Terms and Conditions

Abbreviations used in these Terms and Conditions: Law on Markets in Financial Instruments - LMFI; Law on the Application of the Measures against Market Abuse with Financial Instruments – LAMAMAFI, Commercial law - CL; Financial Supervision Commission - FSC; Deputy Chairperson of FSC, Head of Investment Activity Supervision Division - The Deputy Chairperson; Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EC – Directive 65/2014; Delegated Regulation (EU) 2017/565 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organizational requirements and operating conditions for investment intermediaries and laying down definitions for the purposes of that Directive - Delegated Regulation 565/2017; Ordinance No. 38 of the FSC on the Requirements to the Activities of Investment Intermediaries – ORAII; Ordinance No. 50 of the FSC on Capital Adequacy, the Liquidity of Investment Intermediaries and the Supervision of Compliance - OCALII; Regulation 575/2015 on prudential requirements for credit institutions and investment firms - Regulation 575/2015; Ordinance No. 7 of the FSC on the requirements, which shall be met by the individuals who under a contract directly execute transactions in financial instruments and provide investment advice with regard to securities as well as the procedure for obtaining and forfeiting the right to exercise such activity - Ordinance No. 7; Investment intermediary - II; General terms and conditions - TC; Tariff for standard commissions of the II (investment intermediary) - Tariff; “Bulgarian Stock Exchange - Sofia” AD - BSE; Central Depository - CD.

GENERAL TERMS

Art. 1.    (Amended with decision from 09.03.2018) The present TC regulate the relations between the clients and the II "Lenno Global Advisory" (hereinafter "the Company" or "II") in connection with transactions in financial instruments subject to the LMFI. 

Art. 2.    (Amended with decision from 09.03.2018) "Lenno Global Advisory" AD is entered in the Commercial Register of the Registry Agency under UIC 103277217. 

"Lenno Global Advisory" AD has its registered office and business address: Sofia, 2 Maria Luisa Blvd., 5th floor, office 5, tel.: + 359 2 943 92 15 and 2 943 92 16, e-mail: office@lenno.com, web-site: www.lenno.com

"Lenno Global Advisory" AD is a licensed investment intermediary within the meaning of LMFI, License No. 145-IP/22.02.2006 of the Financial Supervision Commission and is entered in the register of the FSC under registration number RG-03-0188/29.03.2004 with the right of performing the following investment services:

а)    acceptance and transmission of orders in relation to one or more financial instruments; executing orders on behalf of clients; management, in accordance with a contract concluded with the client, of an individual portfolio including financial instruments, at its own discretion, without special orders of the client; provision of individual investment advice to clients, either on its own initiative or at the request of the client, in respect of one or more transactions relating to financial instruments; offering for initial sale of financial instruments without an unconditional and irrevocable obligation to acquire financial instruments at its own expense;

b)    ancillary services: storage and administration of financial instruments on behalf of clients, including custodian activities and related services such as management of cash/provided collateral except for centralized securities accounts under Section A, point 2 of the Annex to Regulation (EU) No 909/2014; granting loans to investors for the execution of transactions with one or more financial instruments, provided that the intermediary providing the loan participates in the transaction under terms and conditions established by an ordinance; business advice on capital structure, industrial strategy and related issues, as well as advice and services related to enterprise transformations; provision of services related to foreign payment instruments insofar as they are related to the investment services provided; investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments; services related to underwriting of financial instruments.

Art.3.    (1) A client of an II may be an individual or a legal entity to whom the II provides investment or ancillary services.

(2) (Amended with decision from 09.03.2018) The II defines its clients as professional and non-professional. A "professional client" is a client who has the experience, knowledge and skills to make their own investment decisions and to properly assess investment risks and meets the criteria set out in Annex II to Directive 65/2014. "Non-Professional Client" is a client who is not defined as a professional client or as an eligible counter-party. 

(3) The II applies appropriate written internal procedures and policies to define clients as professional and non-professional.

(4) Correspondence and communication with clients can be conducted in Bulgarian and English.

Art. 4.    (1) (Amended with decision from 09.03.2018) For cases where the law requires information to be provided to the customer on a durable medium, the II provides information in paper form or otherwise, for which the following requirements are met:

1.    the provision of such information on such a medium is appropriate for the context in which the business activity is conducted or is to be carried out between the II and its client;

2.    when offered to make a choice between paper or another durable medium, the client explicitly chooses to receive the information on that other medium.

(2) (Amended with decision from 09.03.2018) Where information is provided to clients through the intermediary's website and is not addressed to a particular client, it must meet the following conditions:

1.    the provision of information in this way is appropriate for the context in which the business activity is or will be carried out between the investment intermediary and its client;

2.    the client has explicitly agreed to this way of providing the information;

3.    the client is notified by electronic means of the address of the intermediary's website and the specific page where this information is located;

4.    the information is relevant;

5.   the information is continuously available on the intermediary's website for a period within which the customer may have a valid reason to verify it.

(3) (Amended with decision from 09.03.2018) The provision of information by electronic means of communication is considered appropriate for the context in which the business activity between the investment intermediary and its client is or will be carried out where there is evidence that the client has regular access to the Internet. The provision by the client of an e-mail for the purpose of conducting such business is considered as such proof.

Art. 5.    These TCs have the power of contracts with clients for one or more investment services.

Art. 6.    (1) The full text of the present TC becomes part of the specific contract with a client only if they declare in writing that they accept them, as the II is obliged to conclude its contracts with clients only on the basis of the general terms and conditions approved by the Deputy Chairperson of the FSC.

(2) The II is obliged to refer explicitly to the TC at the conclusion of a specific contract with clients, as well as place the last approved TC in a visible and accessible place in the premises where it receives clients and give them an opportunity to familiarize themselves with their content.

Art. 7.    (1) (Amended, in force from 12.01.2017) The client and the II may enter in the contract concluded by them special clauses other than the clauses in the present TC, if this does not violate the LMFI, the LMAMAFI and the regulations for their implementation. In this case, special clauses are in force, even if the relevant clauses in the TC are not explicitly revoked.

(2) The investment intermediary can not conclude a specific contract with a client - a non-professional investor, whose content deviates from the TC approved by the FSC Deputy Chairperson, unless the deviation is in the explicit interest of the client.

Art. 8.     The terms and conditions of each contract for transactions in financial instruments are defined in the specific contract, taking into account the specificity of the individual types of financial instruments, the stock exchange regulations of the respective regulated market and the commercial practice.

Art. 9.      If this is agreed in the particular contract, the II may exercise the rights on the financial instruments, including collecting the income thereon.

Art. 10.   The II may not engage in other commercial transactions other than the explicitly specified investment services in Art. 2.

Art. 11.    The subject and the extent of the representative power of the II are negotiated with the respective contract with the client and the power of attorney.

TYPES OF FINANCIAL INSTRUMENTS

Art. 12.   (Amended with decision from 09.03.2018) The II may conclude and execute transactions with financial instruments within the meaning of Art. 4 of the LMFI, which may be offered to the public, namely:

1.    transferable securities;

2.    financial market instruments;

3.    company shares for collective investment;

4.    options, futures, swaps, fixed rate forward contracts and any other derivative contracts relating to securities, currencies (except those determined pursuant to Article 10 of Commission Delegated Regulation (EU) 2017/565 of 25 April 2016) supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organizational requirements and operating conditions for investment firms and laying down definitions for the purposes of that Directive), with interest rates or with yields, with allowances for emissions or other derivative instruments, financial indices or financial indicators which are settled by physical delivery or cash settlement;

5.    options, futures, swaps, fixed rate forward contracts and any other derivative contracts relating to commodities for which cash settlement has to be made or for which cash settlement may be made at the request of one of the parties (except for cases of non-compliance or other grounds for termination of the contract);

6.    options, futures, swaps and any other derivative contracts relating to commodities for which physical delivery settlement may be made when traded on a regulated market, a multilateral trading facility (MTF) or an organized trading facility (OTF) with the exception of wholesale energy products traded in OTFs with physical delivery settlement defined in accordance with Article 5 of Delegated Regulation (EU) 2017/565;

7.    options, futures, swaps, forward contracts, and any other derivative contracts relating to commodities for which physical delivery settlement may be made, other than those under l. "e" that are not for commercial purposes and have the characteristics of other derivative financial instruments under Art. 7 (1), (2) and (4) of the Delegated Regulation (EU) 2017/565;

8.    derivative financial instruments for transferring credit risk;

9.    contracts for differences;

10.    options, futures, swaps, forward rate agreements and any other derivative contracts related to climate change, freight rates or inflation rates or other official economic statistical indicators for which cash settlement has to be made or for which cash settlement may be made at the request of one of the parties (except for cases of non-performance or other grounds for termination of the contract) and any other derivative contracts relating to assets, rights, obligations, indices and indicators other than those referred to in this Article that have the characteristics of other derivative financial instruments, depending on whether they are traded on a regulated market, MTF or OTF, 7 (3) and Art. 8 of the Delegated Regulation (EU) 2017/565;

11.    emission quotas consisting of any units recognized as complying with the requirements of Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Directive 96/61/EC (emissions trading scheme).

