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ESMA issues Guidelines on Remuneration Practices under UCITS and AIFMD

The European Securities and Markets Authority (ESMA) has published today two sets of Guidelines: Guidelines on Sound Remuneration under UCITS (UCITS Remuneration Guidelines) and Guidelines on Sound Remuneration under the AIFMD (AIFMD Remuneration Guidelines).

UCITS Remuneration Guidelines

The UCITS Remuneration Guidelines provide clarity on the requirements under the UCITS Directive for management companies when establishing and applying a remuneration policy for key staff. The purpose of the Guidelines is to ensure a convergent application of these provisions and provide guidance on the governance of remuneration, requirements on risk alignment, and disclosure.

AIFMD Remuneration Guidelines

The AIFMD Remuneration Guidelines amend the current Guidelines on sound remuneration policies under the AIFMD (ESMA/2013/232). The amendment relates to the section of these Guidelines dealing with the application of the remuneration rules in a group context and is intended to acknowledge the potential outreach of the Capital Requirements Directive rules in a banking group.

ESMA published its final report on Guidelines on sound remuneration policies under the UCITS Directive and AIFMD in March of this year.

Next steps

National Competent Authorities (NCAs) must notify ESMA whether they comply or intend to comply with the Guidelines, with reasons for non-compliance, within two months. ESMA will publish a compliance table based on the responses from the NCAs.

The Guidelines apply from 1 January 2017 and have been translated into the 23 official languages of the all of the European Union.