VAG Circular on Members of Senior Management (Circular 9/2023 (VA))

Page 1 VAG Circular on Members of Senior Management dated 1 December 2023 Circular 9/2023 (VA) – Professional qualifications (fit) and good repute (proper) of mem￾bers of management in accordance with the VAG Bonn, 1 December 2023 (last updated 22 October 2025) 1 This circular provides explanations of the professional and personal requirements made of individuals who are to be appointed to the senior management of an undertaking and of the associated notification requirements based on the German Act on the Supervision of Insurance Undertakings (Insurance Super￾vision Act (Versicherungsaufsichtsgesetz) – VAG). Table of Contents I. Notification requirement and necessary documents ......................................................................................5

1. General information about the notification requirements ..............................................................5
2. Group of persons subject to the notification requirements............................................................6 a. Distinguishing between mandates as a member of senior management under the VAG 7 b. Intent to make a first-time appointment......................................................................................7 c. Intent to make a reappointment at the same undertaking...................................................7 d. Intent of appointment at another undertaking..........................................................................7 e. Intent to make a new appointment due to a reorganisation ...............................................8 f. The definition of “intent”.....................................................................................................................8
3. Notification requirement upon intention of appointment..............................................................8 a. Information on professional qualification in the notification ...............................................8 b. Documents required .............................................................................................................................9 c. The documents in detail ................................................................................................................... 10 (1) Curriculum vitae .........................................................................................................................10 (2) Form “Personal statement including information on fulfilling the fit and proper requirements”..............................................................................................................................11 1 The circular was last amended on 22 October 2025 to clarify margin no. 92 with regard to the necessary qualifications and knowledge of the entire management body and with regard to individual members of senior management.

Page 2 VAG Circular on Members of Senior Management dated 1 December 2023 (3) “Certificate of good conduct for submission to an authority”, “European criminal record check for submission to an authority” or “corresponding documents” from abroad .......................................................................................................13 (a) General information on certificates of conduct...................................................13 (b) Specific information on certificates of conduct...................................................14 (4) Extract from the Central Trade and Industry Register.................................................15 (5) Proof of further training (where applicable) ...................................................................16 4. Notification requirement upon resignation........................................................................................17 5. Allocation of departments amongst senior management............................................................17 II. Requirements made of members of senior management.........................................................................17

1. Professional qualifications (“fit”)..............................................................................................................18 a. Factoring in other professional experience............................................................................... 19 b. Theoretical knowledge ...................................................................................................................... 19 c. Practical knowledge............................................................................................................................ 19 d. Management experience with the rebuttable presumption under the VAG............... 20 e. Knowledge of the (partial) internal model ................................................................................ 20
2. Reliability...........................................................................................................................................................20
3. Conflicts of interest.......................................................................................................................................21
4. Availability in terms of time.......................................................................................................................22
5. Temporary absence due to maternity protection, parental leave, caring for family members or illness........................................................................................................................................22
6. Supervisory measures..................................................................................................................................24
7. Special attention to the requirements of the Money Laundering Act .....................................24 III. Multiple mandates .....................................................................................................................................................24
8. Relevant mandates........................................................................................................................................25
9. Considering mandate limits under other acts at the same time ................................................25
10. Details on the approval...............................................................................................................................25
11. Criteria for exercising discretion..............................................................................................................26
12. Authorised agent mandates......................................................................................................................28 IV. Written internal policy ..............................................................................................................................................29

