This remuneration policy sets out the legal and regulatory requirements which Audentia Capital Management Limited (the “Company”) complies with in order to meet its obligations in the area of the remuneration as Alternative Investment Manager licensed by the Malta Financial Services Authority (“MFSA”).
This Remuneration Policy is aimed at ensuring that any relevant conflicts of interest can be managed appropriately at all times and sets out practices for those categories of staff, including senior management, risk takers, control functions, and any employees receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities have a material impact on the risk profile of the Company or a Fund, that are consistent with and promote sound and effective risk management and do not encourage risk-taking which is inconsistent with the risk profiles, rules or instruments of incorporation of the Company or any relevant Fund.
In the event of any conflict between this policy and the local laws and regulations, the latter shall prevail to the extent where conflict exists. Any discrepancies in standards shall entail application of the more stringent.
The policy covers the remuneration which is paid in exchange for professional services rendered by the Company’s Identified Staff (as defined further below), and which consists of one or more of the following:
Remuneration can be divided into fixed remuneration (payments or benefits without consideration of any performance criteria) or variable remuneration (additional payments or benefits depending on performance or, in certain cases, other contractual criteria).
The Company has drawn up a Remuneration Policy in line with the applicable provisions on remuneration as set out in:
| Maltese Law | Investment Services Act, Cap. 370 of the Laws of Malta |
| EU Directive | No. 2011/61/EU |
| No. 2019/2088 | |
| ESMA Guidelines | No. 2016/411 – Final report on guidelines on sound remuneration policies under the UCITS directive and AIFMD |
| No. 2013/232 Guidelines on sound remuneration policies under the AIFMD | |
| MFSA Guidelines |
Guidance notes on the application of Proportionality Principle in relation to the ESMA Guidelines on sound remuneration policies under the UCITS Directive and the AIFMD last updated 9/05/2017 |
The remuneration policy applies strictly to those categories of staff which are classified as Identified Staff.
The Company adopts the definition of Identified Staff in accordance with ESMA Guidelines, being; categories of staff, including senior management, risk takers, control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities have a material impact on the Company’s risk profile (the “Identified Staff”).
The following is a current list, as of the date of this Remuneration Policy, of the Identified Staff of the Company. The Identified Staff have been determined and selected on the basis of their categories, in line with the ESMA Guidelines:
| Category | Identified Staff |
|---|---|
| Members of Governing Body | Board of Directors |
| Control Functions |
|
| Senior Management | Spanish Branch Manager |
| Other Risk Takers |
|
The Compliance Officer maintains a register of all staff members which fall within the category of Identified Staff.
The Company complies with the remuneration requirements in a way and to the extent that is appropriate, based on its size, internal organisation and the nature, scope and complexity of its activities.
The Company has been granted a derogation from the MFSA, based on the principles of proportionality, and as foreseen in the ESMA Guidelines, from the requirements:
The Company shall re-assess the proportionality principles on a regular basis, at least on an annual basis, and re-submit the results of the proportionality assessment to the MFSA at least every two years. This assessment needs to indicate how such derogation are still appropriate or otherwise for the Company.
The Board of Directors, in its supervisory function, has adopted and periodically reviews the general principles of this Remuneration Policy, and is responsible for its proper implementation.
The Remuneration Policy will be reviewed by the Board of Directors at least annually as part of the annual review of the Company’s liquidity and risk management assessments.
The Company has not established a Remuneration Committee pursuant to the exemption based on the proportionality principle applicable in terms of the ESMA Guidelines.
The Control Functions shall assist in the determination of the overall remuneration strategy of the Company with the aim to promote effective risk management. The Control Functions will be closely involved in reviewing the remuneration system of the Company.
The risk management function assesses how the remuneration, in particular the variable remuneration structure, affects the risk profile of the Company with particular focus on the capital and liquidity requirements.
The compliance function has been involved in the elaboration of this Remuneration Policy and will assess the adherence by the Company to the applicable legislation, regulation and internal policy.
Fixed and variable components of total remuneration must be appropriately balanced. The fixed component must represent a sufficiently high proportion of the total remuneration to allow the operation of a fully flexible policy on variable remuneration components including the possibility to pay no variable remuneration component.
