Articles 88 to 96 of the Capital Requirements Directive IV (CRD IV) introduced higher corporate governance requirements as one of the lessons learned from the recent financial market crisis. These requirements were transposed into German law in 2013 by the Act Implementing the Capital Requirements Directive (CRD IV-Umsetzungsgesetz) for management board members in section 25c of the German Banking Act (Kreditwesengesetz) and for supervisory board members in section 25d of the German Banking Act. The requirements set out in the– at that time valid – EBA Guidelines concerning the assessment of suitability of management body members and key function holders and the EBA Guidelines on internal governance were also taken into account in this context. The revised EBA Guidelines on internal governance and the revised joint EBA and ESMA Guidelines on the assessment of the suitability of members of the management body and key function holders have been applicable since 30 June 2018.
The transposition takes into consideration the German two-tier system in which the management function and the supervisory function are exercised by two separate bodies. Accordingly, the requirements have been specified for the management board members and supervisory board members respectively. They must have the necessary professional knowledge, skills and experience, be trustworthy and be able to commit sufficient time to perform their functions. Furthermore, the maximum permissible number of directorships that a management board member or supervisory board member may hold is more restrictive than before. In addition, institutions have to set up committees that support the supervisory board in performing its duties, depending on the institutions´ size, internal organisation and the nature, scope, complexity and riskiness of their activities. Moreover, significant institutions are required to set up risk, audit, nomination and remuneration committees. Those institutions are considered significant, that have total assets amounting to at least €15 billion over the preceding three years, that are supervised directly by the ECB, that are categorised as having the potential to pose a systemic threat, or that are financial trading institutions. Other CRR institutions are able to opt for establishing these committees.
Information is to be submitted using the forms annexed to guidance notices and the Reports Regulation (Anzeigenverordnung). One copy is to be filed with BaFin and another with the responsible Regional Office of the Deutsche Bundesbank. BaFin also offers the option of transmitting electronic documents that replace hard copies. BaFin informs the ECB of notifications by institutions deemed significant under the SSM Regulation.