Directive (EU) 2025/1 of the European Parliament and of the Council of 27 November 2024 establishing a framework for the recovery and resolution of insurance and reinsurance undertakings and amending Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/1132 and Regulations (EU) No 1094/2010, (EU) No 648/2012, (EU) No 806/2014 and (EU) 2017/1129 (Text with EEA relevance)

• CELEX: Directive (EU) 2025/1
• Articles: 103

Article 1 Subject matter and scope

1.   This Directive lays down rules and procedures relating to the recovery and resolution of the following entities:

(a)

insurance and reinsurance undertakings that are established in the Union and fall within the scope of Article 2 of Directive 2009/138/EC;

(b)

parent insurance and reinsurance undertakings established in the Union;

(c)

insurance holding companies and mixed financial holding companies that are established in the Union;

(d)

parent insurance holding companies in a Member State and parent mixed financial holding companies in a Member State;

(e)

Union parent insurance holding companies and Union parent mixed financial holding companies;

(f)

branches of insurance and reinsurance undertakings that are established in a third country and that fulfil the conditions laid down in Articles 75 to 80.

This Directive also lays down rules and procedures relating to essential service providers where the relevant insurance or reinsurance undertaking enters into resolution.

Resolution authorities and supervisory authorities shall, when establishing and applying the requirements laid down in this Directive and when applying the different tools at their disposal in relation to an entity as referred to in the first or second subparagraph, take account of the nature of the business of that entity, its shareholding structure, legal form, risk profile, size, legal status and interconnectedness to other institutions or to the financial system in general, and the scope and complexity of the entity’s activities.

2.   Member States may adopt or maintain rules that are stricter or additional to those laid down in this Directive and in the delegated and implementing acts adopted on the basis of this Directive, provided that those rules are of general application and do not conflict with this Directive and with the delegated and implementing acts adopted on its basis.

Article 2 Definitions

For the purposes of this Directive, the following definitions apply:

(1)

‘resolution’ means the application of a resolution tool or of a tool referred to in Article 26(7) in order to achieve one or more of the resolution objectives referred to in Article 18(2);

(2)

‘insurance undertaking’ means an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC;

(3)

‘reinsurance undertaking’ means a reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC;

(4)

‘insurance holding company’ means an insurance holding company as defined in Article 212(1), point (f), of Directive 2009/138/EC;

(5)

‘mixed financial holding company’ means a mixed financial holding company as defined in Article 2, point (15), of Directive 2002/87/EC;

(6)

‘parent insurance holding company in a Member State’ means an insurance holding company which is established in a Member State and which is not a subsidiary undertaking of an insurance or reinsurance undertaking, insurance holding company or mixed financial holding company authorised or set up in the same Member State;

(7)

‘Union parent insurance holding company’ means a parent insurance holding company in a Member State which is not a subsidiary undertaking of an insurance or reinsurance undertaking, another insurance holding company or mixed financial holding company authorised or set up in any Member State;

(8)

‘parent mixed financial holding company in a Member State’ means a mixed financial holding company which is established in a Member State, and which is not itself a subsidiary undertaking of an insurance or reinsurance undertaking, an insurance holding company or mixed financial holding company authorised or set up in that same Member State;

(9)

‘Union parent mixed financial holding company’ means a parent mixed financial holding company in a Member State which is not a subsidiary undertaking of an undertaking authorised in any Member State or of another insurance holding company or mixed financial holding company set up in any Member State;

(10)

‘group’ means a group as defined in Article 212(1), point (c), of Directive 2009/138/EC;

(11)

‘resolution objectives’ means the resolution objectives referred to in Article 18(2);

(12)

‘resolution authority’ means an authority designated by a Member State in accordance with Article 3;

(13)

‘supervisory authority’ means a supervisory authority as defined in Article 13, point (10), of Directive 2009/138/EC;

(14)

‘resolution tool’ means a resolution tool referred to in Article 26(3);

(15)

‘resolution power’ means a power referred to in Articles 42 to 54;

(16)

‘competent ministries’ means finance ministries or other ministries of the Member States which are responsible for economic, financial and budgetary decisions at the national level according to national competencies and which have been designated in accordance with Article 3(7);

(17)

‘senior management’ means the person or persons who effectively run the undertaking and who are responsible, and accountable to the administrative, management or supervisory body, for the day-to-day management of the undertaking;

(18)

‘cross-border group’ means a group having group entities established in more than one Member State;

(19)

‘extraordinary public financial support’ means State aid within the meaning of Article 107(1) TFEU, or any other public financial support at supra-national level, which, if provided for at national level, would constitute State aid that is provided to preserve or restore the viability, liquidity or solvency of an entity referred to in Article 1(1), points (a) to (e), or of a group of which such an entity forms part;

(20)

‘group entity’ means a legal person that is part of a group;

(21)

‘group supervisor’ means a group supervisor as defined in Article 212(1), point (d), of Directive 2009/138/EC;

(22)

‘pre-emptive recovery plan’ means a pre-emptive recovery plan drawn up and maintained in accordance with Article 5;

(23)

‘group pre-emptive recovery plan’ means a group pre-emptive recovery plan drawn up and maintained in accordance with Article 7;

(24)

‘significant cross-border activities’ means significant cross-border activities as defined in Article 152aa(1) of Directive 2009/138/EC;

(25)

‘critical functions’ means activities, services or operations performed by an insurance or reinsurance undertaking for third parties that cannot be substituted within a reasonable time or at a reasonable cost, and where the inability of the insurance or reinsurance undertaking to perform the activities, services or operations would be likely to have a significant impact on the financial system or the real economy in one or more Member States including, in particular, the impact resulting from effects on the social welfare of a large number of policy holders, beneficiaries or injured parties or from a systemic disruption or a loss of general confidence in the provision of insurance services;

(26)

‘core business lines’ means business lines and associated services which represent material sources of revenue, profit or franchise value for an insurance or reinsurance undertaking or for a group of which an insurance or reinsurance undertaking forms part;

(27)

‘financing arrangement’ means an arrangement established by a Member State in accordance with Article 81 to ensure the effective application by the resolution authority of the resolution tools and the effective exercise of the resolution powers;

(28)

‘own funds’ means own funds as provided for by Article 87 of Directive 2009/138/EC;

(29)

‘resolution action’ means a decision to place any entity as referred to in Article 1(1), points (a) to (e), under resolution pursuant to Article 19 or 20, the application of a resolution tool or the exercise of one or more resolution powers;

(30)

‘resolution plan’ means a resolution plan for an insurance or reinsurance undertaking drawn up in accordance with Article 9;

(31)

‘group resolution’ means either of the following:

(a)

the taking of resolution action at the level of a parent undertaking or of an insurance or reinsurance undertaking subject to group supervision, or

(b)

the coordination of the application of the resolution tools and the exercise of the resolution powers by resolution authorities in relation to group entities;

(32)

‘group resolution plan’ means a plan for group resolution drawn up in accordance with Articles 10 and 11;

(33)

‘group-level resolution authority’ means the resolution authority in the Member State in which the group supervisor is situated;

(34)

‘group resolution scheme’ means a plan drawn up for the purposes of group resolution in accordance with Article 73;

(35)

‘resolution college’ means a college established in accordance with Article 70;

(36)

‘European resolution college’ means a college established in accordance with Article 71;

(37)

‘mixed-activity insurance holding company’ means a mixed-activity insurance holding company as defined in Article 212(1), point (g), of Directive 2009/138/EC;

(38)

‘normal insolvency proceedings’ means collective insolvency proceedings which entail the partial or total divestment of a debtor and the appointment of a liquidator or an administrator normally applicable to insurance and reinsurance undertakings under national law and either specific to those undertakings or generally applicable to any natural or legal person;

(39)

‘debt instruments’ means bonds and other forms of transferrable debt, instruments creating or acknowledging a debt, and instruments giving rights to acquire debt instruments;

(40)

‘insurance claim’ means an insurance claim as defined in Article 268(1), point (g), of Directive 2009/138/EC;

(41)

‘parent undertaking’ means a parent undertaking as defined in Article 13, point (15), of Directive 2009/138/EC;

(42)

‘Union State aid framework’ means the framework established by Articles 107, 108 and 109 TFEU and regulations and all Union acts, including guidelines, communications and notices, made or adopted pursuant to Article 108(4) or Article 109 TFEU;

(43)

‘winding-up’ means the realisation of assets of an entity referred to in Article 1(1), points (a) to (e);

(44)

‘asset and liability separation tool’ means the mechanism for effecting a transfer by a resolution authority of assets, rights or liabilities of an undertaking under resolution to an asset and liability management vehicle in accordance with Article 30;

(45)

‘asset and liability management vehicle’ means a legal person that meets the requirements laid down in Article 30(2);

(46)

‘write-down or conversion tool’ means the mechanism for effecting the exercise by a resolution authority of the write-down or conversion powers in relation to liabilities of an undertaking under resolution in accordance with Article 35;

(47)

‘sale-of-business tool’ means the mechanism for effecting a transfer by a resolution authority of shares or other instruments of ownership issued by an undertaking under resolution, or assets, rights or liabilities, of an undertaking under resolution to a purchaser that is not a bridge undertaking, in accordance with Article 31;

(48)

‘bridge undertaking’ means a legal person that meets the requirements laid down in Article 32(2);

(49)

‘bridge undertaking tool’ means the mechanism for transferring shares or other instruments of ownership issued by an undertaking under resolution or assets, rights or liabilities of an undertaking under resolution to a bridge undertaking, in accordance with Article 32;

(50)

‘solvent run-off tool’ means the mechanism for prohibiting an undertaking under resolution to conclude new insurance or reinsurance contracts and for limiting its activity to the exclusive administration of its existing portfolio until termination of its activities and winding-up under normal insolvency proceedings in accordance with Article 27;

(51)

‘instruments of ownership’ means shares, other instruments that confer ownership, instruments that are convertible into or give the right to acquire shares or other instruments of ownership, and instruments representing interests in shares or other instruments of ownership;

(52)

‘shareholder’ means a holder of instruments of ownership;

(53)

‘transfer powers’ means the powers specified in Article 42(1), point (e) or (f), to transfer shares, other instruments of ownership, debt instruments, assets, rights or liabilities, or any combination of those items from an undertaking under resolution to a recipient;

(54)

‘central counterparty’ (CCP) means a CCP as defined in Article 2, point (1), of Regulation (EU) No 648/2012 of the European Parliament and of the Council  ( 14 ) ;

(55)

‘derivative’ means a derivative as defined in Article 2, point (5), of Regulation (EU) No 648/2012;

(56)

‘write-down or conversion powers’ means the powers referred to in Article 35(2) and in Article 42(1), points (g) to (k);

(57)

‘secured liability’ means a liability where the right of the creditor to payment or other form of performance is secured by a charge, pledge or lien, or collateral arrangements including liabilities arising from repurchase transactions and other title transfer collateral arrangements;

(58)

‘Tier 1 instruments’ means basic own-fund items that meet the conditions laid down in Article 94(1) of Directive 2009/138/EC;

(59)

‘Tier 2 instruments’ means basic and ancillary own-fund items that meet the conditions laid down in Article 94(2) of Directive 2009/138/EC;

(60)

‘Tier 3 instruments’ means basic and ancillary own-fund items that meet the conditions laid down in Article 94(3) of Directive 2009/138/EC;

(61)

‘eligible liabilities’ means the liabilities and capital instruments that do not qualify as Tier 1, Tier 2 or Tier 3 instruments of an entity referred to in Article 1(1), points (a) to (e), and that are not excluded from the scope of the write-down or conversion tool pursuant to Article 35(5) to (8);

(62)

‘insurance guarantee scheme’ means a scheme officially recognised by a Member State and financed through contributions from insurance or reinsurance undertakings or policy holders guaranteeing the payment of eligible insurance claims, in part or in full, to eligible policy holders, insured parties and beneficiaries, or ensuring the continuation of insurance policies where an insurance undertaking is unable or likely to become unable to fulfil its obligations and commitments resulting from its insurance contracts;

(63)

‘relevant capital instruments’ means Tier 1, Tier 2 or Tier 3 instruments;

(64)

‘conversion rate’ means the factor that determines the number of shares or other instruments of ownership into which a liability of a specific class will be converted, by reference either to a single instrument of the class in question or to a specified unit of value of a debt claim;

(65)

‘affected creditor’ means a creditor whose claim relates to a liability that is reduced or converted to shares or other instruments of ownership by the exercise of the write-down or conversion power pursuant to the use of the write-down or conversion tool;

(66)

‘recipient’ means the entity to which shares, other instruments of ownership, debt instruments, assets, rights or liabilities, or any combination of those items are transferred from an undertaking under resolution;

(67)

‘business day’ means a day other than a Saturday, a Sunday or a public holiday in the Member State concerned;

(68)

‘termination right’ means a right to terminate a contract, a right to accelerate, close out, set-off or net obligations or any similar provision that suspends, modifies or extinguishes an obligation of a party to the contract or a provision that prevents an obligation under the contract from arising that would otherwise arise;

(69)

‘undertaking under resolution’ means any of the entities referred to in Article 1(1), points (a) to (e), in respect of which a resolution action is taken;

(70)

‘ultimate parent undertaking’ means a parent undertaking in a Member State, of a group which is subject to group supervision in accordance with Article 213(2), point (a) or (b), of Directive 2009/138/EC, which is not a subsidiary undertaking of another insurance or reinsurance undertaking, an insurance holding company or a mixed financial holding company that is authorised and set up in any Member State;

(71)

‘third-country insurance or reinsurance undertaking’ means a third-country insurance undertaking or a third-country reinsurance undertaking as defined in Article 13, points (3) and (6), of Directive 2009/138/EC;

(72)

‘third-country resolution proceedings’ means an action under the law of a third country to manage the failure of a third-country insurance or reinsurance undertaking or a third-country parent undertaking that is comparable, in terms of objectives and anticipated results, to resolution actions under this Directive;

(73)

‘Union branch of a third-country undertaking’ means a branch located in a Member State of a third-country insurance or reinsurance undertaking;

(74)

‘relevant third-country authority’ means a third-country authority responsible for carrying out functions comparable to those of resolution authorities or supervisory authorities pursuant to this Directive;

(75)

‘title transfer financial collateral arrangement’ means a title transfer financial collateral arrangement as defined in Article 2(1), point (b), of Directive 2002/47/EC of the European Parliament and of the Council  ( 15 ) ;

(76)

‘netting arrangement’ means an arrangement under which a number of claims or obligations can be converted into a single net claim, including closeout netting arrangements under which, on the occurrence of an enforcement event (however or wherever defined) the obligations of the parties are accelerated so as to become immediately due or are terminated, and in either case are converted into or replaced by a single net claim, including ‘close-out netting provisions’ as defined in Article 2(1), point (n)(i), of Directive 2002/47/EC and ‘netting’ as defined in Article 2, point (k), of Directive 98/26/EC;

(77)

‘set-off arrangement’ means an arrangement under which two or more claims or obligations owed between the undertaking under resolution and a counterparty can be set off against each other;

(78)

‘financial contracts’ means financial contracts as defined in Article 2(1), point (100), of Directive 2014/59/EU;

(79)

‘crisis prevention measure’ means the exercise of powers to direct an undertaking to address the deficiencies or impediments to recoverability under Article 6(5) of this Directive, the exercise of powers to address or remove impediments to resolvability under Article 15 or 16 of this Directive, the application of any measures under Article 137, Article 138(3) and (5), Article 139(3) and Article 140 of Directive 2009/138/EC and the application of a preventive measure under Article 141 of Directive 2009/138/EC;

(80)

‘crisis management measure’ means a resolution action, the appointment of a special manager under Article 44 or the appointment of a person under Article 54(1);

(81)

‘designated national macroprudential authority’ means the authority entrusted with the conduct of macroprudential policy referred to in Recommendation B1 of the Recommendation of the European Systemic Risk Board of 22 December 2011 on the macroprudential mandate of national authorities (ESRB/2011/3);

(82)

‘regulated market’ means a regulated market as defined in Article 4(1), point (21), of Directive 2014/65/EU of the European Parliament and of the Council  ( 16 ) .

(83)

‘credit institution’ means a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 of the European Parliament and of the Council  ( 17 ) ;

(84)

‘investment firm’ means an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013;

(85)

‘small and non-complex undertaking’ means a small and non-complex undertaking as defined in Article 13, point (10a), of Directive 2009/138/EC;

(86)

‘essential service provider’ means an entity that provides goods or services, such as IT services, utilities and the rental, servicing and upkeep of premises, that are needed to maintain the continuous functioning of the operations of an insurance or reinsurance undertaking, or are needed for ensuring the continuity of insurance coverage, and that is part of the same group as that undertaking;

(87)

‘subsidiary undertaking’ means a subsidiary undertaking as defined in Article 13, point (16), of Directive 2009/138/EC;

(88)

‘Union subsidiary undertaking’ means an insurance or reinsurance undertaking which has its head office in a Member State and which is a subsidiary undertaking of a third-country insurance or reinsurance undertaking or a third-country parent undertaking;

(89)

‘branch’ means a branch as defined in Article 13, point (11), of Directive 2009/138/EC;

(90)

‘administrative, management or supervisory body’ means an administrative, management or supervisory body as defined in Article 1, point (43), of Commission Delegated Regulation (EU) 2015/35  ( 18 ) ;

(91)

‘financial conglomerate’ means a financial conglomerate as defined in Article 2, point (14), of Directive 2002/87/EC.

