Stand:updated on 06.06.2024 | Topic Governance Governance – General requirements
All undertakings must have in place a proper and effective system of governance. In principle, undertakings are free to decide how to design their organisational and operational structure. However, the organisational structure must be transparent and proportionate to the nature, scale and complexity of the operations of the undertaking and the risks associated with them.
There are other supervisory requirements to be complied with, such as a clear allocation and appropriate segregation of responsibilities, requirements regarding the scope of the "four eyes" principle for material decisions, the establishment of four objective and independent key functions, comprehensible documentation and the development of contingency plans.
These and other requirements are specified in the following – non-exhaustive – list of legal bases and interpretative decisions.
Legal bases
- Section 23 ff.
Delegated Regulation (EU) 2015/35
- Article 258 ff.
Guidelines on System of Governance (EIOPA-BoS-14/253 EN)
- Guidelines 1 to 8, 65 and 66 (general governance requirements)
- Guidelines 9 and 10 (remuneration)
- Guidelines 11 to 16 (fit and proper)
Circular RS 9/2023 (VA) Members of the management board
The circular provides explanations on the professional and personal requirements for individuals who are to be appointed as members of the management board based on the Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG).
It is addressed to all insurance companies, pension funds, insurance holding companies, entities under § 293 para. 4 VAG, insurance special purpose vehicles, mixed financial holding companies, and branches of insurance companies located in a third country subject to the supervision of the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin).
Different regulations apply to small insurance companies, occupational pension schemes, and death benefit funds regarding the qualification requirements for members of the management board, taking into account the specific characteristics of their business models.
In addition to the provisions of the VAG, other companies must also comply with the Delegated Regulation (EU) 2015/35 (DVO) and the EIOPA Guidelines on the Governance System (EIOPA-BoS-14/253 DE), including the Technical Annex.
Circular RS 10/2023 (VA) Members of administrative or supervisory bodies
The circular provides explanations on the professional and personal requirements for members of administrative or supervisory bodies, based on the Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG). It is directed at all insurance companies, pension funds, insurance holding companies, companies according to § 293 (4) VAG, insurance special purpose vehicles, and mixed financial holding companies under the supervision of the Federal Financial Supervisory Authority (Versicherungsaufsichtsgesetz –BaFin).
For small insurance companies, occupational pension schemes, and death benefit funds, the relevant VAG provisions apply regarding the qualifications of administrative or supervisory body members, taking into account the specific characteristics of each business model.
For all other companies, in addition to the VAG provisions, the Delegated Regulation (EU) 2015/35 (DVO) and the EIOPA Guidelines on the Governance System (EIOPA-BoS-14/253 DE), including its technical annex, must be observed.
