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SYSC 4.3A Management body and nomination committee

Management body

SYSC 4.3A.-1 R
SYSC 4.3A.1 R

1A common platform firm4 must ensure that the management body defines, oversees and is accountable for the implementation of governance arrangements that ensure effective and prudent management of the firm, including the segregation of duties in the organisation and the prevention of conflicts of interest, and in a manner that promotes the integrity of the market and the interests of clients4. The firm must ensure that the management body:

  1. (1)

    has overall responsibility for the firm;

  2. (2)

    approves and oversees implementation of the firm's strategic objectives, risk strategy and internal governance;

  3. (3)

    ensures the integrity of the firm's accounting and financial reporting systems, including financial and operational controls and compliance with the regulatory system.

  4. (4)

    oversees the process of disclosure and communications;

  5. (5)

    has responsibility for providing effective oversight of senior management;4

  6. (6)

    monitors and periodically assesses:4

    1. (a)

      the adequacy and the implementation of the firm’s strategic objectives in the provision of investment services and/or activities and ancillary services;4

    2. (b)

      the effectiveness of the firm's governance arrangements; and4

    3. (c)

      the adequacy of the policies relating to the provision of services to clients, and4

    takes appropriate steps to address any deficiencies; and 4

  7. (7)

    has adequate access to information and documents which are needed to oversee and monitor management decision-making.4

[Note: article 88(1) of CRD and articles 9(1) and 9(3) of MiFID4]

SYSC 4.3A.1A R

4Without prejudice to SYSC 4.3A.1R, a common platform firm must ensure that the management body defines, approves and oversees:

  1. (1)

    the organisation of the firm for the provision of investment services and/or activities and ancillary services, including the skills, knowledge and expertise required by personnel, the resources, the procedures and the arrangements for the provision of services and activities, taking into account the nature, scale and complexity of its business and all the requirements the firm has to comply with;

  2. (2)

    a policy as to services, activities, products and operations offered or provided, in accordance with the risk tolerance of the firm and the characteristics and needs of the firm’s clients to whom they will be offered or provided, including carrying out appropriate stress testing, where appropriate; and

  3. (3)

    a remuneration policy of persons involved in the provision of services to clients aiming to encourage responsible business conduct, fair treatment of clients as well as avoiding conflict of interest in the relationships with clients.

[Note: article 9(3) of MiFID]

SYSC 4.3A.2 R

A common platform firm4 must ensure that the chairman of the firm's management body does not exercise simultaneously the PRA’s Chief Executive function (controlled function SMF14) or 3chief executive function within the same firm4.

[Note: article 88(1)(e) of CRD and article 9(1) of MiFID4]

3
SYSC 4.3A.2A G

4A firm may apply to the FCA under section 138A of the Act to waive SYSC 4.3A.2R.

SYSC 4.3A.3 R

A common platform firm4 must ensure that the members of the management body of the firm:

  1. (1)

    are of sufficiently good repute;

  2. (2)

    possess sufficient knowledge, skills and experience to perform their duties;

  3. (3)

    possess adequate collective knowledge, skills and experience to understand the firm's activities, including the main risks;

  4. (4)

    reflect an adequately broad range of experiences;

  5. (5)

    commit sufficient time to perform their functions in the firm; and

  6. (6)

    act with honesty, integrity and independence of mind to effectively assess and challenge the decisions of senior management where necessary and to effectively oversee and monitor management decision-making.

[Note: article 91(1)-(2) and (7)-(8) of CRD and article 9(1) and 9(4) of MiFID4]

SYSC 4.3A.4 R

A common platform firm4 must devote adequate human and financial resources to the induction and training of members of the management body.

[Note: article 91(9) of CRD and article 9(1) of MiFID4]

SYSC 4.3A.5 R

A common platform firm4 must ensure that the members of the management body of the firm do not hold more directorships than is appropriate taking into account individual circumstances and the nature, scale and complexity of the firm's activities.

[Note: article 91(3) of CRD and article 9(1) of MiFID4]

SYSC 4.3A.6 R
2
  1. (1)

    A common platform firm4 that is significant must ensure that the members of the management body of the firm do not hold more than one of the following combinations of directorship in any organisation at the same time:

    1. (a)

      one executive directorship with two non-executive directorships; and

    2. (b)

      four non-executive directorships.

  2. (2)

    Paragraph (1) does not apply to members of the management body that represent the United Kingdom.

[Note: article 91(3) of CRD and article 9(1) of MiFID4]

SYSC 4.3A.7 R

For the purposes of SYSC 4.3A.5 R and SYSC 4.3A.6 R:

  1. (1)

    directorships in organisations which do not pursue predominantly commercial objectives shall not count; and

  2. (2)

    the following shall count as a single directorship:

    1. (a)

      executive or non-executive directorships held within the same group; or

    2. (b)

      executive or non-executive directorships held within:

      1. (i)

        firms that are members of the same institutional protection scheme provided that the conditions set out in article 113(7) of the EU 5CRR are fulfilled; or

      2. (ii)

        undertakings (including non-financial entities) in which the firm holds a qualifying holding.

[Note: article 91(4) and (5) of CRD and article 9(1) of MiFID4]

Nomination Committee

SYSC 4.3A.8 R

A common platform firm4 that is significant must:

  1. (1)

    establish a nomination committee composed of members of the management body who do not perform any executive function in the firm;

  2. (2)

    ensure that the nomination committee is able to use any forms of resources the nomination committee deems appropriate, including external advice; and

  3. (3)

    ensure that the nomination committee receives appropriate funding.

[Note: article 88(2) of CRD and article 9(1) of MiFID4]

SYSC 4.3A.9 R

A common platform firm4 that has a nomination committee must ensure that the nomination committee:

  1. (1)

    engages 4a broad set of qualities and competences when recruiting members to the management body and for that purpose puts in place a policy promoting diversity on the management body;

  2. (2)

    identifies and recommends for approval, by the management body or by general meeting, candidates to fill management body vacancies, having evaluated the balance of knowledge, skills, diversity and experience of the management body;

  3. (3)

    prepares a description of the roles and capabilities for a particular appointment, and assesses the time commitment required;

  4. (4)

    decides on a target for the representation of the underrepresented gender in the management body and prepares a policy on how to increase the number of the underrepresented gender in the management body in order to meet that target;

  5. (5)

    periodically, and at least annually, assesses the structure, size, composition and performance of the management body and makes recommendations to the management body with regard to any changes;

  6. (6)

    periodically, and at least annually, assesses the knowledge, skills and experience of individual members of the management body and of the management body collectively, and reports this to the management body;

  7. (7)

    periodically reviews the policy of the management body for selection and appointment of senior management and makes recommendations to the management body; and

  8. (8)

    in performing its duties, and to the extent possible, on an ongoing basis, takes account of the need to ensure that the management body's decision making is not dominated by any one individual or small group of individuals in a manner that is detrimental to the interest of the firm as a whole.4

[Note: article 88(2) and article 91(10) of CRD and article 9(1) of MiFID4]

SYSC 4.3A.10 R

A common platform firm4 that does not have a nomination committee must engage a broad set of qualities and competences when recruiting members to the management body. For that purpose a common platform firm4 that does not have a nomination committee must put in place a policy promoting diversity on the management body.

[Note: article 91(10) of CRD and article 9(1) of MiFID4]

Website

SYSC 4.3A.11 R

A CRR firm that maintains a website must explain on the website how it complies with the requirements of SYSC 4.3A.1 R to SYSC 4.3A.3 R and SYSC 4.3A.4 R to SYSC 4.3A.11 R.

[Note: article 96 of CRD]