FRANCE Law and Practice Contributed by: Damien Luqué, Martin Jarrige de la Sizeranne and Sacha Tartarin, Lacourte Raquin Tatar
Decreasing Control Over a Credit Institution When a qualifying holding in a credit institution falls below the aforementioned thresholds or no longer constitutes a qualifying holding, such operation must also be disclosed beforehand to the ACPR. The ACPR has exclusive competence over the decision to approve or reject such an operation. 4. Governance 4.1 Corporate Governance Requirements Regulatory Requirements Overall, corporate governance rules applica - ble to credit institutions aim to strengthen the responsibility of the management body, prevent any situation of conflicts of interests and avoid any kind of misconduct (such as fraud or brib - ery), by promoting a compliance culture and internal transparency (for instance, by facilitat - ing internal alerts). Management functions Credit institutions must have a management body with a clear distinction between the indi - viduals responsible for the management func - tions (ie, conducting officers) and those respon - sible for the supervisory functions. Accordingly, a French credit institution must put in place, in addition to the management body responsible for its management functions, one or more supervisory bodies in charge of supervi - sory functions within that credit institution. The members of these management bodies are (depending on the credit institution’s legal form): • the members of the board of directors, the supervisory board and the executive board; • the chief executive officer (CEO);
• the deputy chief executive officers; and • any other person or member of a body exer - cising equivalent functions. The ACPR specified that in sociétés anonymes à conseil d’administration, the CEO and the depu - ty CEO(s) are the conducting officers (as defined below), whereas in sociétés anonyme à conseil de surveillance , all the members of the executive board ( directoire ) are the conducting officers. Conducting officers are defined as senior man - agers (either legal representatives or not) who effectively direct the business of the credit insti - tution and are empowered to set the institution’s strategy, objectives and overall direction. Furthermore, the positions of chairman of the board of directors and CEO of a credit institution cannot be held by the same person. Governance arrangements In addition, credit institutions are required to have robust governance arrangements. These include: • a clear organisational structure with well- defined, transparent, and consistent lines of responsibility; • effective processes to identify, manage, moni - tor, and report the risks to which they are or might be exposed; • adequate internal control mechanisms; and • practices that are consistent with and pro - mote sound and effective risk management. The corporate governance rules are also set out in the French Order of 3 November 2014 on internal control applicable to entities in the bank - ing, payment services, and investment services sectors. The French Order outlines, inter alia, the key functions of credit institutions and the rules
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