In determining the appropriate ratio between the base remuneration and variable remuneration, the Company will have regard to:
The fixed remuneration is determined on the basis of the role of the individual employee, including his/her responsibilities and job complexity, performance and local market conditions. This also implies that fixed remuneration should be sufficiently high to remunerate the professional services rendered, in line with the level of education, job experience, the degree of seniority, the level of expertise and skills required.
The fixed remuneration must be sufficiently high on its own (without taking into consideration the variable component) to constitute fair remuneration for the professional services rendered by prevailing market standards.
The performance review may lead to an increase of the fixed remuneration of individual employee based on the attainments of agreed targets and/or higher salaries justified by higher level of responsibilities and/or change in industry standards and/or other criteria as may be determined by the Company from time to time.z/ul>
When remuneration includes a variable element, it shall be performance based and risk-adjusted. The variable remuneration should be reasonable, structured in such a way as to achieve a fair balance between fixed and variable elements, and in-line with the business strategy, market condition and the specific environment in which the Company operates. The maximum limit of variable component of remuneration should, in principle, not exceed the fixed remuneration.
In determining the size of variable component of remuneration, the following shall be taken into consideration:
Variable remuneration must not be paid through vehicles or methods that facilitate the avoidance of the Remuneration Provisions.
There is no commitment to pay variable remuneration to employees of the Company.
The Company shall not enter into agreements to pay guaranteed variable remuneration. The only exceptions to this rule are where such a payment:
Any remuneration package relating to compensation for, or buy out from, an employee’s contracts in previous employment is to be aligned with the long-term interest of the Company, and will be subject to the employee meeting specified objectives.
In determining whether to offer guaranteed variable remuneration, the Board of Directors will have regard to the individual’s qualifications and experience, the Company’s need for an individual with such experience and the likely impact on the Company. Consideration may also be made vis-à-vis the strength of the capital base.
In exceptional circumstances the Company may offer key members of staff a one-off retention award. Any decision to offer such a payment must be approved by the Board of Directors and will only be made on prudential grounds.
The Company will ensure that individuals are not remunerated for exceeding the risk tolerances of the Company or the CISs under management.
In establishing the Company’s top-down remuneration framework, the Board of Directors will take into consideration:
While each of the afore-mentioned criteria shall be considered in performance assessments, variable remuneration shall be based primarily on the attainment of function-specific objectives. The Board of Directors also reserves the right to take into account additional criteria on a case- by-case basis.
The appropriate mix of quantitative (financial) and qualitative (non-financial) criteria for assessing individual performance will depend on the tasks and responsibilities of the Identified Staff. A balance between financial and non-financial criteria will be sought. Poor performance in relation to the non-financial criteria may pose a threat to the Company, and hence the negative non-financial performance, in particular, unethical or non-complaint behaviour, will override any good financial performance generated by the individual and hence reduce the entitlement for variable remuneration.
In order to incentivise Identified Staff to manage risk appropriately, variable remuneration will be reduced when;
By way of examples:
The Company’s qualitative criteria could include:
Measures relating to conduct should comprise a substantial portion of non-financial criteria. Quantitative measures could include:
On the other hand, quantitative measures such as Return on Equity, Total Shareholder Return and Earnings Per Share are not suitably adjusted for longer-term risk factors and tend to incentivise highly leveraged activities.
The Company seeks to ensure that individuals involved in Control Functions remain independent from the business areas they oversee to avoid any potential conflicts of interest. The remuneration level of those in the Control Functions should allow the Company to employ qualified and experienced individuals in these functions.
In view that the Company has not established a Remuneration Committee on the basis of proportionality, the remuneration attributed to the Control Functions is directly overseen by the Board of Directors.
In order to prevent and/or avoid conflict of interest, the remuneration of those in the Control Functions shall be determined in accordance with the achievement of function-specific objectives, which are linked to their functions and independent of the business areas that they oversee.
The remuneration of the Control Functions shall be linked to the Company’s adherence to its risk profile, provided that any discretionary bonuses to the Control Functions shall be determined primarily by the attainment of their function-specific objectives, and shall not be determined solely to the Company-wide performance criteria.