Article 3 Designation of resolution authorities and competent ministries

1.   Each Member State shall designate one or, exceptionally, more resolution authorities that are empowered to apply the resolution tools and exercise the resolution powers.

2.   Resolution authorities shall be national central banks, competent ministries, public administrative authorities or authorities entrusted with public administrative powers.

3.   Where a resolution authority is entrusted with other functions, including supervisory functions, adequate structural arrangements shall be in place to avoid conflicts of interest between the functions entrusted to the resolution authority pursuant to this Directive and supervisory or other functions, without prejudice to the exchange of information and cooperation obligations required by paragraph 6.

Member States shall ensure that those arrangements ensure effective operational independence, including separate staff, reporting lines and decision-making processes of the resolution authority from any supervisory or other functions of that resolution authority.

4.   The requirements laid down in paragraph 3 shall not preclude that:

(a)

reporting lines converge at the highest level or senior management level of an organisation that subsumes different functions or authorities;

(b)

staff is shared, under predefined conditions, between the resolution function and other functions, including supervisory functions, to meet temporarily high workloads, or for the resolution authority to be able to avail itself of the expertise of shared staff.

5.   Resolution authorities shall adopt and make public internal rules to prevent conflicts of interest in compliance with the requirements set out in paragraphs 3 and 4, including rules regarding professional secrecy and information exchanges between the different functional areas.

6.   Member States shall require that authorities exercising supervision and resolution functions and persons exercising those functions on their behalf cooperate closely in the preparation, planning and application of resolution decisions, both where the resolution authority and the supervisory authority are separate entities and where the functions are carried out in the same entity.

7.   Each Member State shall designate a single ministry as the competent ministry under this Directive. Where relevant, Member States shall ensure that an appropriate coordination mechanism with other involved ministries is put in place.

8.   Where the resolution authority in a Member State is not the competent ministry, the resolution authority shall inform the competent ministry of the decisions taken pursuant to this Directive without undue delay and, unless otherwise laid down in national law, not implement any decisions that have a direct fiscal impact without having obtained the approval of that competent ministry.

9.   Where a Member State designates more than one resolution authority, it shall provide the Commission and EIOPA with a fully reasoned notification for doing so and shall clearly allocate functions and responsibilities between those authorities, ensure adequate coordination between them and designate a single authority as a contact authority for the purposes of cooperation and coordination with the relevant authorities of other Member States.

10.   Member States shall inform EIOPA of the national authority or authorities designated as resolution authorities and, where relevant, of the contact authority and their specific functions and responsibilities. EIOPA shall publish the list of those resolution authorities and contact authorities.

11.   Without prejudice to Article 67, Member States may limit the liability of the resolution authority, the supervisory authority and their respective staff in accordance with national law for their acts and omissions in the course of discharging their functions under this Directive.

Article 4 Simplified obligations for certain undertakings

1.   Taking into account the impact that the failure of an insurance or reinsurance undertaking could have, due to the nature of its business, its shareholding structure, its legal form, its risk profile, size and legal status, its interconnectedness to other regulated undertakings or to the financial system in general, the scope and the complexity of its activities, and whether its failure and subsequent winding-up under normal insolvency proceedings would be likely to have a significant negative effect on financial markets, on other undertakings, on policy holders, on funding conditions, or on the wider economy, Member States shall ensure that supervisory and resolution authorities determine whether simplified obligations can apply for certain insurance and reinsurance undertakings and groups with respect to:

(a)

the contents and details of pre-emptive recovery plans provided for in Articles 5 to 8 and resolution plans provided for in Articles 9 to 12;

(b)

the date by which the first pre-emptive recovery and resolution plans are to be drawn up and the frequency for updating pre-emptive recovery and resolution plans, which may be lower than the frequency provided for in Article 5(4), Article 7(3), Article 9(5) and Article 11(3);

(c)

the content and level of detail of the information required from undertakings pursuant to Article 5(6), Article 7(3), Article 10(2) and Article 12(1);

(d)

the level of detail for the assessment of resolvability provided for in Articles 13 and 14.

2.   EIOPA shall, by 29 July 2027, issue guidelines in accordance with Article 16 of Regulation (EU) No 1094/2010 to specify further details on the criteria referred to in paragraph 1, introductory part, of this Article.

3.   Member States shall require the supervisory authorities or the resolution authorities, as applicable, to provide EIOPA, on an annual basis and for each Member State separately, with all of the following information:

(a)

the number of insurance and reinsurance undertakings and groups subject to pre-emptive recovery planning and resolution planning pursuant to Articles 5, 7, 9 and 10;

(b)

the number of insurance and reinsurance undertakings and groups subject to simplified obligations as referred to in paragraph 1;

(c)

quantitative information on the application of the criteria referred to in paragraph 1, introductory part;

(d)

a description of the simplified obligations applied on the basis of the criteria referred to in paragraph 1, introductory part, as compared to the full obligations, together with the volume of capital requirements, premiums, technical provisions and assets, measured as percentages of the total volume of, respectively, capital requirements, premiums, technical provisions and assets of the insurance and reinsurance undertakings of the Member States or of all the groups, as applicable.

4.   EIOPA shall publicly disclose, on an annual basis and for each Member State separately, the information referred to in paragraph 3, points (a) to (d), together with an assessment of any divergences regarding the implementation of paragraph 1 at national level.

Article 5 Pre-emptive recovery plans

1.   Member States shall ensure that insurance and reinsurance undertakings that are not part of a group subject to pre-emptive recovery planning pursuant to Article 7, and that meet the criteria laid down in paragraph 2 or 3 of this Article, draw up and keep updated a pre-emptive recovery plan. That pre-emptive recovery plan shall contain measures to be taken by the undertaking concerned to restore its financial position where that position has significantly deteriorated.

The drawing up, keeping up-to-date and application of pre-emptive recovery plans shall be considered to be part of the system of governance within the meaning of Article 41 of Directive 2009/138/EC.

2.   Member States shall ensure that the supervisory authority subjects insurance and reinsurance undertakings to pre-emptive recovery planning requirements on the basis of their size, business model, risk profile, interconnectedness and substitutability, their importance for the economy of the Member States in which they operate, and their cross-border activities, in particular significant cross-border activities.

Supervisory authorities shall ensure that at least 60 % of the Member State’s life insurance and reinsurance market and at least 60 % of its non-life insurance and reinsurance market – the life market share being based on gross technical provisions and the non-life market share being based on gross written premiums – are subject to pre-emptive recovery planning requirements pursuant to this Article.

In the calculation of the market coverage level referred to in the second subparagraph, the subsidiary insurance or reinsurance undertakings of a group may be taken into account where those subsidiary insurance or reinsurance undertakings are part of a group for which the ultimate parent undertaking is drawing up and maintaining a group pre-emptive recovery plan.

3.   Any insurance or reinsurance undertaking which is subject to a resolution plan shall be subject to pre-emptive recovery planning requirements.

Small and non-complex undertakings shall not be subject to pre-emptive recovery planning requirements, except where a supervisory authority considers that such an undertaking represents a particular risk at national or regional level.

4.   Supervisory authorities shall ensure that insurance and reinsurance undertakings update their pre-emptive recovery plans at least every two years, and in any case:

(a)

after a change to the legal or organisational structure of the undertaking, to its business or to its financial position which could have a material effect on, or necessitates a material change to, the pre-emptive recovery plan;

(b)

when a material change to the financial position of the undertaking that could have a material effect on the effectiveness of the plan, or otherwise necessitate a revision of the pre-emptive recovery plan, becomes foreseeable.

5.   Pre-emptive recovery plans shall not assume any access to or receipt of extraordinary public financial support.

6.   Member States shall require that pre-emptive recovery plans contain all of the following:

(a)

a summary of the key elements of the plan, including material changes to the most recently submitted plan;

(b)

a description of the undertaking or the group, including a summary of any material changes since the most recently submitted plan;

(c)

a framework of indicators as referred to in paragraph 8;

(d)

a description of how the pre-emptive recovery plan has been drawn-up, how it will be updated and how it will be applied;

(e)

a range of remedial actions;

(f)

a communication strategy.

(g)

where the undertaking has breached the Solvency Capital Requirement laid down in Title I, Chapter VI, Section 4, of Directive 2009/138/EC and submitted a recovery plan in accordance with Article 138(2) of Directive 2009/138/EC at some point in the last 10 years, that recovery plan as well as an assessment of the measures taken to restore the undertaking’s compliance with the Solvency Capital Requirement.

7.   Member States shall require that insurance and reinsurance undertakings assess the credibility and feasibility of their pre-emptive recovery plans, in particular the framework of indicators referred to in paragraph 8 and the remedial actions, against a range of scenarios of severe macroeconomic and financial stress relevant to the insurance or reinsurance undertaking’s specific conditions, including system-wide events, idiosyncratic stress events likely to materially affect their asset and liability profile, and combinations of such stress events.

8.   Member States shall require that insurance and reinsurance undertakings ensure that their pre-emptive recovery plans contain a framework of qualitative and quantitative indicators that identify the points at which remedial actions should be considered or taken. Those indicators may include criteria relating to, inter alia, capital, liquidity, asset quality, profitability, market conditions, macro-economic conditions and operational events. Indicators relating to the capital position shall as a minimum contain any breach of the Solvency Capital Requirement laid down in Title I, Chapter VI, Section 4, of Directive 2009/138/EC.

Member States shall require that any breach of the Solvency Capital Requirement result in appropriate remedial action by the undertaking concerned in line with the pre-emptive recovery plan.

Member States shall require that supervisory authorities ensure that insurance and reinsurance undertakings put in place appropriate arrangements for the regular monitoring of the indicators referred to in the first subparagraph.

9.   An insurance or reinsurance undertaking that decides to take a remedial action contained in its pre-emptive recovery plan, or that decides to refrain from taking such remedial action even though an indicator as referred to in paragraph 8, first subparagraph, has been met, shall notify such decision to the supervisory authority without delay.

10.   The administrative, management or supervisory body of an insurance or reinsurance undertaking as referred to in paragraph 1 shall assess and approve the pre-emptive recovery plan before submitting it to the supervisory authority for review.

11.   EIOPA shall, by 29 January 2027, issue guidelines in accordance with Article 16 of Regulation (EU) No 1094/2010 to specify further:

(a)

in cooperation with the European Systemic Risk Board, the range of scenarios referred to in paragraph 7 of this Article;

(b)

the qualitative and quantitative indicators referred to in paragraph 8 of this Article.

12.   EIOPA shall develop draft regulatory technical standards to specify further:

(a)

the criteria, in particular as regards cross-border activity, referred to in paragraph 2, first subparagraph;

(b)

the methods to be used when determining the market shares referred to in paragraph 2, second and third subparagraphs;

(c)

the information that an insurance or reinsurance undertaking is to include in the pre-emptive recovery plan, including the remedial actions referred to in paragraph 6, point (e), and their implementation.

EIOPA shall submit those draft regulatory technical standards to the Commission by 29 July 2026.

Power is delegated to the Commission to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

Article 6 Review and assessment by supervisory authorities of pre-emptive recovery plans

1.   Supervisory authorities shall, within nine months of the submission of each pre-emptive recovery plan, review that plan and assess the extent to which it satisfies the requirements laid down in Article 5 and all of the following:

(a)

whether the implementation of the arrangements proposed in the plan is reasonably likely to maintain or restore within an appropriate timeframe the viability and financial position of the insurance or reinsurance undertaking;

(b)

whether the plan and specific options within the plan are reasonably likely to be implemented quickly and effectively in situations of financial stress;

(c)

whether the plan and specific options within the plan are reasonably likely to avoid to the maximum extent possible any significant adverse effect on the financial system, including in scenarios which would lead other insurance and reinsurance undertakings to implement pre-emptive recovery plans within the same period.

2.   Supervisory authorities shall provide resolution authorities with all pre-emptive recovery plans they have received. Resolution authorities may examine the pre-emptive recovery plan to identify any actions in the pre-emptive recovery plan which may adversely impact the resolvability of the insurance or reinsurance undertakings concerned and make recommendations to the supervisory authority with regard to those matters within the period set out in paragraph 1.

3.   Where an insurance or reinsurance undertaking carries out significant cross-border activities, the home supervisory authority shall, upon the request of a host supervisory authority, provide the pre-emptive recovery plan to that host supervisory authority. The host supervisory authority may examine the pre-emptive recovery plan to identify any actions in the pre-emptive recovery plan which may adversely impact policy holders, the real economy or the financial stability in its Member State and make recommendations to the home supervisory authority with regard to those matters. The home supervisory authority shall provide a reasoned reply as to its decision to follow or not the recommendations. Where the home supervisory authority fails to properly take into account the recommendations of the host supervisory authority, the host supervisory authority may refer the matter to EIOPA in accordance with Article 31(2), point (c), of Regulation (EU) No 1094/2010.

4.   Supervisory authorities that, after having assessed the pre-emptive recovery plan, conclude that there are material deficiencies in that plan or material impediments to its implementation shall notify the insurance or reinsurance undertaking concerned of the content of their assessment and require the undertaking concerned to submit, within two months, a revised plan demonstrating how those deficiencies or impediments are addressed. That period of two months may be extended by one month, upon request of the undertaking concerned, where the supervisory authority so agrees.

Before requiring an insurance or reinsurance undertaking to resubmit a pre-emptive recovery plan, the supervisory authority shall give the undertaking the opportunity to state its opinion on that requirement.

A supervisory authority that finds that the deficiencies and impediments have not been adequately addressed in the revised plan may instruct the undertaking to make specific changes to the plan.

5.   Where the insurance or reinsurance undertaking fails to submit a revised pre-emptive recovery plan, or where the supervisory authority comes to the conclusion that the revised pre-emptive recovery plan does not adequately remedy the deficiencies or impediments identified in its original assessment, and where it is not possible to adequately remedy the deficiencies or impediments through an instruction to make specific changes to the plan, the supervisory authority shall require the undertaking to identify within a reasonable timeframe changes the undertaking can make to its business in order to address the deficiencies in the pre-emptive recovery plan or impediments to the implementation of that plan.

Where the insurance or reinsurance undertaking fails to identify such changes within the timeframe set by the supervisory authority, or where the supervisory authority concludes that the actions proposed by the undertaking would not adequately address the deficiencies or impediments, the supervisory authority may take a reasoned decision to instruct the undertaking to take any measures that the supervisory authority considers to be necessary and proportionate, taking into account the seriousness of the deficiencies and impediments and the effect of the measures on the undertaking’s business.

This decision shall be notified in writing to the insurance or reinsurance undertaking and shall be subject to a right of appeal.

Article 7 Group pre-emptive recovery plans

1.   Member States shall ensure that the group supervisor has the power to require that the ultimate parent undertaking of a group draw up and submit to the group supervisor a group pre-emptive recovery plan.

Group pre-emptive recovery plans shall consist of a pre-emptive recovery plan for the group headed by the ultimate parent undertaking. The group pre-emptive recovery plan shall identify remedial actions that may be required to be implemented at the level of that ultimate parent undertaking and at the level of its individual subsidiary undertakings to restore their financial position where that position has significantly deteriorated.

The group supervisor shall impose the requirement referred to in the first subparagraph on the basis of the criteria referred to in Article 5(2) or (3), as applicable.

2.   The group pre-emptive recovery plan shall contain remedial actions to achieve the stabilisation of the group, or of any insurance or reinsurance undertaking of the group, when the group or any of its insurance or reinsurance undertakings is in a situation of stress so as to address or remove the causes of the distress and restore the financial position of the group or the undertaking that is part of the group in question, at the same time taking into account the financial position of other group entities.

The group pre-emptive recovery plan shall contain arrangements to ensure the coordination and consistency of proportionate measures to be taken at the level of the group and the group entities.

3.   The group pre-emptive recovery plan, and any plan drawn up for an individual subsidiary insurance or reinsurance undertaking, shall be drawn up in accordance with Article 5(5) to (8), and shall be updated in accordance with Article 5(4).

In accordance with Article 5(8), third subparagraph, appropriate arrangements for the regular monitoring of the indicators shall be put in place.

The group pre-emptive recovery plan shall identify whether there are obstacles to the implementation of remedial actions within the group, including at the level of individual entities covered by the plan, and whether there are substantial practical or legal impediments to the prompt transfer of own funds or the repayment of liabilities or assets within the group.

4.   Supervisory authorities may require subsidiary insurance or reinsurance undertakings or the entities referred to in Article 1(1), points (c) and (d), to draw up and submit pre-emptive recovery plans where no group pre-emptive recovery plan exists.

