- Question ID
- Legal act
- Directive 2013/36/EU (CRD)
- Internal governance
- COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
- Not applicable
- Type of submitter
- Subject matter
What is the correct interpretation of Article 91 (4) b) ii) of CRD IV setting the rules for quantifying executive and non-executive directorships within undertakings in which the significant institution holds a qualifying holding? i. An individual holding directorships in four undertakings in which the significant institution holds a qualifying holding will be treated as one single directorship with the directorship held within the significant institution being treated as a separate directorship. ii. An individual holding directorships in four undertakings in which the significant institution holds a qualifying holding with the directorship held within the significant institution not being treated as a separate directorship.
- Background on the question
Article 91(3) of CRD IV establishes limits to the number and nature of directorships for members of the management bodies of institutions that are considered significant in terms of their size, internal organisation and the nature, scope and complexity of their activities, whereby members of the management bodies of such institutions must not hold directorships amounting to more than one of the following combinations: a) One executive directorship with two non-executive directorships; b) Four non-executive directorships. For the purposes of quantifying relevant directorships, Article 91(4) CRD IV provides that a single directorship means: b) Executive or non-executive directorships held within ii) undertakings in which the institution holds a qualifying holding.
- Submission date
- Final publishing date
- Final answer
Pursuant to Article 91(3) of Directive 2013/36/EU (hereinafter "CRD"), members of the management body of an institution that is significant in terms of its size, internal organisation and the nature, scope and complexity of its activities, are not allowed to hold more than one executive directorship with two non-executive directorships or more than four non-executive directorships at the same time. The objective of Article 91 CRD is a prudential one, meaning that it should allow directors of institutions to allot sufficient time and attention to discharge their duties in the institution and thus reduce the riskiness of its activity.
Pursuant to point 36 of Article 4(1) of Regulation (EU) No 575/2013 "qualifying holding" means a direct or indirect holding in an undertaking which represents 10 % or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of that undertaking and pursuant to point 16 of the same paragraph "subsidiary" means: (a) a subsidiary undertaking within the meaning of Articles 1 and 2 of Directive 83/349/EEC; (b) a subsidiary undertaking within the meaning of Article 1(1) of Directive 83/349/EEC and any undertaking over which a parent undertaking effectively exercises a dominant influence. Subsidiaries of subsidiaries shall also be considered to be subsidiaries of the undertaking that is their original parent undertaking.
Subsidiaries that are institutions or financial institutions that are subject to consolidation for prudential purposes belong to the same group. The executive or non-executive directorships held within the same group account as a single directorship. However, executive or non-executive directorships held within undertakings in which the institution holds a qualifying holding, but that are not subsidiaries included in the scope of consolidation, count as a single directorship in accordance with point (ii) of paragraph 4 (b) of that Article.
The executive or non-executive directorship held within the institution which holds qualifying holdings in undertakings is treated as a separate directorship.
This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (the Directorate-General for Justice and Consumers) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.
- Answer prepared by
Answer prepared by the European Commission because it is a matter of interpretation of Union law.
- Note to Q&A
Update 26.03.2021: This Q&A has not yet been reviewed by the European Commission in the light of the changes introduced to Directive 2013/36/EU (CRD).