TERM

Art. 13.    These TCs are in force for the parties after signing the specific agreement between them and according to the requirements of Art. 5 and bind them while the specific contract for deals with financial instruments is in force between them and in so far as the specific client does not bring into effect changes in the TC following the conclusion of the contract.

Art. 14.    (1) (Amended with decision from 09.03.2018) The II concludes the contracts with clients under these TCs.

(2) The II declares in the Tariff its standard commission fees for different types of contracts with customers as well as the type and amount of costs for customers, not included in the remuneration.

(3) (Amended, in force from 12.04.2016) The TC and the Tariff shall be displayed in a visible and accessible place in the premises where the II receives clients and shall be published on the II's website. Prior to concluding the contract, the II provides sufficient opportunity for interested persons to become acquainted with current TC and Tariff and answers questions about their content. The II makes its contracts with clients on the basis of the present TC and the Tariff.

(4) (Amended, in force from 12.04.2016) The II informs interested parties that the contract may contain clauses deviating from the General Terms and Conditions if they do not contradict the law.

(5) (New, in force from 12.04.2016) When providing investment services other than providing investment advice to a new non-professional client, the investment firm shall provide them on paper or on another durable medium with information on the fundamental rights and obligations of the client and the investment intermediary.

(6) (New, in force from 12.04.2016) When concluding a contract, the investment intermediary provides the client with the general terms and conditions and the tariff, and the client certifies that they are acquainted with them and accept them. This is contained as a separate clause in the contract, in so far as it is relevant to the respective services under Art. 2 and does not contradict explicit clauses in the contract. The agreed terms and conditions and the tariff are an integral part of the contract concluded between the investment intermediary and the client. 

(7) (New, in force from 12.04.2016) The investment intermediary is obliged to publish in a prominent place on its website any amendment to the general terms and conditions and/or tariff that contains information on the date of its adoption and the date of its entry into force. The publication of the General Terms and Conditions shall be made no later than one month prior to the entry into force of the amendments. The investment intermediary shall include in its contract under Art. 15 information on the order and method of accepting amendments and supplements to the general terms and conditions and/or tariffs applicable to it.

(8) (New, in force from 12.04.2016) In the event of disagreement with the amendments to the terms and conditions and/or the tariff, the customer is entitled to terminate the contract without notice prior to the date of entry into force of the general terms and conditions and/or the tariff without any liability for damages and expenses, excluding expenses, related to assets owned by that customer.

(9) (New, in force from 12.04.2016) Upon termination of the contract under the preceding paragraph, the investment intermediary shall settle its relations with the client within seven days from the receipt of the notice of termination.

(10) (Amended with decision from 09.03.2018) The provisions of the Obligations and Contracts Act, the Commercial Law and the Consumer Protection Act shall apply to the general terms and conditions of the investment intermediary, unless otherwise provided in the LMFI.

Art. 15.    (1) (Amended with decision from 09.03.2018) Contract for provision of services under Art. 6, para. 2 and 3 of the LMFI shall be concluded only in writing.

1.    (Amended, in force from 12.04.2016) The contract may be concluded at a distance by exchanging electronic statements signed with an electronic signature in accordance with Art. 13 of the Electronic Document and Electronic Signature Act. The client, respectively their representative, shall send to the II a copy of their identity document, signed in accordance with the previous sentence, and for clients - legal persons - also a copy of the commercial registration documents containing the data on the establishment and the representation.

2.    (Amended, in force from 12.04.2016) The contract under para. 1 may be concluded in absentia by exchange of the necessary documents signed by the parties provided that the client is the holder of a bank account opened at a credit institution meeting the requirements of para. 16. The client, respectively their representative, shall send to the investment intermediary the signed contract, a document in original, issued by the respective credit institution, that the client is the holder of a bank account and a certified copy of their identity document, and for clients which are legal entities - a copy of the commercial registration documents containing the data on establishment and representation. The authentication shall be done by affixing the inscription "True to the original", date and signature of the customer. The bank account referred to in the first sentence must be opened in a credit institution under paragraph 16. Cash transfers in connection with the receipt and provision of investment and ancillary services by the client under a contract shall be made only from and to a payment account held by a credit institution under the first sentence, of which the client is the holder. No contract may be concluded under the terms of this clause through a proxy.

3.    (Amended, in force from 12.04.2016) The contract under para. 1 may be concluded from a distance by exchanging the necessary paper documents signed by the parties, with the client signing the document in the presence of a notary who certifies this circumstance. The provision of all necessary information by the client in accordance with Ordinance No. 38 as well as the provision of information from the client necessary for the evaluation of a suitable service can be done by the client remotely by signing the necessary documents before a notary. The client or representative thereof, shall send to the investment intermediary the signed contract with a notary certification of the signature, a certified copy of their identity document, and for clients - legal entities - also a certified copy of commercial registration documents containing data about the establishment and the representation. The validation of the identity document and the commercial registration documents shall be done by affixing the inscription "True to the original", date and signature of the client.

(2) (Amended with decision from 09.03.2018) The investment intermediary shall conclude contracts under Art. 82, para. 1 of the LMFI and accept clients' orders through individuals who work for them and are:

а)    brokers, or 

b)    persons who meet the requirements under Art. 3, items 1 to 6 of Ordinance 7 of 2003 on the requirements, which shall be met by the natural persons who under a contract directly execute transactions with financial instruments and provide investment advice with regard to securities as well as the procedure for obtaining and forfeiting the right to exercise such activity (SG 101/03) and are entered in the register under Art. 30, para. 1, item 2 of the Financial Supervision Commission Act, or

c)    managers, executive members of the management body or procurators of the investment intermediary

(3) (New, in force from 12.04.2016) The investment intermediary shall maintain at all times an up-to-date list of the persons under para. 2.

(4) (New, in force from 12.04.2016) The investment intermediary shall exercise permanent control over the compliance of the actions of the persons under para. 2 with the LMFI and acts, concerning its implementation.

(5) (previous text of para. 3 from 01.02.2012) The contract shall include at least the following:

а)    the full names, personal identification number and the address of the client or representative thereof; in the case of a client - legal entity: name, seat, management address, tax number, UIC, full name and personal identification number of the representative and in what capacity they represent the legal entity;

b)    the full name and the personal identification number of the person representing the II and the capacity in which they operate;

c)    date and place of conclusion;

d)    the investment and ancillary services provided under the contract and the financial instruments that are the subject of these services;

e)    the General Terms and Conditions and the Tariff of the Investment Intermediary in effect at the time of conclusion;

(6) (previous text of para. 4 from 01.02.2012; Amended, in force from 12.04.2016) The client, respectively their proxy, shall sign the contract in the presence of a person under para. 2 after their identity has been verified. The conclusion of a contract by proxy is only admissible if a power of attorney, certified by a notary, which contains representative power to perform management or disposition of financial instruments, and a declaration by the proxy that they do not carry out transactions in financial instruments on a professional basis and has not executed such transactions within one year prior to the conclusion of the contract. In the contract under para. 1 are included: individual details of the persons concluding it, the capacity in which the person representing the investment intermediary acts, the date and place of conclusion and the general terms and conditions in force at the time of conclusion, the fundamental rights and obligations of the parties and the indication of the information the intermediary is obliged to provide. 

(7) (previous text of para. 7 canceled; previous text of para. 5, amended, in force since 12.04.2016) The II shall keep in its archive the declaration and the original power of attorney under para. 6, respectively the certified copy of it. If the power of attorney has multiple instances, the II keeps a copy of it, certified by the proxy and a person in the internal control department. The investment intermediary keeps in the archive a copy of the client's identity document, certified by the client and the person under Art. 39, para. 1 and/or para. 2 of Ordinance No. 38, which concludes the contract for the investment intermediary. When the contract is concluded through a representative, the investment intermediary shall keep in the archive a copy of the client's identity document and a copy of the identity document of the representative, certified in accordance with the preceding sentence. The authentication shall be made by affixing the inscription "True to the original", date and signature of the person making the certification.

(8) (Amended, previous text of art. 6, in force since 12.04.2016) The II is obliged to ask the customer, respectively his/her proxy, to declare whether:

а)    they hold inside information regarding the financial instruments to which the order relates and their issuer if the financial instruments to which the order relates or on the basis of which the financial instruments that are the subject of the order are traded on a regulated market;

b)    the financial instruments subject to a sale or exchange order are blocked at the depositary institution in which they are held, whether pledged or under distraint;

c)    (Amended, in force from 12.04.2016) the transaction - subject of the order, is a disguised purchase or sale of financial instruments.

(9) (New, in force from 12.04.2016) The contract under par. 1 may be concluded at a distance by exchange of electronic statements signed with electronic signature according to Art. 13 of the Electronic Document and Electronic Signature Act. The verification of the identity of the client upon conclusion of a contract by exchange of electronic statements, signed with electronic signature, shall be carried out in accordance with Art. 26a of Ordinance No. 38.

(10) (New, in force from 12.04.2016) The investment intermediary shall verify the identity of the client, respectively of his/her representative, provided in accordance with para. 9:

1.    a copy of an identity document, and for clients - legal entities - also a copy of commercial registration documents containing data on establishment and representation; and

2.    a document, including credit and/or debit card data, issued by a credit institution meeting the requirements of para. 16, and/or a document certifying the charging or payment of a utility service; the account or batch holder must be visible from the documents under the preceding sentence.

