusively in favour of the customer account.

(4) The authorised company shall not use the funds on the customer account for the purpose of assignments, conveyances or compensations, with exception of compensations with the customer him/herself for the purchase of new securities, provided that the customer account is not blocked.

(5) Funds in customers’ accounts are not owned by the authorised company, they shall not be included in its property, its assets if in liquidation, or in its bankruptcy estate, nor can they be used in seizures related to claims against the authorised company.

(1) An authorised company may grant and raise loans in securities only with the written consent of the owner of those securities.

(2) The Commission may enact regulations that regulate the conditions and the manner of loaning securities in more detail.

(1) In the execution of orders for the purchase and sales of securities, the authorised company shall act pursuant to provisions of this Law.

(2) The authorised company shall execute orders according to their priority in the order book.

(3) The authorised company shall without delay notify the customer of each business transaction made on the customer’s order even when without customer’s particular request.

(4) When an authorised company purchases or sells securities on its own account and behalf and/or on the account of its employees, the company shall state in the order that it is its own order.

(5) As regards the priority of execution in the order book, the authorised company's own order is equal to other orders.

(6) The company shall immediately, without delay, present orders to purchase or sell securities quoted on the exchange or regulated public market to the trade system of the exchange or the regulated public market, unless the term of presentation has not been expressly specified otherwise.

(7) The brokerage company shall not in any way other than the one laid down in paragraph 6 of this Law merge or execute orders for the purchase or sale of securities.

(8) The brokerage company may jointly present orders to purchase or sell securities of one issuer (joint trading) under the same conditions regarding the price and type of order on the trade system of the exchange or regulated public market, unless the possibility of executing the order would be decreased by this presentation in terms of quantity.

(9) If orders presented jointly have been carried out at the same price, but the quantity of securities was not sufficient for the execution of all the orders, or if jointly presented orders have been executed at different prices, the order to be executed first shall be the order of the customer with priority according to the order book.

(1) Parties in a legal operation concerning the transfer of the ownership of securities shall discharge their obligations (payment of the price and transfer of ownership of securities) within four days from the day of the transaction, unless stipulated otherwise in the contract, which is the foundation for the transfer of ownership of securities that are not entered in the depository of the central depository agency.

(2) The date of the transaction shall be the day when the parties conclude a legal operation.

(3) Ownership of securities not entered in the depository of the central depository agency shall be acquired on the date of the transaction referred to in paragraph 2 of this Article.

(4) Ownership of dematerialised securities shall be acquired on the day of acquittance in accordance with the rules of the central depository agency.

Operations related to the custody of securities for the purposes of this Law shall be:

2. reporting on payments of dividends, interests or other instruments to be collected,

3. informing about meetings of securities issuers and rights related to shares and other securities entrusted for custody, and the execution of customers’ orders related to the realization of these rights,

4. informing about legal changes that directly or indirectly influence the reporting to the customer on the balance of the custodian account,

6. other services related to securities, the realization of rights and fulfilment of obligations resulting from securities, as agreed between the customer and the custodian and which are not contrary to law.

(1) Under a contract of custody of securities, the custodian undertakes to perform one or more operations referred to in Article 68 paragraph 1 of this Law on a customer’s account and for a commission.

(2) Operations related to the custody of securities shall be performed by banks authorised by a decision of the Commission for conducting transactions referred to in Article 34 paragraph 1 subparagraph 8 of this Law.

(4) The custodian shall organize custody-related operations in a special department.

(5) The Commission may introduce a bylaw by which the conditions for conducting transactions related to the custody of securities will be prescribed in detail.

(1) The custodian shall open with the central depository agency a custodian account of dematerialised securities on which the customer’s securities are kept that are registered with the custodian bank. Only the custodian can open a custodian account with the central depository agency, which can be either in the name, code or joint account.

(2) The custodian can handle securities in the custodian account by the customer’s order.

(3) Securities in a custodian account are the customer’s property and shall not be included either in custodian’s property, its assets if in liquidation, or in its bankruptcy estate, nor can they be used for seizures related to claims against the custodian.

(4) The custodian shall handle the customer’s funds in accordance with Article 64 of this Law.

(5) The custodian shall be liable for all damages suffered by its customer due to inadequate implementation of the custody contract, including loss of profit. The custodian cannot limit its responsibility for damage under a securities custody contract.

The Commission can require from the custodian to produce reports with data on all the customers and quantities of securities they owe.

(1) The custodian shall keep special records for each customer on securities with whose custody it is entrusted.

(2) The custodian shall keep a custodial book with data on all orders to purchase and sell securities.

(3) The custodial book shall be kept in the same manner as the order book referred to in this Law.

(4) At the Commission’s request, the custodian shall enable the Commission to inspect the custodial book and all other documentation.

(5) The custodian shall without delay inform the customer about each deal made in accordance with the customer’s order even if the customer does not require so.

The provisions of this Law about the custody of dematerialised securities shall also apply as appropriate to securities issued in the form of documents.

(1) Under a contract on the management of securities portfolios in the company’s own name and on behalf of the customer, the brokerage company shall undertake to perform, for a fee, on the customer’s behalf, operations related to investments of funds in securities, and to manage the customer’s securities so as to gain profit for the customer.

(2) The authorised company shall perform each purchase or sale of securities referred to in Paragraph 1 of this Article on the basis of orders referred to in Article 62 paragraph 2 of this Law.

(3) The authorised company may invest the customer’s funds only in securities traded on an exchange or regulated public market of securities in the Republic of Croatia, or on exchanges of member states of the European Union, member states of OECD, and in securities issued by the Republic of Croatia or the Croatian National Bank, unless prescribed otherwise by a separate law.

(4) An authorised company managing a portfolio of securities in its own name and on the customer’s behalf shall keep the securities in the customer’s account with the central depository agency, i.e. separated from its own property.

The provisions of this Law that relate to trading in securities in one’s own name and for the account of the customer shall also apply as appropriate to operations related to the management of securities portfolio for the customer’s account.

(1) Trading in securities shall be performed in an organized manner on exchanges and regulated public markets established to create conditions to bring together the supply and demand of securities.

(2) The activities of bringing together the supply and demand of securities can be performed only by exchanges and regulated public markets.

(1) Exchanges and regulated public markets may perform the operations referred to in Article 76 paragraph 1 of this Law only if they have a license from the Commission.

(2) The Commission shall issue the license referred to in paragraph 1 of this Article under the condition that all prerequisites under this Law and regulations founded on it are fulfilled.

(3) The Commission is authorised to introduce a bylaw by which it will prescribe special conditions to be fulfilled by exchanges and regulated public markets for performing operations referred to in paragraph 1 of this Article.

(1) A securities exchange shall be established as a joint stock company in accordance with the provisions of the Company Law and this Law.

(2) A securities exchange must have the personnel, equipment, technical conditions and organization so that:

1. all the members of the exchange can simultaneously, equally and under equal conditions make and accept offers for the purchase and sale of securities,

2. all the members of the exchange can at the same moment have equal access to market information on securities being traded and can all sell or purchase securities under the same conditions.

(3) Only brokerage companies that are members of the exchange may participate in trade on the exchange.

(2) The class and the form of securities for which the exchange referred to in paragraph 1 of this Article is specialized must be stated in the name of the exchange.

(3) Provisions for the establishment and business operations of securities exchanges apply as appropriate to the establishment and business operations of specialized securities exchanges.

(1) An exchange may be established by no less than 10 authorised companies, and in every moment it must have at least that same number of shareholders.

(2) With the exception of shareholders of an exchange that were its shareholders at the moment this Law came into force, only authorised companies may be shareholders of an exchange.

(3) An exchange shall accept as its member each authorised company that fulfils the conditions pursuant to this Law and the conditions for membership prescribed by the rules of the exchange.

(1) The initial capital of an exchange must amount to at least HRK 1,000,000.00.

(3) Exchange shareholders shall have an equal number of shares. Shares in an exchange may not be conveyed except on termination of membership in the exchange.

