Board/Management Information • Mar 16, 2022
Board/Management Information
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Document approved by the Board of Directors at its 10 March 2022 meeting
Banca Ifis S.p.A - Registered office in Via Terraglio 63 30174 Venice - Mestre - Italy. Venice Companies Register Number and Tax Code 02505630109
VAT no. 02992620274 - Group VAT 04570150278 - Economic and Administrative Index (REA) no.: VE – 247118
Fully paid-up share capital: 53.811.095 Euro - Registered with the Official List of banks under no. 5508 Parent Company of the Banca Ifis S.p.A. banking group - Member of the National Guarantee Fund, the National Deposit Protection Fund, the Italian Factoring Association and Factors Chain International.
| Document contents 1 |
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| Introduction 3 |
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| 1. | Characteristics of the Bank | ||||||
| 2. Possible indications of the Board of Directors in view of the guiding opinion to be submitted to the next Shareholders' Meeting |
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| 3. | Quantitative and qualitative composition of the Board of Directors | 6 | |||||
| 3.1 | Quantitative composition | 6 | |||||
| 3.2 | Roles within the Board of Directors | 8 | |||||
| 3.3 | Qualitative composition | 9 | |||||
| 3.3.1 | Individual good standing and propriety criteria | 9 | |||||
| 3.3.2 | Individual professionalism requirements | 9 | |||||
| 3.3.3 | Competence criteria | 11 | |||||
| 3.3.4 | Personal characteristics | 12 | |||||
| 3.3.5 | Diversification and gender quotas | 13 | |||||
| 3.3.6 | Independence requirements | 13 | |||||
| 3.3.6.1 Independence of judgement | 14 | ||||||
| 3.3.7 | Availability of time and limits on accumulation of duties | 14 | |||||
| Time availability | 15 | ||||||
| Limits to the accumulation of offices | 16 | ||||||
| 3.3.8 | Incompatibilities | 17 | |||||
| Annex A 18 |
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| Individual requisites of integrity and correctness criteria (articles 3, 4 and 5 of the MEF Decree) | 18 | ||||||
| Individual requirements of professionalism (Art. 7 of the MEF Decree) 21 |
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| Competence criteria (Art. 10 of the MEF Decree) 22 |
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| Independence requirements | 23 |
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| Requirements of independence of judgement (Art. 15 of the MEF Decree) | 27 |
| Availability of time to carry out assignments (Art. 16 of the MEF Decree) | 28 |
| Limits to the accumulation of assignments (Articles 17, 18 and 19 of the MEF Decree) | 28 |
Banca Ifis S.p.A. ("Banca Ifis" or the "Bank") has always paid particular attention to the qualitative and quantitative composition of the Board of Directors, both out of compliance with regulatory provisions and because it firmly believes that the members of the Board must be endowed with, among other things, adequate professional skills to ensure sound and prudent management. In actual fact, the composition of the administrative body is of central importance for the effective performance of the tasks entrusted to it by law, the Supervisory Provisions and the Articles of Association.
The current Supervisory Provisions for banks on corporate governance (Bank of Italy Circular no. 285 of 17 December 2013, Part I, Title IV, Chapter 1, hereinafter the "Supervisory Provisions" or "Provisions") - in compliance with the rules, principles and guidelines drawn up by the sector Authorities also at an international and European level - regulate the role and functioning of the administrative and control bodies of banks as well as their relationship with the corporate structure, taking into account that the organisational and corporate governance structures, in addition to responding to the interests of the company, must ensure conditions of sound and prudent management.
Moreover, the Provisions envisage that the Board of Directors identifies in advance its own qualitative and quantitative composition, which is considered optimal, identifying and justifying the theoretical profile (including the characteristics of professionalism and independence, if any) of the candidates deemed appropriate for these purposes.
Art. 12 of the MEF Decree (as defined below) provides that each body - which therefore refers to both the Board of Directors and the Board of Statutory Auditors - must first identify its optimal qualitative and quantitative composition. Specifically, Art. 11 of the MEF Decree provides that the composition of the administrative and control bodies must be suitably diversified, so as to:
Finally, the Corporate Governance Code (as defined below) provides that the Board of Directors must express an orientation on its qualitative and quantitative composition deemed optimal, taking into account the results of the selfassessment process in the case of companies other than those with concentrated ownership. The guidance of the outgoing administrative body: (i) is published on the company's website in advance of the notice of call of the Shareholders' Meeting concerning its renewal; and (ii) identifies the managerial and professional profiles and skills deemed necessary, also in view of the company's sectoral features, taking into account the diversity criteria indicated in the Corporate Governance Code and the guidelines expressed on the maximum number of offices.
The activities involved in preparing this qualitative and quantitative profile must be the result of a thorough and formalised examination. The results of these analyses should be brought to the attention of the shareholders in a timely manner so that the selection of candidates to be presented can take into account the professionalism required.