Page 3 VAG Circular on Members of Senior Management dated 1 December 2023 1 This circular provides explanations of the professional and personal requirements made of individuals who are to be appointed to the senior management of an undertaking and of the associated notification requirements based on the VAG of 1 April 2015 (Federal Law Gazette I, p. 434), as last amended by Article 9 of the Act of 31 May 2023 (Federal Law Gazette 2023 I no. 140). 2 The circular is intended for all of the following types of undertaking subject to supervision by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) under the VAG: • insurance undertakings (section 7 no. 33 of the VAG); • Pensionsfonds (section 236 of the VAG); • insurance holding companies (section 7 no. 31 of the VAG); • undertakings within the meaning of section 293 (4) of the VAG; • special purpose insurance vehicles (section 168 (1) sentence 1 of the VAG); and • mixed financial holding companies (section 7 no. 10 of the VAG); • branches of insurance undertakings with their registered office in a third country (section 67 (2) sentence 1, also in conjunction with section 67 (4) of the VAG) (each an undertaking) in accordance with the following information. 3 The respective provisions of the VAG in each case are to be applied to small insurance undertakings (section 211 of the VAG), pension provision funds (sections 232 and 236 of the VAG) and funeral expenses funds (section 218 of the VAG) in respect of the suitability requirements for members of senior manage￾ment. The specific characteristics of the respective business model are taken into account. 4 In addition to the provisions of the VAG, the Commission Delegated Regulation (EU) 2015/35 and the EIOPA guidelines on system of governance (EIOPA-BoS-14/253 EN), including its Technical Annex, must also be taken into consideration in respect of all other undertakings. 5 The reference made in section 25 (1) sentence 2 of the German Financial Conglomerates Supervision Act (Finanzkonglomerate-Aufsichtsgesetz – FKAG) applies to superordinated undertakings at the head of a financial conglomerate. 6 The VAG specifies extensive requirements regarding the suitability of a member of senior management. The high level of importance attached to these requirements is reflected in the fact that BaFin will only issue authorisation to engage in insurance activities if the members of senior management meet the professional and personal requirements of the Act, and BaFin can revoke this authorisation if these re￾quirements are no longer met. 7 The relevant normative regulations and the contents of the circular based on them are characterised at various levels by numerous special features. At national level, different areas of law such as supervisory law, company law, labour law and worker co-determination law, as well as European provisions, must be kept in mind in parallel, some of which touch on, interfere with or modify each other. This can give rise to areas of tension that are not always amenable to a general and comprehensive solution and require a case-by-case approach. 8 The circular should be both readable and not too long, yet take the many different aspects into account. Thus the relevant special features, such as those applicable to small mutual societies (section 210 of the VAG), funeral expenses funds (section 218 of the VAG), pension provision funds (sections 232 and 236 of the VAG) and small insurance undertakings (section 211 VAG), must also be taken into consideration, even if they are not always mentioned explicitly in the individual sections.

Page 4 VAG Circular on Members of Senior Management dated 1 December 2023 9 This circular replaces the publication of 6 December 2018, which was previously formulated as a Guid￾ance Notice. 10 Please refer to the following circulars regarding the minimum requirements under supervisory law on the system of governance of insurance undertakings (MaGo) in the version in force at the material time with regard to BaFin’s expectations for the design of key areas of proper business organisation; these are currently: • Circular 02/2017 (VA) – Minimum Requirements under Supervisory Law on the System of Gov￾ernance of Insurance Undertakings incl. the corresponding FAQ published on the linked website • Circular 01/2020 (VA) – Minimum requirements under supervisory law on the system of govern￾ance of small undertakings pursuant to section 211 of the VAG (MaGo for Small IUs) • Circular 08/2020 (VA) – Minimum requirements under supervisory law on the system of govern￾ance of institutions for occupational retirement provision (For details of the scope of the respective MaGo, see section 2 “Scope and definitions” in each case.) Note on other publications by BaFin on related topics based on other supervisory laws In the case of thematically related publications by BaFin on the basis of supervisory laws of other financial sectors (e.g. the German Banking Act (Kreditwesengesetz – KWG)), it should be noted that, even when the content is similar, the special features of the respective supervisory area must be taken into account. This is based in particular on • European and national legal regulations, some of which differ in content; • as a result also on other guidelines issued by the relevant European supervisory authority; and • different institutional supervisory structures and their associated administrative processes. In contrast to insurance and pension funds supervision, in the area of supervision of credit institu￾tions and financial services institutions, the German Bundesbank, the European Central Bank and the auditing associations are involved in various forms in addition to BaFin. Data protection information: general information on the data processing undertaken by BaFin to com￾ply with its statutory obligations regarding notifications of intended appointments can be found on its website www.bafin.de/EN by going to BaFin/Data protection/Information on data processing. Further information on the processing of personal data

• in respect of reporting the intended appointment of members of senior management can be found here; and
• in respect of reporting the intended appointment of members of the senior management of loss adjustment firms can be found here.

