What are the emergency regulations?
If the emergency regulations are declared applicable, the court will appoint an administrator, who will be charged with restoring a healthy financial position and/or liquidating a credit institution or insurer. This means the emergency regulations may involve a restructuring or liquidation procedure. The result of the emergency regulations is that the powers of the financial undertaking will reside with the administrator. Barring a few exceptions, when the emergency regulations are applied, the financial undertaking will no longer have to meet the obligations that arose before the emergency regulations were declared applicable. Finally, for an authorised credit institution, the application of the emergency regulations means that DNB decides to apply the deposit guarantee scheme (DGS) and the investor compensation scheme.
When is a request made for application of the emergency regulations?
Requesting the application of the emergency regulations is a major supervision instrument. Having regard to the far-reaching consequences of the emergency regulations, the legislator assumes that DNB will only request its application if it has become clear that – less far-reaching – measures have not led to the desired result. The emergency regulations may be requested for an insurer or credit institution whose solvency or liquidity position is threatened or when it can reasonably be foreseen that the organisation will not be able to meet its obligations and if declaring the application of the emergency regulations is in the interest of the joint creditors/policyholders. In the case of credit institutions, the importance of financial stability may also play a role. DNB may request that the emergency regulations be applied for both authorised and non-authorised (illegal) credit institutions and insurers.
Procedure for requesting the application of emergency regulations
DNB may request the court to apply the emergency regulations. To this end, DNB files an application with the court in whose jurisdiction the organisation has its registered office. A copy of the request is sent to the relevant organisation. The court processes the request with the utmost urgency at a closed hearing. Both the organisation and DNB are consulted at this session with closed doors. If the court grants the request, it orders for application of the emergency regulations in open court and appoints an examining magistrate and one or more administrator(s). If required, the administrator will be granted authorisation to restructure and/or liquidate the organisation. The authorisation applies for a fixed period, which may be extended. The court's decision is published. The emergency regulations come into effect retroactively from 00:00 hours on the day of declaration.
The decision of the court may be appealed at a higher court and at the Supreme Court.