(1) A stock exchange shall prescribe its organization, business and rules of listing and trading on it by its Bylaw and rules that must be approved by the Commission.

(2) The Commission shall render a decision to approve of the acts referred to in paragraph 1 of this Article within 60 days from the date of the orderly filing of the application.

(3) The application referred to in paragraph 2 of this Article shall be accompanied by proof of payment of administrative fees.

(1) Exchanges shall publish and give to the Commission daily, weekly, monthly and annual reports containing data on the trade with prices and quantities of:

(2) The stock exchange shall make possible for the Commission on-line monitoring of trading in the exchange trade system free of charge.

(1) Exchanges are not authorized either to conduct transactions with securities referred to in Article 34 paragraph 1 of this Law, or to furnish advice on trade in securities and investment in securities, or give opinions on the favourability or unfavourability of acquiring or selling securities.

(2) Exchanges are authorised to present in public the advantages of listing securities in quotations and the advantages of organized public trading.

Information on participation of members in meetings of exchange supervisory boards and on their fees shall be published in the annual business report of the exchange.

Members of the board of directors and supervisory board of the exchange as well as employees of the exchange may not be members of boards of directors or supervisory boards of brokerage companies or issuers whose securities are listed in quotations of the exchange.

(1) The provisions of Article 18 of this Law that relate to professional confidentiality shall apply as appropriate to employees and members of exchange boards of directors and supervisory boards.

(2) Once a month the chairman of the board of directors shall present reports to the Commission on the acquisition or alienation of securities of the persons referred to in paragraph 1 of this Article.

(1) The exchange shall prescribe different conditions for at least two quotations for listing securities.

(2) The quotations referred to in paragraph 1 of this Article are quotation one and the quotation for public joint stock companies.

(3) Applications for listing securities in the quotations referred to in paragraph 2 of this Article shall be filed by the issuer of the security or by the person authorised by the issuer to do so.

(4) Conditions for listing securities in other quotations of the exchange shall be prescribed by the exchange.

(5) Applications for the listing of securities in other quotations shall be filed by the issuer of the security, or the person authorised by the issuer, or by an authorised company.

(1) The form and the content of securities for which an application is filed for listing in a quotation of an exchange shall be in accordance with the regulations of the Republic of Croatia.

(2) Applications for listing shall relate to all securities of the same class of an issuer.

(3) Securities may not be listed in a quotation before the expiry of the term of their payment, if this term was determined at their issuance or prescribed by law.

(4) By way of an exception from provisions of paragraph 3 of this Article, the issuer can, under conditions prescribed by the exchange and the Commission, make a public offering of securities through the exchange.

(1) Securities listed on an exchange shall be fully negotiable and entirely paid for.

(2) Full negotiability means unconditional unlimited negotiability regardless of the place and manner in which the securities have been acquired, i.e. both for trading on the exchange and for other ways of legal acquisition of securities.

(3) Shares of joint stock companies whose bylaws prescribe that the transfer of their shares shall be approved by the company may not be listed on the exchange.

Shares may be listed in quotation one of an exchange if the following conditions have been fulfilled:

1. the issuer shall be a joint stock company established and doing business in accordance with regulations of the Republic of Croatia;

2. the initial capital, reserves and profit in the last financial year shall not be less than the amount prescribed by the Commission;

3. the financial statements of the issuer referred to in paragraph 1 of this Article shall be published or filed with competent institutions for a period of at least three previous years;

4. at least 25% (twenty five percent) of the class of shares for which the listing is sought shall be distributed to the public in the country or abroad; however, listing is acceptable if the percentage is below 25% in those cases when the market functions in a satisfactory manner even with a lower percentage, taking into account a large number of shares of the same class and the size of their distribution to the public.

Debt securities may be listed in quotation one of an exchange if the following conditions have been fulfilled:

1. the issuer company shall have had initial capital, reserves in the last financial year not less than the amount prescribed by the Commission;

2. the financial report of the issuer referred to in paragraph 1 of this Article shall be published or filed with competent institutions for a period of at least three previous financial years;

3. the issuer - sole trader as defined by the Company Law shall fulfil the conditions prescribed by the Commission's bylaws.

Securities of a foreign company established in accordance with the law of its domicile country outside the Republic of Croatia may be listed in a quotation of an exchange under the conditions prescribed for domestic companies and under the condition that securities have been issued in accordance with the laws of the domicile country of the issuer and are dematerialised and entered in the register of the central depository agency.

(1) The exchange is authorised to decide on the suspension or revocation of a listing of a security under the condition prescribed by regulations, of which it shall notify the Commission without delay.

(2) The Commission is authorised to decide on the suspension of a listing or the cancellation of a listing of a security in exchange quotations if it considers this to be indispensable for ensuring the operation of the market or protection of investors.

(3) The Commission is authorised to introduce the measures prescribed in Article 15 of this Law relating to the operation and business of the exchange.

(1) There are no special conditions prescribed for the listing of securities of the Republic of Croatia and the Croatian National Bank in quotation.

(2) The Commission may prescribe by a bylaw additional conditions for the listing of securities in quotations on exchanges.

(3) Exchanges may pose stricter requirements than those prescribed by this Law and regulations of the Commission.

(4) The acts referred to in paragraphs 2 and 3 of this Article prescribe the lowest amount of the issuer’s initial capital, the period of time he/she has being doing business, the minimum nominal or market values of the entire series of securities, the minimum number of shareholders and other conditions of the listing.

(1) When listing securities in quotation one on an exchange, the applicant for the listing shall publish at least the data prescribed pursuant to this Law for the content of the prospectus of an issue of securities.

(2) The Commission shall prescribe the data that the applicant for the listing must publish when listing shares in the quotation of joint stock public companies.

(3) The data referred to in paragraphs 1 and 2 of this Article shall be consistent with the nature of the issuer’s business and enable investors and their investment advisors to objectively evaluate assets and liabilities, the financial position, the issuer’s profit and loss, and the rights contained in the securities.

(4) Publication of the data referred to in paragraphs 1 and 2 of this Article shall be approved by the Commission.

(5) The data referred to in paragraphs 1 and 2 of this Article shall be published in the manner prescribed for the publication of the prospectus of an issue.

(1) Issuers of securities listed in quotation one of an exchange shall regularly produce and publish annual, semi-annual and quarterly financial reports on their business.

(2) The Commission is authorised to prescribe by a bylaw the terms for the publication and content of the reports referred to in paragraph 1 of this Article.

(3) The issuers referred to in paragraph 1 of this Article, whose shares are listed in quotations on exchanges of member countries of the European Union or OECD can produce reports on their business either in accordance with this Law or in accordance with the regulations of the member state of the European Union or OECD.

If during supervision irregularities or illegalities are found in the business of an exchange or regulated public market, the Commission is authorised to render a decision to revoke the license for conducting transactions.

(1) For the purposes of this Law, regulated public markets are legal persons whose core activity is bringing together the supply and demand of securities that are not listed in quotation one of an exchange.

(2) The provisions of this Law that prescribe the organization and operation of the exchange shall also apply as appropriate to regulated public markets.

(1) The listing of securities in the quotations of regulated public markets may be sought by issuers or authorised companies.

(2) The Commission shall be authorised to prescribe by a bylaw the content, manner and terms of publication of data that an issuer must publish when listing a security on regulated public markets.

Regulated public markets shall without delay notify the Commission of each new listing of securities and each revocation of a securities listing, as well as of each change of members or shareholders.

(1) Institutional investors are authorised to conduct only negotiated transactions without a licence from the Commission.

(2) By concluding a negotiated transaction, institutional investors accept their own responsibility for all risks that may arise from such a transaction.

(3) The Commission shall give the status of an institutional investor to a legal entity if the Commission finds that that legal entity invests its funds in securities in order to gain profit through differences in prices or to protect financial property from market risks and has experience in investing and trading in securities.