Page 5 VAG Circular on Members of Senior Management dated 1 December 2023 I. Notification requirement and necessary documents

1. General information about the notification requirements 11 The undertaking must submit to BaFin the notifi￾cation to be made in accordance with the VAG along with the documents that must be attached. 12 Unless told otherwise, BaFin will assume that the undertaking has taken the steps envisaged by the relevant statutory and internal provisions and that, as far as the undertaking’s authorised representatives are aware, the person being put forward as a member of senior management has, for their part, done all that is necessary (e.g. applying for a certificate of good conduct and an extract from the Central Trade and Industry Register). 13 The four-digit BaFin registration number and the name of the undertaking must be entered as the ref￾erence to ensure the unambiguous assignment of a notification and the required documents. 14 The notification, as well as all documentation to be appended, must – subject to any legal exceptions – be submitted in German. If documents are not issued in German, a translation is required in addition to the foreign-language source document, subject to any legal exceptions. A certified translation or a trans￾lation prepared by a publicly appointed or sworn interpreter or translator may be required. The respon￾sible department at BaFin may – in accordance with the relevant legal provisions – refrain from requiring documents submitted in English to be translated. 15 A notification of the intent to appoint a member of senior management must be communicated without delay, which BaFin understands to mean within two weeks from the intent to appoint being formed (see I.2.f. below). 16 The curriculum vitae and the form “Personal statement including information on fulfilling the fit and proper requirements” and, if applicable, evidence of further training should be submitted to BaFin to￾gether with the notification of intent. An application for the certificate of conduct and the extract from the Central Trade and Industry Register must be submitted at the latest at the time of the notification of intent. If the extract from the Central Trade and Industry Register is already available, it must also be submitted with the notification of intent. The certificate of good conduct is sent directly to BaFin by the Federal Office of Justice. 17 The documents must not be more than three months old when the notification of intent is made. This also corresponds to the provision in Article 43(3) of Directive 2009/138/EC of 25 November 2009. The date the relevant document was issued is determinative in this case. 18 If BaFin already possesses a document on the same person from a previous notification procedure and there have not been any changes and no other aspects have become relevant to the current procedure in the interim, then the same document can be used for additional notifications of intent or requests for the approval of multiple mandates within 12 months of its issue date. 19 If reputation-related official documents were submitted to BaFin in a previous notification procedure on account of a foreign place of residence, they will not need to be resubmitted to BaFin for subsequent notifications if the foreign place of residence no longer exists and the documents hitherto submitted have an issue date that lies after the foreign place of residence came to an end. BaFin registration number: The registration number is a four-digit number that BaFin assigns to each undertaking for internal organ￾isation purposes. It appears as the “ID” in the BaFin database of companies.

Page 6 VAG Circular on Members of Senior Management dated 1 December 2023 20 Example to illustrate this: person X (of German nationality) had their place of residence abroad from 2012 to 2016, and then exclusively in Germany from 2017 onwards. The undertaking first submitted a notification of its intent to appoint person X as a member of its senior management in 2019. In addition to the certificate of good conduct for submission to an authority and the extract from the Central Trade and Industry Register, the “relevant documents” from abroad were also submitted. In 2024, after the previous undertaking had given notification of person X’s departure from the company, a new notifica￾tion regarding their intended appointment as a member of the senior management was submitted by another insurance undertaking. The “relevant documents” from abroad do not need to be resubmitted, as this relates to a completed period in the past for which “corresponding documents” have already been submitted. By contrast, the certificate of good conduct for presentation to an authority and the extract from the Central Trade and Industry Register will need to be resubmitted because the documents submitted previously are more than 12 months old. 21 BaFin may request additional or updated documents and information if it appears necessary in individual cases. 22 BaFin does not bear the costs for the documents to be submitted. 2. Group of persons subject to the notification requirements 23 The intention to appoint a member of senior man￾agement must be communicated to BaFin without delay. The notification must be submitted by the undertaking. If changes occur or become known at a later date with regard to the professional qualifi￾cations (fit) or repute (proper) of a person about whom a notification has already been submitted, such changes must be communicated immediately. 24 Members of senior management within the meaning of the VAG are those natural persons appointed by virtue of law or the articles of association to manage the business affairs and represent the undertaking. Besides members of senior management, who also include members of the senior management of loss adjustment firms (section 164 (3) of the VAG), this circular also covers the following within the scope of the VAG: (i) “deputy members” of senior manage￾ment; (ii) authorised agents of the branches of German companies based in other member or EEA sig￾natory states; (iii) claims representatives; (iv) authorised agents of undertakings from third countries; and (v) authorised agents of undertakings from other member or EEA signatory states that are not subject to the insurance directives (hereinafter also referred to as “members of senior management”). The term “members of senior management” is also understood to encompass persons who deal with winding-up (section 265 of the German Stock Corporation Act (Aktiengesetz – AktG); section 204 of the VAG) or liquidation (section 210 (2) of the VAG in conjunction with Section 48 of the German Civil Code (Bun￾desgesetzbuch – BGB)). 25 In order to clarify the term “deputy members of the management board” used in section 94 of the AktG, it must be pointed out that the “deputy members” of senior management are fully fledged members of the management board with all the rights and obligations that this entails. A distinction must be made between these permanent members of the management board and the temporary “deputies of lacking management board members” in accordance with Section 105 (2) AktG. 26 At undertakings with the legal form of an SE and a monistic system within the meaning of sections 20 Legal basis: Section 24 (1) and (2), section 47 no. 1 also in conjunction with section 58 (1) and (2), section 59 (1) sentences 1 and 3 no. 2, section 68 (2) sentence 2, also in conjunction with section 65 (2), section 164 (3), section 168 (2), section 212 (3) no. 7, section 224 (2) sentence 4 no. 9, sec￾tion 232 (1), also in conjunction with section 237 (1) sentence 1, section 293 (1) sentence 1 of the VAG

