Investment funds remuneration and sanctions seminar. Monday, 2 May 2016

Transcription

1 Investment funds remuneration and sanctions seminar Monday, 2 May 2016

2 Agenda The new remuneration regime: what you need to know Sanctions under UCITS V and AIFMD: the dawn of a new era 2

3 THE NEW REMUNERATION REGIME: WHAT YOU NEED TO KNOW Panelists: Alain Goebel, Partner, Arendt & Medernach Isabelle Lebbe, Partner, Arendt & Medernach Philippe Schmit, Partner, Arendt & Medernach Moderator: Claude Niedner, Partner, Arendt & Medernach 3

4 Governance impacts Management company s shareholders BOARD OF DIRECTORS Remuneration Committee Conducting persons Competent corporate functions - Risk management - Compliance - Internal audit - Human resources 4

5 Identification of the key persons so-called Identified Staff BOARD OF DIRECTORS Conducting persons Other members of the senior management Control functions Risk management Compliance Internal Audit Other staff members Head of Investment management, administration, marketing, HR Other risk takers 5

6 Payout process Clawback Vesting point of the last deferred part of bonus Max. 60% paid immediately Departure of the staff member 50% 50% Min. 40 % deferred over min. 3 years Malus Accrual period Deferral period Retention period for instruments 6

7 Disclosure requirements 18 March 2017 o Details of the remuneration policy OR o Summary of the Rem. policy & link to the website February 2017 o Statement indicating that the remuneration policy is available on a website As soon as available Q for annual report for 2017 o Total amount of remuneration o Aggregate amount broken down by categories o How the remuneration and benefits have been calculated o Outcome of the different reviews o Any material change to the Rem. pol 7

8 Delegation of Investment Management Function (1) Identified Staff BOARD OF DIRECTORS Conducting persons And delegate s staff members? Other members of the senior management Control functions Risk management Compliance Internal Audit Staff having a material impact on the risk profiles of the UCITS managed Other staff members Head of Investment management, administration, marketing, HR Other risk takers 8

9 Delegation of Investment Management Function (2) When delegating investment management functions (including risk management) according to Article 13 of the UCITS Directive, where the remuneration rules would otherwise be circumvented, management companies should ensure that: the entities to which investment management activities have been delegated are subject to regulatory requirements on remuneration that are equally as effective as those applicable under these guidelines, or appropriate contractual arrangements are put in place with entities to which investment management activities have been delegated in order to ensure that there is no circumvention of the remuneration rules set out in the present guidelines. 9

10 SANCTIONS UNDER UCITS V AND AIFMD: THE DAWN OF A NEW ERA Panelists: Isabelle Lebbe, Partner, Arendt & Medernach Philippe-Emmanuel Partsch, Partner, Arendt & Medernach Odile Renner, Partner, Arendt Regulatory & Consulting Moderator: Michèle Eisenhuth, Partner, Arendt & Medernach 10

11 Former Internal Market and Services Commissioner Barnier : If a financial institution does not abide by EU rules in the area of financial services, traders and executives must realize that they won't get away with it and that the response will be tough, wherever in Europe the violation occurs 11

12 Trends in Luxembourg Between 2011 and 2014: The overall amount of fines inflicted by the CSSF has more than doubled, while the amount of entities sanctioned has remained fairly stable. 12

13 The New World In April 2014, the FCA fined an asset manager 19 million for breach of investment limits and failure to clearly inform investors or explain the associated risks of its use of derivatives which introduced leverage In April 2015, the FCA fined a UK custodian 126 million for failure to comply with the CASS Rules while no assets were actually lost 13

14 UCITS* UCI part II Manco Depositary Any entity involved in the activity of the relevant entity Management** Liquidator Refusal to provide financial reports or information X X X X X X X Incorrect, inaccurate or incomplete information X X X X X X X Hampering of CSSF supervision, inspection and inquiry powers X X X X X X X No publication of financial statements X X X X X X X Non-compliance with CSSF injunctions X X X X X X X Conduct jeopardizing the sound and prudent management Presenting the agreement of the CSSF of a UCI as a positive appreciation X X X X X X X X X X X X Non-compliance with qualifying holding notification/reporting requirements X X Authorization through false statement or irregular means X X X Non-compliance with organizational, conflicts of interest, delegation, risk management requirements and rules of conduct X X (delegation only) X X Failure to perform depositary tasks X X X X X Non-compliance with investment restrictions (repeated) X X X Non-compliance with investor information (repeated) Non-compliance with notification requirements X X X X X X X * Self-managed UCITS or UCITS having appointed a management company, as the case may be ** Management: members of the management body or supervisory board or the dirigeants 14

15 Sanctions: 3 Procedural Steps «Crescendo» From enquiry to litigation Legal procedural framework «PANC» Non-litigation Participation 2 Investigations Preparation of administrative file 1 Active in passivity Appeals Litigation Participation 3 15

16 Be prepared by reviewing the quality of your procedures and their implementation and by not being afraid of being critical Be prepared as any information communicated is relevant Be prepared as there is no such thing as a perfect organisation and everybody should know how to react when an unexpected visitor knocks at your door 16

17 Contact us Arendt & Medernach Partner, Tax Law Alain Tel : Goebel alain.goebel@arendt.com Partner, EU & Competition Law Tel : philippe-emmanuel.partsch@arendt.com Philippe- Emmanuel Partsch Partner, Investment Management Michèle Tel : Eisenhuth michele.eisenhuth@arendt.com Partner, Employment Law, Pensions Philippe & Benefits Schmit Tel : philippe.schmit@arendt.com Isabelle Lebbe Claude Niedner Partner, Investment Management Tel : isabelle.lebbe@arendt.com Partner, Investment Management Tel : claude.niedner@arendt.com Arendt Regulatory & Consulting Partner, Arendt Regulatory & Consulting Odile Tel : Renner odile.renner@arendt-arc.com This presentation does not constitute legal advice and is merely intended to raise awareness on specific topics. This presentation however is not a substitute for seeking appropriate commercial and legal advice and should not be relied on in this manner. 17

18 Arendt Institute Our professional training solutions By offering specialised and completely customised courses, Arendt Institute delivers training solutions with highly relevant content geared to your increasingly complex needs. Should you wish to register or for any information, please contact: Arendt Institute also developed training sessions responding to your specific context and meeting your exact needs. 18