(4) No exchanges, regulated public markets, brokerage companies, issuers of securities or the central depository agency can be institutional investors for the purpose of the provisions of this Law.

(5) The institutional investor, the buyer in a negotiated transaction, shall notify in writing an exchange or regulated public market of the sale by the end of daily trading through the trade system. The notification shall contain the data on the price and quantity of securities that were the subject of the transaction.

(6) The Commission is authorised to prescribe by a bylaw another deadline and additional contents of the notification referred to in paragraph 5 of this Article.

(1) For the purposes of this Law, privileged information shall be all facts that are not known to the public that pertain to either one or more issuers of securities, or to securities, and which, if known, might influence the price of securities.

(2) The Commission is authorized to prescribe by a bylaw the modes of preventing misuse of privileged information.

All persons referred to in Article 105 shall supply the Commission with all the requested data for the purpose of establishing whether privileged information has been misused.

(1) Persons who possess privileged information shall be those persons who learn about privileged information in the course of their work, profession or duty.

(2) Members of boards of directors, supervisory boards and other equivalent bodies of the issuer of securities shall be considered persons who possess privileged information pertaining to the issuer and the company which the issuer controls.

(3) For the purposes of this Law, lineal relatives in the first degree of kinship (i.e. parents, spouse and children) of natural persons referred to in paragraphs 1 and 2 of this Article shall also be considered persons who possess privileged information. Persons who possess privileged information shall also be affiliated persons for the purpose of Article 473 of the Company Law. Affiliated persons who possess privileged information shall also be legal persons and natural persons not connected in any way that is regulated by the provisions of this Law, yet for which the Commission should find, by inspection of financial and other documentation or in some other way, applying the usual standard of due care, that the deterioration or improvement of the economic or financial standing of one person can cause the deterioration or improvement of the economic or financial standing of one or more other persons, because between them transfer of losses, profit or credit rating is implemented, or there is a possibility of such a transfer.

(4) Members of boards of directors, supervisory boards and employees of authorized companies shall not divulge privileged information on securities or their issuers, which they learn in the conduct of their business. The ban under this Paragraph ceases with the expiry of a six-month period from the date of the termination of performance of the duty or tasks.

(5) Authorized companies that learn privileged information shall neither purchase nor sell securities for their own account, nor advise on investments in securities to which the privileged information relates.

(6) Persons who possess privileged information, as well as the persons who have learned about privileged information in an unauthorized manner and who are aware of its nature shall not:

1. take advantage of privileged information when directly or indirectly buying or selling securities which are traded on the territory of the Republic of Croatia or securities issued by issuers registered in the Republic of Croatia, regardless of where they are traded,

3. take advantage of privileged information in furnishing advice to third parties on the purchase or sale of securities referred to in paragraph 5 subparagraph 1 of this Article.

(7) Persons who possess privileged information may divulge that information only if they are authorised to do so by law or by acts that regulate the operations or duties they perform.

(8) The persons referred to in paragraph 2 of this Article shall be required to report every transaction whereby they acquire or release directly or indirectly securities of the issuers enumerated in paragraphs 2 and 3 of this Article to the issuer, to the Commission and to the exchange or regulated public market on which such securities are listed, and to do so within 15 days counting from the date on which the transaction takes place, in the manner and within the terms specified in Articles 115 to 117 of this Law.

(1) The issuer of securities listed on an exchange or regulated public market must promptly inform the public of all information pertaining to circumstances or decisions that constitute material facts.

(2) Material facts for the purpose of the provisions of paragraph 1 of this Article shall mean all information and facts that can influence the price of securities.

(3) The Commission is authorized to issue regulations concerning the mode of issuance and content of information referred to in paragraph 1 of this Article.

When an issuer is unable to publish the information referred to in Article 106 of this Law because that would jeopardize his legitimate interests, he shall inform so the Commission, which may exempt him from that obligation, but only for a period of time which may not be longer than three months.

(1) The following shall be prohibited for a particular security in order to avoid the creation of a false impression of the market:

1. conducting a transaction with securities in such a manner that its execution does not result in a change of a legal holder or owner, or in some other way create an appearance of an executed business transaction,

2. issuing an order for the purchase or sale of a security knowing that an order has been given or will be given for the sale or purchase of that security at approximately the same price by the same or another person in order to create a fictitious price or appearance of active trading.

1. increase the price of that security and encourage other investors to buy that security,

2. depress the price of that security to encourage investors to sell that security,

3. give the appearance of active trading in that security and thus encourage other investors to purchase and/or sell that security.

It shall be prohibited to spread false information that influence or might influence the volume of trade and price of securities.

Authorised companies that manage a customer’s securities portfolio shall be prohibited from selling securities or issuing orders for their sale, or buying securities or issuing orders for their purchase, exclusively with the intention of earning the commission collected for that service.

CHAPTER V

(1) An issuer’s obligation to pay dividends may not be secured by a bank guarantee, warranty or a similar form of security.

(2) Any guarantee or security for payment of a future dividend shall be null and void.

The obligations of an issuer of a security to pay the principal and interest from debt securities may be secured by a bank guarantee, warranty or a similar form of security that must ensure the fulfilment of obligations from all securities of the same class.

(1) An issuer’s obligation to pay the principal and interest may be secured by a lien on real estate and securities, whose value shall not be less than the total issuer’s obligations from all the secured securities.

(2) During the term of the lien on dematerialised securities, a pledge on them shall be registered with the central depository agency, and securities issued in the form of documents shall be deposited in a bank.

(3) The value of the pledged real estate and securities must be established by an authorized legal expert.

(1) For the purposes of this Law, public joint stock companies shall be those that fulfil one of the following criteria:

2. they have more than 100 shareholders, and their initial capital is at least HRK 30,000,000.00.

(2) Within 30 days from the day of the issue of shares in a public offering, or from the day of the fulfilment of the criterion referred to in paragraph 1 subparagraph 2 of this Article, public joint stock companies shall list shares in the quotation of public joint stock companies on an exchange or regulated public market.

(3) When listing shares in the quotation of public joint stock companies, public joint stock companies shall publish abridged prospectuses; the conditions for listing shall be prescribed by the exchange and the regulated market.

(4) Public joint stock companies shall present to the Commission quarterly financial and business reports within 30 days from the last day of each quarter, and their consolidated reports within 45 days. Public joint stock companies shall present financial and business reports for the 4^th quarter to the Commission within 90 days after the end of each business year.

(5) The Commission is authorized to prescribe by a bylaw the form and the content of the reports referred to in paragraph 4 of this Article, as well as the time and the manner in which it is to be established if a joint stock company has more than 100 shareholders.

(6) The Commission shall make the reports referred to in paragraph 4 of this Article accessible to the public.

(7) Before listing securities in the quotation of public joint stock companies on an exchange or regulated public market, public joint stock companies shall give data on securities and their owners from the share or issuer register to the depository of the central depository agency for the dematerialization of securities, within the periods and in the mode of delivery prescribed by the central depository agency and approved by the Commission.

(8) The provisions of this Article shall not apply to public joint stock companies referred to in paragraph 1 of this Article against which bankruptcy or liquidation proceedings have been instituted until the termination of these proceedings.

The Obligation to Report on Changes in the Structure of Shareholders to the Issuer and to the Commission

When a natural or legal person directly or indirectly acquires or releases shares of a public joint stock company, and as a consequence of that fact the proportion of votes in the assembly which that person or entity possesses exceeds or falls below the following thresholds: 10%, 25%, 50% or 75%, that person or entity must notify in writing the Commission or the issuer of that acquisition or release within 15 days.

The period referred to in Article 115 of this Law shall begin to run from the moment of the conclusion of that business transaction (for the purposes of this Law, a legal transaction shall be deemed concluded in spite of an agreed condition for deferral) or from the moment of coming into being of the fact on which the transfer of shares is based, regardless of the entry into the share book or the depository of the central depository agency.