Page 7 VAG Circular on Members of Senior Management dated 1 December 2023 et seq. of the German SE Implementation Act (SE-Ausführungsgesetz – SEAG), the managing directors within the meaning of section 40 SEAG are to be considered members of senior management under supervisory law. 27 If an insurance undertaking under public law does not have a governing body called the “Vorstand” (“management board”), the equivalent executive body in accordance with section 33 (2) VAG shall take the place of the management board. a. Distinguishing between mandates as a member of senior management under the VAG 28 There are two kinds of mandate as a member of senior management at undertakings subject to the provisions of the VAG. Section 24 (3) sentences 1 and 2 of the VAG distinguishes between the two man￾dates not requiring approval (“statutory” mandates) and the other mandates, which are multiple mandates requiring approval. 29 If undertakings link the notification of intended appointments (for both statutory and multiple man￾dates) in accordance with section 47 no. 1 of the VAG with requests for the approval of multiple man￾dates in accordance with section 24 (3) sentence 2 of the VAG in a letter, these various legal proceedings are to be expressly identified in the cover letter. b. Intent to make a first-time appointment 30 The notification obligation is based on the intent to appoint, for the first time, a person as a member of the senior management of an undertaking supervised under the VAG. First-time appointment: the first-time appointment of a person as a member of the senior management of an undertaking supervised under the VAG. • Statutory mandates: subject to notification requirements • Multiple mandates: subject to notification requirements and requiring authorisation (section 24 (3) sen￾tence 2 of the VAG) c. Intent to make a reappointment at the same undertaking 31 The intention to make a reappointment at the same undertaking is not subject the notification require￾ment. 32 Notifications must only be submitted regarding any changes, for example a change from ordinary member of the senior management to the chair of the senior management. Reappointment: the renewed appointment of a member of senior management at the same undertaking. • Statutory mandates: not subject to notification requirements • Multiple mandates: renewed notification and authorisation not required (section 24 (3) sentence 2 of the VAG) d. Intent of appointment at another undertaking 33 Insofar as a person is to be appointed at another undertaking while already holding a mandate as a member of senior management, all documents must be submitted in an updated form as a basic prin￾ciple. Reference is made to the simplifications described under I.1. in margin numbers 18 and 19. Appointment at another undertaking: appointing a member of senior management again at a different un￾dertaking.