(11)  (New, in force from 12.04.2016) When the contract under para. 1 is concluded through a qualified electronic signature, par. 10, item 2 is not necessary.

(12)  (New, in force from 12.04.2016) In order to certify the identity of the client, the investment intermediary may also request additional data and/or documents. The investment intermediary is responsible for proper identification of the client and takes all reasonable steps to establish the identity of the client.

(13) (New, in force from 12.04.2016) The person under Art. 39, para. 1 and/or para. 2 shall verify that the requirements of para. 9 - 11 are met.

(14) (New, in force from 12.04.2016) The investment intermediary keeps all the documentation and information related to the electronic statement under Art. 74 of Ordinance No. 38.

(15) (New, in force from 12.04.2016) The provision of all necessary information by the client in accordance with Ordinance No 38 as well as the provision of information from the client necessary for the evaluation of a suitable service can be done by an electronic statement signed by the client with an electronic signature.

(16) (New, in force from 12.04.2016) The document under par. 10 (2) shall be issued by a credit institution authorized in a Member State of the European Union or a party to the Agreement on the European Economic Area. The credit institution that issued the document may also be located in a Member State of the Financial Action Task Force (FATF) Group, the Asia/Pacific Group on Money Laundering (APG), the Eurasian Anti Money Laundering Group and the financing of terrorism (EAG) or the Committee of Experts on Measurement of Money Laundering (MONEYVAL) to the Council of Europe.

(17) (New, in force from 12.04.2016) Where the contract is not concluded through the use of a qualified electronic signature, transfers of funds in connection with the receipt and provision of investment and ancillary services to the client under a contract under para. 1 shall be made only from and to a payment account, managed by a credit institution under para. 10, of which the customer is the holder.

(18) (New, in force from 12.04.2016) No contract may be concluded under para. 9 through a proxy.

(19) (previous text of Art. 15, para. 8, Amended, in force from 12.04.2016.) The II can not conclude the contract under para. 1, if the client or his/her representative has not submitted and has not signed all the necessary documents, has submitted documents with obvious irregularities or the data in them is incomplete, has inaccuracies or contradictions, or there is another circumstance that gives rise to suspicion of inappropriate legitimation or representation. The investment intermediary also may not conclude a contract under para. 1 if the counterparty is represented by a proxy who declares the performance of transactions in financial instruments on a professional basis. This limitation does not apply when the contract is entered into by a management company, credit institution, investment intermediary or other person authorized to engage in financial instruments.

Art. 16.    (1) (Amended with decision from 09.03.2018) Prior to concluding a contract with the client, the II provides the following information:

1.    The terms and conditions of the relevant contract;

2.    Information about the investment intermediary and its services regarding the contract under item 1 or about these investment or ancillary services;

3.    Information on financial instruments and a general description of the nature and risks associated with them, taking into account in particular the categorization of the client as a non-professional client, professional client or eligible counterparty;

4.    Information on the protection of financial instruments or client assets and the existence of a system for compensating investors in financial instruments;

5.    Information on costs and related fees for transactions in financial instruments contained in the Tariff on Interest, Fees, Commissions and Expenses;

6.    The policy of executing client orders;

7.    The type, periodicity and timing of reporting and confirmation to the client in relation to the investment services and activities performed;;

8.    Rules and Criteria for Classification of II Clients;

9.    The conflict-of-interest treatment policy applied by the investment intermediary, which is part of the Investment Intermediary's Internal Rules;

(2) (Amended, in force from 01.02.2012) Before the conclusion of the contract, the II provides sufficient opportunity for the persons interested to acquaint themselves with the documents referred to in the previous paragraph. Upon request by the customer, the II provides additional information, clarifications and answers to questions about their content.

(3) (previous text of Art. 16, para. 2, Amended, in force from 01.02.2012) The investment intermediary shall explicitly notify the client of:

1.    the existence of a right of lien or retention on client money or financial instruments for the investment intermediary and the conditions under which such a right arises or may arise;

2.    the existence of a right of set-off on client money or financial instruments for the investment intermediary and the conditions under which such a right arises or may arise;

3.    the existence and terms and conditions under which an investment intermediary has or may have a right of set-off in respect of client financial instruments or money;

4.    the possibility for the depositary institution to be entitled to a lien, a right of retention or set-off on client financial instruments or money, where applicable.

(4) (previous text of Art. 16, para. 3, Amended, in force from 01.02.2012) The information that the II provides to its clients, including in its promotional materials and public statements of the members of the management and supervisory bodies of the intermediary and of the persons working for it, must be understandable, true, clear and not misleading. The information provided must be accurate, sufficient, comprehensible to the usual members of the group to which it is addressed or likely to reach, not to disguise, miss or negate important messages, statements or warnings. 

(5) (previous text of Art. 16, para. 4, Amended, in force from 01.02.2012) Information containing a description of certain financial instruments or a service provided by the II in relation to its activity can not accentuate the potential benefits of those financial instruments or services without simultaneously identifying the risk associated with them.

(6) (previous text of Art. 6 para. 5, Amended, in force from 01.02.2012) When the information includes: data on past profitability of a given financial instrument or investment service, it contains or relates to a simulated past profitability or contains information about future profitability, it must meet the requirements of Art. 7, para. 4 of Ordinance No. 38.

Art. 17.    (1) (Amended with decision from 09.03.2018) The II requires information from its clients regarding their financial experience, knowledge and condition, their ability to handle losses and their investment objectives, including their readiness to risk. The Investment intermediary shall not be entitled to conduct portfolio management and provide investment advice to a client who has not provided the information under sentence one.

(2) (Amended with decision from 09.03.2018) Based on the information under para. 1 The II evaluates the relevance, including the extent to which the financial instruments, subject to the investment advice, correspond to the level of risk permissible for the client and their ability to incur losses. If on the basis of the information received under para. 1 the II considers that the offered investment service would not be adequate, it warns the client respectively the potential client, in writing.

(3) (Amended with decision from 09.03.2018) In case the client, respectively the potential client, does not provide the information under para. 1 or the information provided is insufficient to carry out the assessment under para. 2, the II is obliged to notify in writing the client, respectively the potential client, that it can not provide the services under Art. 6, para. 2, item 4 and 5 of the LMFI.

(4) (Amended with decision from 09.03.2018) The investment intermediary providing investment services under Art. 6, para. 2, item 1 and/or 2 of the LMFI, may provide such services to a client without the information under para. 1 if:

1.    the subject of the services are shares admitted to trading on a regulated market or on an equivalent third-country market, according to a European Commission list, bonds or other debt securities, excluding those bonds or other debt securities that secure a derivative instrument, financial market instruments, shares of collective investment schemes and other non-complex financial instruments;

2.    the service is provided at the initiative of the client or a potential customer;

3.    the client or the potential client is notified in writing that the investment firm will not comply with the obligations under para. 2;

4.    the investment firm complies with the requirements for the treatment of conflicts of interest.

(5) (Amended with decision from 09.03.2018) The provisions of this Article shall not apply to the conclusion of transactions with a professional client within the meaning of Annex II to Directive 65/2014 for which the II may accept that that client has the financial ability to bear all the associated investment risks compatible with its investment objectives and has the necessary experience and knowledge of the products, transactions and services for which it is designated as a professional client.

DUE DILIGENCE 

Аrt. 18.    (1) (Amended with decision from 09.03.2018) When conducting transactions in financial instruments, investment advice and other actions related to financial instruments on behalf of clients, the II is obliged to act fairly, as a professional to take due care to protect the interests of clients and make reasonable efforts to enter into transactions with financial instruments on behalf of the client under the best terms.

(2) (Amended with decision from 09.03.2018) The best execution of the order is determined by the total value of the transaction, including the price of the financial instrument and all costs associated with the execution. Execution costs include all costs directly related to the execution of the order, including site fees, clearing and settlement fees, and other fees and charges paid to third parties involved in the execution of the order. The II has no right to set or collect commissions in ways that clearly disparate the different sites.

(3) The II is obliged at the earliest opportunity to execute the orders of its clients, respectively to enter into transactions in the management of individual portfolios of financial instruments of clients, unless this would be manifestly unfavorable to the clients. 

OBLIGATIONS OF THE INVESTMENT INTERMEDIARY

Art. 19.    (1) (Amended, in force from 01.02.2012) The II shall conclude the contracts with clients and accept the documents under Art. 34 of Ordinance No. 38 only in a management address, branch or office, entered in the register under Art. 30, para. 1, item 2 of the Financial Supervision Commission Act, unless the contract is concluded under the procedure of Art. 15, para. 1, items 1, 2 and 3.

(2) The premises under para. (1) shall have the necessary technical equipment and software to enable the acceptance of orders, including orders sent by means of remote communication, following the order of receipt of orders when transmitted for execution and storage of the information.

(3) The investment intermediary places at the entrance of each of the branches and offices, in accordance with para. 1, information on the name and seat, the working hours, the name and surname of the person responsible for the branch or office concerned.