1. name and surname, personal identification number (JMBG) and residence of the person who has acquired or alienated the shares, or the name, head office and the registration number (MBS) of that legal person, and the name and surname, personal identification number (JMBG) and residence of the responsible person in the legal person person who has acquired or alienated the shares,

3. the number of acquired or alienated shares, the share in the initial capital of the issuer on the basis of acquired or alienated shares, the number of voting rights that the total of acquired or alienated shares ensures in the general assembly of the issuer,

4. the total number of shares, i.e. the share in the initial capital of the issuer after the acquisition or release.

Obligation to Inform the Public and Exemption from the Obligation to Inform the Public

An issuer - public joint stock company who receives the notice referred to in Article 117 of this Law shall be required to publish it in the daily press accessible throughout the territory of the Republic of Croatia within seven days from the date of its delivery.

(1) At the written proposal of the issuer filed within three days from the date of receipt of the notice referred to in Article 117 of this Law, the Commission can render a decision to temporarily exempt the issuer from the obligation of publication for a period of time that may not be longer than 3 (three) months if the issuer feels that this publication of the notice might cause him serious harm and that the public, even without the publication of the notice, will be able to assess the value of shares to which the notice relates.

(2) If within eight days from receipt of the application referred to in paragraph 1 of this Article the Commission does not render a decision, the application shall be considered rejected, and the issuer shall perform his obligation to publish within 7 (seven) days.

The general assembly of a joint stock company may decide to split the issuer’s shares so that each shareholder will be issued two or more shares for one.

(1) The general assembly may decide to reduce the number of shares of the issuer by issuing each shareholder one share instead of two or more.

(2) Shareholders who do not have enough shares for replacement in the reverse split procedure must be given an opportunity by the issuer to acquire shares up to the number necessary for the reverse split, at the same price within three months from the date when they receive the notice of the reverse split.

(1) Within eight days from the day of the decision to make a split or reverse split of stock, the public joint stock company shall give notice to all the shareholders, the Commission, the central depository agency if the shares are dematerialised, and the exchange and the regulated public market if listed in the quotation of an exchange or regulated public market.

(2) The notice referred to in paragraph 1 of this Article must contain information on the conditions and procedure of the stock split or reverse stock split, the designation of the security, the date of execution, the ratio of stock split to reverse stock split and the day from which shares will be traded with the new nominal value.

(3) Shareholders must be given an opportunity to exchange shares within a period of time which may not be shorter than 90 days from the date the decision was made on the stock split or reverse split.

(1) On the next working day, the issuer shall notify the Commission, the exchange or the regulated public market of the split or reverse split of shares undertaken and shall issue a press release on this and see that it is published in the daily press accessible throughout the territory of the Republic of Croatia.

(2) After receipt of the notice referred to in paragraph 1 of this Article, the exchange or regulated public market shall promptly forward it to all their members.

(1) A dematerialised security shall be an electronic record of a securities account in the computer system of the central depository agency with which its issuer shall undertake to fulfil the obligation towards the owner contained in the dematerialised security.

(3) Dematerialised securities that within the same issue and the same class ensure the same rights in legal operations shall be convertible without limitations, so that obligations of any kind can be fulfilled by the transfer of any security of the same issue and the same class, and therefore the creditor cannot individually or particularly claim certain dematerialised securities.

(1) On dematerialised securities accounts, data are kept on the issues, classes, quantities, property rights and holders of these rights, limitations of property rights and the history of entries of dematerialised securities.

(2) A dematerialised securities account can be in the name of a single person, several persons who can be owners or co-owners of dematerialised securities (joint account) and a custodian bank.

(3) Authorised companies are not allowed to keep their customers’ securities in a joint account.

By way of an exception from the provisions of general and specific laws that prescribe the essential elements of individual issues of securities, when these securities have the form of dematerialised securities, then they do not contain either serial or control numbers, or signatures of authorized persons.

(2) The owner of a dematerialised security is the person in whose name a securities account is opened with the central depository agency in which account the dematerialised security is recorded.

(3) By way of an exception from the provisions paragraph 2 of this Article, when a custodian bank keeps dematerialised securities for the account of a third party, separately from the bank’s own property, the owner of these dematerialised securities shall be the person for whom the custodian is keeping them.

(1) The ownership and the rights resulting from a dematerialised security are acquired through its transfer from the transferor’s dematerialised securities account to the transferee’s dematerialised securities account on the basis of a valid legal transaction whose purpose is the acquisition of ownership, a judicial decision or a decision of some other competent authority, by inheritance and on the basis of the law.

(2) The ownership and the rights resulting from a dematerialised security are acquired at the moment of its entry in the dematerialised securities account of the acquirer or the person who, for the purpose of Article 127 paragraph 3 of this Law, keeps dematerialised securities for the buyer’s account.

(3) The provisions of this Article shall apply as appropriate to the termination of ownership.

(1) Lien on a dematerialised security shall be acquired by the appropriate entry of that right in the dematerialised securities account on the basis of a valid legal transaction, judicial decision or pursuant to law.

(3) Out-of-court discharge of a secured claim by pledge shall be allowed on a dematerialised security.

(4) Notwithstanding the legal foundation of termination, lien on a dematerialised security is terminated at the moment of its release.

(1) Transfer of the ownership of a dematerialised security on the basis of a transaction concluded on an exchange or a regulated public market is performed by clearing and settlement.

(2) Acquisition and termination of ownership and other rights of a dematerialised security on the basis of valid transactions concluded outside the exchange or regulated public market, on the basis of a judicial decision or a decision of some other competent authority, by inheritance and on the basis of the law are performed by appropriate entries in electronic records in the re-booking procedure.

(1) The owner of dematerialised securities and the custodian bank referred to in Article 127 paragraph 3 of this Law shall have the right of access to the data referred to in Article 125 paragraph 1 of this Law.

(2) The issuer of dematerialised securities shall have the right of access referred to in Article 125 paragraph 1 of this Law to the data whose issuer he is and the data on the owners of these securities.

(3) The issuer or the central depository agency shall allow each shareholder access to the data referred to in Article 125 paragraph 1 of this Law that relate to the shareholders and shares of that issuer. The central depository agency shall have the right to remuneration for the costs of writing and delivery of reports in accordance with the tariff. The shareholder shall neither communicate nor make accessible to other persons the information on shareholders and shares referred to in this paragraph.

(4) The Commission shall have the right of access to the data referred to in Article 125 paragraph 1 of this Law and to all other data kept in the depository of the central depository agency.

(5) On the basis of a written request and within the authorities pursuant to provisions of a separate law, judicial and administrative bodies shall have the right of access to the data kept in the depository of the central depository agency.

(6) Each person who proves his legal interest shall have the right of access to the history of transactions of individual securities subject to a reasonable fee.

(7) With the exception of cases pursuant to the provisions of paragraphs 1 do 6 of this Article, the central depository agency shall keep data on the balance of individual accounts of dematerialised securities confidential.

(1) The central depository agency shall, in the manner and scope prescribed by its rules, inform:

1. the issuers of dematerialised securities on dematerialised securities they issued and on owners of these securities,

2. the owners on the balance and changes in their dematerialised securities account,

3. members on data that are essential for transactions with dematerialised securities they have made for their own account or for the customers’ account.

(2) The central depository agency shall write and present the Commission monthly reports on its work, within the period and with the content prescribed by the Commission.

(3) Issuers of dematerialised securities shall notify the central depository agency of all the changes related to dematerialised securities and the realization of the rights from these securities.

(4) The data concerning the identity of 10 largest owners of any security shall be made accessible to the public.

(1) The provisions of Article 226 of the Company Law (The Official Gazette of the Republic of Croatia nos. 111/93, 34/99 and 52/00) shall not apply to shares that exist in the form of dematerialised securities, so a shareholder who has a share in the form of a dematerialised security on his dematerialised securities account in the central depository agency shall be considered to be a shareholder who has a share in the form of a dematerialised security.

