French Monetary and Financial Code
In forceI. - The portfolio management companies of the AIFs mentioned in 1° and 2° of II of this article and the portfolio management companies of UCITS determine the remuneration policies and practices of the following persons, when their professional activities have a substantial impact on the risk profiles of the portfolio management companies or the AIFs or UCITS they manage:
1° Managers ;
2° Members of the board of directors or management board;
3° Directors of simplified joint stock companies and persons exercising a management function within the meaning of 4° of II of Article L. 532-9;
4° Risk-takers;
5° Persons exercising a control function;
6° Persons placed under the authority of the portfolio management company who, in view of their total remuneration, are in the same remuneration bracket as persons exercising a management function within the meaning of 4° of II of Article L. 532-9 and risk-takers.
The remuneration policies and practices are compatible with sound and effective risk management, promote it and do not encourage risk-taking that is incompatible with the risk profiles of the AIF or UCITS and the elements of their regulations or articles of association.
II. - This article applies to the portfolio management companies of FIAs:
1° Relevant to II of article L. 214-24, excluding those mentioned in its last paragraph, and excluding AIFs relevant to I of article L. 214-167 and those mentioned in the second paragraph of III of article L. 532-9; and
2° Relevant to 1° of III of Article L. 214-24.
III. - The General Regulation of the Autorité des marchés financiers sets the conditions for the remuneration policies and practices of these AIF and UCITS portfolio management companies. In particular, they shall provide for the terms of implementation of Articles 14a and 14b of Directive 2014/91/EU of the Parliament and of the Council of 23 July 2014 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS), as regards depositary functions, remuneration policies and penalties.
IV.-The remuneration policy and practices referred to in this article may, by way of derogation fromArticle L. 1331-2 of the Labour Code, provide that the total amount of variable remuneration may, in whole or in part, be reduced or give rise to restitution where the person concerned has disregarded the rules laid down by the company with regard to risk-taking, in particular because of his or her responsibility for actions resulting in significant losses for the company or in the event of failure to comply with the obligations of good repute and competence.
