ESMA Publishes Guidelines on Remuneration Practices Under UCITS and AIFMD
Sunday, October 23, 2016

On October 14, the European Securities and Markets Authority (ESMA) published two sets of guidelines (Guidelines) on sound remuneration practices for EU managers of Undertakings for Collective Investment in Transferable Securities (UCITS) funds (UCITS Guidelines) and EU managers subject to the Alternative Investment Fund Manager (AIFM) Directive (AIFMD Amending Guidelines).

The AIFMD Amending Guidelines ameliorate existing AIFMD guidelines on sound remuneration policies published in July 2013. The amendments clarify the application of the Guidelines to AIFMs in a group context, and note that there should be “no exception” for AIFMs which are subsidiaries of a bank.

As mentioned in our previous update, the UCITS Guidelines apply to management companies and EU regulators, and set out guidelines: 1) on how to identify the categories of staff subject to the remuneration requirements; 2) for management companies part of a group; 3) on the application of sectoral rules; 4) on governance arrangements for remuneration (including management bodies, remuneration committees and control functions); 5) on risk alignment; and 6) on disclosure.

Next steps are for EU regulators to confirm whether they intend to comply with the Guidelines within two months. Both sets of Guidelines will go into effect on January 1, 2017.

 

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