5.   Where the supervisory authority concerned assesses that an entity is not sufficiently considered by the group pre-emptive recovery plan in light of the significance of the entity in question in the Member State concerned and in light of the obligations to which comparable undertakings in that Member State are subject, it may request the group supervisor, on the basis of a reasoned opinion, to require the ultimate parent undertaking, or insurance holding company heading the group, to submit a revised group pre-emptive recovery plan taking into account the concerns expressed by the supervisory authority concerned. Where a revised group pre-emptive recovery plan has been submitted and the supervisory authority concerned assesses that that revised plan does not sufficiently address its concerns, it may require the subsidiary insurance or reinsurance undertakings or the entities referred to in Article 1(1), points (c) and (d), concerned, to draw up and submit a pre-emptive recovery plan. In that case, the supervisory authority shall provide the group supervisor with a reasoned opinion for this assessment. Subsequently it shall provide the group supervisor with the pre-emptive recovery plan.

6.   The group supervisor shall, provided that the confidentiality requirements laid down in Article 66 are complied with, transmit the group pre-emptive recovery plans to:

(a)

EIOPA;

(b)

the relevant supervisory authorities which are members of or participate in the college of supervisors as referred to in Article 248(3) of Directive 2009/138/EC;

(c)

the group-level resolution authority;

(d)

the resolution authorities of the subsidiary undertakings;

(e)

where the group is or is part of a financial conglomerate, the relevant resolution authority designated in accordance with Article 3 of Directive 2014/59/EU and the competent authority as defined in Article 4(1), point (40), of Regulation (EU) No 575/2013.

7.   The administrative, management or supervisory body of the entity drawing up the group pre-emptive recovery plan pursuant to paragraph 1 or the pre-emptive recovery plan pursuant to paragraph 4 or 5 shall assess and approve the plan concerned before submitting it to the group supervisor or to the supervisory authority, as appropriate, for review.

8.   When drawing up pre-emptive recovery plans, a Union subsidiary undertaking may take into account any group plans on pre-emptive recovery drawn up by the third-country insurance or reinsurance undertakings or third-country parent undertaking of which it is a subsidiary undertaking, where applicable.

Article 8 Review and assessment by the group supervisor of group pre-emptive recovery plans

1.   The group supervisor shall, after having consulted the relevant supervisory authorities which are members of or participate in the college of supervisors as referred to in Article 248(3) of Directive 2009/138/EC, review the group pre-emptive recovery plan and assess the extent to which it satisfies the requirements and criteria laid down in Article 7. That assessment shall be made in accordance with the procedure established in Article 6 and in this Article and within the period laid down in Article 6(1) and shall take into account the potential impact of the remedial actions on policy holders, the real economy and financial stability in all the Member States where the group operates.

2.   The group supervisor shall endeavour to reach a joint decision, as referred to in Article 17 of this Directive, within the college of supervisors established in accordance with Article 248 of Directive 2009/138/EC, on:

(a)

the review and assessment of the group pre-emptive recovery plan;

(b)

whether a pre-emptive recovery plan on an individual basis is to be drawn up for insurance and reinsurance undertakings that are part of the group, in accordance with Article 7(4) or (5) of this Directive;

(c)

the application of the measures referred to in Article 6(4) and (5) of this Directive.

Article 9 Resolution plans

1.   Member States shall ensure that resolution authorities, after having consulted the supervisory authority, draw up a resolution plan for each insurance or reinsurance undertaking that is not part of a group subject to resolution planning pursuant to Articles 10 and 11, and that meets the conditions laid down in paragraph 2 of this Article. The resolution plan shall provide for the resolution actions which the resolution authority may take where the insurance or reinsurance undertaking meets the conditions for resolution referred to in Article 19(1) or Article 20(3).

2.   Resolution authorities shall draw up resolution plans for insurance and reinsurance undertakings for which they assess that it is more likely, when compared to other undertakings under their remit, that resolution action would be in the public interest as referred to in Article 19(5) in the event of the failure of the undertaking concerned, or for which the authorities assess that they perform a critical function. Those assessments shall take into account, as a minimum, the necessity to achieve resolution objectives and the undertaking’s size, business model, risk profile, interconnectedness, substitutability and in particular its cross-border activity.

On the basis of the assessments referred to in the first subparagraph, resolution authorities shall ensure that at least 40 % of the Member State’s life insurance and reinsurance market and 40 % of its non-life insurance and reinsurance market – the life market share being based on gross technical provisions and the non-life market share being based on gross written premiums – are subject to resolution planning. In the calculation of the market coverage level, the subsidiary undertakings of a group may be taken into account where those subsidiary undertakings are covered in the group resolution plan.

Small and non-complex undertakings shall not be subject to resolution planning requirements, except where the resolution authority considers that such an undertaking represents a particular risk at national or regional level.

3.   Where the insurance or reinsurance undertaking concerned carries out significant cross-border activities, the home resolution authorities shall provide the draft resolution plan to the host supervisory or resolution authorities. The host supervisory or resolution authorities may examine the draft resolution plan to identify any actions in the draft resolution plan which may adversely impact policy holders, the real economy or the financial stability in their Member State and make recommendations to the home resolution authority with regard to those matters. The home resolution authority shall provide a reasoned reply as to its decision to follow or not the recommendations. Where the home resolution authority fails to properly take into account the recommendations of the host supervisory or resolution authority, the host supervisory or resolution authority may refer the matter to EIOPA in accordance with Article 31(2), point (c), of Regulation (EU) No 1094/2010.

4.   When specifying the options for application of resolution tools and powers, resolution plans shall take into consideration relevant resolution scenarios, including the scenario where the failure of the insurance or reinsurance undertaking is idiosyncratic and the scenario where it occurs at a time of broader financial instability or system-wide events.

Resolution plans shall not assume any extraordinary public financial support besides, where available, the use of insurance guarantee schemes or of any financing arrangements.

5.   Resolution authorities shall review, and where necessary update, resolution plans at least every two years, and in any case:

(a)

after any material change to the legal or organisational structure of the insurance or reinsurance undertaking, to its business, or to its financial position, that could have a material effect on the effectiveness of the plan or would otherwise necessitate a revision of the resolution plan;

(b)

when a material change to the financial position of the insurance or reinsurance undertaking that could have a material effect on the effectiveness of the plan, or otherwise necessitate a revision of the resolution plan, becomes foreseeable.

Insurance and reinsurance undertakings and supervisory authorities shall promptly communicate to the resolution authorities any event that necessitates a revision or update of the resolution plan.

6.   Without prejudice to Article 4, resolution plans shall set out options for applying the resolution tools to, and exercising resolution powers with respect to, the insurance or reinsurance undertaking. Resolution plans shall contain, quantified whenever appropriate and possible, all of the following:

(a)

a summary of the key elements of the plan;

(b)

a summary of the material changes to the undertaking that have occurred since the latest resolution-related information was filed;

(c)

a demonstration of how critical functions and core business lines could be legally and economically separated, to the extent necessary, from other functions so as to ensure continuity upon the failure of the undertaking;

(d)

an identification of those assets which would be expected to qualify as collateral;

(e)

an estimation of the timeframe for executing each material aspect of the plan;

(f)

a detailed description of the assessment of resolvability, including the assessment of feasibility and credibility of winding-up under normal insolvency proceedings, carried out in accordance with Article 13;

(g)

a description of any measures required pursuant to Article 15 to address or remove impediments to resolvability identified as a result of the assessment carried out in accordance with Article 13;

(h)

an explanation as to how the resolution options could be financed without the assumption of any extraordinary public financial support besides, where available, the use of insurance guarantee schemes or of any financing arrangements;

(i)

a detailed description of the different resolution strategies that could be applied in light of the different possible scenarios and the applicable timescales;

(j)

a description of critical interdependencies;

(k)

an analysis of the impact of the resolution plan on the employees of the undertaking, including an assessment of any associated costs, and a description of envisaged procedures to consult staff during the resolution process, taking into account national systems for dialogue with social partners where applicable;

(l)

a plan for communicating with the media and the public;

(m)

a description of essential operations and systems for maintaining the continuous functioning of the undertaking’s operational processes;

(n)

where applicable, any opinion expressed by the undertaking in relation to the resolution plan.

The summary of the key elements of the plan shall be disclosed to the insurance or reinsurance undertaking.

7.   The resolution authority shall transmit the resolution plans and any changes thereto to the supervisory authorities concerned.

8.   EIOPA shall develop draft regulatory technical standards to specify further the contents of the resolution plan.

EIOPA shall submit those draft regulatory technical standards to the Commission by 29 July 2026.

Power is delegated to the Commission to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

9.   EIOPA shall, by 29 January 2027, issue guidelines in accordance with Article 16 of Regulation (EU) No 1094/2010 to specify further the criteria for the identification of critical functions.

Article 10 Group resolution plans

1.   Member States shall ensure that group-level resolution authorities have the power to draw up group resolution plans for groups that are subject to resolution planning on the basis of the conditions laid down in Article 9(2).

2.   The group resolution plan shall:

(a)

set out the resolution actions that are to be taken in respect of each entity where measures will be necessary to ensure the continuity of critical functions;

(b)

examine the extent to which the resolution tools could be applied and the resolution powers exercised in a coordinated manner and identify any potential impediments to a coordinated resolution;

(c)

where a group contains entities incorporated in third countries, identify appropriate arrangements for cooperation and coordination with the relevant authorities of those third countries and the implications for resolution within the Union;

(d)

identify measures, including the legal and economic separation of particular functions or business lines, that are necessary to facilitate group resolution, taking into account intra-group interdependencies;

(e)

identify available sources of funding to finance the group resolution actions and, where the use of insurance guarantee schemes or of any financing arrangement would be required, set out principles for sharing responsibility for that financing between sources of funding in different Member States, while not assuming any extraordinary public financial support;

(f)

contain the elements laid down in Article 9(6).

3.   The group-level resolution authority shall transmit group resolution plans and any changes thereto to the supervisory authorities concerned and, where the group is, or is part of, a financial conglomerate, to the relevant resolution authority designated in accordance with Article 3 of Directive 2014/59/EU and the competent authority as defined in Article 4(1), point (40), of Regulation (EU) No 575/2013.

4.   Resolution authorities may draw up resolution plans for subsidiary insurance or reinsurance undertakings or the entities referred to in Article 1(1), points (c) and (d), where no group resolution plan exists.

5.   When drawing up resolution plans, the resolution authorities of Union subsidiary undertakings may take into account the resolution strategy pursued by the third-country authorities concerned for the groups for which those resolution authorities are responsible.

If the resolution authority considers such resolution strategy to be credible and feasible, it may appropriately reflect that resolution strategy and its possible consequences for the Union subsidiary undertaking concerned in its resolution plan. This shall not put at risk the achievement of resolution objectives referred to in Article 18.

6.   EIOPA shall develop draft regulatory technical standards specifying the contents of group resolution plans, taking into account the diversity of business models of groups in the internal market.

EIOPA shall submit those draft regulatory technical standards to the Commission by 29 July 2026.

Power is delegated to the Commission to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

Article 11 Requirements and procedure for group resolution plans

1.   Member States shall ensure that ultimate parent undertakings submit to the group-level resolution authority the information that may be required under Article 12. That information shall concern the ultimate parent undertaking and to the extent required each of the group entities including the entities referred to in Article 1(1), points (b) to (e).

The group-level resolution authority shall, provided that the confidentiality requirements laid down in this Directive are complied with, transmit the relevant information provided in accordance with this paragraph to:

(a)

EIOPA;

(b)

the resolution authorities which are members of the resolution college;

(c)

the relevant supervisory authorities which are members of or participate in the college of supervisors as referred to in Article 248(3) of Directive 2009/138/EC.

2.   Member States shall ensure that, in resolution colleges, group-level resolution authorities, acting jointly with the resolution authorities referred to in paragraph 1, second subparagraph, point (b), and after having consulted the supervisory authorities concerned which are members of or participate in the college of supervisors as referred to in Article 248(3) of Directive 2009/138/EC, draw up and maintain group resolution plans. Group-level resolution authorities may, at their discretion, and subject to them meeting the confidentiality requirements laid down in Article 80 of this Directive, involve in the drawing up and maintenance of group resolution plans third-country resolution authorities of jurisdictions in which the group has established subsidiary insurance or reinsurance undertakings or insurance holding companies, or significant branches as defined pursuant to Article 248(8) of Directive 2009/138/EC.

3.   Member States shall ensure that group resolution plans are reviewed, and where appropriate updated, at least every two years, and in any case:

(a)

after any change to the legal or organisational structure, to the business, or to the financial position of the group including any group entity, that could have a material effect on or necessitate a change to the plan;

(b)

when a material change to its financial position that could have a material effect on the effectiveness of the plan or otherwise necessitate a revision of the resolution plan, becomes foreseeable.

4.   The adoption of the group resolution plan shall take the form of a joint decision, as referred to in Article 17, of the group-level resolution authority and the resolution authorities of the subsidiary insurance and reinsurance undertakings and of the entities referred to in Article 1(1), points (b) to (e).

Article 12 Information for the purposes of resolution plans and cooperation of the insurance or reinsurance undertaking

1.   Member States shall ensure that resolution authorities have the power to require insurance and reinsurance undertakings or the ultimate parent undertaking, as applicable, to:

(a)

cooperate as much as necessary in the drawing up of resolution plans or group resolution plans;

(b)

provide them, either directly or through the supervisory authority, with all of the information necessary to draw up and implement resolution plans or group resolution plans.

2.   Supervisory authorities in the Member States concerned shall cooperate with resolution authorities to verify whether some or all of the information referred to in paragraph 1 is already available and shall provide that information to those resolution authorities. Resolution authorities shall obtain all such available information from supervisory authorities before requesting information from insurance and reinsurance undertakings.

3.   EIOPA shall develop draft implementing technical standards to specify procedures and a minimum set of standard forms and templates for the provision of information under this Article, and to specify the content of such information.

EIOPA shall submit those draft implementing technical standards to the Commission by 29 July 2026.

Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1094/2010.

Article 13 Assessment of resolvability

1.   Member States shall ensure that resolution authorities, after having consulted the supervisory authority, assess the extent to which insurance or reinsurance undertakings that are not part of a group are resolvable without the assumption of any extraordinary public financial support besides, where available and applicable, the use of insurance guarantee schemes or of any financing arrangements.

An insurance or reinsurance undertaking shall be deemed resolvable where it is feasible and credible for that undertaking to be wound up under normal insolvency proceedings, or for the resolution authority to resolve that undertaking by applying resolution tools and exercising resolution powers.

2.   Where a resolution authority concludes that resolution action may be necessary in the public interest because winding up under normal insolvency proceedings would not meet the resolution objectives to the same extent, it shall proceed to the following consecutive stages:

(a)

select a preferred resolution action appropriate to achieve the resolution objectives given the structure and business model of the insurance or reinsurance undertaking;

(b)

assess whether it is feasible to apply the selected resolution action effectively within an appropriate timeframe and identify potential impediments to its implementation;

(c)

assess the credibility of the selected resolution action, taking into consideration the likely impact of resolution on the financial systems or real economies of the Member States or the Union and the protection of the collective interest of policy holders, beneficiaries and claimants, with a view to ensuring the continuity of critical functions carried out by the insurance or reinsurance undertaking.

3.   Resolution authorities shall make the resolvability assessment referred to in paragraph 1 at the same time as, and for the purposes of, the drawing up and updating of the resolution plan in accordance with Article 9. When performing the assessment referred to in paragraph 1, resolution authorities shall, as a minimum, examine the resolvability dimensions specified in the Annex.

4.   For the purposes of the assessment of resolvability, resolution authorities may request insurance or reinsurance undertakings to provide all necessary information.

5.   EIOPA shall, by 29 January 2027, issue guidelines in accordance with Article 16 of Regulation (EU) No 1094/2010 to specify further matters and criteria for the assessment of the resolvability of insurance and reinsurance undertakings or groups provided for in paragraph 1 of this Article and in Article 14 of this Directive.

Article 14 Assessment of resolvability for groups

1.   Member States shall ensure that group-level resolution authorities, together with the resolution authorities of subsidiary undertakings, after having consulted the group supervisor and the supervisory authorities of such subsidiary undertakings, assess the extent to which groups are resolvable without the assumption of any extraordinary public financial support besides, where available and applicable, the use of insurance guarantee schemes or of any financing arrangements.

2.   A group shall be deemed resolvable where it is feasible and credible for the resolution authorities either to wind up group entities under normal insolvency proceedings or to resolve that group by applying resolution tools to, and exercising resolution powers with respect to, group entities where they can be easily separated in a timely manner, or by any other means provided for under national law.

The resolution colleges referred to in Article 70 shall take into account the assessment of group resolvability when discharging their functions.