Page 8 VAG Circular on Members of Senior Management dated 1 December 2023 • Statutory mandates: subject to notification requirements • Multiple mandates: subject to notification requirements and requiring authorisation (section 24 (3) sen￾tence 2 of the VAG) e. Intent to make a new appointment due to a reorganisation 34 Insofar as a member of senior management is to be newly appointed when an undertaking is being reorganised, a corresponding notification of intent is required. When such a new appointment takes place is determined by the provisions of reorganisation or company law. 35 No notification of intent needs to be submitted if the undertaking is changing legal form in accordance with the German Transformation Act (Umwandlungsgesetz – UmwG) and if the makeup of its senior management is being maintained or remaining unchanged and it is to continue engaging in its insurance business. In the event of a merger, the acquiring undertaking is required to submit a notification to the effect that a member of the senior management of the undertaking being acquired is to be appointed as a member of the senior management at the acquiring undertaking. 36 If a notification of intent is necessary, all documents must be submitted in an updated form. Reference is made to the simplifications described under I.1. in margin numbers 18 and 19. New appointment in the event of a merger: appointing a member of the senior management at the acquiring company who previously worked for the undertaking being acquired: • Statutory mandates: subject to notification requirements • Multiple mandates: subject to notification requirements and requiring authorisation (section 24 (3) sen￾tence 2 of the VAG) f. The definition of “intent” 37 The statutory provision under section 47 no. 1 of the VAG requires even the envisaged appointment of a member of senior management to be communicated. Only a sufficiently concrete intent to appoint a member of senior management is subject to notification requirements. This will be the case at the latest when the decision to appoint the person as a member of senior management has been finalised by the competent governing body of the undertaking, even if the decision still requires approval by other bod￾ies or feedback from BaFin. There must not have been an effective appointment yet. The intention to make an appointment can also be communicated at an earlier point in time if the undertaking considers the intention to make the appointment to be sufficiently concrete. For example, the intent to appoint might exist as early as when a relevant committee of the supervisory body proposes to the plenary assembly that a particular person be appointed. 38 The notification must include the date on which the member of senior management is to be appointed. 3. Notification requirement upon intention of appointment a. Information on professional qualification in the notification 39 The notification (e.g. the cover letter) must set out what professional experience, education, further train￾ing where applicable, and other qualifications possessed by the designated member of senior manage￾ment are deemed to constitute the appropriate theoretical and practical knowledge required for their intended duties at the specific undertaking.

Page 9 VAG Circular on Members of Senior Management dated 1 December 2023 40 With regard to those areas for which the member of senior management is to hold department-level responsibility, the term “appropriate” means that this theoretical and practical knowledge has to be sound. With regard to areas in other departments, “appropriate” means that the member of senior man￾agement possesses at least such theoretical and/or practical knowledge as makes them able to under￾stand the decisions made by the other members of senior management and question them if necessary and thus capable of assuming their overall responsibility on the management board. 41 In a first step, the undertaking must – on the basis of the actual undertaking-specific criteria mentioned in section 296 (1) sentence 1 or sentence 2 of the VAG as well as the tasks and responsibilities of the position to be filled – set out which professional requirements exist for this position from the undertak￾ing’s point of view (determination of the requirement profile). 42 In a second step, the extent to which the theoretical and practical knowledge presented of the desig￾nated member of senior management justifies their professional qualifications (fit) for their specific du￾ties at the undertaking (illustration of how the requirement profile is fulfilled) must be clearly ex￾plained in more detail, making reference to the specific requirement profile. 43 The notification must also set out what professional experience and, if applicable, what other skills or qualifications gained by the person are deemed to constitute adequate management experience for their intended position as a member of senior management. To this end, information must be provided on the management competence required for the future position and the person’s previous manage￾ment experience (in particular what internal decisions the person had the authority to make, what busi￾ness areas they were previously responsible for, including the number of employees) and these must be set in relation to each other (comparability of the management range/management tasks). Reference is made to the rebuttable presumption in section 24 (1) sentence 4 of the VAG and to Article 273 of the Commission Delegated Regulation. 44 BaFin expects a specific description of the requirement profile of the position to be filled, including an explanation of why the envisaged member of senior management fulfils this requirement profile. 45 In isolated cases in the past, BaFin was unable or initially unable to fully understand descriptions pro￾vided by undertakings regarding the professional qualifications (fit) of certain designated members of senior management. This particularly related to people who had not previously worked in the insurance industry or for whom the intended position was accompanied by a large increase in the management range. BaFin therefore expects a more detailed presentation in such cases. The statements provided by undertakings enable BaFin to assess whether the designated member of senior management will have the necessary professional qualifications (fit) for the position at the time they are expected to take office or – insofar as they are not (yet) deemed fit on the basis of the supervisory inspection – whether addi￾tional qualifications such as a familiarisation period combined with a later start date are required. b. Documents required 46 The notification of intent must be accompanied by the following documents: (1) Curriculum vitae of the designated member of senior management (2) A “Personal statement including information on fulfilling the fit and proper requirements” form for the designated member of senior management (3) A “Certificate of good conduct for submission to an authority”, “European criminal records check for submission to an authority” and/or “corresponding documents” from abroad (4) An extract from the Central Trade and Industry Register