(2) The provisions defined in Article 227 paragraph 2 of the Company Act do not apply to dematerialised shares.

(1) The central depository agency is a legal person authorised for performing tasks related to the depository of dematerialised securities and the clearing and settlements of legal operations performed with securities.

(2) For the purposes of this Law, the terms relating to the tasks of the central depository agency shall have the following meanings:

1. clearing is the comparison of information on concluded legal transactions in dematerialised securities, determination of deadlines for payments related to legal transactions and calculation of obligations to be paid,

2. settlement is the mediation and supervision of payment and/or transfer of securities associated with legal transactions in securities,

3. depository tasks are the corresponding entries in electronic records for the purpose of acquisition, transfer or termination of ownership, lien and other rights from dematerialised securities.

(1) The central depository agency is a joint stock company established by, i.e. whose shareholders may be, the Republic of Croatia, authorised companies, exchanges and regulated public markets, fund management companies, banks that are issuers of dematerialised securities and other legal persons with the status of a member of the central depository agency.

(2) An individual shareholder of the central depository agency may only have a quantity of voting shares up to the maximum of 10% of total votes in the general assembly.

(3) The provision of paragraph 2 of this Article shall not apply to the Republic of Croatia.

(4) The Government of the Republic of Croatia shall undertake measures to bring the shareholding structure of this joint stock company, i.e. of the central depository agency, into conformity with provisions of this Law within 6 months from the date of entry into force of this Law.

(1) The central depository agency may perform transactions referred to in Article 134 paragraph 1 of this Law only with a license issued by the Commission.

(2) The Commission shall issue the license referred to in paragraph 1 of this Article subject to the condition that all prerequisites prescribed by this Law and regulations founded on this Law have been fulfilled.

(1) The central depository agency shall prescribe its business, modes of transacting operations, as well as rights and obligations of its members by its Statute, rules, instructions and tariff, which shall be approved by the Commission.

(2) The Commission shall render a decision on the application for approval of the acts referred to in paragraph 1 of this Article within 60 (sixty) days from the day of the filing of a proper application.

(3) The application referred to in paragraph 2 of this Article shall be accompanied by the proof of payment of the administrative fee.

(1) Members of the central depository agency, for the purposes of this Law, may be authorized companies, fund management companies, issuers of dematerialised securities, institutional investors and other domestic and foreign legal persons if they fulfil the conditions for membership.

(2) Every person that accesses the services of the central depository agency shall sign a membership agreement.

Securities and funds of owners and members of the central depository agency shall not be included either in its property, or in its bankruptcy or liquidation estate, nor can they be used for distraint levied on the central depository agency.

(1) The central depository agency shall have a supervisory board consisting of seven members at the most, appointed for the period of four years.

(2) One member of the supervisory board shall be appointed by the Republic of Croatia on the recommendation of the Ministry of Finance.

(3) Other members of the supervisory board shall be appointed by the general assembly.

(4) The board of directors of the central depository agency shall consist of three members at the most, appointed for a period of four years, and they may be re-elected.

(5) Data on the amount of remuneration received by members of the supervisory board and on the amount of income of members of the board of directors shall be public and published in the annual business report of the central depository agency.

The central depository agency shall be remunerated for its services in accordance with the tariff defined by the agency.

(1) The central depository agency shall neither conduct transactions with securities referred to in Article 34 of this Law nor furnish advice on trade in securities and investment in securities.

(2) The central depository agency shall be authorised to present in public the general advantages of dematerialised securities.

(1) The central depository agency shall be required to protect the computer system and the data it contains against unauthorised use and against change and loss, and to preserve in a safe place and in the original form the original documentation used for making entries in the data storage media for at least five years. Data recorded on electronic media shall be kept permanently.

(2) The Commission may establish more detailed standards and techniques for protecting the computer system and data it contains and which pertain to dematerialised securities.

The central depository agency shall be liable for loss, including lost income, occurring because of inaccuracy or loss of data related to dematerialised securities on the principle of presumed guilt.

(1) Certain individuals must be designated responsible for the accuracy of data and the correctness of individual operations in connection with dematerialised securities in the acts of the central depository agency, and the scope of their responsibility must be defined.

(2) Members of the board of directors of the central depository agency shall be accountable for the accuracy of data related to dematerialised securities, regardless of the content of the acts referred to in paragraph 1 of this Article.

(2) The assets of the guarantee fund shall consist of payments made by the members of the central depository agency that use its clearing and settlement services.

(3) The assets of the guarantee fund shall be used for settlement of obligations of the members when there are insufficient funds or enough securities for settlement under contract; such assets shall not be used for any other purpose and cannot be the object of seizure either in the case of members or in the case of the central depository agency

(4) The rules of payment of contributions and the usage of the guarantee fund shall be prescribed by the central depository agency, subject to approval by the Commission.

(1) If illegalities should be found in the central depository agency in the course of supervision, the Commission is authorized to render a decision to revoke the license for conducting transactions referred to in Article 136 of this Law. The Commission shall revoke the license of the central depository agency if:

1. it no longer fulfils the conditions for the issuance of a license prescribed by this Law, and if it is certain that it will not be able to fulfil them for a long period of time,

2. it performs transactions for which it is not authorized by the Commission’s license and the provisions of this Law,

4. it does not apply, does not have, or acts contrary to rules, instructions and the tariff prescribed by law and approved by the Commission.

(2) The Commission is authorized to order the implementation of the measures prescribed in Article 15 of this Law pertaining to the operation and conduct of business of the central depository agency.

(3) To protect the interests of investors, members and other users of services of the central depository agency, the Commission is authorized to render a decision ordering the central depository agency to take action that will block or render impossible the alienation or burdening of entered securities, the securities that in the process of clearing or settlement or re-booking should be entered into individual accounts opened with the central depository agency if:

1. the Commission has at the disposal data that raise suspicion that the securities entered on the account of the investor have been acquired by actions contrary to this Law and regulations founded upon this Law,

2. the person authorized to conduct trade in securities has made a mistake or some other inappropriate action whose consequence has been the entry of securities into the investor’s account,

3. it is necessary for the implementation of the supervision of persons referred to in Article 12 paragraph 1 subparagraph 3 of this Law.

(4) Under the decision referred to in paragraph 3 of this Article, the Commission shall order the prohibition of the alienation or burdening of securities for a period that cannot be longer than sixty days.

(1) The provisions of Article 18 of this Law pertaining to the obligation to keep official secrets apply as appropriate to employees, members of the board of directors and supervisory board of the central depository agency.

(2) The Chairman of the board of directors of the central depository agency shall once a month present to the Commission a report on acquisitions and alienations of securities of the persons referred to in paragraph 1 of this Article.

(3) The board of directors of the central depository agency must see that the persons cited in paragraph 1 of this Article are regularly, at least once a year, informed about their obligations with respect to preserving professional secrecy.

(4) Persons who are employees of the central depository agency shall not be members of managing and supervisory bodies of authorized companies.

(1) Whosoever, through authorized or unauthorized disposal of privileged information not known to the public and pertaining to one or more issuers of securities, or to securities that, if known to the public, would influence the price of securities, does the following:

1. knowing the privileged nature of such information, uses it to buy or sell securities traded on the territory of the Republic of Croatia or securities issued by an issuer seated in the Republic of Croatia regardless of where they are traded, with a view to realising material gain for himself or for a third party or to cause damage to a third party,

2. knowing the privileged nature of such information, without authorization communicates such information, delivers such information and facts or in some other way makes them accessible to a third party,

3. knowing the privileged nature of such information, uses it to furnish advice to a third party on the purchase or sale of securities traded on the territory of the Republic of Croatia or of securities issued by issuers with a seat in the Republic of Croatia, regardless of where they are traded, with a view to realising material gain for himself or a third party or to cause damage to a third party,

shall be subject to a fine of at least 100 daily incomes or imprisonment up to one year.