Art. 20.    The investment intermediary requires a client who makes an order to purchase financial instruments to provide the cash needed to pay the transaction upon the submission of the order unless the client certifies that they will fulfill their payment obligation as well as in other cases provided for in an ordinance. If the rules at the place of execution at which the deal is concluded allow for a transaction in which the payment of the financial instruments does not take place at the same time as the transfer, the II need not require payment by the buyer, provided the express written consent of the seller. This is also the case with other financial transactions.

Art. 21.    (1) (Amended, in force from 12.04.2016) The investment intermediary shall not have the right to execute a client order if the client, respectively their representative, refuses to submit the declaration under Art. 15, para. 8, b. (a), (b) and (c). The refusal under sentence one shall be certified by a separate document signed by the client.

(2) The investment intermediary may not execute an order if it is declared or if it finds that the financial instruments - subject to the order for sale - are not available on the client's account or are blocked in a depositary institution, or if a pledge or distraint is imposed on them.

(3) The prohibition under para. 2 in respect of pledged financial instruments shall not apply in the following cases: 1. the acquirer has been informed of the established pledge and has expressly agreed to acquire the pledged financial instruments, there is an explicit consent of the pledge creditor in the cases provided for under the Special Pledges Act; 2. the pledge is made on an aggregate within the meaning of the Special Pledges Act.

1.    the acquirer has been informed of the established pledge and has expressly agreed to acquire the pledged financial instruments, there is an explicit consent of the pledge creditor in the cases provided for under the Special Pledges Act;

2.    the pledge is made on an aggregate within the meaning of the Special Pledges Act.

(4) The prohibition under para. 2 in respect of an order for the sale of financial instruments that are not available on the client's account shall not apply in cases where the investment intermediary otherwise provides that the financial instruments subject to the sale will be delivered on the settlement date of the transaction as well as in other cases defined by an ordinance.

(5) (Amended, in force from 12.01.2017) The II refuses to sign the contract under Art. 15 as well as to execute a client's order for a deal with financial instruments if this would lead to a non-fulfillment of the requirements of the LMFI, the LMAMAFI or the Law on the Measures against Money Laundering and the acts for its implementation.

Art. 22.    The investment intermediary shall promptly notify the client of any material change in the circumstances under Art. 9, 10, 18 and 32 of Ordinance No 38, which are related to the service offered to the client. The notification shall be made on a durable medium if the information to which it relates has been provided on a durable medium to the customer. This does not apply to customers who only give small irregular orders to enter into securities transactions.

Art. 23.    (1) The investment intermediary may not:

1.    carry out transactions on behalf of customers in volume or frequency, at prices or with a counterparty, which, in the circumstances, can be assumed to be performed exclusively in the interest of the investment intermediary;

2.    buy at its own expense financial instruments for which a client has made a purchase order and to sell them to the client at a price higher than the price at which it bought them;

3.    (Amended, in force from 12.04.2016) take action with money and financial instruments of the client for which it is not authorized by the client;

4.    sell on behalf of a third party financial instruments that the investment intermediary or its client does not own, except under the terms and conditions of an ordinance;

5.    participate in the execution, including as a registration agent, of disguised purchases or sales of financial instruments;

6.    receive part or all of the benefit if the investment intermediary has concluded and executed the transaction on terms more favorable than those established by the client;

7.    engage in other activities that threaten the interests of its clients or the stability of the financial instruments market.

(2) The prohibition under para. 1, item 1 shall not apply to transactions, for the execution of which the client has given explicit instructions on their own initiative.

(3) The prohibition under para. 1, item 2 shall also apply to the members of the management and supervisory bodies of the Investment Intermediary, to the persons who manage its activity, as well as to all persons working under a contract for it and to persons related to them.

Art. 24.    (Amended with decision from 09.03.2018) When the transaction is concluded and executed on a stock exchange, another regulated market, a multilateral trading system or an organized trading system, the rules of the relevant regulated market or trading system apply for the conclusion and execution, even if the contractual agreements between the II and the client differ from the aforementioned rules.

Art. 25.   The II may deviate from the order if it is in the express interest of the client and it was not possible to obtain their consent.

Art. 26.   If the II concludes and executes the transaction on terms more favorable than those established by the customer, the whole benefit belongs to the latter.

Art. 27.    (1) The investment intermediary executes client orders under the following conditions:

1.    immediate and accurate registration and distribution of execution orders;

2.    immediate execution by the order of their receipt of identical client orders, except when the characteristics of the order or the prevailing market conditions make this impossible or the interests of the client require otherwise;

3.    the investment intermediary informs the non-professional client about the objective difficulties that have arisen, preventing the correct execution of the orders immediately after they are established.

(2) Where the II has undertaken to organize or monitor the settlement of an order executed by it on behalf of a client, it shall take the necessary action to ensure that all client financial instruments or money received on settlement are promptly and accurately transferred on the accounts of the respective client.

(3) The investment intermediary may not abuse information about outstanding client orders and shall take all necessary measures to prevent such abuse by any person working under a contract for the investment intermediary.

Art. 28.    (1) (Amended with decision from 09.03.2018) The investment intermediary accepts cash payments from clients for providing investment and/or ancillary services as well as cash needed for payment on a transaction in financial instruments, respectively performs payments to clients, subject to the requirements of the Law on limiting cash payments. The investment intermediary deposits the cash provided by clients or received as a result of investment services performed on their account to a person under Art. 93, para. 1 LMFI no later than the end of the next working day by taking the necessary actions to diversify the funds to the persons under the same article.  

(2) (Amended with decision from 09.03.2018) An investment intermediary which deposits the cash of a client to a person under Art. 93, para. 1, item 2 - 4 of the LMFI, shall take due care of the client's interests in determining that person and the depositing of the client's cash to them, as well as periodically but at least once a year, to review with the same care the choice of this institution or a qualifying financial market fund and the conditions under which the client's cash is held. In fulfilling these obligations, the investment firm takes into account the professional qualities and market reputation of the individual in order to ensure the protection of the client's rights as well as any legal and regulatory requirements or market practices related to the holding of cash of clients that may unfavorably affect the rights of customers. In the contract concluded between the investment intermediary and the person under Art. 93, para. 1 of LMFI, it is explicitly stated that client funds are kept in the opened account and that these funds are not subject to distraint for obligations of the investment intermediary.

(3) (Amended with decision from 09.03.2018) In case the applicable legislation to the activity of the person under Art. 93, para. 1 of LMFI does not allow compliance with the requirements under para. 2, the investment intermediary shall take appropriate measures to guarantee the rights of the client in relation to the deposited funds, including by opening a common account for clients' cash, which this person manages in the name of the investment intermediary but on others' behalf.

(4) (New, in force from 12.01.2017) The investment intermediary is not entitled to invest the client's cash in a collective investment scheme if the client opposes such a way of storing the cash provided by them.

Art. 29.    (1) The investment intermediary shall be obliged to store, with due diligence, the securities, cash and other property received in connection with the contract awarded to it or acquired by a transaction executed on the order of the client. The investment intermediary is required to separate its financial instruments and cash from those of its clients. The investment intermediary is not liable to its creditors with the financial instruments and cash of its clients, as well as with securities that are basic to depository receipts

(2) The investment intermediary cannot store the cash of its clients on its own premises.

(3) (Amended with decision from 09.03.2018) The investment intermediary deposits the cash of its clients in:

1.    a central bank;

2.    a credit institution licensed to operate under the Law on Credit Institutions, respectively, as required by Directive 2013/36 / EC;

3.    a credit institution authorized in a third country;

4.    qualified financial market fund.

(4) The investment intermediary may deposit the cash resources of its clients to persons under para. 3 to which it is a related party only if the clients have given written consent to this.

(5) The investment intermediary shall store the financial instruments of its clients in a depositary institution on client accounts to the account of the investment intermediary or on accounts opened to the account of a third party under the conditions and according to the procedure established by Ordinance No. 38.

(6) An investment firm shall regularly inform its clients of the cash assets and the operations of the cash accounts and the financial instruments it holds and the terms of the contracts for their keeping.

(7) Except in the cases specified in Ordinance No 38, the investment intermediary may not use:

1.    on its own behalf, the cash and financial instruments of its clients;

2.    on behalf of its client, cash or financial instruments of other clients;

3.    on behalf of a client, its own cash or financial instruments.

(8) (New, in force from 12.01.2017) No enforcement or establishment of collateral on the cash and financial instruments of clients for the obligations of the investment intermediary shall be allowed.

Art. 30.    If the II acts on behalf of the client, the rights and obligations of the transaction arise directly in the legal sphere of the client with the conclusion of the transaction.

Art. 31.    If the II acts on its own behalf, the rights and obligations of the transaction arise in the legal sphere of the client after their transfer from the II. Rights and obligations are considered transferred when the respective financial instruments and/or cash subject to the transaction are transferred to a client's personal account or to a customer's account with the II. The deadlines for the transfer of rights and obligations in the client's legal sphere depend on the settlement time and the rules of the relevant depository institutions.

