The European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) have jointly issued a consultation paper containing draft guidelines on the assessment of the suitability of members of the management body and key function holders under the Capital Requirements Directive IV (CRD IV) and the Markets in Financial Instruments Directive (recast) (MiFID II).
The draft guidelines:
- provide common criteria to assess the individual and collective knowledge, skills and experience of members of the management body as well as the good reputation, honesty and integrity and independence of mind of members of the management body;
- set a framework for assessing the time commitment expected of members of the management body and specify how the number of directorships has to be counted, in the case of significant institutions; and
- determine how diversity is to be taken into account in the selection process for members of the management body.
It is also noted that induction and training are key to ensure the initial and on-going suitability of members of the management body. Institutions are required to establish training policies and to provide for appropriate financial and human resources to be devoted to induction and training.
The deadline for comments on the consultation is 28 January 2017.
The guidelines take into account the European Commission’s recommendation of 15 February 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the supervisory board, and the results of the EBA’s review of its guidelines on the assessment of the suitability of members of the management body and key function holders of credit institutions. These earlier guidelines will be repealed after the entry into force of the guidelines that ESMA and the EBA are jointly consulting on.
View Joint ESMA and EBA guidelines on the assessment of the suitability of members of the management body and key function holders, 28 October 2016