3.   Where a resolution authority concludes that resolution action may be necessary in the public interest because winding up under normal insolvency proceedings would not meet the resolution objectives to the same extent, it shall proceed to the following consecutive stages:

(a)

select preferred resolution actions appropriate to achieve the resolution objectives given the structure and business model of the group;

(b)

assess whether it is feasible to apply the selected resolution action effectively within an appropriate timeframe and identify potential impediments to its implementation;

(c)

assess the credibility of the selected resolution action, taking into consideration the likely impact of resolution on the financial systems or real economies of the Member States or the Union and the protection of the collective interest of policy holders, beneficiaries and claimants, with a view to ensuring the continuity of critical functions carried out by the group.

4.   Group-level resolution authorities shall make the resolvability assessment of groups at the same time as, and for the purposes of, the drawing up and updating of the group resolution plans in accordance with Article 10. The assessment shall be made under the decision-making procedure laid down in Article 11. When performing the assessment referred to in paragraph 1, group-level resolution authorities shall, as a minimum, examine the resolvability dimensions specified in the Annex.

5.   For the purposes of the assessment of resolvability, the group-level resolution authority may request the group entities to provide all necessary information.

Article 15 Power to address or remove impediments to resolvability

1.   Member States shall ensure that, where the assessment carried out in accordance with Article 13 or 14 reveals that there are substantive impediments to the resolvability of an insurance or reinsurance undertaking, the resolution authority notifies that insurance or reinsurance undertaking and the supervisory authority concerned thereof in writing.

2.   The requirement for resolution authorities to draw up resolution plans and for the relevant resolution authorities to reach a joint decision in accordance with Article 17 on group resolution plans referred to in Article 9(1) and Article 11(4) respectively shall be suspended following the notification referred to in paragraph 1 of this Article until the measures to remove the substantive impediments to resolvability have been accepted by the resolution authority pursuant to paragraph 3 of this Article or decided upon pursuant to paragraph 4 of this Article.

3.   Within four months of the date of receipt of a notification referred to in paragraph 1, the insurance or reinsurance undertaking shall propose to the resolution authority possible measures to address or remove the substantive impediments identified in the notification.

The timeline for the implementation of those measures proposed by the undertaking shall take into account the reasons for the substantive impediments.

The resolution authority, after having consulted the supervisory authority, shall assess whether those measures effectively address or remove the substantive impediments.

4.   Resolution authorities that find that the measures proposed by an insurance or reinsurance undertaking in accordance with paragraph 3 do not effectively reduce or remove the impediment concerned, shall, either directly, or indirectly through the supervisory authority, require the insurance or reinsurance undertaking to take any of the alternative measures set out in paragraph 5, and notify such measures in writing to that undertaking, which shall propose a plan to comply with those requirements within one month of receiving such notification.

When identifying alternative measures, resolution authorities shall demonstrate how the measures proposed by the insurance or reinsurance undertaking would not be able to remove the impediments to resolvability and how the alternative measures proposed are proportionate in removing those impediments. Resolution authorities shall take into account the effect of the measures on the business of the insurance or reinsurance undertaking, its stability and its ability to contribute to the economy.

5.   For the purposes of paragraph 4, resolution authorities shall have the power to take at least any of the following alternative measures:

(a)

require the insurance or reinsurance undertaking to revise any intra-group financing agreements or review the absence thereof, or draw up service agreements, whether intra-group or with third parties;

(b)

require the insurance or reinsurance undertaking to limit its maximum individual and aggregate exposures;

(c)

impose specific or regular additional information requirements relevant for resolution purposes;

(d)

require the insurance or reinsurance undertaking to divest specific assets or to restructure liabilities;

(e)

require the insurance or reinsurance undertaking to limit or cease specific existing or proposed activities;

(f)

restrict or prevent the development of new or existing business lines or sale of new or existing products;

(g)

require the insurance or reinsurance undertaking to change the reinsurance strategy;

(h)

require changes to legal or operational structures of the insurance or reinsurance undertaking or any group entity, either directly or indirectly under its control, so as to reduce complexity to ensure that critical functions may be legally and operationally separated from other functions through the application of the resolution tools;

(i)

require the insurance or reinsurance undertaking or a parent undertaking to set up a parent insurance holding company in a Member State or a Union parent insurance holding company;

(j)

where the insurance or reinsurance undertaking is the subsidiary undertaking of a mixed-activity insurance holding company, require that the mixed-activity insurance holding company sets up a separate insurance holding company to control the insurance or reinsurance undertaking, where necessary to facilitate the resolution of the insurance or reinsurance undertaking and to avoid that the application of resolution tools and the exercise of resolution powers has an adverse effect on the non-financial part of the group.

6.   Before identifying any alternative measure referred to in paragraph 5, the resolution authority, after having consulted the supervisory authority, shall duly consider the potential effect of such measure on the soundness and stability of that particular insurance or reinsurance undertaking’s ongoing business and on the internal market.

7.   A notification or decision made pursuant to paragraph 1 or 4 shall:

(a)

contain the reasons for the assessment or determination in question;

(b)

be subject to a right of appeal.

Moreover, a decision made pursuant to paragraph 4 shall indicate how it complies with the requirement for proportionate application laid down in paragraph 4, second subparagraph.

8.   EIOPA shall, by 29 July 2027, issue guidelines in accordance with Article 16 of Regulation (EU) No 1094/2010 to specify further details on the measures provided for in paragraph 5 of this Article and the circumstances in which each measure may be applied.

Article 16 Power to address or remove impediments to resolvability: group treatment

1.   A group-level resolution authority, together with the resolution authorities of subsidiary undertakings, after having consulted the college of supervisors established in accordance with Article 248 of Directive 2009/138/EC, shall consider the assessment referred to in Article 14 within the resolution college and shall take all reasonable steps to reach a joint decision as referred to in Article 17 on the application of measures identified in accordance with Article 15(4) in relation to all relevant group entities.

2.   The group-level resolution authority, in cooperation with the group supervisor and with EIOPA, in accordance with Article 25(1) of Regulation (EU) No 1094/2010, shall prepare a report and submit it to the ultimate parent undertaking and to the resolution authorities of subsidiaries, which shall provide that report to the subsidiary undertakings within their remit. The report shall be prepared after having consulted the supervisory authorities, and shall analyse the substantive impediments to the effective application of resolution tools and the effective exercise of resolution powers in relation to the group. The report shall recommend any proportionate and targeted measures that, in the view of the group-level resolution authority, are necessary or appropriate to remove those impediments, considering the impact of those measures on the group’s business model.

3.   Within four months of the date of receipt of the report, the ultimate parent undertaking may submit observations and propose to the group-level resolution authority alternative measures to address or remove the impediments identified in the report.

The group-level resolution authority, after having consulted the group supervisor, shall assess whether those measures effectively address or remove the substantive impediments.

4.   The group-level resolution authority shall communicate any measure proposed by the ultimate parent undertaking to the authorities that are members of or participate in the resolution college. The group-level resolution authority and the resolution authorities of the subsidiary undertakings, after having consulted the supervisory authorities, shall do everything within their power to reach a joint decision, as referred to in Article 17, within the resolution college regarding the identification of substantive impediments, and, where necessary, regarding the assessment of the measures proposed by the ultimate parent undertaking and the measures required by the authorities in order to address or remove the impediments. When doing so, they shall take into account the potential impact of the measures in all Member States where the group operates.

Article 17 Joint decisions

1.   Group supervisors, supervisory authorities, group-level resolution authorities and resolution authorities shall endeavour to reach the joint decisions referred to in Article 8(2), Article 11(4) and Article 16(4), as applicable, within four months of the date of:

(a)

the transmission by the group supervisor of the group pre-emptive recovery plan in accordance with Article 7(6);

(b)

the transmission by the group-level resolution authority of the information referred to in the Article 11(1), second subparagraph;

(c)

the submission of any observations or the proposal of any alternative measures by the ultimate parent undertaking, or the expiry of the period referred to in Article 16(3), whichever is earlier.

EIOPA may, at the request of a supervisory authority or a resolution authority, assist the group supervisors, supervisory authorities, group-level resolution authorities and resolution authorities in reaching a joint decision in accordance with Article 31(2), point (c), of Regulation (EU) No 1094/2010.

2.   In the absence of a joint decision within the period referred to in paragraph 1, first subparagraph, introductory wording, on any of the following matters, the group supervisor or the group-level resolution authority, as applicable, shall make its own decision thereon:

(a)

the review and assessment of the group pre-emptive recovery plan;

(b)

any measures the ultimate parent undertaking is required to take in accordance with Article 6(4) and (5);

(c)

the group resolution plan;

(d)

the measures referred to in Article 16.

The decision made by the group supervisor or the group-level resolution authority, as applicable, shall be fully reasoned and shall take into account the views and reservations of other supervisory authorities or resolution authorities, as applicable, expressed during the period referred to in paragraph 1, first subparagraph, introductory wording. The decision shall be provided to the ultimate parent undertaking and to the other authorities concerned.

3.   In the absence of a joint decision within the period referred to in paragraph 1, first subparagraph, introductory wording, between the supervisory authorities or resolution authorities on any of the following matters, each supervisory authority or resolution authority, as applicable, of a subsidiary undertaking shall make its own decision thereon:

(a)

whether a pre-emptive recovery plan on an individual basis is to be drawn up for the insurance or reinsurance undertakings under its jurisdiction as referred to in Article 8(2);

(b)

the application at subsidiary level of the measures referred to in Article 6(4) and (5);

(c)

the identification of the substantive impediments, and, where necessary, the assessment of the measures proposed by the ultimate parent undertaking and the measures required by the authorities to address or remove those impediments, as referred to in Article 16(1).

4.   In the absence of a joint decision between the resolution authorities on the adoption of the group resolution plan, as referred to Article 11(4), within the period referred to in paragraph 1, first subparagraph, introductory wording, of this Article, each resolution authority responsible for a subsidiary undertaking shall make its own decision and shall draw up and keep updated a resolution plan for the entities under its jurisdiction. Each resolution authority shall notify its decision to the other members of the resolution college.

5.   Each of the decisions of supervisory or resolution authorities in accordance with paragraph 3 or 4 shall be fully reasoned and shall take into account the views and reservations of the other supervisory authorities, resolution authorities, group supervisors or group-level resolution authorities, as applicable.

6.   The supervisory authorities or resolution authorities that do not disagree with a decision as referred to in paragraphs 3 and 4 may reach a joint decision on a group pre-emptive recovery plan or group resolution plan covering group entities under their jurisdictions.

7.   Where, by the end of the period referred to in paragraph 1, first subparagraph, introductory wording, any of the supervisory authorities or resolution authorities concerned has referred a matter to EIOPA in accordance with Article 19 of Regulation (EU) No 1094/2010, the group supervisor, the group-level resolution authority, the supervisory authority or the resolution authority concerned, as applicable, shall defer its decision under paragraphs 2, 3 and 4 of this Article, await any decision that EIOPA may take in accordance with Article 19(3) of that Regulation, and take its decision in accordance with the decision of EIOPA. The period referred to in paragraph 1, first subparagraph, introductory wording, of this Article shall be deemed to be the conciliation phase as referred to in Article 19(2) of that Regulation. EIOPA shall take its decision within one month. The matter shall not be referred to EIOPA after the end of the period referred to in paragraph 1, first subparagraph, introductory wording, or after a joint decision has been reached. In the absence of a decision by EIOPA within one month after the referral to EIOPA was made, the decision of the group supervisor, group-level resolution authority, supervisory authority or resolution authority for the group or the subsidiary undertaking at an individual level, as applicable, shall apply.

8.   The joint decisions referred to in Article 8(2), Article 11(4), Article 16(4) and paragraph 6 of this Article and the decisions referred to in paragraphs 2, 3 and 4 of this Article shall be recognised as conclusive and shall be applied by the supervisory authorities or resolution authorities in the Member States concerned.

9.   Where joint decisions are taken pursuant to Article 11(4) and, in respect of group resolution plans, paragraph 6 of this Article and where a resolution authority assesses that the subject matter of a disagreement regarding group resolution plans impinges on the fiscal responsibilities of its Member State, the group-level resolution authority shall initiate a reassessment of the group resolution plan.

Article 18 Resolution objectives

1.   Member States shall ensure that resolution authorities, when applying resolution tools and exercising resolution powers, have regard to the resolution objectives listed in paragraph 2, and choose the tools and powers that best achieve the objectives that are relevant in the circumstances of the case.

2.   The resolution objectives are:

(a)

protecting the collective interest of policy holders, beneficiaries and claimants;

(b)

maintaining financial stability, in particular by preventing contagion and by maintaining market discipline;

(c)

ensuring the continuity of critical functions;

(d)

protecting public funds by minimising reliance on extraordinary public financial support.

When pursuing the resolution objective referred to in the first subparagraph, point (c), resolution authorities shall choose those approaches in relation to critical functions that best preserve the continuity of insurance coverage for the policy holders.

When pursuing the resolution objective referred to in the first subparagraph, point (d), resolution authorities shall, to the maximum extent possible, prioritise the use of financing sources other than the budget of the Member States, including financing arrangements as referred to in Article 81 and insurance guarantee schemes, where these are available for that purpose under applicable law.

Member States shall ensure that resolution authorities, when pursuing the resolution objectives, seek to minimise the cost of resolution and avoid destruction of value unless necessary to achieve those resolution objectives.

3.   The resolution objectives are of equal significance, and Member States shall ensure that resolution authorities balance them as appropriate to the nature and circumstances of each case.

Article 19 Conditions for resolution

1.   Member States shall ensure that resolution authorities take a resolution action in relation to an insurance or reinsurance undertaking only where all of the following conditions are met:

(a)

the supervisory authority, after having consulted the resolution authority, or the resolution authority, after having consulted the supervisory authority, has determined that the insurance or reinsurance undertaking is failing or likely to fail;

(b)

there is no reasonable prospect that any alternative private sector measures or supervisory action, including preventive and corrective measures, would prevent the failure of the undertaking within a reasonable timeframe;

(c)

resolution action is necessary in the public interest.

2.   Where a resolution authority takes a resolution action and until that resolution action has been terminated, the supervisory authority shall not adopt measures with respect to the undertaking under resolution unless the resolution authority agrees with such measures.

3.   Member States shall ensure that resolution authorities have the necessary tools, in particular adequate access to any relevant information, for making the determination under paragraph 1, point (a), after having consulted the supervisory authority. The supervisory authority shall provide the resolution authority without delay with any relevant information that the latter requests in order to perform its assessment.

4.   An insurance or reinsurance undertaking shall be deemed to be failing or likely to fail in any of the following circumstances:

(a)

the insurance or reinsurance undertaking is in breach or likely to be in breach of the Minimum Capital Requirement referred to in Title I, Chapter VI, Section 5, of Directive 2009/138/EC and there is no reasonable prospect of compliance being restored;

(b)

the insurance or reinsurance undertaking no longer fulfils the conditions for authorisation or fails seriously in its obligations under the laws and regulations to which it is subject, or there are objective elements to support that the undertaking will, in the near future, seriously fail its obligations in a way that would justify the withdrawal of the authorisation;

(c)

the assets of the insurance or reinsurance undertaking are or there are objective elements to support a determination that the assets of the undertaking will, in the near future, be less than its liabilities;

(d)

the insurance or reinsurance undertaking is unable to pay its debts or other liabilities, including payments to policy holders or beneficiaries, as they fall due, or there are objective elements to support a determination that the undertaking will, in the near future, be in such a situation;

(e)

extraordinary public financial support is required.

5.   For the purposes of paragraph 1, point (c), a resolution action shall be in the public interest where such action is necessary for the achievement of, and is proportionate to, one or more of the resolution objectives and the winding-up of the undertaking under normal insolvency proceedings, including with the use of insurance guarantee schemes applicable to that undertaking if the conditions for normal insolvency proceedings are met, would not meet those objectives to the same extent.

Article 20 Conditions for resolution with regard to parent undertakings and holding companies

1.   Member States shall ensure that resolution authorities may take resolution action in relation to any of the entities referred to in Article 1(1), points (b) to (e), where that entity meets the conditions laid down in Article 19(1), mutatis mutandis .

2.   Where the subsidiary insurance or reinsurance undertakings of a mixed-activity insurance holding company are held directly or indirectly by an intermediate insurance holding company, Member States shall ensure that resolution actions for the purposes of group resolution are taken in relation to the intermediate insurance holding company, and shall not take resolution actions for the purposes of group resolution in relation to the mixed-activity insurance holding company.

3.   Subject to paragraph 2, resolution authorities may take resolution action with regard to any of the entities referred to in Article 1(1), points (c) to (e), even where those entities do not meet the conditions laid down in paragraph 1 of this Article, where all of the following conditions apply:

(a)

one or more of the subsidiary insurance or reinsurance undertakings meet the conditions established in Article 19(1);

(b)

the assets and liabilities of the subsidiary insurance or reinsurance undertakings are such that their failure threatens another insurance or reinsurance undertaking of the group or the group as a whole, or the insolvency law of the Member State requires that groups be treated as a whole;

(c)

resolution action with regard to the entities referred to in Article 1(1), points (c) to (e), is necessary for the resolution of the subsidiary insurance or reinsurance undertakings or for the resolution of the group as a whole.

