processing where such processing is required in the ordinary course of business of such institution. Article 1408: Senior Management and Boards of Directors 1. No Party may require financial institutions of another Party to engage individuals of any particular nationality as senior managerial or other essential personnel. 2. No Party may require that more than a simple majority of the board of directors of a financial institution of another Party be composed of nationals of the Party, persons residing in the territory of the Party, or a combination thereof. (a) any existing non-conforming measure that is maintained by (i) (ii) 2. (b) (c) (iii) a Party at the federal level, as set out in Section A of its Schedule to Annex VII, a state or province, for the period ending on the date specified in Annex 1409.1 for that state or province, and thereafter as described by the Party in Section A of its Schedule to Annex VII in accordance with Annex 1409.1, or a local government; the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or an amendment to any non-conforming measure referred to in subparagraph Articles 1403 through 1408 do not apply to any non-conforming measure that a Party adopts or maintains in accordance with Section B of its Schedule to Annex VII. 3. Section C of each Party's Schedule to Annex VII sets out certain specific commitments by that Party. 4. Where a Party has set out a reservation to Article 1102, 1103, 1202 or 1203 in its Schedule to Annex I, II, III or IV, the reservation shall be deemed to constitute a reservation to Article 1405 or 1406, as the case may be, to the extent that the measure, sector, subsector or activity set out in the reservation is covered by this Chapter. Article 1410: Exceptions 1. Nothing in this Part shall be construed to prevent a Party from adopting or maintaining reasonable measures for prudential reasons, such as: 2. (a) (b) (c) the protection of investors, depositors, financial market participants, policyholders, policy-claimants, or persons to whom a fiduciary duty is owed by a financial institution or cross-border financial service provider; the maintenance of the safety, soundness, integrity or financial ensuring the integrity and stability of a Party's financial system. Nothing in this Part applies to non-discriminatory measures of general application taken by any public entity in pursuit of monetary and related credit policies or exchange rate policies. This paragraph shall not affect a Party's obligations under Article 1106 (Investment - Performance Requirements) with respect to measures covered by Chapter Eleven (Investment) or Article 1109 (Investments - Transfers). 3. Article 1405 shall not apply to the granting by a Party to a financial institution of an exclusive right to provide a financial service referred to in Article 1401(3)(a). 4. Notwithstanding Article 1109(1), (2) and (3), as incorporated into this Chapter, and without limiting the applicability of Article 1109(4), as incorporated into this Chapter, a Party may prevent or limit transfers by a financial institution or cross-border financial services provider to, or for the benefit of, an affiliate of or person related to such institution or provider, through the equitable, non-discriminatory and good faith application of measures relating to maintenance of the safety, soundness, integrity or financial responsibility of financial institutions or cross-border financial service providers. This paragraph does not prejudice any other provision of this Agreement that permits a Party to restrict transfers. Article 1411: Transparency 1. In lieu of Article 1802(2) (Publication), each Party shall, to the extent practicable, provide in advance to all interested persons any measure of general application that the Party proposes to adopt in order to allow an opportunity for such persons to comment on the measure. Such measure shall be provided: (c) in such other form as permits an interested person to make informed 2. Each Party's regulatory authorities shall make available to interested persons their requirements for completing applications relating to the provision of financial services. 3. On the request of an applicant, the regulatory authority shall inform the applicant of the status of its application. If such authority requires additional information from the applicant, it shall notify the applicant without undue delay. 4. A regulatory authority shall make an administrative decision on a completed application of an investor in a financial institution, a financial institution or a cross-border financial service provider of another Party relating to the provision of a financial service within 120 days, and shall promptly notify the applicant of the decision. An application shall not be considered complete until all relevant hearings are held and all necessary information is received. Where it is not practicable for a decision to be made within 120 days, the regulatory authority shall notify the applicant without undue delay and shall endeavor to make the decision within a reasonable time thereafter. 5. Nothing in this Chapter requires a Party to furnish or allow access to: (a) (b) information related to the financial affairs and accounts of individual any confidential information, the disclosure of which would impede law enforcement or otherwise be contrary to the public interest or prejudice legitimate commercial interests of particular enterprises. 6. Each Party shall maintain or establish one or more inquiry points no later than 180 days after the date of entry into force of this Agreement, to respond in writing as soon as practicable, to all reasonable inquiries from interested persons regarding measures of general application covered by this Chapter. Article 1412: Financial Services Committee 1. The Parties hereby establish the Financial Services Committee. The principal representative of each Party shall be an official of the Party's authority responsible for financial services set out in Annex 1412.1. 2. Subject to Article 2001(2)(d) (Free Trade Commission), the Committee shall: 3. (a) supervise the implementation of this Chapter and its further elaboration; (b) (c) consider issues regarding financial services that are referred to it by a participate in the dispute settlement procedures in accordance with Article 1415. The Committee shall meet annually to assess the functioning of this Agreement as it applies to financial services. The Committee shall inform the Commission of the results of each annual meeting. Article 1413: Consultations 1. A Party may request consultations with another Party regarding any matter arising under this Agreement that affects financial services. The other Party shall give sympathetic consideration to the request. The consulting Parties shall report the results of their consultations to the Committee at its annual meeting. 2. Consultations under this Article shall include officials of the authorities specified in Annex 1412.1. 3. A Party may request that regulatory authorities of another Party participate in consultations under this Article regarding that other Party's measures of general application which may affect the operations of financial institutions or cross-border financial service providers in the requesting Party's territory. 4. Nothing in this Article shall be construed to require regulatory authorities participating in consultations under paragraph 3 to disclose information or take any action that would interfere with individual regulatory, supervisory, administrative or enforcement matters. 5. Where a Party requires information for supervisory purposes concerning a financial institution in another Party's territory or a cross-border financial service provider in another Party's territory, the Party may approach the competent regulatory authority in the other Party's territory to seek the information. 6. Annex 1413.6 shall apply to further consultations and arrangements. Article 1414: Dispute Settlement 1. Section B of Chapter Twenty (Institutional Arrangements and Dispute Settlement Procedures) applies as modified by this Article to the settlement of disputes arising under this Chapter. 2. The Parties shall establish by January 1, 1994 and maintain a roster of up to 15 individuals who are willing and able to serve as financial services panelists. Financial services roster members shall be appointed by consensus for terms of three years, and may be reappointed. (a) have expertise or experience in financial services law or practice, which may include the regulation of financial institutions; (b) be chosen strictly on the basis of objectivity, reliability and sound 4. (c) meet the qualifications set out in Article 2009(2)(b) and (c) (Roster). Where a Party claims that a dispute arises under this Chapter, Article 2011 (Panel Selection) shall apply, except that: where the disputing Parties so agree, the panel shall be composed entirely of panelists meeting the qualifications in paragraph 3; and (a) (b) |