25. Without prejudice to the tasks and responsibilities assigned to the management body under …

Without prejudice to the tasks and responsibilities assigned to the management body under Directive (EU) 2014/65, the management body ’s responsibilities should include setting, approving and overseeing the implementation of:

• a. the overall business strategy and the key policies of the investment firm within the applicable legal and regulatory framework, taking into account the investment firm ’ s long-term financial interests and solvency;
• b. the overall risk strategy, including the investment firm ’s risk appetite and its risk management framework, including adequate policies and procedures, taking into account the macroeconomic environment and the business cycle of the investment firm and measures to ensure that the management body devotes sufficient time to risk management issues; an adequate and effective internal governance and internal control framework that includes a clear organisational structure and well-functioning internal control mechanisms. Such mechanisms should include a permanent and effective compliance function and, where appropriate and proportionate in accordance with Title I, internal risk management and internal audit functions that have sufficient authority, stature and resources to perform their functions independently, and ensure compliance with applicable regulatory requirements in the context of the prevention of money laundering and terrorism financing; and also targets for the liquidity management of the investment firm;
• c. a remuneration policy that is in line with the remuneration principles set out in Articles 26 and 30 to 33 of Directive (EU) 2019/2034 and the EBA guidelines on sound remuneration policies under Directive (EU) 2019/2034¹³ ;
• d. arrangements that aim to ensure that the individual and collective suitability assessments of the management body are carried out effectively, that the composition and succession planning of the management body are appropriate, and that the management body performs its functions effectively¹⁴ ;
• e. a selection and suitability assessment process for key function holders¹⁵ ;
• f. arrangements that aim to ensure the internal functioning of each committee of the management body, where established, detailing the:

• g. a risk culture in line with Section 8 of these guidelines that addresses the investment firm ’s risk awareness and risk -taking behaviour;
• h. a corporate culture and values in line with Section 9 that foster responsible and ethical behaviour, including a code of conduct or similar instrument;
• i. a conflict of interest policy at the investment firm level in line with Section 10; and for staff in line with Section 11; and
• j. arrangements that aim to ensure the integrity of the accounting and financial reporting systems, including financial and operational controls and compliance with the law and relevant standards.

¹³ EBA guidelines on sound remuneration policies under the IFD

¹⁴ See also the joint ESMA and EBA guidelines on the assessment of the suitability of members of the management body and key function holders.

¹⁵ See also the joint ESMA and EBA guidelines on the assessment of the suitability of members of the management body and key function holders.

1. Overview

1.1 References

• Article 26 Internal governance
• Article 30 Remuneration policies
• Article 31 Investment firms that benefit from extraordinary public financial support
• Article 32 Variable remuneration
• Article 33 Remuneration committee

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA - Published by the European Banking Authority at https://www.eba.europa.eu/