(2) If the material gain or damage caused to a third party through the criminal offence referred to in paragraph 1 of this Article exceeds the amount of HRK 5, 000.00, the perpetrator shall be subject to a fine of at least 150 daily incomes or imprisonment up to two years.

1. concludes or executes a contract on the sale or replacement of securities in order to give an appearance that a deal has been made although none of the parties wishes to execute it,

2. gives an order to purchase or sell a security on an exchange or on some other regulated market knowing that the order to purchase or sell that security has been given or will be given by some other party at a price that is approximately the same, or if he himself gives the order and counter-order,

3. spreads information about an issuer, securities or other facts he/she knows to be false, with the intention of thus influencing the increase or fall in the price, or to create an appearance of active trading and thus realise for him/herself or for a third party a material gain or cause damage, shall be subject to a fine of at least 100 daily incomes or up to one year imprisonment.

(2) If a material gain realised or damage caused through the criminal offence referred to in paragraph 1 of this Article exceeds the amount of HRK 5.000,00, the perpetrator shall be subject to a fine of at least 150 daily incomes or up to two years imprisonment.

(1) Whosoever as a member of the board of directors or the supervisory board of an issuer allows or facilitates the distribution of a prospectus whose contents differ from the contents prescribed by Article 21 of this Law, or as member of the board of directors or the supervisory board allows or facilitates the presentation of false data and false representation of material facts in a prospectus shall be subject to a fine of at least 150 daily incomes or up to 2 years imprisonment.

(2) If a considerable material loss occurs because of the criminal offence referred to in paragraph 1 of this Article or if the offender realises a material gain for himself or for a third party, he shall be a subject to a fine of at least 350 daily incomes or up to three years imprisonment.

(1) Whosoever as a member of the board of directors of an exchange allows the listing in quotation one, the quotation of public joint stock companies or other quotations of securities which do not meet the conditions prescribed under this Law, he/she shall be subject to a fine of at least 250 daily incomes or up to two years imprisonment.

(2) If a considerable material loss occurs because of the criminal offence referred to in paragraph 1 of this Article or if the offender realises a material gain for himself or for a third party, he/she shall be a subject to a fine of at least 350 daily incomes or up to three years imprisonment.

(1) Whosoever omits to supply data on ownership pursuant to Article 115 of this Law shall be subject to a fine not exceeding 200 daily incomes or up to one-year imprisonment.

(2) If a considerable material gain has been realised or considerable damage occurs to a third party because of the criminal offence referred to in paragraph 1 of this Article, the offender shall be subject to a fine of at least 250 daily incomes or up to three years imprisonment.

(1) Whosoever is engaged in unauthorized mediation in the purchase or sale of securities shall be subject to a fine not exceeding 200 daily incomes or up to one-year imprisonment.

(2) If a considerable material gain has been realised because of the criminal offence referred to in paragraph 1 of this Article, the offender shall be subject to a fine of at least 200 daily incomes or up to three years imprisonment.

(3) Whosoever organizes a network of agents to commit the criminal offence referred to in paragraph 1 of this Article shall be subject to a fine of at least 350 daily incomes or up to five years imprisonment.

(1) A legal person shall be subject to a fine of between HRK 60,000.00 and 1,000,000.00 for a misdemeanour if:

1. it prevents the access of authorized persons of the Commission to its premises, or does not ensure appropriate rooms and personnel, or does not deliver or give for inspection the required papers and documentation, does not make statements and declarations and ensure all other conditions necessary for supervision, or in other ways prevents the Commission in the implementation of supervision (Article 14),

2. within the deadlines and in the manner laid down in Article 15 of this Law, it does not execute a decision made by the Commission, or if it fails to deliver the Commission proof of execution,

3. contrary to the provisions of Article 19 paragraph 1 of this Law, it publishes data and information that have not been previously presented to the Commission,

4. contrary to the provisions of Article 19 paragraph 2 of this Law, it does not present to the Commission the data and information in the manner and within deadlines specified by the Commission,

5. it issues securities or starts trading in them contrary to the provisions of this Law,

6. contrary to the provisions of Article 22 of this Law, it publishes a prospectus (public offering) or delivers it to potential investors (private offering) without approval of the Commission, or if it publishes or delivers to potential investors a prospectus whose content is different from the content approved by the Commission,

7. it publishes, delivers or distributes a prospectus in a manner or within the periods that are contrary to the provisions of Article 24 of this Law,

8. it publishes a modification of a prospectus in a manner contrary to provisions of Article 25 of this Law,

9. within the time period referred to in Article 25 paragraph 3 of this Law, it does not publish a modification of a prospectus, or does not publish it in the same manner as it has published the prospectus,

10. in the case of a private offering of securities, it does not publish a prospectus or if it communicates with potential investors in a manner that is contrary to the provisions of Article 26 paragraph 4 of this Law,

11. it offers, subscribes or receives payments for securities after the expiration of the period for subscription and payment (Article 27),

12. it does not deposit funds from payments for securities in a separate account or if it disposes of such funds during the period of payment (Article 27 paragraph 2),

13. contrary to the provisions of Article 27 paragraph 3 of this Law, it does not return paid-in deposits to the investors,

14. within the prescribed period it does not notify the Commission in accordance with Article 27 paragraph 4 of this Law, or if contrary to the same provision it does not present to the Commission other information on subscriptions and payments within the times and in the manner specified by the Commission,

15. it issues short-dated securities in a manner contrary to the provision of Article 28 paragraph 2 of this Law,

16. within the prescribed period it does not present to the Commission the report referred to in Article 28 paragraph 3 of this Law, or if this report does not contain all the data prescribed by Article 28 paragraph 5 of this Law,

17. it does not publish the securities published in a public offering in the form prescribed for such securities by the provisions of Article 29 of this Law, or if it does not list them in a quotation in the period prescribed by the same Article,

18. it does not present to the Commission the data referred to in Article 31 paragraph 2 of this Law within the prescribed period of time,

19. it does not present to the Commission the information in accordance with Article 32 paragraph 2 of this Law within the prescribed period,

20. in the case referred to in Article 32 paragraph 4 of this Law, the issuer does not produce a prospectus,

21. in the case referred to in Article 32 paragraph 5 of this Law, the institutional investor does not make the prospectus available to potential customers before sale of the securities to which the prospectus referred to in Article 32 paragraph 4 of this Law refers,

22. it conducts transactions referred to in Article 34 of this Law without a license from the Commission,

23. a bank has not separated operations related to securities from its other operations in terms of structure, organization or accounting (Article 39),

24. a bank has shares or business stakes in two or more brokerage companies (Article 40 paragraph 1),

25. contrary to the provisions of Article 40 paragraph 2 of this Law, it has shares or business stakes in another brokerage company,

26. a brokerage company does not furnish to the Commission information on every change in its ownership structure within the prescribed period (Article 40 Paragraph 3),

27. a brokerage company does not co-ordinate its liquid assets and obligations within the periods and in the manner prescribed by the provisions of Article 47 of this Law, or if it does not report to the Commission within the prescribed periods,

28. a brokerage company does not furnish the Commission within the periods prescribed with notices pursuant to Article 49 paragraphs 2 and 3 of this Law or if the notice referred to in paragraph 2 of the same Article does not contain some of the prescribed attachments,

29. an authorised company within the periods and in the manner prescribed by provisions of Article 51 of this Law does not present to the Commission the reports and information prescribed by the same Article,

30. an authorised company, contrary to the provisions of Article 52 paragraph 5 of this Law, makes, commences to perform or conducts a new transaction with securities after the decision has become final of revocation of its license to conduct transactions with securities,

31. an authorised company conducts transactions with securities without fulfilling the conditions referred to in Article 57 of this Law,

32. an authorized company and the persons referred to in Article 59 paragraphs 1 and 2 of this Law do not take care of the customer’s interests, or do not act with due professional care, or if they use, divulge or enable third parties access to confidential information referred to in Article 59 paragraph 2 of this Law,

33. it advertises conducting transactions with securities and is not an authorised company (Article 60 paragraph 1),

