Response to consultation on Guidelines on internal governance (revised)

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Question 1: Are the guidelines regarding the subject matter, scope, definitions and implementation appropriate and sufficiently clear?

The Guidelines appear to be sufficiently clear regarding the subject matter and the scope. The Guidelines also clearly define their legal basis and their addressees. They refer to Directive 2013/36/EU as a legal framework, where connected provisions and definitions of the terms, which are not explained in the Guidelines, can be identified. From our perspective, however, it is important to draw attention to some critical points regarding both the implementation and certain definitions.

Question 2: Are there any conflicts between the responsibilities assigned by national company law to a specific function of the management body and the responsibilities assigned by the Guidelines, in particular within paragraph 23, to either the management or supervisory function?

NA

Question 3: Are the guidelines in Title I regarding the role of the management body appropriate and sufficiently clear?

NA

Question 4: Are the guidelines in Title II regarding the internal governance policy, risk culture and business conduct appropriate and sufficiently clear?

Title II offers a transparent framework of risk culture and corporate values. The comparison with existing domestic regulations underscores that the Guidelines offer a broader framework of outsourcing policy, making specific indications and provisions. However, some elements of concern should be brought up. Especially, the provisions of Chapter 8 raise certain issues.

Question 5: Are the guidelines in Title III regarding the principle of proportionality appropriate and sufficiently clear?

Title III on the rule of proportionality points out all the criteria that institutions need to consider. It refers in greater detail to the major elements, such as the aim and the basic assumptions (i.e., sophisticated internal governance arrangements applying to more complex institutions) that need to be taken into consideration.

Question 6: Are the guidelines in Title IV regarding the internal control framework appropriate and sufficiently clear?

NA

Question 7: Are the guidelines in Title V regarding transparency of the organization of the institution appropriate and sufficiently clear?

NA

Question 8: Are the findings and conclusions of the impact assessments appropriate; please provide to the extent possible an estimate of the cost to implement the Guidelines differentiating of one-off and ongoing costs?

NA

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Paul Hastings Europe LLP