5.1 Setting up committees

In accordance with Article 109(1) of Directive 2013/36/EU in conjunction with Articles 76(3), 88(2), and 95(1) of Directive 2013/36/EU, all institutions that are themselves significant, considering the individual, sub-consolidated and consolidated levels, must establish risk, nomination¹⁸ and remuneration¹⁹ committees to advise the management body in its supervisory function and to prepare the decisions to be taken by this body. Non-significant institutions, including when they are within the scope of prudential consolidation of an institution that is significant in a sub-consolidated or consolidated situation, are not obliged to establish those committees.

¹⁸ See also the joint ESMA and EBA guidelines on the assessment of the suitability of members of the management body and key function holders under Directive 2013/36/EU and Directive 2014/65/EU.

¹⁹ With regard to the remuneration committee, please refer to the EBA guidelines on sound remuneration practices.

Where no risk or nomination committee is established, the references in these guidelines to those committees should be construed as applying to the management body in its supervisory function, taking into account the principle of proportionality as set out in Title I.

Institutions may, taking into account the criteria set out in Title I of these guidelines, establish other committees (e.g. anti-money laundering/counter terrorist financing (AML/CTF), ethics, conduct and compliance committees).

Institutions should ensure a clear allocation and distribution of duties and tasks between specialised committees of the management body.

Each committee should have a documented mandate, including the scope of its responsibilities, from the management body in its supervisory function and establish appropriate working procedures.

Committees should support the supervisory function in specific areas and facilitate the development and implementation of a sound internal governance framework. Delegating to committees does not in any way release the management body in its supervisory function from collectively fulfilling its duties and responsibilities.