The Autorité des Marchés Financiers publishes the findings of its thematic inspections on governance and role of senior managers at asset management companies

Governance is a determining factor in asset management companies complying with their professional obligations, whether they are small, independent or part of a group. The principle of proportionality, based on criteria of size, activity and legal form, offers eligible asset management companies a certain latitude in implementing their governance obligations.

In this publication, the AMF recalls the regulations applicable to asset management companies, which impose several obligations on their senior managers. In the event of a regulatory breach by the asset management company, senior managers may be held liable.

The AMF carried out a series of "SPOT" (Supervision of Operational and Thematic Practices) inspections at a diverse sample of five asset management companies, independent or part of groups, and managing assets ranging from a few hundred million to in excess of five billion euros. These entities are incorporated in the form of public limited companies or simplified joint-stock companies, with or without a supervisory body. All of them carry out listed assets management. These inspections covered the period from 1 January 2022 to 31 December 2024.

For the five asset management companies, the AMF looked at the following points:

1. the organisation of asset management companies;
2. the definition and evaluation of policies and procedures;
3. the reports sent to senior managers and members of the supervisory function;
4. the system for informing the AMF in the event of a serious incident.

1 - The organisation of the asset management companies revealed generally well-organised management and supervisory bodies. However, some of these bodies did not comply with the requisite minimum frequency for the holding of committee meetings, and their functioning was sometimes deficient, in particular due to the occasional absence of meetings or of the expected senior managers. Furthermore, while all the executive managers had taken training courses during the three years inspected, only one asset management company on the panel had extended this training to members of the supervisory function.

2 - As regards the definition and evaluation of policies and procedures, all the asset management companies had policies on investment, risk management, remuneration and asset valuation. However, these documents were not always subject to regular review or formal validation by the management bodies.

3 - In terms of the reports sent to senior management and those in charge of the supervisory function, information relating to compliance, internal audit and risk management was generally communicated on a regular basis. However, one asset management company did not transmit to these senior managers information relating to the investment strategies pursued.

4 - Finally, although all the asset management companies had an internal alert system for serious incidents, some procedures appeared to be imprecise or obsolete. They did not systematically recall the regulatory obligation to inform the AMF immediately in the event of a serious incident or event likely to compromise compliance with the conditions of their authorisation.

Among the good practices, the AMF noted:

• the adoption of internal regulations specific to the supervisory function, which precisely defined how it was organised and operated, as well as its remit;
• the implementation of a systematic process for informing employees of changes in procedures affecting them and including, where appropriate, a request for an acknowledgment of receipt for policies or procedures covering activities deemed to be the riskiest;
• the regular presentation by the Chief Compliance and Internal Control Officer of the important points of their reports to the persons responsible for the supervisory function;
• the prior validation by senior managers of reports to be sent to the AMF, such as the annual disclosure sheets and annual internal control reports.

Among the poor practices observed, the AMF identified:

• the absence of a defined minimum meeting frequency for members of the asset management company's senior management;
• the absence of a formal communication channel for transmitting to senior managers the main decisions adopted by the investment committee.

About the AMF
The AMF is an independent public authority responsible for ensuring that savings invested in financial products are protected and that investors are provided with adequate information. The AMF also supervises the orderly operations of markets.Visit our website https://www.amf-france.org/en