FRANCE Law and Practice Contributed by: Damien Luqué, Martin Jarrige de la Sizeranne and Sacha Tartarin, Lacourte Raquin Tatar
applicable to their appointment, responsibilities, and the compliance and control requirements. The main requirements related to corporate gov - ernance of a credit institution are: • the management body must have the ultimate and overall responsibility for the credit institu - tion’s activities; • a clear distinction between the executive and non-executive functions must be defined; • the management body must take decisions on a sound and well-informed basis; • the management body in its supervisory func - tions must include independent members; • the management body must adhere to and promote high ethical and professional stand - ards; • the management body in its supervisory func - tions should periodically monitor the effec - tiveness of the governance arrangements and ensure that appropriate measures are put in place in case of any deficiencies; and • when applicable (eg, for significant credit institutions), the setting up of a risk commit - tee, a nomination committee and a remunera - tion committee. Diversity Although French law does not contain any such provision, the European Banking Authority (EBA) recommends, in its guidelines on the assess - ment of the suitability of the management body and key function-holders, implementing a diver - sity criterion regarding the composition of credit institutions’ management bodies, for instance by taking into account characteristics such as edu - cational and professional background, age and gender. The EBA considers that while the diver - sity of the management body is not a criterion for the assessment of the members’ individual suitability, diversity should also be taken into
account when selecting and assessing members of management bodies. Thus, a more diverse management body, in its supervisory and man - agement functions, can reduce the phenomenon of “groupthink” and facilitate the expression of independent opinions and constructive chal - lenges during the decision-making process. Regarding the remuneration policy which must be put in place by credit institutions, French law states that it must be gender-neutral and com - ply with the principle of equal pay for male and female workers for work of equal value. Voluntary Codes and Industry Initiatives On a national level, the Association Française des Entreprises Privées (AFEP) and Mouvement des Entreprises de France (MEDEF), which are the principal French business confederations, have developed a set of recommendations on corporate governance for listed companies. The AFEP-MEDEF Code defines the principles of good corporate governance by introducing rules on communication between the board and shareholders, diversity in governance bod - ies and outlining the ethical standards to be observed by senior management. While all French listed credit institutions com - ply with the requirements set out in this Code, unlisted institutions are also encouraged to adhere to it. Bankers’ Oath Unlike some other EU countries, France does not implement a bankers’ oath. However, all employees of a credit institution are bound by professional secrecy ( secret bancaire ), and any breach of this obligation constitutes a criminal offence.
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