34. an authorized company publishes advertisements in a manner contrary to the provisions of Article 60 paragraphs 2 and 3 of this Law,

35. an authorised company, contrary to the provisions of Article 61 Paragraph 1, does not prescribe general contract conditions, or if the general contract conditions do not have the mandatory content referred to in Article 61 paragraph 3 of this Law,

36. an authorised company does not exhibit the general contract conditions and the tariff in the manner described in Article 61 paragraph 2 of this Law,

37. an authorised company does not inform investors pursuant to the provisions of Article 61 paragraph 4 of this Law,

38. an authorised company omits to notify a customer of circumstances referred to in Article 61 paragraph 5 of this Law,

39. an authorised company does not keep an order book, or keeps it in a manner contrary to the provisions of Article 63 of this Law,

40. an authorised company does not promptly furnish a customer at the customer’s request with the listing of records from the order book (Article 63 paragraph 4 of this Law),

41. an authorised company handles funds of a customer in a manner contrary to the provisions of Article 64 of this Law,

42. an authorised company loans securities without written consent of their owner (Article 65 paragraph 1),

43. in execution of orders, an authorised company does not act in the manner prescribed by the provisions of Article 66 of this Law,

44. a custodian does not open a separate account with the central depository agency (Article 70 paragraph 1 of this Law),

45. a custodian handles securities on the custodian account contrary to the provisions of Article 70 paragraph 2 of this Law,

46. a custodian uses customer’s securities contrary to the provisions of Article 70 paragraph 3 of this Law,

47. a custodian handles the funds of a customer contrary to the provisions of Article 70 paragraph 4 of this Law,

48. a custodian does not present to the Commission a report in the manner and within the period specified in Article 71 of this Law,

49. a custodian does not keep special records on securities with whose custody he is entrusted, or if the custodian does not keep the custodian book, or the custodian does not keep the custodian book in the same manner as the order book, or the custodian does not enable the Commission access to the custodian book and other documentation, or if the custodian does not without delay notify the customer of each deal made (Article 72),

50. an authorised company manages a customer’s securities portfolio contrary to the provisions laid down in Article 74 of this Law,

51. an exchange or a regulated public market perform operations referred to in Article 76 paragraph 1 of this Law without a license from the Commission (Article 77),

52. an exchange or a regulated public market do not ensure trading conditions and equal access to market information to all their members (Article 78 Paragraph 2 of this Law); if a specialised exchange does not state in its name the class and the form of securities for which it is specialised (Article 79 paragraph 2),

53. an exchange or a regulated public market do not have the structure of shareholders in accordance with Article 80 of this Law,

54. an exchange or a regulated public market, contrary to the provisions laid down in Article 80 paragraph 3, do not accept as a member a brokerage company that fulfils the conditions for membership,

55. an exchange or a regulated public market, if all the shareholders of an exchange or a regulated public market do not have an equal number of shares (Article 81 paragraph 3),

56. an exchange or a regulated public market, contrary to the provisions of this Law, do not prescribe the acts referred to in Article 82 paragraph 1 of this Law, or if they apply these acts without the approval of the Commission, or if they act contrary to the provisions of acts approved by the Commission,

57. an exchange or a regulated public market, contrary to the provisions of Article 83 of this Law, do not publish or present to the Commission the prescribed reports,

58. an exchange or a regulated public market do not provide for the Commission the conditions for monitoring trading as described in Article 83 paragraph 2 of this Law,

59. an exchange or a regulated public market, contrary to the provisions of Article 84 paragraph 1 of this Law, conduct transactions with securities, or furnish advice on trade or investment in securities, or give opinions on the favourability or unfavourability of acquiring or selling securities,

60. an exchange or a regulated public market do not publish in their annual reports the data referred to in Article 85 of this Law,

61. an exchange or a regulated public market, if the persons referred to in Article 87 of this Law act contrary to the provisions of the same Article,

62. an exchange does not prescribe different conditions for at least two quotations (Article 88 paragraph 1),

63. an exchange allows securities to be listed in quotation one or in the quotation for public joint stock companies on the basis of an application for listing that has been filed by an authorised person (Article 88 paragraph 3),

64. it lists securities in a quotation of an exchange or a regulated public market before the expiry of the term for payment of the securities (Article 89 paragraph 3),

65. an exchange allows the listing of shares in quotation one although the conditions referred to in Article 91 of this Law have not been fulfilled before the listing,

66. an exchange allows the listing of debt securities in quotation one although the conditions referred to in Article 92 of this Law have not been fulfilled before the listing,

67. an exchange allows the listing in the quotation of securities of a foreign trading company contrary to the conditions specified in Article 93 of this Law,

68. an exchange or a regulated public market does not notify the Commission without delay of the facts referred to in Article 94 paragraph 1 of this Law,

69. an issuer of securities, when listing securities in quotation one or the quotation of public joint stock companies, publishes data without the consent of the Commission, or if it does not publish these data, or does not publish them in the manner prescribed for the publication of a prospectus of an issue (Article 96),

70. an issuer of securities listed in quotation one of an exchange does not produce or publish the report referred to in Article 97 paragraph 1 of this Law within the period or with the content referred to in Article 97 paragraph 2 of this Law,

71. an issuer, when listing securities on a regulated public market, does not publish the information with the content, in the manner and within the periods prescribed for publication of such data (Article 100),

72. a regulated public market does not notify the Commission without delay of facts referred to in Article 101 of this Law,

73. an institutional investor fails to inform an exchange or a regulated public market in the manner, within the period and with the content prescribed by the provisions of Article 102 paragraphs 5 and 6 of this Law,

74. an authorised company, if the persons referred to in Article 105 paragraph 4 of this Law act contrary to the provisions of the same of Article,

75. an authorized company, contrary to the provisions of Article 105 paragraph 5 of this Law, purchases or sells for its own account the securities for which it has privileged information, or if it provides investment advice on such securities,

76. it uses privileged information in a manner contrary to the provisions of Article 105 paragraphs 6 and 7 of this Law,

77. an issuer of securities listed on an exchange or a regulated public market does not without delay make public all the information referred to in Article 106 of this Law,

78. it conducts a transaction with securities or issues an order to purchase or sell securities in spite of prohibitions or contrary to Article 108 paragraph 1 subparagraphs 1 and 2 of this Law,

79. it conducts transactions with securities contrary to prohibitions specified in Article 108 paragraph 2 subparagraphs 1 to 3 of this Law,

80. it executes or spreads false information that influence or might influence the volume of trade and the prices of securities contrary to the prohibition specified in Article 109 of this Law,

81. an authorised company that manages a customer’s securities portfolio trades in these securities exclusively with the intention of earning commission (Article 110),

82. a public company with share capital, contrary to the provisions of Article 114 paragraph 2 and 3 of this Law, does not list shares in the quotation of public joint stock companies of an exchange or a regulated public market within the prescribed periods and in the prescribed manner,

83. a public joint stock company, contrary to the provisions of Article 114 paragraph 4, does not write the prescribed reports and produce them to the Commission within the prescribed periods,

84. a public joint stock company, contrary to the provisions of Article 114 paragraph 7, does not present the prescribed data to the central depository agency,

85. a public joint stock company, contrary to the provisions of Article 115 of this Law, does not produce to the Commission or to the issuer, within the prescribed periods or in the prescribed manner, a notice in writing of the acquisition or release of shares of the public joint stock company below or above the prescribed thresholds,

86. the notice referred to in Article 115 of this Law does not contain the data referred to in Article 117 of this Law,

87. a public joint stock company, contrary to the provisions of Article 118, does not make public the notification referred to in Article 115 of this Law within the prescribed period,

88. the issuer, in the case referred to in Article 121 paragraph 2 of this Law, does not allow shareholders to perform acquisition or release of shares up to the necessary quantity, within an appropriate period of time and at the same price,

