Andorran Investment Guarantee System (SAGI)

The Law sets up the Andorran Investment Guarantee System (SAGI) as an ex-post guarantee system in which, are members banks, financial investment companies, financial investment agencies, asset management companies and management companies of collective investment agencies authorized to provide administration and custody services of financial instruments for clients in the Principality.

The main regulatory features of the investment guarantee system ara as follows:

• The coverage is 100,000 euros per holder,  above the coverage level of 20,000 euros established in Directive 97/9/EC. This law also establishes a total limit of SAGI resources.
• The losses derived from the fluctuation in the value of investments are not guaranteed. The guarantee covers cases of non-recovery when the entity that provides administration services and securities custody becomes insolvent.
• The SAGI resources target is established at 1.5% of the base investment calculation as regulated by section 2 of article 18 of Law 20/2018  and with a deadline of June 30^th2020 to get to said target.
• The amount of the investment guarantee reserve that each SAGI member entity needs to maintain must be calculated annually, and must correspond to the proportion that represents the amount of guaranteed investments the entity has over the aggregate total investment guaranteed to all SAGI member organizations. In order to calculate the investment guarantee reserve, 5% of the market value of the investments held by SAGI member entities must be taken into consideration.
• The investment guarantee reserves required by Law 1/2011, maintained in the balance sheets of the SAGI member banks, must be kept as unavailable reserves and assigned to the SAGI that can be used to cover possible risks or losses; the AFA may authorize its reclassification as available reserves.
• The SAGI Management Committee, with prior consent from the AFA, may request extra member contributions for investment guarantee reserves under exceptional circumstances, which in no case may exceed the maximum coverage limit established in the Law.