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The Danish FSA (DFSA) has updated its fit & proper guidance on the requirements set out in the financial legislation for directors and board members. The new guide replaces the Danish FSA's guide no. 9291 of 15 May 2014
The purpose of the update is to create transparency around both the DFSA's practice for suitability assessments and the application process itself.
In the guidance, the DFSA describes the overall principles for assessing competence and experience requirements, which are based on a holistic approach when assessing candidates' suitability. Several of the new initiatives, such as conditional approvals and special requirements for board chairs, that have been introduced in the fit & proper area in recent years are described in the guide.
With the updated guide, the DFSA also further clarifies the information to be submitted when applying for a fit & proper assessment by the DFSA. The guidance does not contain specific contributions to the interpretation in relation to integrity assessments. However, in April 2022, the DFSA published a memorandum on practices and considerations in relation to integrity assessments, which aids in the assessment. However, the guide deals with matters that may be applicable to both the fit & proper assessment, as the application process for the candidates includes both.
The guidance highlights the various principles for the assessment of the competence and experience requirements for the suitability of board members, executive board members and key persons. The purpose is to clarify for companies and candidates as well what is required for the DFSA to conclude that a person meets the suitability requirement.
Criteria and Considerations Applied by the DFSA
The DFSA uses a holistic approach when evaluating a candidate's suitability and integrity. Some of the specific criteria and considerations include:
Sufficient knowledge, professional competence, and experience: The proposed candidate should have the necessary qualifications and experience to fulfill their role effectively. The DFSA considers experience from various fields, including the specific financial field, related financial fields, and other relevant professions. It is therefore up to the applicant to ensure that the application process duly highlights both direct and transferrable experiences.
Integrity and propriety: The candidate should demonstrate a high degree of integrity and propriety. This includes an assessment of their criminal record, economic conditions, and any previous sanctions or civil actions.
Conflicts of interest: The candidate should be sufficiently independent and free from any conflicts of interest that might hinder their ability to perform their duties, fiduciary and otherwise. For that reason, it will be necessary to map out the candidates interests in connection with the application.
Time commitment: The candidate should be able to dedicate sufficient time to carry out the duties of their office or position. This requirement will put a natural barrier on candidates with multiple engagements 'across the board', so to speak.
Personal competencies: In the case of the proposed chair of the board, the DFSA also assesses personal competencies such as robustness, impact, and managerial weight. This is obviously a rather imprecise factor, but designed to weed out 'nominee candidates'.
The DFSA's evaluation is always based on a specific, individual assessment of the candidate in relation to the role, the company, and the relevant company's business model. In less legal terms ... "it depends on the circumstances" and the candidate.
Guidance from DFSA
The full report is available on the DFSA's website and is included below in the Danish original and as an automated English translation for reading purposes only:
Danish Original
English Translation (Automated Translation)
Further detailed information about the DFSA's practice in the fit & proper area are available in Danish on Practices and considerations in integrity assessments from April 2022 and in the DFSA's annual report on suitability approvals.
Further Information
For more information on banking and financial regulation law for banking or capital markets transactions in Denmark, please contact Dr. Andreas Tamasauskas or Michael Carsted Rosenberg at Carsted Rosenberg.
This briefing is intended to provide general information on financial regulation in Denmark It is not intended to provide definitive legal or tax advice. No legal, tax or business decisions should be based solely on its content. The briefing does not necessarily deal with every important topic and is not designed to provide legal or other advice. It shall not be used as a substitute for legal advice and none may be inferred. It is only intended for general information on matters of interest. While we endeavour to represent the information as accurately and correctly as possible, we cannot accept any responsibility for any errors or omissions.