1. Role and responsibilities of the management body

In accordance with Article 34 of Regulation (EU) 2023/1114, the management body of an issuer of ARTs must define, oversee and is accountable for the implementation of sound governance arrangements that ensure effective and prudent management of the issuer and the interest of holders of ART including the segregation of duties and the identification, prevention and management of conflicts of interest within the issuer of ARTs in accordance with Article 32 of Regulation (EU) 2023/1114.

The duties of the management body should be clearly defined, distinguishing, where applicable, between the duties of the management (executive) function and of the supervisory (non-executive) function. The responsibilities and duties of the management body should be described in a written document and duly approved by the management body. All members of the management body should be fully aware of the structure and responsibilities of the management body and, where applicable, of the division of tasks between different functions of the management body.

Where applicable, the management body in its supervisory function and its management function should interact effectively. Both functions should provide each other with sufficient information to allow them to perform their respective roles. To have appropriate checks and balances in place, decision-making within the management body should not be dominated by a single member or a small subset of its members.

The management body’s responsibilities should include at least setting, approving, and overseeing the implementation of:

• a. the overall business strategy and the key policies of the issuer within the applicable legal and regulatory framework, taking into account the issuer ’s long -term financial interests and solvency and interest of the holders of ARTs.
• b. the policies required under Article 34(5) of Regulation (EU) 2023/1114; such policies should be consistent with the risk appetite and tolerance of the issuer and the characteristics, the needs of the clients of the issuer of ARTs to whom they will be offered and their prospective holders;
• c. the organisation of the issuer for the issuance of ARTs specifying the skills, knowledge and expertise required by staff and the necessary resources;
• d. the overall risk strategy, the issuer’s risk appetite and its risk management framework, including adequate policies and procedures, taking into account the macroeconomic environment and the business cycle, and specifying the involvement of the management body in risk management issues;
• e. an adequate and effective internal control framework including a risk management framework and well-functioning internal control mechanisms to ensure compliance with applicable regulatory requirements including with regard to the management of reserve of assets;
• f. a remuneration policy for issuers of significant ARTs that is in line with Article 45(1) of Regulation (EU) 2023/1114⁹ ;
• g. the policies and procedures to identify, prevent, manage and disclose conflicts of interest, in line with Article 32 of Regulation (EU) 2023/1114 10;
• h. arrangements that aim to ensure that the individual and collective suitability assessments of the management body are carried out effectively, that the composition of the management body is appropriate, and that the management body performs its functions effectively;
• i. a risk culture in line with Title IV Section 7 which addresses the issuer of ARTs ’ risk awareness and risk-taking behaviour;
• j. a corporate culture and values in line with Title IV Section 8 which foster responsible and ethical behaviour, including a code of conduct or similar instrument;
• k. 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.

⁹ See the RTS on the minimum content of the governance arrangements on the remuneration policy for issuers of significant ARTs in accordance with Article 45(7)(a) of Regulation (EU) 2023/1114.

When setting up, approving and overseeing the implementation of the aspects listed in paragraph 20, the management body should ensure that the business model and governance arrangements take into account all risks the issuer of ARTs is or might be exposed to and the risks that they pose or might pose to others and to the environment. For that purpose, issuers of ARTs should also take into account all relevant risk factors, including environmental, social and governance risks factors (ESG) and consider the climate and other environmental impacts caused by the energy consumption of the consensus and validation mechanisms used. Other ESG risk factors that should be considered include legal risks in the area of contractual or labour law, risks relating to potential human rights violations or other ESG risk factors that may affect the country where a third-party service provider is located and its ability to provide the agreed service levels.

The management body should oversee the process of disclosure, in particular as mandated by Article 30 of Regulation (EU) 2023/1114, and communications with external stakeholders and competent authorities.

All members of the management body should be informed about the overall activity, financial and risk situation of the issuer of ARTs, taking into account the economic environment and business cycle, and also about any decisions taken that have a major impact on the issuance of ARTs or other material business activities.

A member of the management body may be responsible for an internal control function as referred to in Title V, provided that the member does not have other mandates that would compromise the member’s internal control activities and the independence of the internal control function.

The management body should monitor, periodically review and address any weaknesses identified regarding the implementation of processes, strategies and policies relating to the responsibilities listed in this section. The governance framework and its implementation should be reviewed and updated on a periodic basis, taking into account the proportionality principle, as further specified in Title I. A deeper review should be carried out where material changes affect the issuer of ARTs.

Where the issuers of ARTs are legal persons managed by a single natural person in accordance with their constitutive rules and national laws, the references in these guidelines to a management body should be construed as applying to the single person that is responsible for implementing alternative arrangements to ensure the sound and prudent management of such an issuer and the adequate consideration of governance arrangements.