For the purposes of the above, this document - called "Qualitative and quantitative composition of the Board of Directors of Banca Ifis S.p.A." - contains the guidelines that the Board of Directors of the Bank, whose term of office is expiring, makes available to the Shareholders, with a view to facilitating the process of defining the best proposals for the quantitative and qualitative composition of the new Board of Directors of the Bank, which will be presented by the Shareholders at the next Shareholders' Meeting.
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The following is a summary of the national and European regulations applicable with reference to the requirements of company representatives, including the soft law, since it was considered essential that the principles contained therein be reflected in the candidate selection process:
Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, as subsequently amended and supplemented (the "CRD");
Regulation (EU) no. 575 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms, as amended and supplemented (the "CRR");
Banca Ifis S.p.A. is the Parent Company of the "Banca Ifis Banking Group" and is one of the Less Significant Institutions subject to the direct supervisory powers of the Bank of Italy.
In accordance with the Provisions and the applicable regulations, Banca Ifis meets the definition of a bank of greater size or operational complexity, taking into account the size and type of activities carried out, directly or through Group companies, as well as the fact that it is listed on a regulated market ("STAR" segment of the Italian Stock Exchange).
The Bank adheres to the Corporate Governance Code promoted by the Corporate Governance Committee set up by the Associations of Business (ABI, ANIA, Assonime, Confindustria) and Professional Investors (Assogestioni), as well as by Borsa Italiana. In accordance with the Code's definitions, it is included among "companies with concentrated ownership" but not among "large companies".
The Bank adopts the traditional system of administration and control, based on the presence of a Board of Directors and a Board of Statutory Auditors, appointed by the Shareholders' Meeting. Under the model adopted by Banca Ifis:
Banca Ifis is a player active in speciality finance and its main business activities are Commercial and Corporate Banking and the acquisition/management of impaired loan portfolios. It operates in the territory without traditional branches, collecting deposits through on-line deposits.
In the area of NPLs, activities consist of both the purchase and the management/transformation of bad loans. The Banca Ifis Banking Group has expertise in all asset classes: unsecured and corporate & secured.
The business areas relating to Trade receivables, Leasing, Corporate and Investment Banking (through Structured Finance, Special Situations, Equity Investments and Financial Advisory) and Tax Credits as well as personal salary- and pensionbacked loans and finance for pharmacies are just some of the sectors in which the Bank operates.
With the approval of the financial statements as of 31 December 2021, the term of office of the Board of Directors of Banca Ifis appointed on 19 April 2019 comes to an end and, therefore, the Shareholders will be asked at the next Shareholders' Meeting to resolve on the appointment inter alia of new directors.
In the light of the above and of the results of its self-assessment exercise for the year 2021, the outgoing Board of Directors - except as indicated in greater detail below:
The quantitative composition of the Board of Directors is key to the effective performance of the tasks entrusted to it by law, the Supervisory Provisions, the Corporate Governance Code and the Articles of Association.
In actual fact, pursuant to the Supervisory Provisions, the number of members of the Board of Directors must be adequate to the size and complexity of the bank's organisational structure in order to effectively oversee the entire company's operations. The presence of an adequate number of non-executive members with well-defined roles and tasks, who effectively act as a counterbalance to the bank's executive and management, facilitates internal debate within the board.
The composition of the administrative body, however, should not be redundant. In banks of greater size or operational complexity (as Banca Ifis is), Boards of Directors with more than 15 members represent exceptional cases, which must be analytically assessed and justified.
In this regard, it should be noted that the Bank's Articles of Association envisage that the Board of Directors consists of a minimum of 5 and a maximum of 15 members, who are elected by the Shareholders' Meeting. The Directors' term of office lasts for the period - which cannot exceed three financial years - established upon appointment and expires on the date of the Shareholders' Meeting convened to approve the financial statements for the last financial year of their office.
The Shareholders' Meeting, which met on 19 April 2019, set the number of members of the Board of Directors at 12 for FYs 2019, 2020 and 2021.
At present, as mentioned above, there are 3 sub-committees, in compliance with Supervisory Instructions and the indications contained in the Corporate Governance Code.
In the light of the above, the outgoing Board of Directors, after having examined - with the support of the Appointments Committee - the results of the self-assessment referring to FY 2021, also taking into account the current legislation on the composition of the Board of Directors and its sub-committees, recommends to the Shareholders - who are responsible for determining the number of directors - to consider a number of members equal to 12 as optimal, in view of the size, organisational complexity and operating dynamics of the Bank.
Indeed, the outgoing Board believes that this size can both guarantee the presence of the various professional skills required to ensure the proper functioning and operativeness of the body and that it is consistent with the level of operational complexity and diversification that characterises the Bank, as well as adequate to the current structure and activities of the Advisory Committees, as also emerged from the self-assessment carried out by the Board of Directors for FY 2021.
In formulating this recommendation, the Board has also taken into consideration the various criteria and the different requirements deriving from the peculiar characteristics of Banca Ifis, seeking to achieve a balanced balance between them, including:
The new Board of Directors, that will be elected by the Shareholders' Meeting, will be asked - during the assessment of the suitability of the new members - to verify, with the support of the Appointments Committee, the compliance of the new Body with the requirements of qualitative and quantitative composition deemed optimal, also for the purposes of art. 12 of the MEF Decree, in accordance with the provisions of these Guidelines and represented to the Shareholders.
Different roles can be identified within the Board of Directors: Chairman, Deputy Chairman, Honorary Chairman, Chief Executive Officer, Non-Executive Directors, Independent Directors and Lead Independent Director.
The Chairman promotes the effective functioning of the corporate governance system, ensuring a balance of powers with respect to the CEO and the other executive directors; he acts as the contact point for the body in charge of control functions and the internal committees. To this end, he, in addition to possessing the characteristics required of directors, must have the specific skills necessary to carry out the duties assigned to him. To effectively carry out his function, the Chairman, as is currently the case, must have a non-executive role and not perform, even de facto, management functions. The Chairman guarantees the effectiveness of the Board's debate and ensures that the resolutions reached by the Board are the result of adequate debate and the informed and reasoned contribution of all its members.
The Deputy Chairman replaces the Chairman in the event of his absence or impediment in carrying out the duties incumbent on the Chairman and has no operational powers. The Deputy Chairman also acts as Chairman of the Brand Committee and the Sustainability Committee and participates in the management of the extra-meeting dialogue with the representatives of investors and the Bank's stakeholders on issues within the Board's competence.
The Honorary Chairman may be elected by the Shareholders' Meeting, even outside the Board, and is chosen from among people who have significantly contributed to the prestige and development of the Company. The Honorary Chairman, who is not a director, may attend meetings of the Board of Directors, in an advisory capacity and without voting rights, and Shareholders' Meetings. The Honorary Chairman may be entrusted by the Board of Directors with duties of representation of the Company, among others.
The Chief Executive Officer is responsible for the management of corporate operations aimed at achieving the strategic corporate policies and objectives approved by the Board of Directors.
Non-executive Directors are involved in the decisions taken by the whole Board and are called upon to play a dialectic role.
The Independent Directors supervise the management of the Company with independent judgement, contributing to ensure that it is carried out in the interest of the Bank.
Moreover, on 19 April 2019, taking into account that the role of Chairman of the Board of Directors coincided with the person who, as the then majority shareholder of La Scogliera S.p.A., held control of Banca Ifis, the Board of Directors - in line with the guidelines established by the Corporate Governance Code for listed companies - had appointed an independent Director as Lead Independent Director. After the changes made to the figure of the indirect parent company and communicated to the market by the controlling shareholder La Scogliera S.p.A. on 23 May 2020, there were no changes in the presence of the current Lead Independent Director within the Issuer. During the 2021 self-assessment exercise, it emerged that the position of Lead Independent Director should be confirmed. This person has the task of
representing a point of reference and coordination for the requests and contributions of the directors (non-executive and, in particular, independent directors) and of collaborating with the Chairman of the Board of Directors in order to guarantee that the directors receive complete and timely information flows. The same has the power to convene, when deemed appropriate or upon proposal of other directors, special meetings dedicated solely to independent directors to discuss issues deemed of interest with respect to the functioning of the Board of Directors or the management of the Company.
The members of the Board of Directors must be suitable for the performance of their duties, in accordance with the provisions of current legislation and the Articles of Association and, in particular, they must meet the requirements of professionalism, integrity and independence and comply with the criteria of competence, fairness and dedication of time and the specific limits on the number of offices held, as set out in current legislation.
In view of the importance of the requirements of integrity from a reputational point of view, the candidates for the office of director of the Bank must meet the requirements of integrity set out in Art. 3 of the MEF Decree, as detailed in Annex A.
Moreover, in addition to compliance with the above-mentioned requirements of integrity, the lack of which entails in itself the forfeiture of the office held, the candidates must also meet the criteria of correctness in their personal and professional conduct in the past, in accordance with the provisions of Art. 4 of the MEF Decree and better indicated in Annex A.
Any existence of the situations indicated in Art. 4 of the MEF Decree shall not automatically lead to the unsuitability of the candidate, but shall instead require an assessment - based on one or more of the parameters set out in Art. 5 of the MEF Decree - by the Board, carried out with regard to the principles of sound and prudent management as well as to the safeguard of the Bank's reputation and public trust. The criterion of correctness will not be met when one or more of the situations indicated in Art. 4 of the MEF Decree paint a serious, precise and concordant picture of conduct that is in contrast with the objectives set out in paragraph 1 of the cited Article.
The Board of Directors recommends that Shareholders ensure that there are individuals on the Body:
• with an adequate degree of diversification, also in terms of age, gender and geographical origin.
The theoretical knowledge and practical experience of the Directors must be appropriate with regard to the tasks inherent in the role covered by the representative and to any specific delegations or powers, including participation in Committees, as well as to the size and operational complexity of the Group. According to the applicable legislation and inter alia pursuant to Art. 7 of the MEF Decree, candidates for administrative and management positions must meet certain professional requirements depending on whether they hold executive or non-executive positions, which are detailed in Annex A.
In particular, executive officers are chosen among people who have exercised, for at least three years, also alternatively, the following functions:
The non-executive directors are chosen from among people who meet the requirements set out in the previous point or who have held the position for at least three years, also alternatively:
Moreover, the Chairman of the Board of Directors (pursuant to Art. 7, paragraph 3 of the MEF Decree) is a non-executive member who has accrued at least two years' overall experience in addition to the above requirements.
The Chief Executive Officer is chosen from among persons with specific experience in the credit, financial, securities or insurance sectors, gained through administration or control activities or managerial duties for a period of no less than five years in the credit, financial, securities or insurance sector, or in listed companies or companies of a size and complexity comparable with those of Banca Ifis.
Pursuant to Art. 7 of the MEF Decree, for the purposes of meeting the above requirements, it will be necessary to take into account the experience gained during the twenty years prior to taking office is taken into account; experience gained in several functions at the same time is counted only for the period of time during which they were carried out, without accumulating it.
In addition to the above-mentioned professionalism requirements, the candidates for the office of director of the Bank must meet the competence criteria set out in Art. 10 of the MEF Decree (see Annex A), aimed at proving their suitability to take on the office, taking into account the tasks inherent to the role covered and the dimensional and operational characteristics of the Bank.
Theoretical knowledge - acquired through studies and training - and practical experience, gained in the course of previous or current work activities, are taken into account for these purposes. In particular, pursuant to Art. 10, paragraph 2 of the MEF Decree:
Moreover, in order to ensure the overall suitability of the administrative body, also based on diversity criteria and the future challenges that the Bank will face, the outgoing Board, in light of the results of its Self-Assessment, recommends that the candidates for the Bank's new Board of Directors should express a balanced composition of experience, having also taken into account the following areas (in addition to those listed above):
expertise and knowledge in ESG/social and environmental sustainability;
international experience;
Moreover, for the position of Chairman of the Board of Directors, the experience gained in the coordination, direction or management of human resources shall be assessed, so as to ensure an effective performance of his functions of coordination and direction of the works of the Board, of promotion of its proper functioning, also in terms of circulation of information, effectiveness of the comparison and stimulus to internal dialectics, as well as of adequate overall composition of the body.
Pursuant to Art. 10, paragraph 5 of the MEF Decree, the competence criterion is not met when the information acquired regarding theoretical knowledge and practical experience paint a serious, precise and concordant picture of the candidate's unsuitability for the position. In the event of specific, limited shortcomings, the Board of Directors may take steps to address them.
The Board - having stressed the aspect of the overall suitability of the Administrative Body pursuant to the provisions of Art. 11 of the MEF Decree concerning the collective composition of the body and, therefore, the importance that its members (executive and non-executive) are jointly able to take informed decisions - invites the Shareholders to submit lists containing candidates with skills that allow an optimal combination of profiles with the above-mentioned characteristics, so to foster the comparison and ensure the development of the internal dialectic, the efficient functioning and the overall suitability of the Board as well as of its sub-committees.
In addition to the above-mentioned professional requirements, the outgoing Board recommends that the selection of candidates should also take into due consideration the aptitude characteristics of candidates (termed "soft skills"). In this regard, in addition to the personal characteristics as indicated in the EBA/ESMA Guidelines, following specific reflections carried out during the course of its self-assessment in relation to soft skills and with a view to outlining the expected profile of the future director of Banca Ifis, the outgoing Board decided to give relevance and centrality to the characteristics indicated below:
The outgoing Board is aware that an adequate degree of diversification in terms of age, gender, length of tenure and geographical origin favours a plurality of approaches and perspectives in the analysis of problems and in the taking of decisions, avoiding the risk of behaviours of mere alignment to prevailing positions, whether internal or external to the Bank.
In this context, the outgoing Board of Directors, in the light of the results of the 2021 self-assessment, particularly emphasises the importance of further promoting diversification in terms of skills and professionalism, training and experience, including managerial experience, within the Bank's future Board.
With particular regard to gender diversification, the legal and regulatory framework on gender diversification has undergone numerous updates over the last two financial years. In particular,
In this regard, the expiring Board of Directors recommends to the Shareholders to indicate a number of candidates belonging to the less represented gender at least equal to the current one (5 directors of the less represented gender, equal to 41% of the members, respectively).
The Board of Directors hopes for continuity in the positions of Chairman of the Board of Directors, to date held by the Bank's Founder, and Chief Executive Officer, appointed in 2021. With regard to the good practice indicated by the Bank of Italy, according to which the offices of Chairman of the Board of Directors, Chairman of the Board of Statutory Auditors and Chief Executive Officer should not be held by members of the same gender, it is recommended that this be adequately taken into account when submitting lists for the appointment of the Board of Directors and the Board of Statutory Auditors.
In this regard, it should be noted that the current Articles of Association of Banca Ifis establish that the standing auditor elected from the minority list is declared Chairman of the Board of Statutory Auditors.
The outgoing Board - having reminded that the Articles of Association provide for the presence of at least 1/4 of Directors qualified as independent - suggested to confirm 7 independent Directors, considering this number (higher than the minimum required by the Articles of Association and regulations) as optimal in order to ensure a high level of internal
dialectic within the Board and its sub-committees and a significant contribution to the decision-making process of the bodies.
With regard to the criteria for assessing independence, the requirements set out in the following provisions will be taken into account, as detailed in Annex A:
At the beginning of its term of office, the Board of Directors defines the quantitative and qualitative criteria to assess the significance of the relevant cases in order to verify the compliance of its members with the independence requirements.
All candidates for the position of director are required to act, inter alia, pursuant to Art. 15 of the MEF Decree, with full independence of judgement and awareness of the duties and rights inherent in the position, in the interests of the sound and prudent management of the Bank and in compliance with the applicable pro tempore regulations in force, and shall be required to provide the information requested pursuant to Art. 15, paragraph 2, of the MEF Decree and the reasons why any relevant cases pursuant to this provision do not materially affect their autonomy of judgement. The cases relevant to the assessment of independence of judgement are indicated in Annex A.
Banca Ifis has recently updated its "Regulation on the accumulation of offices held by company representatives", incorporating the regulatory changes made following the publication of the MEF Decree and the issuing of the 35th update of the Supervisory Provisions.
This Regulation rules, inter alia, that the candidate accepts the position and retains the exercise of it to the extent that he believes he can devote the necessary time to the diligent performance of the relevant duties. The time required is estimated on the basis of qualitative-quantitative parameters such as, in particular:
The Directors are required to dedicate adequate time to carrying out their duties, in compliance with the provisions of Art. 16 of the MEF Decree (see Annex A).
The adequate availability of time to devote to the performance of the office, in view of its nature, quality and complexity, is a fundamental requirement that candidate directors must ensure, also with regard to the activities deriving from their participation in the works of the Advisory Committees, if they are members of them. Consideration must also be given to the effort required to prepare for meetings, given the multiplicity of topics to be examined and the volume of supporting documentation. In addition, the commitment required to attend dedicated induction meetings, recurring training organised for the benefit of the Board as well as any off-site meetings must be kept in mind.
Clearly, in addition to having the necessary time, it is also necessary to take into account other assignments, commitments and work activities, without prejudice to the constraints provided for by the regulations on the limits to the accumulation of assignments.
In order to allow the Shareholders to assess the availability of time, to be requested from the candidates members of the Board of Directors and, to the latter, to be able to assess whether they are able to ensure preparation and participation in the meetings, the outgoing Board of Directors indicates below the number and the average duration of the meetings held during FY 2021:
| Body | Number of meetings | Average meeting duration |
|---|---|---|
| Board of Directors | 19 | 3 hours, 15 minutes |
| Control and Risks Committee | 21 | 2 hours, 20 minutes |
| Appointments Committee | 12 | 30 minutes |
| Remuneration Committee | 9 | 1 hour, 40 minutes |
Moreover, the outgoing Board of Directors - with the aim of ensuring the proper functioning of the Board and the contribution of each member to the internal dialectic of the Body - made an estimate - to be intended as a reference for the assessment of the minimum time necessary for an effective participation in the meetings - summarised in the following table:
| Office | Estimated time required for the effective performance of the assignment at Banca Ifis |
|---|---|
| Chairman of the Board of Directors | 80 days per year |
| Deputy Chairman of the Board of Directors | 50 days per year |
| Office | Estimated time required for the effective performance of the assignment at Banca Ifis |
|---|---|
| Chairman of the Board of Directors | 80 days per year |
| CEO | full-time |
| Non-executive member of the Board of Directors | 30 days per year |
| Chairman of a Board Committee | 50% more than the members |
| Member of the Appointments Committee | 7 days per year |
| Member of the Remuneration Committee | 10 days per year |
| Member of the Control and Risk Committee | 30 days per year |
In line with the provisions of Art. 17 of the MEF Decree (see Annex A), candidates for the position of director in Banca Ifis, a large bank or bank of operational complexity, may not hold a number of positions in banks or other commercial companies (i.e. companies whose purpose is one of the activities envisaged by Art. 2195 paragraph 1 of the Italian Civil Code) exceeding one of the following alternative combinations:
For the purposes of the above calculation, it should be noted that:
"Exempt assignment" means:
to-day management by the candidate; (b) as a professional at professional partnerships; and (c) as an alternate auditor.
Pursuant to the Regulation on Issuers, the term "small company" means a joint-stock company, a limited partnership with a share capital or a limited liability company, other than issuers and public interest companies, which, also alternatively:
For the purposes of determining the number of positions held, the aggregation methods set out in Art. 18 of the MEF Decree are taken into account. The set of assignments counted as one is considered an executive assignment if at least one of the assignments held is executive; in other cases it is considered a non-executive assignment.
A candidate for election as a director shall provide the Board of Directors with an updated status of the administrative, managerial and supervisory positions held. The updated status of the above assignments includes timely references to:
Without prejudice to the above-mentioned limits, in addition to the causes of incompatibility, ineligibility and disqualification pursuant to the law, which may affect the candidature and/or the assumption/maintenance of the office - such as, for example, those set out in Art. 2382 of the Civil Code - the director candidates must also comply with the socalled prohibition of interlocking as provided for by Art. 36 of the Salva Italia Decree, also taking into account the "Criteria for the application of Art. 36 of the "Salva Italia" Decree Law, the "prohibition of interlocking")" published by the Bank of Italy, CONSOB and IVASS on 20 April 2012, as subsequently updated and supplemented.
The Board therefore recommends to the Shareholders to indicate candidates for whom the absence of causes of incompatibility provided for by the said regulation has been previously verified.
Positions may not be held by those who:
Offices cannot be held by those who have been given a final sentence at the request of the parties or following an abbreviated judgement, any of the penalties envisaged:
With reference to cases governed in whole or in part by foreign legislation, verification of the non-existence of the conditions provided for in paragraphs 1 and 2 is carried out on the basis of an assessment of substantial equivalence.
With reference to paragraph 1, letters b) and c) and paragraph 2, the effects of rehabilitation and revocation of the sentence for abolition of the crime pursuant to Article 673, paragraph 1, of the Code of Criminal Procedure are not affected.
In addition to the requirements of integrity, the representatives meet criteria of fairness in past personal and professional conduct. The following are considered to this end:
g. performance of duties in companies that have been subject to extraordinary administration, resolution, bankruptcy or compulsory administrative liquidation procedures, collective removal of members of management and control bodies, withdrawal of authorisation pursuant to Article 113-ter of the Consolidated Law on Banking, cancellation pursuant to Article 112-bis, paragraph 4, letter b) of the Consolidated Law on Banking or similar procedures;
h. suspension or expulsion from professional bodies, cancellation (as a disciplinary measure) from professional lists and orders imposed by the competent authorities on the professional bodies themselves; measures of revocation for just cause from offices held in management, administration and control bodies; similar measures adopted by bodies entrusted by law with the management of lists and directories;
With reference to cases governed in whole or in part by foreign laws, the verification of the existence of the situations described above is carried out on the basis of an assessment of substantial equivalence.
The occurrence of one or more of the situations indicated above does not automatically lead to the unsuitability of the candidate, but does require an assessment by the competent body. The assessment is conducted with regard to the principles of sound and prudent management as well as the safeguarding of the bank's reputation and public trust.
The evaluation shall be conducted based on one or more of the following parameters, where relevant:
g. level of cooperation with the relevant body and the supervisory authority;
h. any remedial action taken by the party concerned to mitigate or eliminate the effects of the violation, even after the adoption of the conviction, penalty or otherwise of one of the measures referred to in Article 4, paragraph 2, of the MEF Decree;
In the case referred to in Article 4, paragraph 2, letter f), of the MEF Decree, the sanction imposed is only taken into consideration if there are objective elements capable of proving the individual and specific contribution made by the subject in the commission of the sanctioned facts. In any case, penalties equal to the minimum amount are not taken into consideration.
The case provided for in Article 4, paragraph 2, letter g), of the MEF Decree, is relevant only if there are objective elements that can prove the individual and specific contribution made by the person to the facts that have determined the crisis of the company, taking into account, among other things, the duration of the period of performance of the functions of the person concerned at the company itself and the period of time that elapsed between the performance of the functions and the adoption of the measures mentioned in Article 4, paragraph 2, letter g), of the MEF Decree.
The criterion of fairness is not met when one or more of the situations indicated in Article 4 of the MEF Decree paint a serious, precise and concordant picture of conduct that conflicts with the objectives indicated in paragraph 1 of the same Article.
Executive officers are chosen among people who have exercised, for at least three years, , also alternatively, the following functions:
The non-executive directors are chosen from among people who meet the requirements set out above or who have held the position for at least three years, also alternatively:
a. professional activities relating to the credit, financial, securities and insurance sectors, or in any event those functional to the bank's activities; the professional activity must be characterised by adequate levels of complexity, also with reference to the recipients of the services provided, and must be carried out on an ongoing basis and be significant in the above-mentioned sectors;
The Chairman of the Board of Directors shall be a non-executive officer who has at least two years more total experience than the requirements now stated.
The Chief Executive Officer and the General Manager shall be chosen from among persons with specific experience in the field of credit, finance, securities or insurance, gained through administrative or supervisory activities or managerial duties for a period of no less than five years in the credit, finance, securities or insurance sector, or in listed companies or companies whose size and complexity are greater than or comparable with (in terms of turnover, nature and complexity of the organisation or activity carried out) to that of the bank at which the office is to be held. Similar requirements are necessary for positions involving the exercise of functions equivalent to that of general manager.
For the purposes of meeting the requirements set out in the preceding paragraphs, the experience gained during the twenty years prior to taking up the position is taken into account; experience gained at the same time in more than one function is counted only for the period of time in which they were carried out, without accumulating them.
In addition to the requirements of professionalism, the candidates shall meet competence criteria aimed at proving their suitability to take on the role, taking into account the tasks inherent to the role covered and the size and operational characteristics of the bank. Theoretical knowledge - acquired through studies and training - and practical experience, gained in the course of previous or current work activities, are taken into account for these purposes.
The criterion is evaluated by the appropriate body, which:
(vii) banking and financial activities and products;
(viii) accounting and financial reporting;
For the position of Chairman of the Board of Directors, the experience gained in the coordination, direction or management of human resources is also assessed, in order to ensure an effective performance of the functions of coordination and direction of the works of the Board, of promotion of its proper functioning, also in terms of circulation of information, effectiveness of the comparison and stimulus to internal dialectics, as well as adequate overall composition of the body.
The assessment provided for in this Article may be omitted for candidates in possession of the professionalism requirements, when they have accrued for a period at least equal to that provided for in the annex to the MEF Decree.
The competence criterion is not met when the information acquired regarding theoretical knowledge and practical experience paint a serious, precise and concordant picture of the candidate's unsuitability for the position. In the event of specific, limited shortcomings, the appropriate body may take steps to address them.
When the presence on the Board of Directors of representatives who meet the independence requirements is required by law or regulations, a non-executive director who does not meet any of the following situations is considered independent:
in the last twelve years, the position of member of the Board of Directors, the Supervisory Board or the Management Board, as well as the executive position at a participant in the bank or its subsidiaries;
With regard to offices held in non-corporate bodies, the provisions of the previous paragraphs shall apply to subjects who perform equivalent functions in the body to those indicated in the same paragraphs.
Failure to meet the requirements set out in this article shall entail forfeiture of the office of independent director. If, following the lapse of office, the remaining number of independent directors on the body is sufficient to ensure compliance with the corporate governance provisions for banks implementing the Consolidated Law on Banking or with other provisions of the law that establish a minimum number of independent directors, the director who does not meet the requirements set out in this article shall remain a non-independent director, unless otherwise provided for in the Articles of Association.
Auditors may not be elected and, if elected, shall forfeit their office:
Considering that an independent director is characterised by his independence of judgement with respect to executive directors and by the absence of involvement in the management of the company, in applying to directors the requirements set out for auditors in letter b) of Art. 148, paragraph 3 of the Consolidated Law on Finance, CONSOB considers that the directors referred to in the said provision should be considered as executive directors.
More precisely, the Authority considers, in the light of the rationale of the regulations, that a person who holds the office of executive director in one of the companies of the group of the listed company (parent company, subsidiaries or companies under common control) cannot be qualified as an independent director of the listed company. By contrast, the fact that the independent director of the listed company acts as an independent director in other companies of the group would not compromise independence.
Circumstances that compromise, or appear to compromise, a director's independence include at least the following:
(iii) or, if the parent company is a corporation or institution, with its executive officers or top management;
d. if he receives, or has received in the previous three financial years, from the company, one of its subsidiaries or the parent company, significant additional remuneration compared to the fixed remuneration for the office and the remuneration for participation in the committees recommended by the Code or provided for by the regulations in force;
The administrative body shall predefine, at least at the beginning of its term of office, the quantitative and qualitative criteria for assessing the significance referred to in points c) and d) above. In the case of a director who is also a partner in a professional firm or consulting firm, the board assesses the significance of any professional relationships that may affect his position and role in the firm or consulting firm, or that otherwise relate to significant transactions of the firm and its group, even if independent of quantitative parameters.
The chairman of the administrative body may be assessed as independent where none of the above circumstances apply. If the chairman assessed as independent participates in committees recommended by the Corporate Governance Code, a majority of the committee members shall be other independent directors. The Chairman who is assessed as independent does not chair the Remuneration Committee or the Control and Risk Committee.
The Corporate Governance Code expressly excludes from the amount of "significant additional remuneration" that could impair an individual director's independence the "fixed compensation for office" and "compensation for participation in committees recommended by the Code."
"Fixed compensation for office" means:
On the contrary, the remuneration received by the director of the company adhering to the Code for duties in the parent company or in the subsidiary is considered as "additional remuneration" and is therefore assessed in its "significance" for the purposes of recommendation 7, letter d).
"Compensation for participation in committees recommended by the Code" means the compensation that an individual director receives by reason of his participation in endowed committees having functional responsibilities for the implementation of the Code, including any committee established pursuant to Recommendation 1, letter a), provided that it is not an executive committee. As expressly envisaged by the Code, remuneration for participation in the committees (or bodies) envisaged by current legislation, excluding the Executive Committee if any, is also assimilated to "committees recommended by the Code".
The Corporate Governance Code does not define the scope of individuals who are considered "close family members" for purposes of assessing an individual director's independence. For the purposes of assessing independence, their identification is therefore left to the appreciation of the Board of Directors.
Based on a mere illustrative and non-exhaustive list, "close family members" are commonly understood to include parents, children, spouses who are not legally separated, and domestic partners.