The Company through its Interim Financial Return (IFR) and Annual Financial Return (AFR) calculates its ongoing capital requirements. This is reviewed periodically by the Board of Directors. In co-ordination with this review, the Board of Directors determines the size of the variable remuneration based on the assessment of each individual member of the Identified Staff and any other considerations that it may deem relevant. This will take into consideration:
It is important to ensure that the Company maintains a prudent balance between sound financial situation and the reward, pay out or vesting of variable remuneration. The finanical health of the Company should not be adversely affected by:
The Company ensures that any payment of variable remuneration only occurs following risk adjustments to profits and where the Company is not at risk of being unable to maintain a sound capital base.
The maximum annual variable remuneration that may collectively be paid to Identified Staff shall be the Company’s profit for the preceding year less any amounts determined by the Board of Directors to be held as a reserve (the “Variable Remuneration Pool”). Any reserves established shall be in order to strengthen the Company’s capital base, taking into consideration the various risks to which the Company and its CISs under management are exposed (as outlined in greater detail in the Company’s Risk Management Policy) and other potential adverse developments that may impact the Company’s financial stability.
The Board of Directors may determine to disburse the entire Variable Remuneration Pool or none of it. Similarly, the Board may, at its sole discretion, decide not to award variable remuneration to any member of Identified Staff where it feels this is not justified.
The Sustainable Finance Disclosure Regulation (“SFDR”) requires the Company to include in this Policy information on how the said Policy is consistent with the integration of sustainability risks.
As outlined previously, no variable remuneration shall be paid to Identified Staff unless it is determined to be justified by the Board of Directors following a performance assessment based on quantitative (financial) as well as qualitative (non-financial) criteria. Considering the very limited impact of the variable remuneration of the Identified Staff on the risk profile of the CISs and the nature of the business of the Company, the Company deems that there is no risk of misalignment with the integration of the sustainability risks the investment decision making process of the Company in respect of the CISs
In the event that the Company delegates portfolio management activity to a third-party investment manager (the “delegate”), such delegate shall ensure that it adopts remuneration policies and procedures which are consistent with the integration of sustainability risks, provided that sustainability risks are integrated into the investment decision-making process.
The Company believes that, where portfolio management is retained, its existing structures are sufficient to prevent excessive risk taking in respect of sustainability risks.
This Remuneration Policy has been designed in a way to mitigate as much as possible conflicts of interest.
The Board of Directors has additionally adopted a Conflict of Interest Policy aimed at addressing any conflicts that may arise between its officials and the clients, between the officials and the Company and between one client and another/others. The Company maintains a conflict of interest register which, if any, will identify remuneration conflicts and the procedures the Company implements to mitigate these conflicts.
The Company will comply with the remuneration disclosure requirements set out in the AIFMD.
A copy of this Policy (as may be amended from time to time) will be made available on the following website: www.audentiacapital.eu A paper soft copy of the Policy is also available free of charge from the Company upon request.
The total amount of remuneration for each full performance year after the effective date of this Policy, split into fixed and variable remuneration (if any), paid by the Company to the identified staff will be disclosed in the annual report of the Company.
The Board of Directors shall be responsible for initiating and facilitating, at least an annual basis, a review of the Remuneration Policy and its implementation. The review shall assess whether the overall remuneration system of the Company is:
Pursuant to an assessment with respect to proportionality, the Board of Directors may choose to outsource the annual review to a qualified independent external consultant such as the Company’s outside legal counsel or auditor. Whether carried out internally, or outsourced, the Board of Directors remain responsible for the review of the remuneration policies and practices and for ensuring that the results are the review are followed up. In addition, the relevant control function should be closely involved in reviewing the remuneration system of the Company.
The results of the annual review and any recommendations will be presented to the Board which shall promptly evaluate the results of the review, address any recommendations, and make any changes to the Remuneration Policy that are deemed appropriate. All changes or material exceptions to the Remuneration Policy are to be approved by the Board following consultation with the Control Functions, whether in relation to the annual independent review or otherwise.