C.3. Suitability assessments of members of the management body by Issuers of ARTs and CASPs

Issuer of ARTs and CASPs should have the primary responsibility for ensuring, in accordance with Articles 34(2) and 68(1) of MiCA, that the management body collectively and its members individually are suitable at all times. They should ensure that the members of the management body have collectively and individually appropriate knowledge, skills and experience to ensure the effective, sound and prudent management and business continuity of the firm and the adequate consideration of the interest of their clients and the integrity of the market.

Issuers of ARTs and CASPs should ensure that all members of the management body are of sufficiently good repute, taking into account the criteria referred to in Section C.2.1, and are able to commit sufficient time to effectively perform their duties at all times taking into account the criteria in Section C.2.4.

Without prejudice to the shareholders’ approval, the management bodies of issuers of ARTs and CASPs should adopt a suitability policy. The policy should include principles on the selection, monitoring and succession planning of its members and for re-appointing existing members and should set out at least the following:

• a. the process for the selection, appointment, re-appointment and succession planning of members of the management body and the applicable internal procedure for the assessment of the suitability of members, including the internal function responsible for providing support for the assessment (e.g. human resources);
• b. the criteria to be used in the assessment, which should include the suitability criteria set out in these Guidelines;
• c. the criteria on the composition of the management body, including how diversity as-pects in terms of gender, age, educational and professional background and geograph-ical provenance of members of the management body are to be taken into account and, where applicable, how targets regarding the appropriate gender balance will be met;
• d. the communication channel with the competent authorities; and
• e. how the assessment and its result should be documented, including the setting of an appropriate retention period.

Issuers of ARTs and CASPs, should perform the assessment or a re-assessment of the suitability of the management body, and its members:

• a. when applying for authorisation before commencing the activities that require author-isation;
• b. when material changes to the composition of the management body occur, including:
• i. when appointing new members of the management body, including in the context of a direct or indirect acquisition or increase of a qualifying holding in the issuer of ARTs or the CASP. This assessment should be limited to newly appointed members and the collective suitability of the management body;
• ii. when re-appointing members of the management body, if the requirements of the position have changed or if the member is appointed to a different po-sition within the management body. This assessment should be limited to the members whose position has changed and to the analysis of the relevant as-pects, taking into account any additional requirements for the position and the collective suitability of the management body;
• c. where material changes to the business model and activities, underlying legal provi-sions or technologies used occurred;
• d. on an ongoing basis, in the light of any relevant new fact or situation. In particular, a re-assessment should be performed in the following cases:
• i. when there are concerns regarding the individual or collective suitability of the members of the management body;
• ii. in the event of a possible material impact on the reputation of a member of the management body, or the issuer of ARTs or CASPs, including cases where members do not comply with the firm’s conflict of interest policy;
• e. where there are reasonable grounds to suspect that money laundering or terrorist fi-nancing has been or is being committed or attempted in connection with that issuer of ARTs or CASP, or where it has been found to be in breach of its AML/CFT obligations in the home or host Member State or in a third country in any event that can otherwise materially affect the suitability of the member of the management body.

Issuers of ARTs and CASPs should re-assess the sufficient time commitment of a member of the management body if that member takes on an additional directorship or starts to perform new relevant activities.

Where re-assessments of the collective suitability are performed, issuers of ARTs and CASPs should focus their assessment on the relevant changes in their business model and activities, strategies, technical infrastructures, and risk profile and in the distribution of duties within the management body and their effect on the required collective knowledge, skills and experience of the management body.

When assessing a member`s appropriate knowledge, skills and experience, issuer of ARTs or CASPs should, within the same time period, also assess the collective suitability of the management body. In particular, it should be assessed what knowledge, skills and experience the individual brings to the collective or, in the case of a member that has left the management body, the knowledge and experience that might, following the change of composition of the management body, be missing.

The knowledge, skills and experience assessments of individual members of the management body and of the collective management body, should be carried out before the individual members are appointed. Where applicable, the management body in its supervisory function should be responsible for performing the final assessment.

By way of derogation from paragraph 44, the suitability assessments may, without prejudice to national law, be performed as soon as practicable but in any case within one month of the appointment of the member of the management body, in any of the following cases for which the issuer of ARTs or the CASP has duly provided a justification:

• a. Shareholders, owners or members of the issuer of ARTs or of the CASP nominate and appoint members of the management body at the shareholder’s or equivalent meeting that have not been proposed by the issuer of ARTs or by the CASP or by their manage-ment body;
• b. a full individual suitability assessment prior to the appointment of an individual mem-ber or the collective suitability assessment following a change of the composition of the management body would disrupt the sound functioning of the management body, including as a result of the following situations:
• i. where the need to replace members arises suddenly or unexpectedly, e.g. death or disability of a member; and
• ii. where a member needed to be removed as the member was not any longer suitable.

The assessment of appropriate knowledge, skills and experience should take into account all matters relevant to and available for the assessments. Issuers of ARTs or CASPs should take into account the knowledge, skills and experience of the individual member of the management body when assessing the adequate collective knowledge, skills and experience of the management body and vice-versa.

The issuer of ARTs or the CASP should document the results of their assessment, and in particular any weaknesses identified between the necessary and the actual collective knowledge and experience of members of the management body, and measures to be taken to overcome these shortcomings, including induction or training to be provided.

To ensure the appropriate ongoing supervision, the issuer of ARTs and the CASP should inform the competent authority of the proposed appointment of members or without undue delay after the appointment of members.

Where the assessment is also carried out by competent authorities for supervisory purposes, the responsibility to assess and ensure the suitability of the management body continues to remain with the issuer of ARTs or the CASP.

C.3.1 Assessment of the individual suitability of members of the management body by CASPs

and issuers of ARTs

and issuers of ARTs