ADDITIONAL REQUIREMENTS FOR ENTERING INTO TRANSACTIONS WITH FINANCIAL INSTRUMENTS THROUGH AN ELECTRONIC SYSTEM APPROVED BY THE REGULATED MARKET

Аrt. 32.    (1) If the II is a subscriber of an electronic system approved by the regulated market and eligible to place orders for the purchase or sale of financial instruments on a client's order, the II may conclude contracts with clients for the submission of orders via the same electronic system.

(2) Access to the system under para. 1 and the placing of orders by clients of the II is carried out through an electronic certificate issued in the name of the client and in compliance with the requirements of the regulated market for operation with the respective electronic system. If the client enters orders through a proxy, the certificate is issued in the name of the proxy, and the certificate states that they are acting as a proxy and on behalf of the client.

(3) An order submitted via an electronic system is considered to have been initiated by the client.

(4) The II examines whether the financial instruments, subject to the order - have been blocked, pledged or seized. The verification is not performed if the electronic system provides at any time up-to-date information and does not allow the conclusion of transactions with blocked, seized and pledged financial instruments.

(5) The order is introduced for the execution on the regulated market by the II and the confirmation of the concluded transaction is done through the electronic system.

(6) The payment for a transaction completed in execution of an order, submitted via an electronic system, is made only in a non-cash way. A settlement confirmation of a transaction concluded in execution of an order submitted through an electronic system shall be made through the electronic system if the latter so permits.

MANAGEMENT OF A PORTFOLIO OF FINANCIAL INSTRUMENTS AND MONEY AT ITS OWN DISCRETION WITHOUT SPECIAL ORDERS FROM THE CLIENT

Art. 33.    The contract for managing an individual portfolio of financial instruments is concluded in writing.

Art. 34.    When managing a portfolio of financial instruments at its own discretion (trust management), the II is responsible only for the good faith and competent performance of the contractual obligations, but not for the final financial result achieved by the client.

Art. 35.    With the conclusion of the Trust Management Agreement, it is considered that the client gives their confirmation in advance to any specific operation or transaction executed by the II under the terms of the contract.

Art. 36.    If the specific contract does not contain any constraints, the Investment intermediary is deemed to be empowered by its sole discretion and guided by the investment objectives and the client's strategy to invest the funds allocated to it in financial instruments, according to its subject of activity and the license obtained, to sell and to replace financial instruments from the portfolio and to reinvest the funds received in new financial instruments, to collect interest and dividends on behalf of the client, which funds it may also invest in financial instruments, and carry out all operations it deems necessary and in the interest of the customer.

Art. 37.    The II evaluates the financial instruments in the portfolio at market price. When there is no market price of the other types of financial instruments in the portfolio, the II evaluates them through established financial models agreed in the particular contract.

Art. 38.    The remuneration of the II on the trust contract is defined as a fixed amount or percentage of the value of the portfolio or as a percentage of the realized positive result of the management of the client's funds.

Art. 39.    Upon termination of the contract - early or on expiry of the term, the II is obliged to report to the client within 7 days and they are obliged to accept the results of the portfolio management and to receive the cash and the available financial instruments. The client's cash and financial instruments may remain with the II on another basis (a new service contract within the scope of the II business).

Art. 40.    The other sections of the General Conditions apply to the contracts for trust management of a portfolio of financial instruments, as long as they do not contradict this section. Art. 41. (Supplemented, in force from 12.01.2017) An investment intermediary that provides clients with the portfolio management service provides a durable medium for each client with a periodic report on the portfolio management activities performed on behalf of the client.

ASSIGNMENT OF PERFORMANCE TO A THIRD PARTY

Art. 42.    (1) (Amended with decision from 09.03.2018) The investment intermediary may entrust the execution of important operational functions or investment services and activities to a third party. The assignment is based on a written contract between the II and the third party service provider through which the service provider performs a process, service or activity that would otherwise be performed by the investment firm itself.

(2) (Amended with decision from 09.03.2018) The assignment of important operational functions, as well as of investment services and activities, must be carried out in a way that does not lead to the release of the investment intermediary from its obligations under the LMFI and the acts for its implementation. When assigning critical critical functions, the investment intermediary complies with the following conditions:

1.    when assigning to third parties, senior management does not delegate its responsibility;

2.    the relationship and obligations of the investment intermediary to its clients under the LMFI and the acts for its implementation do not change;

3.    the terms and conditions that the investment intermediary must perform in order to obtain and maintain a license in accordance with the LMFI and the acts for its implementation are not violated;

4.    none of the conditions under which the investment intermediary's license was issued shall be abolished or altered. 

(3) (Amended with decision from 09.03.2018) An investment firm exercises due diligence, care and effort in concluding, enforcing or terminating any arrangement for the assignment of a third party service provider to critical or important operational functions and shall take the necessary steps to ensure that the following conditions are met: 

а)    the service provider possesses the abilities, capacity, sufficient resources and appropriate organizational structure to facilitate the performance of the assigned functions and all the required by law authorizations for the reliable and professional performance of the assigned functions;

b)    the service provider carries out the outsourced services efficiently and in accordance with applicable laws and regulations and for that purpose the investment firm has established methods and procedures for assessing the performance of the service provider and for ongoing review of the services provided by that service provider;

c)    the service provider performs a proper oversight of the assigned functions and adequately manages the risks associated with the assignment;

d)    appropriate measures shall be taken if there are grounds for believing that the service provider may not perform the functions effectively and in accordance with the applicable laws and regulations;

e)    the investment intermediary exercises effective oversight of the functions assigned and manages the risks associated with the assignment and, to this end, the investment firm maintains the necessary expertise and resources to exercise effective oversight of the assigned functions and to manage those risks;

f)    the service provider shall disclose to the investment intermediary any development that may have significant repercussions for its ability to perform the functions assigned effectively and in accordance with applicable laws and regulations;

g)    where appropriate, the investment intermediary may terminate the assignment arrangement without prior notice when the termination is in the interest of its clients, without affecting the continuity and quality of service of its clients;

h)    the service provider assists the competent authorities of the investment intermediary in relation to the functions assigned;

i)     the investment firm, its auditors and relevant competent authorities have effective access to the data relating to the functions assigned and to the relevant business premises of the service provider where this is necessary for the exercise of effective control in accordance with this Article and the competent authorities are able to exercise those access rights;

j)    the service provider protects any confidential information relating to the investment intermediary and its clients;

k)    the investment intermediary and the service provider establish, implement and maintain a contingency plan for post-disaster recovery and periodic testing of data archiving systems where this is necessary in view of the function, service or activity to be assigned.

l)    the investment intermediary has taken measures to maintain the continuity and quality of the assigned functions or services upon termination of the assignment, by transferring the assigned functions or services to another third party or through their execution by the intermediary itself.

REQUIREMENTS FOR ISSUANCE OF SHARES IN THE EVENT OF AN INCREASE IN THE CAPITAL OF A PUBLIC COMPANY

Art. 43.    (1) Upon submission by a client of an application for issuance of shares against rights, the II immediately submits an order on behalf of the client to the CD for issuance of shares under the procedures of the CD and notifies the II processing the request. The notification referred to in the preceding sentence shall be made by telephone or by other means of remote communication, and a document certified by a person in the internal control department shall be drawn up for the notification made by the end of the working day.

(2) In case the II processes the issue:

а)    when submitting an application for issuance of shares against rights by a client - submits both an order on behalf of the client and an order on behalf of the issuer to the CD according to the procedures of the CD;

b)    upon receipt of the notification under para. 1 from another intermediary for a request for issuance of shares against rights by a client of that other intermediary - immediately submits a counter-order on behalf of the issuer to the CD, according to the procedures of the CD.

(3) When submitting applications under this section no declaration under Art. 15, para. 5. is required.

Art. 44.    (1) In the case of an increase in the capital of a public company and on the basis of a written contract with the company, the II (when authorized by a competent body of the public company to service the capital increase) may open client subaccounts for new shares in favor of their holders.

(2) The preceding paragraph shall not apply to persons who, upon expiration of the term under para. 3, hold shares of the company under client's subaccounts with the II.

(3) After the registration of the capital increase in the Commercial Register, the II declares for registration in the CD the new issue of shares at the same time as requesting the opening of client subaccounts to the holders of the new shares in accordance with the requirements of the preceding paragraphs.

(4) Before the conclusion of individual contracts, the II only provides custody services. In these cases, the II may make notifications to its clients by posting it in a central daily newspaper.

(5) Holders of the new shares may at any time transfer their shares to client subaccounts to their chosen II according to the rules of the Central Depository.

REGISTRATION AGENT ACTIVITY

Art. 45.    (1) The investment intermediary acts as a registration agent when, on the basis of a written contract with the client, it submits to the respective depository institutions data and documents for registration of:

1.    Transactions in financial instruments concluded in advance between the parties;

2.    transfer of dematerialized financial instruments in case of donations and inheritance;

3.    change of data for the holders of dematerialized financial instruments, correction of incorrect data, issuance of duplicates of supporting documents and other actions provided for in the rules of the respective depository institution;

(2) (Supplemented, in force from 12.04.2016) In the cases under para. 1 the persons, respectively their representatives, sign the necessary documents in the presence of a person under Art. 39, para. 1 and/or para. 2 of Ordinance No. 38 after their identity has been verified.