Article 21 Proceedings in respect of undertakings that are not subject to resolution action

Member States shall ensure that insurance or reinsurance undertakings that meet the conditions laid down in Article 19(1), points (a) and (b), but not the condition laid down in Article 19(1), point (c), are made subject to winding-up proceedings as defined in Article 268(1), point (d), of Directive 2009/138/EC, or other proceedings under national law opened and monitored by the competent authorities as defined in Article 268(1), point (a), of Directive 2009/138/EC, ensuring an orderly exit from the market.

Article 22 General principles governing resolution

1.   Member States shall ensure that resolution authorities, when they apply resolution tools and exercise resolution powers, take all appropriate measures to ensure that the resolution action is taken in accordance with the following principles:

(a)

the shareholders of the undertaking under resolution bear first losses;

(b)

creditors of the undertaking under resolution bear losses after the shareholders in accordance with the order of priority of their claims under normal insolvency proceedings, save as expressly provided for otherwise in this Directive;

(c)

the administrative, management or supervisory body and the senior management of the undertaking under resolution are replaced, except where the retention, in whole or in part, of that body or the senior management is considered necessary for the achievement of the resolution objectives;

(d)

the administrative, management or supervisory body and the senior management of the undertaking under resolution provide all assistance necessary for the achievement of the resolution objectives;

(e)

natural and legal persons are made liable under civil or criminal law for their responsibility for the failure of the undertaking under resolution;

(f)

except where otherwise provided for in this Directive, creditors of the same class are treated equally;

(g)

no shareholder or creditor incurs greater losses than they would have incurred if the insurance or reinsurance undertaking had been wound up under normal insolvency proceedings in accordance with the safeguards in Articles 55 to 57;

(h)

resolution action is taken in accordance with the safeguards in this Directive.

2.   Where the insurance or reinsurance undertaking is part of a group, resolution authorities shall apply resolution tools and exercise resolution powers in a way that minimises, in particular in the countries where the group operates:

(a)

the impact on other group entities and on the group as a whole;

(b)

the adverse effects on policy holders, the real economy and financial stability in the Union and in Member States.

3.   When applying resolution tools and exercising resolution powers, Member States shall ensure that they comply with the Union State aid framework.

4.   Where resolution tools are applied, the entity to which those tools are applied shall be considered the subject of bankruptcy proceedings or analogous insolvency proceedings for the purposes of Article 5(1) of Council Directive 2001/23/EC  ( 19 ) .

5.   When applying resolution tools and exercising resolution powers, resolution authorities shall inform and consult employee representatives of the undertaking concerned where appropriate.

6.   Resolution authorities shall apply resolution tools and exercise resolution powers without prejudice to provisions on the representation of employees in management bodies as provided for in national law or practice.

Article 23 Valuation for the purposes of resolution

1.   Resolution authorities shall ensure that any resolution action is taken on the basis of a valuation ensuring a fair, prudent and realistic assessment of the assets, liabilities, rights and obligations of an entity as referred to in Article 1(1), points (a) to (e).

2.   Before the resolution authority places an entity as referred to in Article 1(1), points (a) to (e), under resolution, it shall ensure that a first valuation is carried out to determine whether the conditions for resolution under Article 19(1) or Article 20(3) are met.

3.   After the resolution authority has decided to place an entity referred to in Article 1(1), points (a) to (e), under resolution, it shall ensure that a second valuation is carried out to:

(a)

inform the decision on the appropriate resolution action to be taken;

(b)

ensure that any losses of that entity are fully recognised at the moment the resolution tools are applied;

(c)

inform the decision on the extent of the cancellation or dilution of instruments of ownership;

(d)

inform the decision on the extent of the write-down or conversion of any unsecured liabilities, including debt instruments;

(e)

where the bridge undertaking tool is applied, inform the decision on the assets, liabilities, rights and obligations or instruments of ownership that may be transferred to the bridge undertaking, and inform the decision on the value of any consideration that may be paid to the undertaking under resolution or, where relevant, to the holders of the instruments of ownership;

(f)

where the sale-of-business tool is applied, inform the decision on the assets, liabilities, rights and obligations or instruments of ownership that may be transferred to the third-party purchaser and to inform the resolution authority’s understanding of what constitutes commercial terms for the purposes of Article 31.

4.   The valuation referred to in paragraph 3 shall be consistent with Article 75 of Directive 2009/138/EC. However, that valuation may, where appropriate, be adjusted to reflect that the assumption that the undertaking pursues its business as a going concern is not met, and to reflect the specific circumstances related to the use of resolution tools.

5.   The valuations referred to in paragraphs 2 and 3 may be subject to an appeal in accordance with Article 67 only together with the decision to apply a resolution tool or to exercise a resolution power.

Article 24 Requirements for valuation

1.   Member States shall ensure that the valuations referred to in Article 23 are carried out by any of the following:

(a)

a person independent from any public authority and from the entity referred to in Article 1(1), points (a) to (e);

(b)

the resolution authority, where those valuations cannot be carried out by a person as referred to in point (a).

2.   The valuations referred to in Article 23 shall be considered definitive where they have been carried out by the person referred to in paragraph 1, point (a), of this Article and all the requirements laid down in paragraphs 3 to 5 of this Article are fulfilled.

3.   Without prejudice to the Union State aid framework, a definitive valuation shall be based on prudent assumptions and shall not assume any potential provision of extraordinary public financial support from the point in time at which resolution action is taken.

4.   A definitive valuation shall be supplemented by the following information held by the entity referred to in Article 1(1), points (a) to (e):

(a)

an updated financial statement and an updated economic valuation, in accordance with Directive 2009/138/EC, of the entity;

(b)

a report on the financial position of the entity, including, where relevant, an evaluation by an independent actuarial function of the entity’s technical provisions referred to in Title I, Chapter VI, Section 2, of Directive 2009/138/EC;

(c)

any additional information on the market and accounting values of the assets, technical provisions referred to in Title I, Chapter VI, Section 2, of Directive 2009/138/EC, and other liabilities of the entity.

5.   A definitive valuation shall indicate the subdivision of the creditors in classes in accordance with their priority levels under the applicable insolvency law. The definitive valuation shall also contain an estimate of the treatment that each class of shareholders and creditors would have been expected to receive if the entity concerned were wound up under normal insolvency proceedings.

The estimate referred to in the first subparagraph shall not prejudice the valuation referred to in Article 56.

6.   EIOPA shall develop draft regulatory technical standards to specify:

(a)

the circumstances in which a person is deemed to be independent from both the resolution authority and the entity referred to in Article 1(1), points (a) to (e), for the purposes of paragraph 1 of this Article;

(b)

the methodologies for assessing the value of the assets and liabilities of the insurance or reinsurance undertaking in the context of resolution;

(c)

the separation of the valuations under Articles 23 and 56 of this Directive.

EIOPA shall submit those draft regulatory technical standards to the Commission by 29 July 2027.

Power is delegated to the Commission to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

Article 25 Provisional and definitive valuations

1.   Valuations as referred to in Article 23 that do not meet the requirements laid down in Article 24(2) shall be considered provisional valuations.

Provisional valuations shall contain a buffer for additional losses and an appropriate justification for that buffer.

2.   Resolution authorities that take resolution action on the basis of a provisional valuation shall ensure that a definitive valuation is carried out as soon as possible.

Those resolution authorities shall ensure that the definitive valuation referred to in the first subparagraph:

(a)

allows for full recognition of any losses of the entity referred to in Article 1(1), points (a) to (e), in its books;

(b)

informs a decision to write back creditors’ claims or to increase the value of the consideration paid, in accordance with paragraph 3.

3.   Where the definitive valuation’s estimate of the net asset value of the entity referred to in Article 1(1), points (a) to (e), is higher than the provisional valuation’s estimate of the net asset value of that entity, the resolution authority may:

(a)

increase the value of the claims of affected creditors which have been written down or restructured;

(b)

require a bridge undertaking to make a further payment of consideration in respect of the assets, liabilities, rights and obligations to the undertaking under resolution or, as the case may be, to the owners of the instruments of ownership.

4.   EIOPA shall develop draft regulatory technical standards to specify, for the purposes of paragraph 1 of this Article, the methodology for calculating the buffer for additional losses to be included in provisional valuations.

EIOPA shall submit those draft regulatory technical standards to the Commission by 29 July 2027.

Power is delegated to the Commission to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

Article 26 General principles on resolution tools

1.   Member States shall ensure that resolution authorities have the powers necessary to apply the resolution tools to an entity referred to in Article 1(1), points (a) to (e), that meets the conditions for resolution referred to in Article 19(1) or Article 20(3).

2.   Where a resolution authority decides to apply a resolution tool to an entity referred to in Article 1(1), points (a) to (e), and that resolution action would result in losses being borne by creditors, in particular policy holders, or would result in their claims being restructured or converted, the resolution authority shall exercise the power to write down or convert capital instruments and eligible liabilities in accordance with Article 35 immediately before or together with the application of the resolution tool.

Any proceeds, generated after recovery of any reasonable expenses properly incurred in connection with the use of the resolution tools or the exercising of resolution powers as a result of the application of any resolution tool in accordance with paragraph 5, shall first compensate the entity’s policy holders and other creditors to the extent that their claims have been written down without being fully compensated.

The conversion of eligible liabilities into capital instruments may be applied to insurance claims only in cases where the resolution authority justifies that the resolution objectives cannot be achieved through other resolution tools, or that the conversion of insurance claims would lead to better protection for policy holders compared to the use of any other resolution tool and the write-down of their claims.

3.   The resolution tools are the following:

(a)

the solvent run-off tool;

(b)

the sale-of-business tool;

(c)

the bridge undertaking tool;

(d)

the asset and liability separation tool;

(e)

the write-down or conversion tool.

Resolution authorities may apply the resolution tools individually or in any combination, except for the asset and liability separation tool, which shall be applied only in combination with another resolution tool.

4.   Where only the sale-of-business tool and the bridge undertaking tool are used, and where those tools are used to transfer only part of the assets, rights or liabilities of the undertaking under resolution, the residual insurance or reinsurance undertaking or a residual entity as referred to in Article 1(1), points (b) to (e), from which the assets, rights or liabilities have been transferred, shall be wound up under normal insolvency proceedings. Such winding-up shall be done within a reasonable timeframe, having regard to any need for that residual insurance or reinsurance undertaking or residual entity referred to in Article 1(1), points (b) to (e), to provide services or support pursuant to Article 45 in order to enable the recipient to carry out the activities or services acquired by virtue of that transfer, and any other reason that the continuation of the residual insurance or reinsurance undertaking or a residual entity as referred to in Article 1(1), points (b) to (e), is necessary to achieve the resolution objectives or comply with the principles laid down in Article 22.

5.   The resolution authority and any financing arrangement acting pursuant to Article 81 or the resolution authority on behalf of any financing arrangement may recover any reasonable expenses properly incurred in connection with the application of the resolution tools or the exercising of the resolution powers in one or more of the following ways:

(a)

as a deduction from any consideration paid by a recipient to the undertaking under resolution or, as the case may be, to the owners of the shares or other instruments of ownership;

(b)

from the undertaking under resolution, as a preferred creditor;

(c)

from any proceeds generated as a result of the termination of the activities of the bridge undertaking, the asset and liability management vehicle or the insurance or reinsurance undertaking in solvent run-off, as a preferred creditor.

6.   Member States shall ensure that rules of national insolvency law on the voidability or unenforceability of legal acts detrimental to creditors do not apply to transfers of assets, rights or liabilities from an undertaking under resolution to another entity by virtue of the application of a resolution tool or the exercise of a resolution power.

7.   Member States may confer upon resolution authorities additional tools and powers exercisable where an entity referred to in Article 1(1), points (a) to (e), meets the conditions for resolution referred to in Article 19(1) or Article 20(3), provided that:

(a)

when applied to a cross-border group, those additional tools and powers do not pose obstacles to effective group resolution; and

(b)

those tools and powers are consistent with the resolution objectives and the general principles governing resolution laid down in Article 22.

8.   Member States shall ensure that, to the extent that any of the resolution tools is not applicable to an entity within the scope of Article 1(1) as a result of its specific legal form of mutual undertaking or cooperative society, resolution authorities have the powers necessary to apply tools which are as similar as possible to those listed in paragraph 3 of this Article, including in terms of their effects.

Article 27 The solvent run-off tool

1.   Member States shall ensure that resolution authorities have the power to place the undertaking under resolution in a solvent run-off procedure to terminate the activities of that undertaking, and to prohibit the undertaking under resolution to underwrite new insurance and reinsurance business.

2.   Member States shall ensure that, in the event the authorisation has been withdrawn by the supervisory authority, the insurance or reinsurance undertaking to which the solvent run-off tool has been applied meets the Minimum Capital Requirement laid down in Title I, Chapter VI, Section 5, of Directive 2009/138/EC immediately following the application of that tool.

3.   In the event of withdrawal of authorisation by the supervisory authority, Member States shall ensure that the insurance or reinsurance undertaking under the solvent run-off tool continues to be subject to the general rules and objectives of insurance supervision set out in Title I, Chapter III, of Directive 2009/138/EC, until termination of its activities in accordance with paragraph 8 of this Article.

4.   Resolution authorities shall ensure that an insurance or reinsurance undertaking under resolution in a solvent run-off is capable of retaining adequately trained and competent staff to ensure the orderly continuation of its insurance activities in run-off until its liquidation.

5.   Resolution authorities shall monitor, in close cooperation with supervisory authorities, the cash flow, as well as the costs and expenses of an insurance or reinsurance undertaking under resolution to preserve its value and marketability.

6.   Resolution authorities shall, in close cooperation with supervisory authorities, assess intended changes to the composition of assets, monitor closely reinsurance arrangements and require, at least on a quarterly basis, independent actuarial reviews of the technical provisions and reserves.

7.   In application of the solvent run-off tool, resolution authorities may restrict or prohibit any remuneration of equity and instruments treated as equity, including dividend payments, and may restrict or prohibit any payments of variable remuneration and discretionary pension benefits.

8.   Resolution authorities shall take a decision that an undertaking under resolution in solvent run-off has to be wound-up in any of the following cases, whichever occurs first:

(a)

all or substantially all of the assets, rights or liabilities of the undertaking under resolution in solvent run-off are sold to a third-party purchaser;

(b)

the assets of the undertaking under resolution in solvent run-off are completely wound down and its liabilities are completely discharged.

9.   Where the solvent run-off tool is used and where the net asset value of the undertaking under resolution in solvent run-off has become negative, the resolution authority shall assess whether to wind up the undertaking under normal insolvency proceedings or to apply another resolution tool.

In the event the Minimum Capital Requirement laid down in Title I, Chapter VI, Section 5, of Directive 2009/138/EC is not met, the resolution authority shall assess, in close cooperation with the supervisory authority, whether the undertaking should be wound up under normal insolvency proceedings, or another resolution tool should be applied.

Article 28 Principles for the application of the asset and liability separation tool, the sale-of-business tool and the bridge undertaking tool

1.   Member States shall ensure that, subject to Article 31(5) and (6), and Article 67, resolution authorities have the power to use the asset and liability separation tool, the sale-of-business tool and the bridge undertaking tool without obtaining the consent of the shareholders of the undertaking under resolution or any third party, other than the purchaser or the bridge undertaking, and without complying with any procedural requirements under company or securities law, other than those laid down in Article 29.

2.   Subject to Article 26(2) and (5), any consideration paid by the purchaser or the bridge undertaking shall benefit:

(a)

the owners of the shares or of other instruments of ownership, where such shares or such other instruments of ownership issued by the undertaking under resolution have been transferred from the holders of those shares or instruments to the purchaser or the bridge undertaking;

(b)

the undertaking under resolution, where some or all of the assets or liabilities of the undertaking under resolution have been transferred to the purchaser or the bridge undertaking.

3.   Subject to Article 26(2) and (5), any consideration paid by an asset and liability management vehicle as referred to in Article 30(2) in respect of the assets, rights or liabilities acquired directly from the undertaking under resolution shall benefit the undertaking under resolution. Consideration may be paid in the form of debt issued by the asset and liability management vehicle.

4.   Transfers made by using the asset and liability separation tool, the sale-of-business tool or the bridge undertaking tool shall be subject to the safeguards referred to in Title III, Chapter V.

5.   Resolution authorities may use the asset and liability separation tool, the sale-of-business tool and the bridge undertaking tool more than once to make supplemental transfers where necessary to achieve the resolution objectives.

6.   Member States shall ensure that a purchaser or bridge undertaking as referred to in paragraph 1 may continue to exercise the rights of membership and access to, where relevant, payment, clearing and settlement systems, stock exchanges and insurance guarantee schemes of the undertaking under resolution, provided that that purchaser or bridge undertaking meets the membership and participation criteria for participation in such systems.

