Scope of application

These guidelines apply in relation to investment firm s’ governance arrangements as required under Directive (EU) 2019/2034, including their organisational structure and the corresponding lines of responsibility, and also to the processes to identify, manage, monitor and report all risks⁹ that they are or might be exposed to, and to the internal control framework.

⁹ Any reference to risks in these guidelines should include all risks to which investment firms are or may be exposed, including risks to clients, risks to the market, risks to the investment firm and liquidity risks, operational risks including legal and IT risks and reputational risks, ESG risks and money laundering and terrorist financing risks.

These guidelines apply on an individual and consolidated basis within the scope of application set out in accordance with Article 25 of Directive (EU) 2019/2034.

The guidelines intend to embrace all existing board structures and do not advocate any particular structure. The guidelines do not interfere with the general allocation of competences in accordance with national company law. Accordingly, they should be applied irrespective of the board structure used (unitary and/or a dual board structure and/or another structure) across Member States. The management body, as defined in Points (23) and (24) of Article 3(1) of Directive (EU) 2019/2034, should be understood as having management (executive) and supervisory (non-executive) functions¹⁰ .

¹⁰ See also recital 27 of Directive 2019/2034/EU

The terms ‘management body in its management function’ and ‘management body in its supervisory function’ are used throughout these guidelines without referring to any specific governance structure, and references to the management (executive) or supervisory (non-executive) function should be understood as applying to the bodies or members of the management body responsible for that function in accordance with national law. When implementing these guidelines, competent authorities should take into account their national company law and specify, where necessary, to which body or members of the management body those functions should apply.

In Member States where the management body delegates, partially or fully, the executive function to a person or an internal executive body (e.g. a chief executive officer (CEO), management team or executive committee), the persons who perform these executive functions and direct the business of the institution on the basis of that delegation should be understood as constituting the management function of the management body. For the purposes of these guidelines, any reference to the management body in its management function should be understood as also including the members of the executive body or the CEO, as defined in these guidelines, even if they have not been proposed or appointed as formal members of the investment firm ’s governing body or bodies under national law.

In Member States where some responsibilities are directly exercised by shareholders, members or owners of the investment firms instead of the management body, investment firms should ensure that such responsibilities and related decisions are in line, as far as possible, with these guidelines applicable to the management body.

The definitions of CEO, chief financial officer (CFO) and key function holder used in these guidelines are purely functional and are not intended to impose the appointment of those officers or the creation of such positions unless prescribed by relevant EU or national law.