(3) A person from the internal control department in the II shall verify that the contract under para. 1 corresponds to the requirements of the LMFI, the acts for its implementation and the internal acts of the investment intermediary. In this case, the person in the Internal Control Department, by the end of the working day, draws up a document certifying the verification.

(4) (Supplemented, in force from 12.04.2016) A copy of the identity document of the persons, respectively of their representatives, certified by them and by the person under Art. 39, para. 1 and/or para. 2 of Ordinance No. 38, who concludes the investment intermediary contract in accordance with art. 24, para. 5 of Ordinance No. 38, and in the cases under para. 1, item 1 - declaration by the parties to the transaction, respectively by their proxies, that they do not carry out and that they did not perform transactions in financial instruments professionally within one year before the conclusion of the contract, and a declaration under Art. 35, para. 1 of Ordinance No. 38 shall remain in the archive of the investment intermediary.

(5) The transferor and the acquirer of the financial instruments in the cases under Art. 56, para. 1 of Ordinance No. 38 may be represented before an II, which carries out the activity of a registration agent, by persons expressly authorized by a notarized power of attorney, observing the requirements of art. 25 of the Ordinance.

(6) The investment intermediary, acting as a registration agent, refuses to sign a contract with the client and accept documents for making registrations under Art. 58 of Ordinance No 38 if:

1.    not all necessary data and documents are available, the documents submitted contain obvious irregularities or the data has inaccuracies and contradictions;

2.    a party to the transaction declares that it possesses inside information about the financial instruments that are the subject of the transaction if they are traded on a regulated market or about their issuer;

3.    there is a circumstance that gives rise to a suspicion of inappropriate legitimacy or representation;

4.    the party to the transaction, respectively its proxy, declare the professional performance of financial instruments transactions in the cases under art. 56, para. 1, item 1 of Ordinance No. 38;

5.   the transaction party, respectively its proxy, declares that the transaction is a disguised purchase or sale of financial instruments.

(7) For its activity under Art. 56 of Ordinance 38, the II collects fees according to its tariff. The Tariff shall be displayed in a visible and accessible place in the premises where the investment firm receives clients.

(8) At the request of the seller and with the consent of the buyer in the purchase and sale of dematerialized financial instruments under Art. 56, para. 1, item 1 of Ordinance No. 38, the amount representing the sale price of the transaction shall be deposited with the investment intermediary - registration agent until the registration of the transaction with the Central Depository. The investment intermediary shall notify the parties to the transaction of this option.

(9) The II discloses information about the transactions under Art. 56, para. 1, item 1 of Ordinance No 38 under the procedure for disclosure of transactions concluded by it, provided for in Regulation 1287/2006/EC.

(10) (New, in force from 12.04.2016) The contract under par. 1 may be concluded in accordance with art. 26a - 26c of Ordinance No. 38.

(11) (previous text of para. 10, Supplemented, in force from 12.04.2016) Chapters 2, 3 and 4, with the exception of Art. 26a - 26c of Ordinance No 38 do not apply to persons who use the services of the II only as a registration agent.

SUPPORT FROM CUSTOMERS. RIGHTS AND OBLIGATIONS

Art. 46.    (1) The Customer has the right to require that the contractual obligations be fully executed by the II, providing maximum assistance in this respect.

(2) The Customer undertakes to provide accurate, clear and comprehensive orders related to the implementation of the contractual relationship.

(3) (Supplemented, in force from 12.04.2016) Submitting the orders under para. 2 through a proxy shall be performed only if they present a notarized power of attorney, which contains representative power for execution of dispositions with financial instruments and a declaration under Art. 25, para. 1 of Ordinance No. 38 for a one-year period prior to the submission of the order. When submitting the orders under para. 2 in a address of management, branch or office of the investment intermediary, entered in the register under Art. 30, para. 1, item 2 of the FSC Act, if during verification of the identity of the client it is established that there is a change in the personal data and/or a new identity document has been issued, Art. 24, para. 5 of Ordinance No. 38 applies.

(4) (Amended, in force from 01.02.2012) The II may accept orders for transactions in financial instruments submitted by telephone or other remote means of communication by clients. In this case, the II is obliged to make a record of the conversation with the client. When the orders are submitted by other remote means, the investment intermediary is obliged to store in electronic form the data provided by the client in relation to the orders. Fax messages are stored on paper.

(5) The provision of para. 4 shall not apply to the transfer of dematerialized financial instruments from a personal account to a client sub-account to the II in the CD. Transferring financial instruments from a personal account to a client subaccount to the II is possible if the client (or his/her proxy) provides a certificate (depository receipt) for the financial instruments and there is no other circumstance that gives rise to suspicion of inappropriate legitimation or representation.

(6) Client orders for transactions in financial instruments, confirmations of concluded transactions and other documents for which a written form is required may be drawn up as electronic documents and signed with an electronic signature under the Electronic Document and Electronic Signature Act and subject to the requirements of Ordinance No 38.

(7) The II refuses to accept an order, which does not comply with the requirements or has been submitted by a proxy without complying with the requirements of the LMFI and Ordinance No. 38. In this case, the II draws up a document for the refusal which it provides to the client against a signature.

Art. 47.    The client may not place orders regarding financial instruments and compensatory instruments for which they hold inside information or regarding financial instruments and compensatory instruments that are blocked in the CD as well as place orders on transactions that represent a disguised purchase or sale of financial instruments and compensatory instruments.

Art. 48.    The Client undertakes to perform his/her obligations in good faith. They are responsible for the authenticity of the financial instruments submitted by them for sale as well as for the authenticity of the documents deposited with the II, which must be in the required form. If irregularities are found, they should be replaced by new ones. In the event that this does not happen and the realization of the transaction becomes impossible, the relations between the parties shall be settled as a guilty breach of obligations.

Art. 49.    (Amended, in force from 01.02.2012) The Client is required to promptly notify the II of any changes in its legal status and the persons having representative power for them, by providing the II with all documents related to the change. The II is not responsible for actions taken prior to the notification under the previous sentence, in compliance with the orders submitted in accordance with the information currently available to the II.

ACCOUNTABILITY AND ONGOING INFORMATION TO CUSTOMERS

Art. 50.    (1) (Amended, in force from 01.02.2012) In the cases when the II executes a transaction on behalf of a non-professional client which is not in the execution of an individual portfolio management contract, it shall send on a durable medium at the earliest opportunity but no later than the first business day following the conclusion of the transaction, confirmation of the transaction. When the contract is executed in parts, the investment intermediary may provide the customer with information about the price of each transaction or average price. Where an average price is presented, the intermediary shall provide a non-professional client with information on the price of each transaction individually upon request. If the confirmation is accepted by the II through a third party, the notification to the client shall be no later than the first business day following the day on which the investment intermediary has received confirmation from the third party.

(2) (previous text of Art. 49, para. 2, Amended, in force from 01.02.2012) The first paragraph does not apply if the confirmation contains the same information as the confirmation that is immediately sent to the customer by another person.

(3) (previous text of Art. 49, para. 3, Amended, in force from 01.02.2012) When the transaction under para. 1 is concluded on behalf of a professional client, the Investment intermediary shall immediately provide it on a durable medium with the essential information about the concluded transaction.

(4) (previous text of Art. 49, para. 4, Amended, in force from 01.02.2012) If the settlement is not executed on the specified date or if there is another change in the information contained in the confirmation, the II shall notify the customer accordingly by the end of the business day on which the intermediary has learned of the change.

(5) (previous text of Art. 49, para. 5, Amended, in force from 01.02.2012) The investment intermediary shall provide the client, upon request, with information on the status of the order and its execution. (6) (previous text of Art. 49, para. 6, Amended, in force from 01.02.2012) The intermediary shall be entitled to provide the information under par. 1, using standard codes, provided that it provides the customer with explanations of the codes used.

(7) (previous text of Art. 49, para. 7, Amended, in force from 01.02.2012) In the case of orders placed for a non-professional client subject to shares of collective investment undertakings, which are executed periodically, the II shall undertake the actions under para. 1 or provide the customer with information related to these transactions at least once every 6 months.

(8) (previous text of Art. 49, para. 8, Amended, in force from 01.02.2012) In the case where the II accepts client orders through an electronic trading system, the confirmation, respectively the information, is provided to the client through the electronic system.

Art. 51.    (1)  (previous text of Art. 50 para. 1, Amended, in force from 01.02.2012) (1) The investment intermediary that provides clients with portfolio management services provides a standing report to each client on a periodic basis on the client's portfolio management activities, unless provided to the client by a third party.

(2) (previous text of Art. 50 para. 2, Amended, in force from 01.02.2012) The investment intermediary shall provide a report under para. 1 every six months when entered into a contract with a non-professional client, except:

1.    when a client has asked to receive a report every three months;

2.    when the report shall be submitted once every 12 months;

3.    when the contract between the investment firm and the client allows for leverage in the management of the portfolio - in this case the report is submitted at least once a month.

(3) (previous text of Art. 50 para. 3, Amended, in force from 01.02.2012) The client has the right to choose to receive a report on each concluded portfolio management transaction after it has been concluded. In the cases under sentence one, the investment intermediary shall provide the client with the essential information about the transactions on a durable medium immediately after their conclusion. In the cases when the client is non-professional, the II sends them confirmation of the transaction no later than the first business day following the conclusion of the transaction or if the II has received the confirmation through a third party - no later than the first business day following the receipt of the confirmation. The third sentence does not apply if the confirmation contains the same information as the confirmation sent immediately to the customer by another person.

