Subject matter, scope and definitions

These guidelines specify further the internal governance arrangements, processes and mechanisms that institutions, that are subject to Directive 2013/36/EU⁽⁸⁾ and investment firms that are subject to Title VII of Directive 2013/36/EU in application of Article 1(2) (opens EUR-Lex in a new tab) and (5) (opens EUR-Lex in a new tab) of Regulation 2019/2033/EU (opens EUR-Lex in a new tab), should implement in accordance with Article 74(1) of Directive 2013/36/EU to ensure their effective and prudent management.

These guidelines apply in relation to institutions’ governance arrangements, including their organisational structure and the corresponding lines of responsibility, processes to identify, manage, monitor and report all risks⁽⁹⁾ they are or might be exposed to, and internal control framework.

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 (7) and (8) of Article 3(1) of Directive 2013/36/EU, should be understood as having management (executive) and supervisory (non-executive) functions⁽¹⁰⁾.

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 functions to a person or an internal executive body (e.g. a chief executive officer (CEO), management team or executive committee), the persons who perform those executive functions 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 including also 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 institution’s governing body or bodies under national law.

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

Institutions should comply and competent authorities should ensure that institutions comply with these guidelines on an individual, sub-consolidated and consolidated basis, in accordance with the level of application set out in Article 109 of Directive 2013/36/EU.

Unless otherwise specified, terms used and defined in Directive 2013/36/EU and Regulation (EU) No 575/2013 have the same meaning in the guidelines. In addition, for the purposes of these guidelines, the following definitions apply: