Book V: Service providers

Credit institutions and finance companies shall have a sound system of governance including, in particular, a clear organisation ensuring a well-defined, transparent and consistent division of responsibilities, effective procedures for detecting, managing, monitoring and reporting the risks to which they are or could be exposed, an adequate system of internal control, sound administrative and accounting procedures, remuneration policies and practices enabling and promoting sound and effective risk management and, where…

The internal control system referred to in the first paragraph of article L. 511-55 includes the functions or other essential or significant operational tasks entrusted to third parties.

I. – Where supervision is exercised on the basis of the consolidated financial situation, financial or mixed groups and groups comprising at least one finance company must adopt adequate internal control procedures for the production of information and data relevant to the exercise of such supervision. II. – Credit institutions and finance companies that are part of a mixed group shall put in place adequate risk management processes and internal…

The chairmanship of the board of directors or any other body exercising equivalent supervisory functions of a credit institution or finance company may not be exercised by the chief executive or by a person exercising equivalent management functions. In the case of a branch of a credit institution referred to in I of Article L. 511-10, this prohibition means the exercise of effective management functions, within the meaning of the…

The board of directors, the supervisory board or any other body exercising equivalent supervisory functions shall review the governance arrangements provided for in Article L. 511-55, periodically assess their effectiveness and ensure that corrective measures have been taken to remedy any shortcomings. In the case of a branch of a credit institution mentioned in I of Article L. 511-10, the persons mentioned in the second paragraph of Article L. 511-13…

The board of directors, the supervisory board or any other body exercising equivalent supervisory functions shall approve and regularly review the strategies and policies governing the incurrence, management, monitoring and mitigation of the risks to which the credit institution or finance company is or may be exposed, including the risks generated by the economic environment. In the case of a branch of a credit institution mentioned in I of Article…

The persons referred to in Article L. 511-13 are required to be actively involved in the management of all significant risks incurred by the credit institution or finance company as well as in the valuation of assets and the use of external credit ratings and internal models relating to these risks. They shall ensure that adequate resources are allocated to this task.

In order to enable it to carry out the task provided for in Article L. 511-60, the Board of Directors, the Supervisory Board or any other body exercising equivalent supervisory functions shall be informed by the persons referred to in Article L. 511-13 of all significant risks, risk management policies and any changes made thereto. In the case of a branch of a credit institution mentioned in I of Article…