In cases where not all criteria listed in the first subparagraph are met, Member States shall ensure that, where relevant:

(a)

membership or participation in payment, clearing and settlement systems, stock exchanges and insurance guarantee schemes is not denied on the grounds that the purchaser or the bridge undertaking does not possess a rating from a credit rating agency, or that such rating is not commensurate with the rating levels required to be granted access to such systems;

(b)

where the purchaser or the bridge undertaking does not meet the membership or participation criteria of a payment, clearing or settlement system, stock exchange or insurance guarantee scheme, the rights referred to in the first subparagraph are exercised for a period specified by the resolution authorities, not exceeding 24 months, and renewable on application by the purchaser or the bridge undertaking to the resolution authority.

7.   Without prejudice to Title III, Chapter V, shareholders or creditors of the undertaking under resolution and other third parties whose assets, rights or liabilities are not transferred by using the asset and liability separation tool, the sale-of-business tool or the bridge undertaking tool, shall not have any rights or claims over or in relation to the assets, rights or liabilities transferred or over or in relation to the administrative, management or supervisory body or senior management of the bridge undertaking or the assets and liabilities management vehicle.

Article 29 Procedural requirements regarding sales of business, assets, rights or liabilities in resolution

1.   Subject to paragraph 3, Member States shall ensure that, where resolution authorities seek to apply the sale-of-business tool, or sell a bridge undertaking, or its assets, rights or liabilities, the undertaking under resolution, the bridge undertaking or the assets, rights, liabilities, shares or other instruments of ownership concerned are marketed in accordance with the requirements set out in paragraph 2. Pools of rights, assets and liabilities may be marketed separately.

2.   Without prejudice to the Union State aid framework, the marketing referred to in paragraph 1 shall comply with the following requirements:

(a)

it shall be as transparent as possible and shall not materially misrepresent the assets, rights, liabilities, shares or other instruments of ownership of the undertaking or bridge undertaking that a resolution authority intends to transfer;

(b)

it shall not unduly favour, or discriminate between, potential purchasers;

(c)

it shall be free from any conflict of interest;

(d)

it shall not confer any unfair advantage on a potential purchaser;

(e)

it shall take account of the need to effect a rapid resolution action;

(f)

it shall be aimed at maximising, as far as possible, the sale price for the shares or other instruments of ownership, assets, rights or liabilities involved.

Those requirements shall not prevent resolution authorities from soliciting particular potential purchasers.

Any public disclosure of the marketing of an entity referred to in Article 1(1), points (a) to (e), or of the bridge undertaking that would otherwise be required in accordance with Article 17(1) of Regulation (EU) No 596/2014 may be delayed in accordance with Article 17(4) or (5) of that Regulation.

3.   Resolution authorities may adopt a reasoned decision not to comply with the requirement to market a sale where they determine that compliance with the requirements laid down in paragraph 2 would be likely to undermine one or more of the resolution objectives.

Article 30 The asset and liability separation tool

1.   Member States shall ensure that resolution authorities have the power to transfer assets, rights or liabilities of an undertaking under resolution or a bridge undertaking to one or more asset and liability management vehicles.

2.   For the purposes of the asset and liability separation tool, an asset and liability management vehicle shall be a legal person that:

(a)

is wholly or partially owned by one or more public authorities which may include the resolution authority and is controlled by the resolution authority; and

(b)

has been created for the purpose of receiving some or all of the assets, rights and liabilities of one or more undertakings under resolution or a bridge undertaking.

3.   The asset and liability management vehicle shall manage the portfolios transferred to it with a view to maximising their value through the sale of those portfolios or an orderly winding-down.

4.   Member States shall ensure that the operation of an asset and liability management vehicle complies with the following requirements:

(a)

the resolution authority concerned has approved the asset and liability management vehicle’s constitutional documents;

(b)

subject to the asset and liability management vehicle’s ownership structure, the resolution authority concerned either appoints or approves the vehicle’s administrative, management or supervisory body;

(c)

the resolution authority concerned approves the remuneration of the members of the administrative, management or supervisory body and specifies their responsibilities;

(d)

the resolution authority concerned approves the strategy and risk profile of the asset and liability management vehicle.

5.   Resolution authorities may exercise the power specified in paragraph 1 to transfer assets, rights or liabilities only in conjunction with other resolution tools and where any of the following situations occurs:

(a)

the situation of the particular market for those assets, rights or liabilities is such that the liquidation of those assets, rights or liabilities under normal insolvency proceedings could have an adverse effect on one or more financial markets;

(b)

such a transfer is necessary to facilitate the use of the solvent run-off tool or to ensure the proper functioning of the undertaking under resolution or a bridge undertaking;

(c)

such a transfer is necessary to maximise liquidation proceeds.

6.   When applying the asset and liability separation tool, resolution authorities shall, in accordance with Article 23 and in accordance with the Union State aid framework, determine the consideration for which assets, rights and liabilities are transferred to the asset and liability management vehicle. The consideration may have nominal or negative value.

7.   Where resolution authorities have applied the bridge undertaking tool, asset and liability management vehicles may, subsequent to the application of the bridge undertaking tool, acquire assets, rights or liabilities from the bridge undertaking.

8.   Resolution authorities may transfer assets, rights or liabilities from the undertaking under resolution to one or more asset and liability management vehicles on more than one occasion and transfer assets, rights or liabilities back from one or more asset and liability management vehicles to the undertaking under resolution in any of the following situations:

(a)

the possibility that the assets, rights or liabilities might be transferred back is stated expressly in the instrument under which the transfer was made;

(b)

the assets, rights or liabilities do not fall within the classes of, or meet the conditions for transfer of, assets, rights or liabilities specified in the instrument under which the transfer was made.

In either of the cases referred in the first subparagraph, points (a) and (b), the transfer back may be made within any period, and shall comply with any other conditions, stated in that instrument for the relevant purpose.

The undertaking under resolution shall be obliged to take back any assets, rights or liabilities transferred in accordance with the first subparagraph, points (a) and (b).

9.   The objectives of an asset and liability management vehicle shall not imply any duty or responsibility to shareholders or creditors of the undertaking under resolution. The members of the administrative, management or supervisory body or senior management of the asset and liability management vehicle shall have no liability to such shareholders or creditors for acts or omissions in the discharge of their duties, unless such acts or omissions involved gross negligence or serious misconduct under national law which directly affected the rights of such shareholders or creditors.

Member States may further limit the liability of an asset and liability management vehicle, and of the members of its administrative, management or supervisory body or senior management for acts and omissions in the discharge of their duties.

Article 31 The sale-of-business tool

1.   Member States shall ensure that resolution authorities have the power to transfer to a purchaser other than a bridge undertaking:

(a)

shares or other instruments of ownership issued by an undertaking under resolution;

(b)

all or any assets, rights or liabilities of an undertaking under resolution.

2.   A transfer made pursuant to paragraph 1 shall be made on commercial terms, having regard to the circumstances, and in accordance with the Union State aid framework.

Resolution authorities shall take all reasonable steps to obtain commercial terms for the transfer that are consistent with the valuation conducted under Article 23, having regard to the circumstances of the case.

3.   Resolution authorities may, with the consent of the purchaser, revert the executed transfers where justified by the circumstances of the case. The undertaking under resolution or the original owners shall be obliged to take back any transferred shares or other instruments of ownership, or assets, rights or liabilities.

4.   Purchasers shall be required to have the appropriate authorisation to carry out the business they acquire when a transfer as referred to in paragraph 1 is made. Supervisory authorities shall ensure that any application for such authorisation is considered, in conjunction with the transfer, in a timely manner.

5.   By way of derogation from Articles 57 to 62 of Directive 2009/138/EC, where a transfer of shares or of other instruments of ownership by virtue of an application of the sale-of-business tool would result in the acquisition of or increase in a qualifying holding in an insurance or reinsurance undertaking as referred to in Article 57(1) of Directive 2009/138/EC, the supervisory authority of that insurance or reinsurance undertaking shall carry out the assessment required under those Articles in a timely manner that does not delay the application of the sale-of-business tool or prevent the resolution action from achieving the resolution objectives.

6.   Member States shall ensure that, where the supervisory authority has not completed the assessment referred to in paragraph 5 from the date of the transfer, the following apply:

(a)

such a transfer of shares or other instruments of ownership to the acquirer shall have immediate legal effect;

(b)

during the assessment period and during any divestment period provided for in point (f), the acquirer’s voting rights attached to such shares or other instruments of ownership shall be suspended and vested solely in the resolution authority, which shall have no obligation to exercise any such voting rights and which shall have no liability whatsoever for exercising or refraining from exercising any such voting rights;

(c)

during the assessment period and during any divestment period provided for in point (f), the penalties and other measures for infringing the requirements for acquisitions or disposals of qualifying holdings laid down in Article 62 of Directive 2009/138/EC shall not apply to such a transfer of shares or other instruments of ownership;

(d)

promptly upon completion of its assessment, the supervisory authority shall notify the resolution authority and the acquirer in writing of whether it approves or, in accordance with Article 58(4) of Directive 2009/138/EC, opposes such a transfer of shares or other instruments of ownership to the acquirer;

(e)

where the supervisory authority approves such a transfer of shares or other instruments of ownership to the acquirer, the voting rights attached to such shares or other instruments of ownership shall be deemed to be fully vested in the acquirer immediately upon receipt by the resolution authority and the acquirer of such an approval notice from the supervisory authority;

(f)

where the supervisory authority opposes such a transfer of shares or other instruments of ownership to the acquirer:

(i)

the voting rights attached to such shares or other instruments of ownership as provided for in point (b) shall remain in full force and effect;

(ii)

the resolution authority may require the acquirer to divest such shares or other instruments of ownership within a divestment period determined by the resolution authority having taken into account prevailing market conditions;

(iii)

where the acquirer does not comply with the request provided for in point (ii), the supervisory authority, with the consent of the resolution authority, may impose on the acquirer penalties and other measures for infringing the requirements for acquisitions or disposals of qualifying holdings laid down in Article 62 of Directive 2009/138/EC.

7.   For the purpose of exercising the rights to provide services or to establish itself in another Member State in accordance with Directive 2009/138/EC, the purchaser shall be considered to be a continuation of the undertaking under resolution, and may continue to exercise any such right that was exercised by the undertaking under resolution in respect of the assets, rights or liabilities transferred.

Article 32 Bridge undertaking tool

1.   Member States shall ensure that resolution authorities have the power to transfer to a bridge undertaking:

(a)

shares or other instruments of ownership issued by one or more undertakings under resolution;

(b)

all or any assets, rights or liabilities of one or more undertakings under resolution.

2.   The bridge undertaking shall be a legal person that meets all of the following requirements:

(a)

it is wholly or partially owned by one or more public authorities which may include the resolution authority or, where applicable, an insurance guarantee scheme and is controlled by the resolution authority;

(b)

it is created for the purpose of receiving and holding some or all of the shares or other instruments of ownership issued by an undertaking under resolution or some or all of the assets, rights and liabilities of one or more undertakings under resolution with a view to achieving the resolution objectives and selling the undertaking under resolution.

3.   When applying the bridge undertaking tool, resolution authorities shall ensure that the total value of liabilities transferred to the bridge undertaking does not exceed the total value of the rights and assets transferred from the undertaking under resolution.

4.   Following an application of the bridge undertaking tool, resolution authorities may, where justified by the circumstances, revert the executed transfers, and the undertaking under resolution or the original owners shall be obliged to take back any transferred assets, rights or liabilities, or shares or other instruments of ownership, where justified by the circumstances of the case, in any of the following situations:

(a)

the possibility that the specific shares or other instruments of ownership, assets, rights or liabilities might be transferred back is stated expressly in the instrument by which the transfer was made;

(b)

the specific shares or other instruments of ownership, assets, rights or liabilities do not fall within the classes of, or meet the conditions for transfer of, shares or other instruments of ownership, assets, rights or liabilities specified in the instrument by which the transfer was made.

A transfer back as referred to in the first subparagraph may be made within any period and shall comply with any other conditions stated in the instrument by which the transfer was made.

5.   Following an application of the bridge undertaking tool, resolution authorities may transfer shares or other instruments of ownership, or assets, rights or liabilities from the bridge undertaking to a third-party purchaser.

6.   A bridge undertaking shall be considered to be a continuation of the undertaking under resolution, and be able to continue to exercise any right that was exercised by the undertaking under resolution in respect of the assets, rights or liabilities transferred.

7.   The objectives of a bridge undertaking shall not imply any duty or responsibility to shareholders or creditors of the undertaking under resolution. The members of the administrative, management or supervisory body or senior management of the bridge undertaking shall have no liability to such shareholders or creditors for acts or omissions in the discharge of their duties, unless such acts or omissions involved gross negligence or serious misconduct under national law which directly affected the rights of such shareholders or creditors.

Member States may further limit the liability of a bridge undertaking and of the members of its administrative, management or supervisory body or senior management in accordance with national law for acts and omissions in the discharge of their duties.

Article 33 Operation of a bridge undertaking

1.   Member States shall ensure that the operation of a bridge undertaking respects the following requirements:

(a)

the resolution authority has approved the bridge undertaking’s constitutional documents;

(b)

subject to the bridge undertaking’s ownership structure, the resolution authority either appoints or approves the bridge undertaking’s administrative, management or supervisory body;

(c)

the resolution authority approves the remuneration of the members of the administrative, management or supervisory body and determines their responsibilities;

(d)

the resolution authority approves the strategy and risk profile of the bridge undertaking;

(e)

the bridge undertaking is authorised in accordance with Directive 2009/138/EC and has the necessary authorisation under the applicable national law to carry out the activities or services that it acquires by virtue of a transfer made pursuant to Article 42 of this Directive;

(f)

the bridge undertaking complies with the requirements of, and is subject to supervision in accordance with, Directive 2009/138/EC;

(g)

the operation of the bridge undertaking complies with the Union State aid framework and the resolution authority may specify restrictions on its operations accordingly.

Notwithstanding the provisions referred to in the first subparagraph, points (e) and (f), and where necessary to meet the resolution objectives, a bridge undertaking may be established and authorised without complying with Directive 2009/138/EC for a short period at the beginning of its operation. To that end, the resolution authority shall submit a request in that sense to the supervisory authority. Where the supervisory authority decides to grant such an authorisation, it shall indicate the period for which the bridge undertaking is waived from complying with the requirements of Directive 2009/138/EC. That period shall not exceed 24 months.

2.   Subject to any restrictions imposed by Union or national competition rules, the management of the bridge undertaking shall operate the bridge undertaking to achieve the resolution objectives and to sell the undertaking under resolution or the transferred assets, rights or liabilities to one or more private sector purchasers as soon as market conditions are appropriate.

3.   Resolution authorities shall decide that an entity is no longer a bridge undertaking in any of the following situations, whichever occurs first:

(a)

the bridge undertaking merges with another entity;

(b)

the bridge undertaking ceases to meet the requirements of Article 32(2);

(c)

all or substantially all of the bridge undertaking’s assets, rights or liabilities are sold to a third-party purchaser;

(d)

the bridge undertaking’s assets are completely wound down and its liabilities are completely discharged.

4.   Subject to Article 26(2) and (5), any proceeds generated as a result of the termination of the operation of the bridge undertaking shall benefit the shareholders of the bridge undertaking.

Article 34 Transfer to insurance guarantee schemes

1.   By way of derogation from Articles 32 and 33, Member States may provide that an appropriate insurance guarantee scheme is assigned with the duties and rights of a bridge undertaking. While ensuring the interests of policy holders, continuity of insurance relationships and settlement of claims, and ensuring that the objectives of this Directive are still adequately met, Member States may provide for a transfer, to such insurance guarantee scheme, of:

(a)

shares or other instruments of ownership issued by one or more undertakings under resolution; or

(b)

all or any assets, rights or liabilities of one or more undertakings under resolution.

Resolution authorities shall ensure that the total value of liabilities transferred to the insurance guarantee scheme does not exceed the total value of the rights and assets transferred from the undertaking under resolution.

2.   Member States shall ensure that an insurance guarantee scheme assigned with the duties and rights of a bridge undertaking respects the following requirements:

(a)

the resolution authority has approved the constitutional documents of the bridge undertaking;

(b)

the resolution authority approves the remuneration of the members of the administrative, management or supervisory body and determines their responsibilities;

(c)

the bridge undertaking shall not conclude new insurance contracts, or change existing insurance contracts in a way that could increase the insurance claims against the bridge undertaking;

(d)

the insurance guarantee scheme is subject to general rules and objectives of insurance supervision to ensure an adequate level of policy holder protection.

Point (b) of the first subparagraph shall not apply to an insurance guarantee scheme assigned with the duties and rights of a bridge undertaking if any transferred assets, rights, liabilities or rights of ownership are segregated from the other assets, rights and liabilities of the insurance guarantee scheme and remuneration is not paid from the transferred assets.

3.   Member States shall ensure that the funding of an insurance guarantee scheme assigned with the duties and rights of a bridge undertaking is adequate to continue insurance relationships and guarantee the settlement of insurance claims.

