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New BaFin Information Sheets: An Overview of The Most Important Changes

New BaFin Information Sheets: An Overview of The Most Important ChangesChanges for managers and supervisory bodies of regulated institutions under German supervisory law

On June 3, 2020, the German Federal Financial Supervisory Authority (BaFin) submitted drafts of the information sheets it had revised as well as various forms of the Ordinance on Notification for consultation in anticipation of a later amendment. Specifically, this involves the following

  • the information sheet for managers in accordance with the German Banking Act (KWG), the German Insurance Supervision Act (ZAG) and the German Investment Companies Act (KAGB) as well as
  • the information sheet on the members of administrative or supervisory bodies pursuant to the German Banking Act (KWG) and the German Investment Companies Act (KAGB)

BaFin has adopted the EBA and ESMA guidelines

The revision of the information sheets serves to incorporate guidelines issued by the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) into the administrative practice of BaFin. The guidelines should be applied as of June 30, 2018:

  • Guidelines on the assessment of the suitability of members of the board of directors and key management personnel (EBA/GL/2017/12)
  • Guidelines on internal governance (EBA/GL/2017/11)

The Federal Institute has issued limited compliance statements on both guidelines, which you can view on the EBA and ESMA websites.

The most important changes to the BaFin information sheets

As a result of the implementation of the above-mentioned guidelines – on the assessment of the suitability of members of the management body and holders of key functions as well as on internal governance – the BaFin information sheets were extensively revised. The main new contents are:

  • Stricter requirements for the supervisory review process (“fit and proper review“):

– Deepening and concretization of requirements, including notification of reappointments,
– Extension of the information to be obtained in the notification procedure and extended information obligations of the supervised companies vis-à-vis the supervisory authority (see in particular the changes to the form).

  • Adjustments to the material requirements for managing directors and members of supervisory bodies with a focus on mandate census.
  • Requirements for internal guidelines and processes of the institutions (suitability, diversity, introduction and training, dealing with conflicts of interest).

In the future, BaFin will pay attention to the existence of a proper business organization by checking, among other things, whether institutions have

Suitability guidelines,
Diversity policies for management, administrative and supervisory bodies and employees,
Introduction and training guidelines,
Guidelines for dealing with conflicts of interest for management, the administrative and supervisory body and employees.

The level of detail of these guidelines should depend on the size of the institution, its internal organization and the nature, scale and complexity of the institution’s business (application of the principle of proportionality).

  • Information on the duties of institutions (conducting internal audits of the individual and collective suitability of board members, suitability audits of key function holders, dealing with conflicts of interest)

Companies with BaFin licence and applicants affected

The content of the information sheets is not only relevant for those companies that are currently conducting or seeking to conduct a licensing procedure with BaFin, but also for all institutions already licensed.

We provide our clients with comprehensive advice on the requirements of all internal control systems required by BaFin. Take advantage of our experience in this area. We will help you to implement suitable and appropriate procedures that will support and not hinder your business activities. We will also be happy to provide you with guidelines tailored to your specific needs. Feel free to contact us!

Continue reading:
Who requires a BaFin license?
BaFin Letter: Correct Handling of BaFin Notices

Dr. Annette Wagemann

Dr. Annette Wagemann comprehensively advises companies and their managers on questions regarding business law and banking regulations. She is specialized in the legal structuring of business models, corporate governance and compliance, and especially in business models that require a BaFin license.

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