(4) (previous text of Art. 50 para. 4, Amended, in force from 01.02.2012) The investment intermediary shall notify the unprofessional client on whose behalf it manages a portfolio when there are uncovered options in contingent trades.

Art. 52.    (previous text of Art. 51, Amended, in force from 01.02.2012) In the cases where the II carries out portfolio management transactions for a non-professional client or manages accounts for such clients that include uncovered options in transactions or transfers that are dependent on future contingencies, the investment intermediary shall notify the non-professional client when the losses exceed thee customer's predetermined thresholds. The notification under sentence one shall be made no later than the end of the working day in which these thresholds were exceeded or when it occurred on a non-working day - by the end of the next business day.

Art. 53.    (previous text of Art. 52 Amended, in force from 01.02.2012) The investment intermediary shall notify its client under the terms and conditions specified in the contract when the client becomes subject to an obligation under Art. 145 of the Public Offering of Securities Act as a result of transactions with financial instruments on his/her behalf, including the management of an individual portfolio of financial instruments and/or money.

Art. 54.    (Supplemented, in force from 12.01.2017) The investment intermediary holding money or financial instruments of a client shall provide them on a durable medium at least once a year with the following statement unless the content of this statement is reflected in another periodic statement to the client: data on the financial instruments or money, held by the investment intermediary on behalf of the client at the end of the reporting period; the extent to which client's financial instruments or money have been the subject of a securities financing transaction; the amount of dividends received or other payments to the client due to its participation in a securities financing transaction as well as the basis on which they are determined; fees paid by the client and storage fees, including those paid to the investment intermediary. In cases where one or more transactions have been concluded on the client's portfolio for which the settlement has not been completed, the information is indicated on the settlement date.

REMUNERATION

Art. 55.    (1) (previous text of Art. 53, para. 1, Amended, in force from 01.02.2012) The Customer is obliged to pay to the Investment intermediary remuneration for each concluded and executed transaction under conditions, amount, term and in the way agreed to in the specific contract.

(2) (previous text of Art. 53, para. 2, Amended, in force from 01.02.2012) Where the amount of the remuneration is not agreed, it shall be determined by the Tariff under Art. 14, para. 2.

(3) (previous text of Art. 53, para. 3, Amended, in force from 01.02.2012) When the II undertakes to personally fulfill the obligations under the concluded transaction, it is also entitled to a separate remuneration, which is agreed in writing.

(4) (previous text of Art. 53, para. 4, Amended, in force from 01.02.2012) The investment intermediary has the right to remuneration for the amounts collected by it for the client, which is negotiated separately.

(5) (previous text of Art. 53, para. 5, Amended, in force from 01.02.2012) In the case of intermediation, the II is entitled to remuneration by both parties to the transaction.

(6) (previous text of Art. 53, para. 6, Amended, in force from 01.02.2012) The remuneration is paid within 3 (three) days after the execution of the transaction, unless the parties agree otherwise.

(7) (previous text of Art. 53, para. 7, Amended, in force from 01.02.2012) The non-cash payment is considered to have been made at the moment when the bank account of the II is certified.

IMPOSSIBILITY

Art. 56.    (previous text of Art. 54, in force from 01.02.2012) If the execution of a particular transaction becomes impossible for reasons beyond the II, the client must pay to the II the costs and rewards corresponding to the work done.

TRADE SECRET

Art. 57.    (1) (previous text of Art. 55, para. 1, Amended, in force from 01.02.2012) In carrying out its activities, the II is obliged to keep the client's business secrets, including the information under Art. 17, para. 1, as well as its commercial prestige.

(2) (previous text of Art. 55, para. 2, Amended with decision from 09.03.2018) The members of the II's management and supervisory bodies, its officers and all persons working for the II may not disclose, unless they are authorized to do so, and to use to the benefit of themselves or other persons facts and circumstances affecting stocks and operations on the financial instruments and cash accounts of clients of the investment intermediary, as well as all other facts and circumstances of business secrecy which they have learned in the course of their official and professional duties.

(3) (New, in force from 12.01.2017) Apart from FSC, the Deputy Chairperson and authorized officials from the Commission's administration and the regulated market of which it is a member, for the purposes of their control activities and within the framework of the verification order, the investment intermediary may provide information on para. 2 only:

1.    with the consent of its client;

2.    in accordance with the provisions of Part Two, Chapter Sixteen, Section IIIa of the Taxation Insurance Procedure Code, or

3.    by decision of the court, issued under the conditions and by the order of para. 4 and 5.

(4) The court may order disclosure of the information under para. 2 at the request of:

1.    the prosecutor - if there is evidence of a crime;

2.    the Minister of Finance or an official authorized by him - in the cases of Art. 143, para. 4 of the Tax Insurance Procedure Code;

3.    the Director of the Territorial Directorate of the National Revenue Agency where:

а)    evidence is provided that the inspected person has failed to carry out an audit or review, or does not keep the required records, and if there is significant incompleteness;

b)    an act of a competent state authority has ascertained the occurrence of an accidental event that led to the destruction of the reporting documentation of the inspected person;

4.    (Amended with decision from 09.03.2018) The commission for counteracting corruption and seizing unlawfully acquired property and the Directors of its Territorial Directorates;

5.    the Director of the State Financial Inspection Agency, where, by an act of an agency body, it is established that:

а)    the management of the audited organization or person interferes with a financial inspection;

b)    the audited organization or person do not keep records, or such are incomplete or unreliable;

c)    there is evidence of losses or crime;

d)    it is necessary to impose a distraint on bank accounts to secure receivables established at financial inspection;

e)    an act of a state authority has ascertained the occurrence of a random event leading to the destruction of the accounting records of the audited organization or person;

6.    the Director of the Customs Agency and the customs officers when:

а)    an act of a customs authority establishes that the person inspected has interfered with a customs check or does not keep the required records and if they are incomplete or unreliable;

b)    an act of a customs authority has established a customs violation;

c)    it is necessary to impose attachments on bank accounts to secure a receivable collected by a customs authority and to secure fines, legal interest or other;

d)    an act of a state authority has ascertained the occurrence of an accidental event that led to the destruction of the accounting documentation of the object inspected by the customs authority;

7.    the Director of the National Police Directorate or the Director of the Regional Directorate of the Ministry of Interior - for the purpose of investigating criminal proceedings;

8.    the President of the State Agency for National Security or an official authorized by him - when this is necessary for the protection of national security;

9. the Executive Director of the National Revenue Agency or an official authorized by him - in the cases under Art. 143e, para. 6 of the Tax and Social Insurance Procedure Code.

(5) The District Judge shall pronounce on the request by a reasoned decision in a closed session no later than 24 hours after its receipt, specifying the term for disclosure of the information under para. 2. The court's decision shall not be subject to appeal.

(6) At the written request of the Director of the National Investigation Service, the President of the State Agency for National Security or the Secretary General of the Ministry of Interior, the investment intermediaries shall provide information on the stocks and movements in the accounts of the companies with more than 50 per cent state and/or municipal participation.

(7) Where there is evidence of organized crime or money laundering, the Chief Prosecutor or a deputy empowered by him may request investment firms to provide the information referred to in paragraph 1. 2.

RISK, RISK MANAGEMENT AND LIABILITY

Art. 58.    (1) (previous text of Art. 56, para. 1, Amended, in force from 01.02.2012) As a party to the contract, the client deliberately and fully takes on the risk associated with the realization of the financial instruments they have provided.

(2) (previous text of Art. 56, para. 2, Amended, in force from 01.02.2012) The II is specifically required to alert the customer to the existence of this risk, its probable source and the possibility of incurring a loss to the client as a consequence. In fulfillment of this obligation of the II and the client's right to information, the latter signs a declaration that they are aware of the existence of a risk.

Art. 59.    (1) (Supplemented, in force from 12.04.2016; previous text of Art. 57, para. 1, Amended, in force from 01.02.2012) The management authority of the investment intermediary shall adopt and apply rules for risk assessment, organization and management, in accordance with the activity performed by the investment intermediary.

(2) (Amended, in force from 12.04.2016) The Management Authority of the Investment intermediary shall review and evaluate at least once a year the rules under para. 1, in case of incompleteness and/or the necessity to improve the risk management making amendments to the rules. Notwithstanding the requirement under the preceding sentence, the governing body shall adopt amendments and supplements to the rules under para. 1 when there is a need for this.

Art. 60.    (1) (previous text of Art. 58, para. 1, Amended, in force from 01.02.2012) If the II entrusts the conclusion or performance of the assigned transaction with financial instruments to another person, it is responsible for the actions of the deputy as its own.

(2) (previous text of Art. 58, para. 2, Amended, in force from 01.02.2012) The Investment Firm bears full responsibility for the safekeeping of the deposited financial instruments, cash and the results of the transactions.

Art. 61.    (1) (previous text of Art. 59, para. 1, Amended, in force from 01.02.2012) The parties are liable for non-fulfillment of a specific contractual obligation under the general rules of the CL and the Law on Obligations and Contracts.