Article 35 Objective and scope of the write-down or conversion tool

1.   Member States shall ensure that resolution authorities may apply the write-down or conversion tool to meet the resolution objectives for any of the following purposes:

(a)

to recapitalise an entity as referred to in Article 1(1), points (a) to (e), that meets the conditions for resolution referred to in Article 19(1) and Article 20(3) to the extent sufficient to apply the solvent run-off tool and to maintain its authorisation under Directive 2009/138/EC;

(b)

to convert to equity or reduce the principal amount of claims, including insurance claims, or debt instruments that are transferred:

(i)

to a bridge undertaking; or

(ii)

under the asset and liability separation tool or the sale-of-business tool.

When applying the write-down or conversion tool to insurance claims, resolution authorities may also restructure the terms of the related insurance contracts to achieve the resolution objectives more effectively. When doing so, resolution authorities shall take into account the impact on the collective interest of policy holders.

2.   Member States shall ensure that resolution authorities determine the amount by which capital instruments, debt instruments and other eligible liabilities are to be written down or converted for the purposes set out in paragraph 1 on the basis of the valuation carried out in accordance with Article 23.

3.   Member States shall ensure that resolution authorities may apply the write-down or conversion tool to all liabilities of entities referred to in Article 1(1), points (a) to (e), maintaining their current legal form or considering a change of their legal form where necessary.

4.   Member States shall ensure that the write-down or conversion tool may be applied to all capital instruments and all liabilities of an entity referred to in Article 1(1), points (a) to (e), that are not excluded from the scope of that tool pursuant to paragraphs 5 to 8 of this Article.

5.   Resolution authorities shall not apply the write-down or conversion tool in relation to the following liabilities whether they are governed by the law of a Member State or of a third country:

(a)

secured liabilities;

(b)

liabilities to credit institutions, investment firms and insurance or reinsurance undertakings, except for entities that are part of the same group, with an original maturity of less than seven days;

(c)

liabilities with a remaining maturity of less than seven days, owed to either systems or operators of systems designated in accordance with Directive 98/26/EC or to their participants and arising from the participation in such a system, or to CCPs authorised in the Union pursuant to Article 14 of Regulation (EU) No 648/2012 and third-country CCPs recognised by the European Supervisory Authority (European Securities and Markets Authority) (ESMA), established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council  ( 20 ) , pursuant to Article 25 of Regulation (EU) No 648/2012;

(d)

a liability to any one of the following:

(i)

an employee, in relation to accrued salary, pension benefits or other fixed remuneration, except for the variable component of remuneration that is not regulated by a collective bargaining agreement;

(ii)

a commercial or trade creditor arising from the provision to an entity referred to in Article 1(1), points (a) to (e), of goods or services, such as IT services, utilities and the rental, servicing and upkeep of premises, that are needed to maintain the continuous functioning of the operations of that entity, or are needed for ensuring the continuity of insurance coverage;

(iii)

tax and social security authorities, provided that those liabilities are preferred under the applicable law;

(iv)

insurance guarantee schemes arising from contributions due in accordance with applicable national laws;

(e)

liabilities arising from compulsory insurance against civil liability in respect of the use of motor vehicles in accordance with Directive 2009/103/EC.

6.   Member States may provide that resolution authorities are not to apply the write-down or conversion tool in relation to:

(a)

liabilities arising from current and future insurance claims which are covered by assets in accordance with Article 275(1), point (a), of Directive 2009/138/EC;

(b)

liabilities arising under private health insurance contracts or private long-term care insurance contracts provided as an alternative to mandatory health or long-term care cover provided by the statutory social security system; the exclusion shall apply only to the part of the liability concerned that replaces the mandatory component of the statutory social security system.

7.   Paragraph 5, point (a), and paragraph 6, point (a), shall not prevent resolution authorities, where appropriate, from applying the write-down or conversion tool to any part of a secured liability or a liability for which collateral has been pledged that exceeds the value of the assets, pledge, lien or collateral against which it is secured or to any part of liabilities referred to in paragraph 6, point (a), that exceed the value of the assets entered into the special register referred to in Article 276(1) of Directive 2009/138/EC.

8.   In exceptional circumstances, where the write-down or conversion tool is applied, resolution authorities may exclude or partially exclude certain liabilities from the application of the write-down or conversion tool in any of the following situations:

(a)

it is not possible to write down or convert that liability within a reasonable time, notwithstanding the good faith efforts of the resolution authority;

(b)

the exclusion is strictly necessary and is proportionate to achieve the continuity of critical functions and core business lines in a manner that maintains the ability of the undertaking under resolution to continue key operations, services and transactions;

(c)

the exclusion is strictly necessary and proportionate to avoid giving rise to widespread contagion, in a manner that could cause a serious disturbance to the economy of a Member State or of the Union;

(d)

the application of the write-down or conversion tool to those liabilities would cause a destruction in value such that the losses borne by other creditors would be higher than if those liabilities were excluded from the application of the write-down or conversion tool; or

(e)

the exclusion is strictly necessary and proportionate to ensure that third parties are compensated for their personal injuries and damage covered by insurance contracts related to third-party liabilities where such contracts are compulsory under applicable law.

9.   Resolution authorities shall take into account that, where the write-down or conversion tool is applied, insurance contracts the terms of which were restructured pursuant to paragraph 1, second subparagraph, meet, after the contract is restructured, the compulsory minimum coverage levels under applicable law.

Article 36 Treatment of shareholders when applying the write-down or conversion tool

1.   Member States shall ensure that, when applying the write-down or conversion tool, resolution authorities take, in respect of shareholders, one or both of the following actions:

(a)

cancel existing shares or other instruments of ownership, or transfer them to creditors whose claims have been converted;

(b)

provided that the valuation carried out under Article 23 shows that the undertaking under resolution has a positive net value, dilute existing holdings of shares or other instruments of ownership by converting relevant capital instruments or debt instruments issued by the undertaking under resolution, or other eligible liabilities of the undertaking under resolution, into shares or other instruments of ownership pursuant to the application of the write-down or conversion tool.

With regard to point (b) of the first subparagraph, the conversion shall be conducted at a rate of conversion that severely dilutes existing holdings of shares or other instruments of ownership.

2.   When considering which of the actions referred to in paragraph 1 to take, resolution authorities shall have regard to:

(a)

the valuation carried out in accordance with Article 23;

(b)

the amount by which the resolution authority has assessed that Tier 1 items are to be reduced and relevant capital instruments written down or converted pursuant to Article 38(1).

3.   By way of derogation from Articles 57 to 62 of Directive 2009/138/EC, where the conversion of capital instruments, debt instruments issued by the undertaking under resolution, or other eligible liabilities of the undertaking under resolution, would result in the acquisition of or increase in a qualifying holding in an insurance or reinsurance undertaking as referred to in Article 57(1) of that Directive, supervisory authorities shall carry out the assessment required under those Articles in a timely manner that does not delay the conversion of capital instruments or prevent resolution action from achieving the relevant resolution objectives.

4.   Where the supervisory authority of that undertaking has not completed the assessment required under paragraph 3 on the date of the conversion of the capital instruments, Article 31(6) shall apply to any acquisition of or increase in a qualifying holding by an acquirer resulting from the conversion of capital instruments.

Article 37 Rate of conversion of debt to equity

Member States shall ensure that, when resolution authorities apply the write-down or conversion tool and exercise the power specified in Article 42(1), point (h), they may apply a different conversion rate to different classes of capital instruments and liabilities in accordance with one or both of the following principles:

(a)

the conversion rate represents appropriate compensation to the affected creditor for any loss incurred by virtue of the exercise of the write-down or conversion powers;

(b)

the conversion rate applicable to liabilities that are considered to be senior under applicable insolvency law is higher than the conversion rate applicable to subordinated liabilities.

Article 38 Additional provisions governing the write-down or conversion tool

1.   Resolution authorities shall apply the write-down or conversion tool in accordance with the priority of claims applicable under normal insolvency proceedings, in a way that produces the following results:

(a)

Tier 1 items are reduced first in proportion to the losses and to the extent of their capacity and the resolution authority takes one or both of the actions specified in Article 36(1) in respect of holders of Tier 1 instruments;

(b)

the principal amount of Tier 2 instruments is written down or converted into Tier 1 instruments or both, to the extent required to achieve the resolution objectives or to the extent of the capacity of the relevant capital instruments, whichever is lower;

(c)

the principal amount of Tier 3 instruments is written down or converted into Tier 1 instruments or both, to the extent required to achieve the resolution objectives or to the extent of the capacity of the relevant capital instruments, whichever is lower;

(d)

the principal amount of, or outstanding amount payable in respect of, the rest of eligible liabilities in accordance with the hierarchy of claims in normal insolvency proceedings, including the ranking of insurance claims provided for in Article 275(1) of Directive 2009/138/EC, is written down or converted into Tier 1 instruments or both, to the extent required to achieve the resolution objectives.

Where the level of write-down based on the provisional valuation as referred to in Article 25 is found to exceed requirements when assessed against the definitive valuation as referred to in Article 24(2), a write-up mechanism may be applied to reimburse creditors and, subsequently, shareholders to the extent necessary.

When deciding on whether liabilities are to be written down or converted into equity, resolution authorities shall not convert one class of liabilities, while a class of liabilities that is subordinated to the class remains unconverted into equity or not written down.

Member States shall ensure that all claims resulting from own-fund items have, in national laws governing normal insolvency proceedings, a lower priority ranking than any claim that does not result from an own-fund item. For the purposes of this subparagraph, to the extent that an instrument is only partly recognised as an own-fund item, the whole instrument shall be treated as a claim resulting from an own-fund items and shall rank lower than any claim that does not result from an own-fund item.

2.   Where the principal amount of a relevant capital instrument or the principal amount of a debt instrument or other eligible liability is written down, the following shall apply:

(a)

the reduction resulting from the application of the write-down or conversion tool shall be permanent, subject to any write-up in accordance with the reimbursement mechanism referred to in paragraph 1;

(b)

no liability to the holder of the relevant capital instrument, the debt instrument or other eligible liability shall remain under or in connection with that amount of the instrument, which has been written down, except for any liability already accrued, and any liability for damages that may arise as a result of an appeal challenging the legality of the exercise of the write-down power;

(c)

no compensation shall be paid to any holder of the relevant capital instrument, the debt instrument or other eligible liability other than in accordance with paragraph 3.

3.   In order to effect a conversion of the capital instruments, debt instruments or other eligible liabilities concerned in accordance with paragraph 1, points (b) and (c), resolution authorities may require entities referred to in Article 1(1), points (a) to (e), to issue Tier 1 instruments to the holders of the capital instruments, debt instruments or other eligible liabilities concerned.

The capital instruments, debt instruments or other eligible liabilities concerned may be converted provided that all of the following conditions are met:

(a)

the Tier 1 instruments are issued by the insurance or reinsurance undertaking, by the entity referred to Article 1(1), points (b) to (e), or by the parent undertaking with the agreement of the relevant resolution authority;

(b)

the Tier 1 instruments are issued prior to any issuance of shares or other instruments of ownership by that entity referred to in Article 1(1), points (a) to (e), for the purposes of the provision of own funds by the State or a government entity;

(c)

the Tier 1 instruments are awarded and transferred without delay following the exercise of the conversion power;

(d)

the conversion rate that determines the number of Tier 1 instruments that are provided in respect of each relevant capital instrument, debt instrument or other eligible liability complies with Article 37.

4.   For the purposes of the provision of Tier 1 instruments in accordance with paragraph 3, the resolution authority may require entities referred to in Article 1(1), points (a) to (e), to maintain at all times the necessary prior authorisation to issue the relevant number of Tier 1 instruments.

Article 39 Effect of write-down or conversion

1.   Member States shall ensure that, where a resolution authority applies the write-down or conversion tool and exercises the write-down or conversion powers in accordance with Article 35(1) and Article 42(1), points (g) to (k), the reduction of principal or outstanding amount due, conversion or cancellation takes effect and is immediately binding on the undertaking under resolution and affected creditors and shareholders.

2.   The resolution authority shall complete or require the completion of all the administrative and procedural tasks necessary to give effect to the application of the write-down or conversion tool, including:

(a)

the amendment of all registers concerned;

(b)

the delisting, or removal from trading of shares or other instruments of ownership or debt instruments;

(c)

the listing, or admission to trading of new shares or other instruments of ownership;

(d)

the relisting or readmission of any debt instruments which have been written down, without having to issue a prospectus as required by Regulation (EU) 2017/1129 of the European Parliament and of the Council  ( 21 ) .

3.   Where a resolution authority reduces to zero the principal amount of, or outstanding amount payable in respect of, a liability by means of the power referred to in Article 42(1), point (g), that liability and any obligations or claims arising in relation to it that are not accrued at the time when the power is exercised shall be treated as discharged for all purposes, and shall not be provable in any subsequent proceedings in relation to the undertaking under resolution or any successor entity in any subsequent winding-up.

4.   Where a resolution authority reduces in part, but not in full, the principal amount of, or outstanding amount payable in respect of, a liability by means of the power referred to in Article 42(1), point (g):

(a)

the liability shall be discharged to the extent of the amount reduced;

(b)

the instrument concerned or the agreement that created the original liability shall continue to apply in relation to the residual principal amount of, or outstanding amount payable in respect of the liability, subject to any modification of the amount of interest payable to reflect the reduction of the principal amount, and any further modification of the terms that the resolution authority might make by means of the power referred to in Article 42(1), point (l).

Article 40 Write-down or conversion of liabilities arising from derivatives

1.   Member States shall ensure that resolution authorities exercise the write-down or conversion powers in relation to a liability arising from a derivative only upon or after closing out the derivatives. Upon entry into resolution, resolution authorities shall be empowered to terminate and close out any derivative contract for that purpose. Where a derivative liability has been excluded from the application of the write-down or conversion tool under Article 35(8), resolution authorities shall not be obliged to terminate or close out the derivative contract.

2.   Where derivative transactions are subject to a netting agreement, the resolution authority or an independent valuer shall determine, as part of the valuation under Article 23, the liability arising from those transactions on a net basis in accordance with the terms of the netting agreement.

3.   Resolution authorities shall determine the value of liabilities arising from derivatives in accordance with all of the following:

(a)

appropriate methodologies for determining the value of classes of derivatives, including transactions that are subject to netting agreements;

(b)

principles for establishing the relevant point in time at which the value of a derivative position should be established;

(c)

appropriate methodologies for comparing the destruction in value that would arise from the closeout and write-down or conversion of derivatives with the amount of losses that would be borne by derivatives in a write-down or conversion.

4.   EIOPA, after consulting ESMA, shall develop draft regulatory technical standards specifying the methodologies and principles laid down in paragraph 3 on the valuation of liabilities arising from derivatives. In relation to derivative transactions that are subject to a netting agreement, EIOPA shall take into account the methodology for closeout set out in the netting agreement.

EIOPA shall submit those draft regulatory technical standards to the Commission by 29 July 2027.

Power is delegated to the Commission to supplement this Directive by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

Article 41 Removal of procedural obstacles for write-down or conversion

1.   Where the write-down or conversion tool is applied, Member States shall, where applicable, require the entities referred to in Article 1(1), points (a) to (e), to maintain at all times a sufficient amount of authorised share capital or of other Tier 1 instruments to ensure that those undertakings and entities are not prevented from issuing sufficient new shares or other instruments of ownership to ensure that the conversion of liabilities into shares or other instruments of ownership can be carried out effectively.

Resolution authorities shall assess compliance with the requirement laid down in the first subparagraph in the context of the development and maintenance of the resolution plans in accordance with Articles 9 and 10.

2.   Member States shall ensure that there are no procedural impediments to the conversion of liabilities to shares or other instruments of ownership that exist by virtue of their instruments of incorporation or statutes, including pre-emption rights for shareholders or requirements for the consent of shareholders to an increase in capital.

Article 42 General powers

1.   Member States shall ensure that resolution authorities have all the powers necessary to apply resolution tools to the entities referred to in Article 1(1), points (a) to (e), that meet the conditions for resolution laid down in Article 19(1) or 20(3), as applicable. In particular, resolution authorities shall have the following resolution powers, which they may exercise individually or in any combination:

(a)

the power to require any person to provide any information required for the resolution authority to decide upon and prepare a resolution action, including updates and supplements of information provided in the resolution plans and including information to be provided through on-site inspections;

(b)

the power to take control of an undertaking under resolution and exercise all the rights and powers conferred upon the shareholders, other owners and the administrative, management or supervisory body of the undertaking under resolution;

(c)

the power to prohibit to underwrite new insurance or reinsurance business and to place an undertaking under resolution into an orderly solvent run-off procedure and terminate its activities;

(d)

the power to authorise a bridge undertaking established and authorised without complying with Directive 2009/138/EC during the short period referred to in Article 33(1), second subparagraph, of this Directive to underwrite new insurance or reinsurance business, or renew existing business;

(e)

the power to transfer shares or other instruments of ownership issued by an undertaking under resolution;

(f)

the power to transfer to another entity, with the consent of that entity, rights, assets or liabilities of an undertaking under resolution;

(g)

the power to restructure insurance claims or reduce, including to reduce to zero, the principal amount of or outstanding amount due in respect of debt instruments and eligible liabilities, including insurance claims, of an undertaking under resolution;

(h)

the power to convert debt instruments and eligible liabilities, including insurance claims, of an undertaking under resolution into ordinary shares or other instruments of ownership of an entity referred to in Article 1(1), points (a) to (e), of a relevant parent undertaking or of a bridge undertaking to which assets, rights or liabilities of the entity referred to in Article 1(1), points (a) to (e), are transferred;

(i)

the power to cancel debt instruments issued by an undertaking under resolution, except for secured liabilities subject to Article 35(5);

(j)

the power to reduce, including to reduce to zero, the nominal amount of shares or other instruments of ownership of an undertaking under resolution and to cancel such shares or other instruments of ownership;

(k)

the power to require an undertaking under resolution or a relevant parent undertaking to issue new shares or other instruments of ownership or other capital instruments, including preference shares and contingent convertible instruments;

(l)

the power to amend or alter the maturity of debt instruments and other eligible liabilities issued by an undertaking under resolution or amend the amount of interest payable under such instruments and other eligible liabilities, or the date on which the interest becomes payable, including by suspending payment for a temporary period;

(m)

the power to close out and terminate financial contracts or derivatives;

(n)

the power to remove or replace the administrative, management or supervisory body and senior management of an undertaking under resolution;

(o)

the power to require the supervisory authority to assess the buyer of a qualifying holding in a timely manner by way of derogation from the time-limits laid down in Article 58 of Directive 2009/138/EC.