89. the issuer, contrary to the provisions of Article 122 of this Law, does not inform the persons referred to in paragraph 1 of the same Article, or if the notification does not contain the information referred to in paragraph 2 of the same Article, or if it makes it impossible for shareholders to exchange shares,

90. the issuer does not perform the obligations referred to in Article 123 paragraph 1 of this Law within the prescribed periods and in the prescribed manner,

91. the issuer, contrary to the provisions of this Law, does not perform the dematerialisation of securities,

92. the central depository agency handles the data referred to in Article 125 paragraph 1 of this Law contrary to the provisions of Article 131 of this Law,

93. the central depository agency does not regularly perform the obligation to inform referred to in Article 132 paragraph 1 of this Law,

94. the central depository agency does not produce monthly reports to the Commission within the period and with the content referred to in Article 132 paragraph 2 of this Law,

95. the central depository agency does not have a shareholding structure in accordance with the provisions of Article 135 paragraphs 1 and 2 of this Law,

96. the central depository agency performs operations without a license from the Commission (Article 136),

97. the central depository agency, contrary to the provisions of Article 137 paragraph 1 of this Law, does not enact the Statute, rules, instructions or list of prices, or if it applies the provisions of these acts without the Commission’s approval or acts contrary to the provisions of the approved acts,

98. the central depository agency receives as its member a person that does not fulfil the conditions for membership (Article 138 paragraph 1),

99. the central depository agency does not publish the data referred to in Article 140 paragraph 5 of this Law,

100. the central depository agency, contrary to the provisions of Article 142 of this Law, conducts transactions with securities referred to in Article 34 of this Law,

101. the central depository agency does not protect the computer system and the data as provided for in Article 143 paragraph 1 of this Law,

102. the central depository agency, if the data related to dematerialised securities are not correct (Article 145),

103. the central depository agency loans or lends securities contrary to the prohibition specified in Article 146 paragraph 5 of this Law,

104. the central depository agency does not execute an order of the Commission as laid down in Article 147 paragraph 2 of this Law,

105. an exchange, a regulated public market or the central depository agency do not bring their business and general acts into conformity with the provisions of this Law within the periods and in the manner prescribed by Article 160 of this Law,

106. brokerage houses do not harmonize their business or do not file the application for the issuance of the license within the periods and in the manner prescribed by Article 162 paragraph 1 of this Law,

107. licensed brokers do not file their applications for conducting transactions with securities within the periods prescribed by the provisions of Article 162 paragraph 1 of this Law.

(2) For misdemeanours referred to in paragraph 1 of this Article, the responsible person in a legal person shall also be subject to a fine in an amount from HRK 20,000,00 to 200,000.00.

A natural person, the responsible person in a legal person, or a person engaged in private business shall be subject to a fine in the amount from HRK 20.000,00 to 200.000,00 if:

1. this person should acquire stakes or shares contrary to the provisions of Article 40 paragraph 2 of this Law,

2. he/she is engaged in brokerage without a license from the Commission (Article 53 paragraph 5),

3. he/she performs the activities of an investment advisor without a license from the Commission (Article 54 paragraph 5),

4. he/she publishes advertisements whose subject is the offer to conduct transactions with securities (Article 69 paragraph 1),

5. he/she does not produce all the required data at the Commission’s request (Article 104),

6. he/she uses privileged information in a manner contrary to the provisions of Article 105 of this Law,

7. he/she does not notify the Commission or the issuer of acquisition or release of shares of a public joint stock company within the prescribed period and in the prescribed manner (Article 115),

8. he/she acts contrary to the provisions of prohibition to divulge confidential business information of any kind.

(1) The statute of limitation for the institution of misdemeanour proceedings referred to in this Law shall apply after the expiry of three years after the misdemeanour was committed.

(2) The statute of limitation for conducting misdemeanour proceedings referred to in this Law shall apply in every case after the expiry of six years after the misdemeanour was committed.

(3) The statute of limitation for the execution of sentences and safety measures in misdemeanour cases shall apply after the expiry of five years after the judgement becomes legally effective.

(1) A broker or an investment advisor who has committed a misdemeanour referred to in Article 155 of this Law may be sentenced to the protective measure of revocation of his license to conduct transactions with securities for a period of up to one year.

(2) If the offender referred to in paragraph 1 of this Article repeats the misdemeanour referred to in Article 155 or commits it in order to realize a material gain, or if the misdemeanour committed has resulted in material or immaterial damage to an authorized company, or material damage to customers or third parties, the offender shall be sentenced to the mandatory protective measure of revocation of his license to conduct transactions with securities for the period of one year.

(3) An authorized company that has committed a misdemeanour referred to in Article 155 of this Law can be sentenced to the protective measure of revocation of the license to conduct transactions with securities for a period of up to one year.

(4) If the authorised company referred to in paragraph 3 of this Article repeats a misdemeanour referred to in Article 155 or commits it in order to realize material gain, or if the misdemeanour committed has resulted in material or immaterial damage to customers or third parties, the offender shall be sentenced to the mandatory protective measure of revocation of his license to conduct transactions with securities for the period of one year.

(1) Joint stock companies shall issue shares as securities pursuant to the provisions of the Company Law or as dematerialised securities pursuant to provisions of this Law.

(2) Joint stock companies that are for the purposes of this Law considered to be public joint stock companies shall produce to the central depository agency for dematerialisation the data on securities and their owners from the share register or issuer register, within the periods and in the manner prescribed by the central depository agency and approved by the Commission.

(3) Joint stock companies that are for the purposes of this Law not considered to be public joint stock companies, and that have neither issued documents on shares nor issued shares as dematerialised securities in the computer system of the central depository agency before this Law has taken effect, shall produce to the central depository agency for dematerialisation the data on securities and their owners from the share register or issuer register, within the periods and in the manner prescribed by the central depository agency and approved by the Commission.

Bringing into Conformity the Organisation of Exchanges, Regulated Public Markets and the Central Depository Agency

(1) Zagrebačka burza d.d. Zagreb, Varaždinsko tržište vrijednosnica d.d., Varaždin and Središnja depozitarna agencija d.d. Zagreb (the Central Depository Agency) shall within one year from the effective date of this Law bring their business into conformity with provisions of this Law and submit their harmonised general acts to the Commission for approval.

(2) Zagrebačka burza d.d. and Varaždinsko tržište vrijednosnica d.d. shall be considered to have a license for conducting transactions under Article 77 paragraph 3 of this Law.

(3) If legal entities referred to in paragraph 1 of this Article should fail to bring their business into conformity with provisions of this Law and submit their harmonised general acts to the Commission for approval, their licence for conducting transactions shall cease to be valid after the expiry of the specified period.

Joint stock companies that until the effective date of this Law fulfil the conditions specified in Article 114 paragraph 1 of this Law shall, within one year from the date of entry into force of this Law, list their shares in quotations of public joint stock companies of an exchange or a regulated public market.

(1) Brokerage companies and authorised brokers shall within six months from the date of entry into force of this Law bring their business into conformity with the provisions of this Law; until the expiry of that period, they may conduct the transactions for which they have been licensed by the Commission.

(2) If legal persons referred to in paragraph 1 of this Article should fail to bring their business into conformity with provisions of this Law, the licence issued by the Commission shall cease to be valid.

(3) The Commission shall, without special conditions, enter in the broker register all the persons that were entered in the register of agents authorised for transactions with securities before the effective date of this Law.

(1) Within 12 months from the date of entry into force of this Law, the Commission shall enact regulations based on this Law.

(2) Until the enactment of such regulations based on this Law, the regulations based on the Law on Issuance and Sale of Securities (The Official Gazette of the Republic of Croatia nos. 107/95, 142/98 and 87/00) shall be in force appropriately.

On the date of entry into force of this Law, the Law on the Issuance and Sale of Securities (The Official Gazette of the Republic of Croatia nos. 107/95, 142/98 and 87/00) shall cease to be valid.

This Law shall enter into force on the eight day of its publication in the Official Gazette of the Republic of Croatia.