LIECHTENSTEIN Law and Practice Contributed by: Bernhard Rankl, Moritz Blasy and Nicolai Binkert, Schurti Partners Attorneys at Law Ltd
duties. The Banking Ordinance stipulates a max - imum number of other mandates that a mem- ber of the board of directors or executive man - agement may hold at the same time. In banks or investment firms of significant importance, a person may not be a member of the senior management if he or she is already a member of the senior management of another bank or investment firm, or a member of the senior man - agement of two other banks or investment firms. Similarly, a person may not be a member of the board of directors if he/she is already a mem - ber of the board of directors of another bank or investment firm and is already a member of the board of directors of two other banks or invest - ment firms, or is a member of the board of direc - tors of four other banks or investment firms. Registration with the FMA All members of senior management must be reg - istered and approved by the FMA prior to assum - ing office. The bank must submit a detailed application to the FMA, providing information on the individual’s professional background, qualifications and clean criminal record. Poten - tial conflicts of interest must also be disclosed. The FMA then conducts a thorough assess - ment of the person’s suitability. The regulator reserves the right to reject an appointment if the individual does not meet the required standards. Once approved, senior managers are officially registered with the FMA and their details are maintained in regulatory records for ongoing supervision. 4.3 Remuneration Requirements In Liechtenstein, the remuneration rules appli - cable to banks are designed to promote pru - dent risk management, to align incentives with long-term performance and to avoid excessive risk-taking. These rules focus on aligning remu - neration structures with risk management and
sustainable performance. Banks must ensure that their remuneration policies are consistent with sound and effective risk management, do not encourage excessive risk-taking that could jeopardise the financial stability of the bank, are gender neutral and align the interests of manage - ment, staff and shareholders with the long-term health of the institution. These principles apply to all employees whose professional activities have a material impact on the institution’s risk profile, but with particular emphasis on senior management and staff in control functions such as compliance, risk management and internal audit. Fixed and Variable Remuneration The bank must ensure that fixed and variable remuneration components of risk-taking person - nel are well balanced to avoid excessive risk- taking to bolster bonus payments. Fixed remuneration Fixed remuneration is the guaranteed, regular salary that employees receive. It must reflect the individual’s role, responsibilities and skills. This component should be sufficient to ensure that employees do not become overly dependent on variable pay, thereby reducing the incentive for The performance-related variable remunera - tion components may include bonus payments, stock options or other incentives and must not exceed 100% or, in certain cases, 200%, of fixed compensation. The determination of the variable component must be based on a combination of individual, business unit and overall bank per - formance, whereby also non-financial factors (risk management, compliance and adherence to ethical standards, etc) should be factored in. In order to align variable compensation with the short-term risk-taking. Variable remuneration
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