2.   Member States shall ensure that the measures taken by the supervisory authority are terminated, if their continuation would hinder the use of resolution tools.

3.   Member States shall take all measures necessary to ensure that, when applying resolution tools and exercising resolution powers, resolution authorities are not subject to any of the following requirements that would otherwise apply by virtue of national law or contract or otherwise:

(a)

subject to Article 3(8) and Article 67(1), requirements to obtain approval or consent from any person either public or private, including the shareholders, the creditors or the policy holders of the undertaking under resolution;

(b)

prior to the exercise of the power, procedural requirements to notify any person, including any requirement to publish any notice or prospectus or to file or register any document with any other authority.

Point (b) of the first subparagraph is without prejudice to the requirements laid down in Articles 63 and 65 and any notification requirements under the Union State aid framework.

4.   Member States shall ensure that, to the extent that any of the powers listed in paragraph 1 of this Article is not applicable to an entity within the scope of Article 1(1) as a result of its specific legal form of mutual undertaking or cooperative society, resolution authorities have powers which are as similar as possible to those listed in paragraph 1 of this Article, including in terms of their effects.

5.   Member States shall ensure that, when resolution authorities exercise the powers laid down in paragraph 4, the safeguards provided for in Chapter V of this Directive, or safeguards that deliver the same effect, are applied to the persons affected, including shareholders, creditors, policy holders and counterparties.

Article 43 Ancillary powers

1.   Member States shall ensure that resolution authorities, when exercising a resolution power, have the power to do all of the following:

(a)

subject to Article 60, provide for a transfer to take effect, free from any liability or encumbrance affecting the financial instruments, rights, assets or liabilities transferred;

(b)

remove rights to acquire any additional shares or other instruments of ownership;

(c)

require the authority concerned to discontinue or suspend the admission to trading on a regulated market or the official listing of financial instruments pursuant to Directive 2001/34/EC of the European Parliament and of the Council  ( 22 ) ;

(d)

provide for the recipient to be treated as if that recipient were the undertaking under resolution for the purposes of any rights or obligations of, or actions taken by, the undertaking under resolution, including, subject to the application of the sale-of-business tool and the bridge undertaking tool referred to in Articles 31 and 32, any rights or obligations relating to participation in a market infrastructure;

(e)

require the undertaking under resolution or the recipient to provide each other with information and assistance;

(f)

cancel or modify the terms of a contract to which the undertaking under resolution is a party, or substitute a recipient as a party;

(g)

transfer any reinsurance rights covering transferred insurance or reinsurance claims without the consent of the reinsurance undertaking where the resolution authority transfers assets and liabilities related to those reinsurance rights of the undertaking under resolution in whole or in part to another entity.

For the purposes of the first subparagraph, point (a), any right of compensation provided in accordance with this Directive shall not be considered to be a liability or an encumbrance.

2.   Resolution authorities shall exercise the powers specified in paragraph 1 where they consider such exercise to be appropriate to ensure that a resolution action is effective or to achieve one or more resolution objectives.

3.   Member States shall ensure that resolution authorities exercising a resolution power have the power to provide for continuity arrangements necessary to ensure that the resolution action is effective and, where relevant, to ensure that the business transferred may be operated by the recipient. Such continuity arrangements shall include, in particular:

(a)

the continuity of contracts entered into by the undertaking under resolution, so that the recipient assumes the rights and liabilities of the undertaking under resolution relating to any financial instrument, right, asset or liability that has been transferred and is substituted for the undertaking under resolution, expressly or implicitly in all relevant contractual documents;

(b)

the substitution of the recipient for the undertaking under resolution in any legal proceedings relating to any financial instrument, right, asset or liability that has been transferred.

4.   The powers referred to in paragraph 1, first subparagraph, point (d), and paragraph 3, point (b), shall not affect the following:

(a)

the right of an employee of the undertaking under resolution to terminate a contract of employment;

(b)

subject to Articles 49, 50 and 51, any right of a party to a contract to exercise rights under the contract, including the right to terminate, where entitled to do so in accordance with the terms of the contract by virtue of an act or omission by the undertaking under resolution prior to the relevant transfer, or by the recipient after the completion of the transfer concerned.

Article 44 Special management

1.   Member States shall ensure that resolution authorities may appoint a special manager to replace the administrative, management or supervisory body of the undertaking under resolution. Member States shall further ensure that the special manager has the qualifications, ability and knowledge to carry out his or her functions. Member States may provide that a resolution authority may appoint several special managers.

2.   The special manager shall have all the powers of the shareholders and of the administrative, management or supervisory body of the undertaking under resolution. The special manager shall exercise those powers under the control of the resolution authority. The resolution authority may limit the actions of the special manager or require prior consent for certain acts.

The resolution authority shall make public the appointment referred to in paragraph 1 and the terms and conditions attached to that appointment.

3.   The special manager shall have the statutory duty to take all the measures necessary to promote the resolution objectives and implement resolution actions taken by the resolution authority. In the event of inconsistency or conflict with any other duty of management laid down in the statutes of the undertaking or in national law, that statutory duty shall override such other duty.

4.   Member States shall require that the special manager draw up reports for the resolution authority that appointed him or her, at regular intervals set by the resolution authority and at the beginning and the end of his or her mandate. Those reports shall describe in detail the financial position of the undertaking under resolution and state the reasons for the measures taken.

5.   The special manager shall not be appointed for more than one year. That period may be renewed, if the resolution authority determines that the conditions for appointment of a special manager continue to be met.

6.   The resolution authority may remove the special manager at any time.

Article 45 Powers concerning the provision of operational services and facilities

1.   Member States shall ensure that resolution authorities have the power to require an undertaking under resolution, or any of its group entities, to provide any operational services or facilities that are necessary to enable a recipient to operate the business transferred to it effectively, including where the undertaking under resolution or relevant group entity has entered into normal insolvency proceedings.

2.   Member States shall ensure that resolution authorities have the powers necessary to ensure that the goods and services provided, directly or indirectly, by an essential service provider to an undertaking under resolution can continue to be provided by it after resolution action has been taken where:

(a)

the assets of the essential service provider are or there are objective elements to support a determination that the assets of the essential service provider will, in the near future, be less than its liabilities; or

(b)

the essential service provider is unable to pay its debts or other liabilities as they fall due, or there are objective elements to support a determination that the essential service provider will, in the near future, be in such a situation.

3.   Member States shall ensure that their resolution authorities have powers to enforce obligations imposed, pursuant to paragraph 1, on group entities established in their territory by resolution authorities established in other Member States.

4.   The operational services and facilities provided in accordance with paragraphs 1 and 3 shall be on the following terms:

(a)

where the operational services and facilities were provided to the undertaking under resolution under an agreement before resolution action was taken and for the duration of that agreement, on the same terms;

(b)

where there is no agreement or where the agreement has expired, on reasonable terms.

Article 46 Power to enforce crisis management measures by other Member States

1.   Member States shall ensure that, where a transfer of shares, other instruments of ownership, or assets, rights or liabilities includes assets that are located in a Member State other than the Member State of the resolution authority, or includes rights or liabilities under the law of a Member State other than the Member State of the resolution authority, the transfer has effect in or under the law of that other Member State.

2.   Member States shall provide the resolution authority that has made, or intends to make, the transfer, with all reasonable assistance to ensure that the shares or other instruments of ownership or assets, rights or liabilities are transferred to the recipient in accordance with any applicable requirements of national law.

3.   Member States shall ensure that shareholders, creditors and third parties that are affected by a transfer of shares, other instruments of ownership, assets, rights or liabilities as referred to in paragraph 1, are not entitled to prevent, challenge, or set aside the transfer under any provision of law of the Member State where the assets are located or of the law governing the shares, other instruments of ownership, rights or liabilities.

4.   Member States shall ensure that the principal amount of capital instruments, debt instruments or other eligible liabilities is reduced, or that such liabilities or instruments are converted, in accordance with the exercise of write-down or conversion powers by a resolution authority of another Member State to an undertaking under resolution, where the relevant liabilities or instruments:

(a)

are governed by the law of the Member State other than the Member State of the resolution authority that exercised the write-down or conversion powers;

(b)

are owed to creditors located in the Member State other than the Member State of the resolution authority that exercised the write-down or conversion powers.

5.   Member States shall ensure that shareholders and creditors that are affected by the exercise of write-down or conversion powers referred to in paragraph 4 are not entitled to challenge the reduction of the principal amount of the instrument or liability or its conversion, as the case may be, under any provision of law of the Member State other than the Member State of the resolution authority that exercised the write-down or conversion powers.

6.   Each Member State shall ensure that all of the following is determined in accordance with the law of the Member State of the resolution authority:

(a)

the right for shareholders, creditors and third parties to challenge, by way of appeal as laid down in Article 67, a transfer of shares, other instruments of ownership, assets, rights or liabilities referred to in paragraph 1 of this Article;

(b)

the right for creditors to challenge, by way of appeal as laid down in Article 67, the reduction of the principal amount, or the conversion, of an instrument or liability covered by paragraph 4, point (a) or (b), of this Article;

(c)

the safeguards for partial transfers, as referred to in Chapter V, in relation to the assets, rights or liabilities referred to in paragraph 1.

Article 47 Power in respect of assets, rights, liabilities, shares and other instruments of ownership located in or governed by the law of third countries

1.   Member States shall provide that, in cases in which resolution action involves action taken in respect of assets located in a third country or shares, other instruments of ownership, rights or liabilities governed by the law of a third country, resolution authorities may require that:

(a)

the person exercising control over the undertaking under resolution and the recipient take all steps necessary to ensure that the resolution action becomes effective;

(b)

the person exercising control over the undertaking under resolution hold the shares, other instruments of ownership, assets or rights or discharge the liabilities on behalf of the recipient until the resolution action becomes effective;

(c)

the reasonable expenses of the recipient properly incurred in carrying out any action required under points (a) and (b) are met in any of the ways referred to in Article 26(5).

2.   In order to facilitate potential action pursuant to paragraph 1 of this Article, Member States shall require entities referred to in Article 1(1), points (a) to (e), to include into the related agreements contractual terms by which shareholders, creditors or parties to the agreement creating the liability recognise that the liability may be subject to write-down or conversion powers and agree to be bound by any reduction of the principal or outstanding amount due, conversion or cancellation that is effected by the exercise of those powers by a resolution authority.

Member States shall ensure that resolution authorities may require entities referred to in Article 1(1), points (a) to (e), to provide those resolution authorities with a reasoned legal opinion by an independent legal expert confirming the legal enforceability and effectiveness of such contractual terms.

3.   Where a resolution authority assesses that, in spite of all the necessary steps taken by the person exercising control over the undertaking under resolution in accordance with paragraph 1, point (a), it is highly unlikely that the resolution action will become effective in relation to certain assets located in a third country or certain shares, other instruments of ownership, rights or liabilities governed by the law of a third country, the resolution authority shall not proceed with the resolution action. Where the resolution authority has already ordered the resolution action, that order shall be void in relation to the assets, shares, instruments of ownership, rights or liabilities concerned.

Article 48 Exclusion of certain contractual terms

1.   A crisis prevention measure or a crisis management measure taken in relation to an entity, including the occurrence of any event directly linked to the application of such a measure, shall not, per se, under a contract entered into by the entity concerned, be deemed to be an enforcement event within the meaning of Directive 2002/47/EC or insolvency proceedings within the meaning of Directive 98/26/EC, provided that the substantive obligations under that contract, including payment and delivery obligations and the provision of collateral, continue to be performed.

In addition, a crisis prevention measure or a crisis management measure shall not, per se, be deemed to be an enforcement event within the meaning of Directive 2002/47/EC or insolvency proceedings within the meaning of Directive 98/26/EC under a contract entered into by:

(a)

a subsidiary undertaking, where the parent undertaking or any group entity guarantees or otherwise supports the obligations under that contract; or

(b)

any entity of a group, where the contract contains cross-default provisions.

2.   Where third-country resolution proceedings are recognised pursuant to Article 76, or, in the absence of such recognition, where a resolution authority so decides, third-country resolution proceedings shall for the purposes of this Article constitute a crisis management measure.

3.   Provided that the substantive obligations under the contract, including payment and delivery obligations, and provision of collateral, continue to be performed, a crisis prevention measure, or a crisis management measure, including any event directly linked to the application of such a measure, shall not, per se, make it possible for anyone to:

(a)

exercise any termination, suspension, modification, netting or set-off rights, including in relation to a contract entered into by:

(i)

a subsidiary undertaking, where the obligations under the contract are guaranteed or otherwise supported by a group entity;

(ii)

any group entity, where the contract contains cross-default provisions;

(b)

obtain possession, exercise control or enforce any security over any property of any of the entities referred to in Article 1(1), points (a) to (e), concerned or any group entity in relation to a contract which contains cross-default provisions;

(c)

affect any contractual rights of any of the entities referred to in Article 1(1), points (a) to (e), concerned or any group entity in relation to a contract which contains cross-default provisions.

4.   Paragraphs 1, 2 and 3 shall not affect the right of a person to take an action as referred to in paragraph 3, point (a), (b) or (c), where that right arises by virtue of an event other than the crisis prevention measure, the crisis management measure, or by virtue of any event directly linked to the application of such a measure.

5.   A suspension or restriction under Article 49 or 50 shall not constitute non-performance of a contractual obligation for the purposes of paragraphs 1 and 3 of this Article and of Article 51(1).

6.   The provisions contained in this Article shall be considered to be overriding mandatory provisions within the meaning of Article 9 of Regulation (EC) No 593/2008 of the European Parliament and of the Council  ( 23 ) .

Article 49 Power to suspend certain obligations

1.   Member States shall ensure that resolution authorities have the power to suspend any payment or delivery obligations pursuant to any contract to which an undertaking under resolution is a party from the publication of a notice of the suspension in accordance with Article 65(3) until midnight in the Member State of the resolution authority of the undertaking under resolution at the end of the business day following that publication.

2.   A payment or delivery obligation that would have been due during the suspension period referred to in paragraph 1 shall be due immediately upon expiry of the suspension period.

3.   Where an undertaking under resolution’s payment or delivery obligations under a contract are suspended in accordance with paragraph 1, the payment or delivery obligations of the undertaking under resolution’s counterparties under that contract shall be suspended for the same period.

4.   Any suspension under paragraph 1 shall not apply to payment and delivery obligations owed to the following:

(a)

systems and operators of systems designated in accordance with Directive 98/26/EC;

(b)

CCPs authorised in the Union pursuant to Article 14 of Regulation (EU) No 648/2012 and third-country CCPs recognised by ESMA pursuant to Article 25 of that Regulation.

5.   When exercising a power under this Article, resolution authorities shall have regard to the impact the exercise of that power might have.

The resolution authorities shall set the scope of that power having regard to the circumstances of each case.

Article 50 Power to restrict the enforcement of security interests

1.   Member States shall ensure that resolution authorities have the power to restrict secured creditors of an undertaking under resolution from enforcing security interests in relation to any assets of that undertaking from the publication of a notice of the restriction in accordance with Article 65(3) until midnight in the Member State of the resolution authority of the undertaking under resolution at the end of the business day following that publication.

2.   Any restriction under paragraph 1 shall not apply to:

(a)

security interest of systems or operators of systems designated for the purposes of Directive 98/26/EC;

(b)

CCPs authorised in the Union pursuant to Article 14 of Regulation (EU) No 648/2012 and third-country CCPs recognised by ESMA pursuant to Article 25 of that Regulation.

3.   Where Article 62 applies, resolution authorities shall ensure that any restrictions imposed pursuant to the power referred to in paragraph 1 of this Article are consistent for all group entities in relation to which a resolution action is taken.