(2) (previous text of Art. 59, para. 2, Amended, in force from 01.02.2012) In the case of a full culpable breach, the defaulting party owes a penalty in the amount fixed in the particular contract.

(3) (previous text of Art. 59, para. 3, Amended, in force from 01.02.2012) In case of delay, the defaulting party owes a penalty in the amount fixed in the specific contract.

(4) (previous text of Art. 59, para. 4, Amended, in force from 01.02.2012) The penalties set out in the preceding paragraphs do not prevent the possibility of seeking compensation for actual damages and loss of profits exceeding the amount of the penalty. 

CONFLICT OF INTEREST

Art. 62.    (1) (Amended with decision from 09.03.2018) A conflict of interest is a situation that arises in connection with the provision of investment and/or ancillary services by the II and may be detrimental to the client's interest. Conflicts may arise between:

а)    the interests of individual clients of the company;

b)    the interests of the clients and the interests of the company, including the persons managing the company, the persons working under contract, the agents or any person directly or indirectly related to the investment intermediary by means of control;

c)    the interests of the different departments or employees of the company.

(2) (previous text of Art. 60, para. 2, Amended with decision from 09.03.2018) The II shall apply effective procedures and measures for the treatment of conflicts of interest, settled in the rules under Art. 34 (1) of the Delegated Regulation 565/2017.

(3) (Amended with decision from 09.03.2018) In cases where, despite the application of the rules under Art. 34 (1) of the Delegated Regulation 565/2017 the risk to the client's interests is retained, the II, prior to performing an activity on behalf of a client in respect of which there is a conflict of interest, provides the client with a durable medium with information on the conflict of interest, which is sufficient in accordance with the characteristics of the client to make an informed decision about the investment or ancillary service in relation to which a conflict of interest arises.

(4) (previous text of Art. 60, para. 4, Amended, in force from 01.02.2012) The II maintains and updates information about the types of investment or ancillary services or investment activities carried out by, or on behalf of, the Investment intermediary where a conflict of interest arises or may arise in the course of the service or activity which results in a material breach of the interest of client or clients of the investment intermediary.

CHANGES TO AND TERMINATION OF THE CONTRACTUAL RELATIONSHIP

Art. 63.    (1) (previous text of Art. 62, para. 1, Amended, in force from 01.02.2012) Any change in the contractual relationship shall be effected with the express written consent of the parties in the form of an annex or an additional agreement and shall take effect from the time of its signature by both parties.

(2) (previous text of Art. 61, para. 2, Amended, in force from 01.02.2012) The II refuses to enter into a contract with a client and refuses to execute a transaction, including unilaterally terminating the contract with a client, if this would lead to non-fulfillment of the requirements of the Law on Measures against Money Laundering and of the Act on Measures against Financing of Terrorism the implementing acts and shall immediately inform the relevant authorities. In this case, the II is not liable for any damages caused by the delay or non-execution of the transaction.

CHANGES TO AND TERMINATION OF THE CONTRACTUAL RELATIONSHIP

Art. 64.    (1) (previous text of Art. 62, para. 1, Amended, in force from 01.02.2012) Any change in the contractual relationship shall be effected with the express written consent of the parties in the form of an annex or an additional agreement and shall take effect from the time of its signature by both parties.

(2) (previous text of Art. 62, para. 2, Amended, in force from 01.02.2012) Neither party may transfer its rights under this Agreement to any third party unless it has received the written consent of the other Party.

(3) (previous text of Art. 62, para. 3, Amended, in force from 01.02.2012) The contractual relations shall be terminated:

1.    upon expiration of the relevant contract;

2.    in advance - by mutual agreement of both parties;

3.    in case of death or disability of the client - natural person;

4.    upon termination of a legal entity - a party to the contract;

5.    with one month's written notice by each party;

6.    in case of revocation of the license for carrying out activity of the II;

7.    on other grounds provided by law.

(4) (previous text of Art. 62, para. 4, Amended, in force from 01.02.2012) The client has the right to withdraw an order at his/her discretion before the time of entering into a transaction in its performance, and the client pays to the II the costs incurred. In other cases, the client is liable for all transactions the II has entered into on his/her behalf.

(5) (previous text of Art. 62, para. 5, Amended, in force from 01.02.2012) Except for the cases provided in these TC, the II has no right to refuse the execution of a received order, except in case of termination of the contract due to customer default. In the latter case the II immediately notifies the client of the refusal and is entitled to commission and compensation for the expenses incurred.

(6) (previous text of Art. 62, para. 6, Amended, in force from 01.02.2012) In the event of termination of the contractual relationship, each party shall be required to report to the other party and to transmit to everything it has received in connection with the transaction within seven days.

(7) (previous text of Art. 62, para. 7, Amended, in force from 01.02.2012) The order for termination of the contractual relations is regulated in the specific contracts and can not be in contradiction with imperative legal provisions.

Art. 65.    (previous text of Art. 63, Amended, in force from 01.02.2012) Upon termination of the contractual relations between the client and the II and provided that the financial instruments of the client are kept on a client sub-account with the II in Central Depository AD, the client has the right within one month from the date of termination of the contract to indicate another member of the depository institution, under whose sub-account the financial instruments are to be transferred. Otherwise within one month, the investment intermediary has the right to transfer the financial instruments to the client's personal account, including by opening a new account, according to the procedure established by the Central Depository AD and to withhold the due fees and commissions.

Art. 66.    (1) (previous text of Art. 64, para. 1, Amended, in force from 01.02.2012) Changes to the TC and the Tariff shall be valid for the client under a signed contract only if He/she has been notified, and has confirmed acceptance in writing within a reasonable amount of time.

(2) (previous text of Art. 64, para. 2, Amended, in force from 01.02.2012) The changes to the TC are accepted by the Board of Directors of the Investment intermediary and are subject to the approval of the Deputy Chairperson of the FSC in charge of the Investment Activity Supervision Division.

(3) (New, in force from 12.04.2016) An investment firm is obliged to publish in a prominent place on its website any amendment to the general terms and conditions and/or tariff that contains information on the date of its adoption and the date of its entry into force. The publication of the General Terms and Conditions shall be made no later than one month prior to the entry into force of the amendments. The investment intermediary shall include in its contract under Art. 24, para. 1 information on the order and manner of accepting amendments and supplements to the general terms and/or tariffs applicable to it.

NOTIFICATIONS

Art. 67.    (1) (previous text of Art. 65, para. 1, Amended, in force from 01.02.2012) All notifications between the parties are made in writing or by e-mail to the addresses of the client and the II, specified in the specific contract.

(2) (previous text of Art. 65, para. 2, Amended, in force from 01.02.2012) Notifications not made in the form under para. 1 or not sent to the address specified by the party to the contract shall not be valid.

DISPUTES

Art. 68.    (previous text of Art. 66, Amended, in force from 01.02.2012) In cases of dispute between the II and the client in connection with the performance of the contract, it should be settled by mutual agreement. If the dispute can not be resolved, it shall be referred to the competent court.

APPLICABLE LAW

Art. 69.    (previous text of Art. 67, Amended, in force from 01.02.2012) For the unsettled by these TC cases, Bulgarian commercial and civil law applies.

FINAL PROVISIONS

§ 1. In the event that it is established that any of these TC or any other special condition of the contract concluded between the II and the client is contrary to imperative legal provisions, the provisions of the normative acts shall be binding.

§ 2. (Amended with decision from 09.03.2018) (1) These TC, applicable to client contracts in transactions with financial instruments subject to the LMFI were adopted at a meeting of the Board of Directors of "Lenno Global Advisory" AD, as last amended by a protocol of 09.03.2018, in compliance with the requirements of the Markets in Financial Instruments Act, Delegated Regulation 565/2017 and Ordinance No 38 on the requirements for the activity of investment intermediaries of the Financial Supervision Commission. These TC cancel all previous TC that Lenno Global Advisory AD has applied to customer contracts.

(2) In accordance with Art. 22, para. 5 of Ordinance No. 38, these TC, as last amended, according to the protocol of 09.03.2018, shall enter into force for new clients of the II who enter into a contract with the II after 09.03.2018 and who have certified that they are aware of the TC and accept them - from the date of their acceptance and the expression of the client's agreement in the contract, that they are acquainted with the TC and accept them.

(3) In accordance with Art. 22, para. 6 of Ordinance No. 38, these TC as last amended by the protocol of 09.03.2018 shall enter into force for customers who have entered into contracts as at 09.03.2018 after 1 month or the later of the two dates: from their publication on the web site of the II, respectively the notification of their acceptance to each client as provided in the current contract with the client. Upon disagreement with these TC, customers are entitled to terminate the contract without notice prior to the entry into force of the TC without liability for damages and expenses, except for the costs associated with their assets. Upon termination of the contract under the preceding sentence, the II shall settle its relations with the client within 7 days of receiving the termination statement.

(4) Notwithstanding the provisions of par. 2 and 3, the mandatory provisions of the LMFI and the instruments for its implementation, which have priority in case of conflict between them and the ones provided in the preceding paragraphs, shall apply to the entry into force of these TC.

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