The quantitative and qualitative criteria have a general and abstract scope and are promptly defined by the Board of Directors before their actual application and, therefore, before the actual assessment of the independence of each individual director.
All officers shall act with full independence of judgement and awareness of the duties and rights inherent in their office, in the interest of sound and prudent management of the bank and in compliance with the law and any other applicable regulations.
All candidates shall inform the competent body of the situations referred to in Article 13, paragraph 1, letters a), b), c), h) and i), of the MEF Decree and the reasons why, in their opinion, those situations do not materially affect their independence of judgement.
The competent body shall assess the independence of judgement of the candidate in the light of the information and reasons provided by the latter and shall verify whether the safeguards envisaged by legal and regulatory provisions, as well as any additional organisational or procedural measures adopted by the bank or by the candidate, are effective in counteracting the risk that the situations referred to in paragraph 2 may affect the independence of judgement of the candidate or the decisions of the body. The following Articles are particularly relevant: 2391 and 2391-bis of the Civil Code and related implementing provisions; Chapter IX of Title V of Book V of the Civil Code; 53, paragraphs 4 and 4-quater, and 136 of the Consolidated Law on Banking and related implementing provisions; 6, paragraph 2-novies, of the Consolidated Law on Finance; 36 of the Salva Italia Decree.
If existing safeguards are not deemed sufficient, the appropriate body may:
If the measures indicated in this paragraph are not adopted or are insufficient to eliminate the shortcomings found, the competent body shall declare the candidate's disqualification pursuant to Article 23 of the Corporate Governance Code.
The competent body shall verify the effectiveness of the controls and measures adopted to preserve the independence of judgement of the representative, also in the light of the conduct actually adopted by the latter in the performance of his duties.
Each officer shall devote adequate time to the performance of the assignment. At the time of appointment and promptly in the event of facts occurring, he shall inform the competent body of the positions held in other companies, enterprises or bodies, the other work and professional activities carried out and the other situations or facts pertaining to the professional sphere capable of affecting his time availability, specifying the time that these positions, activities, facts or situations require.
The bank ensures that the candidate is aware of the time it has estimated as necessary for the effective performance of the assignment.
On the basis of the information obtained, the competent body assesses whether the time that each candidate can devote is suitable for the effective performance of the assignment.
If the candidate declares in writing that he can devote at least as much time to the assignment as the bank estimates necessary, the assessment may be omitted provided that all of the following conditions are met:
The competent body verifies the appropriateness of the time actually dedicated by the representatives, also in the light of their presence at the meetings of the bodies or committees.
If the availability of time is insufficient, the competent body shall ask the candidate to renounce one or more assignments or activities or to make specific commitments suitable for increasing his availability of time, or shall take measures including the revocation of proxies or specific tasks or the exclusion of the candidate from committees. Compliance with the candidate's commitments is verified. The assessment relating to the availability of time does not have independent importance for the purposes of pronouncing the candidate's disqualification, but contributes to the assessment of the candidate's suitability pursuant to Article 23 of the MEF Decree.
Except as provided in Article 19 of the MEF Decree, each member of large banks or banks of operational complexity may not hold a total number of positions in banks or other commercial companies that exceeds one of the following alternative combinations:
When calculating limits, the position held at the bank is included.
The competent body pronounces the forfeiture in case it ascertains that the limit to the accumulation of assignments has been exceeded and the representative concerned does not renounce the office or the offices that determine the exceeding of the limit in due time with respect to the deadline indicated in Art. 23, paragraph 7 of the MEF Decree.
The limits on the accumulation of offices do not apply to members who hold offices in the bank representing the State or other public bodies.
For the purposes of calculating the limits on the accumulation of offices, the offices held by the candidate are not taken into account:
For purposes of calculating the limits on the accumulation of offices, all offices held in each of the following cases shall be considered as a single office:
If more than one of the cases set out in Art. 18, paragraph 3, letters a), b) and c) of the MEF Decree occur at the same time, the positions are added together.
The set of appointments counted as a single appointment is considered as an executive appointment if at least one of the appointments held in the situations set out in Art. 18, paragraph 3, letters a), b) and c) of the MEF Decree is executive; in the other cases it is considered as a non-executive appointment.
The assumption of an additional non-executive position, compared to the limits indicated in Art. 17 of the MEF Decree and also determined on the basis of the provisions of Art. 18 of the MEF Decree, is permitted on condition that it does not prejudice the possibility for the candidate to devote adequate time to the position at the bank in order to carry out his functions effectively.
The appropriate body shall consider, among other things:
b. the size, business, and complexity of the bank or other trading company where the additional assignment would be made;
c. the duration of the additional assignment;
The additional non-executive position referred to in this Article shall not be permitted to the candidate who:
The additional non-executive assignment referred to in this Article cannot benefit from the application of the aggregation mechanism provided for in Art. 18, paragraph 3, of the MEF Decree.
The provisions of Art. 17, paragraph 3, of the MEF Decree are applied to the cases referred to in this Article.
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