Page 10 VAG Circular on Members of Senior Management dated 1 December 2023 (5) Proof of further training, where applicable (6) In the cover letter or as a separate document: a specific description of the requirement profile of the position to be filled, including a detailed explanation of why the envisaged person fulfils this requirement profile (see I.3.a) above) 47 Please note: Certificates of conduct are sent directly to BaFin by the Federal Office of Justice. 48 BaFin provides a checklist on its website as an annex to this circular, which the notifying undertaking can use to make sure they are enclosing all the necessary documents. 49 General guidance notes on communicating with the Insurance Supervision can be found on the BaFin website, currently here. 50 As soon as an electronic submission procedure for notifications and change notifications has been es￾tablished, notifications and change notifications (each including the documents to be submitted to BaFin by the undertaking) must be submitted via this procedure. BaFin will publish further details on its website in due course. c. The documents in detail (1) Curriculum vitae 51 The notification of intent must be accompanied by a detailed CV. The CV of the designated member of senior management must be dated, without gaps, complete and truthful. Signing it with an electronic facsimile (scanned-in signature) is currently 2 sufficient as a basic principle. The CV must include the fol￾lowing information: • surname, all first names, birth name if applicable, interim names; • date of birth, place of birth; • place(s) of residence; • citizenship(s); • a detailed description of the candidate’s professional background; • the names of all undertakings for which the person works or has worked; • information on the type and duration of the respective jobs, including secondary activities; • details concerning language skills. 52 The focus of the CV must be on the stages of the candidate’s professional life. The individual career stages include in particular: 2 Reference is made to the Guidance notes on communicating with the Insurance Supervision Sector in all other respects. As soon as a standardised electronic submission procedure for notifications and change notifications has been established, noti￾fications and change notifications (each including the documents to be submitted to BaFin by the undertaking) must be submit￾ted via this procedure. BaFin will publish further details on its website in due course. See the Technical Annex to the EIOPA guidelines on system of governance The European regulations contain detailed specifications on what in￾formation must be provided to the supervisory authority.

Page 11 VAG Circular on Members of Senior Management dated 1 December 2023 • the actual position held, including, where relevant, details of representative authority, internal decision-making powers and business units within the undertaking that report(ed) to the per￾son, including number of employees; • start and end of activity with month and year in each case; • the name and registered office of the undertaking (for supervised undertakings include the reg￾ister number) as well as the type and scope of the business model (e.g. regionally active hail insurer, nationally active health insurer, internationally active reinsurer); • the location of the job. 53 If the person has been resident outside Germany in the past ten years, the relevant country and period of time must be indicated. The CV must also state if the principal residence and the place of professional activity were not in the same country. This information will be relevant for BaFin insofar as it has an impact on the register extracts to be submitted (see I.3.c. (3) and (4) below). (2) Form “Personal statement including information on fulfilling the fit and proper requirements” 54 BaFin makes the “Personal statement including information on fulfilling the fit and proper requirements” form available on its website for the declarations to be made by persons envisaged as members of the senior management of undertakings: • disclosure of criminal convictions and administrative offence proceedings; • sovereign sanctions; 3 • Proceedings under commercial or property law and proceedings concerning the withdrawal or revocation of a licence to practise as a liberal professional if the proceedings in question could be relevant to determining whether or not the person is of good repute (proper) (e.g. section 35 of the German Trade Regulation Code (Gewerbeordnung – GewO), insolvency proceedings, proceedings regarding the swearing of an affidavit regarding financial circumstances, section 46 of the German Tax Advisory Act (Steuerberatungsgesetz – StBerG), section 20 of the German Act on the Profession of Auditors (Wirtschaftsprüferordnung – WPO) or section 14 of the German Federal Lawyers’ Act (Bundesrechtsanwaltsordnung – BRAO)) • disclosure of relationships; • disclosure of business relationships; • disclosure of qualifying holdings within the meaning of section 7 no. 3 of the VAG; • overview of further mandates. 55 The form must be dated and then submitted both together with the notification of intent and, in updated form, in the event of any changes occurring at a later date. Signing it with an electronic facsimile 3 “Sovereign sanctions” include the cases set out in section 7a of the VAG, which result in the person not being considered of good repute (proper) (sentence 1) or generally result in the person not being considered of good repute (proper) (sentences 2 and 3). Similar matters under other legal systems must also be disclosed, which also includes sovereign sanctions imposed by official bodies outside the European Union.

Page 12 VAG Circular on Members of Senior Management dated 1 December 2023 (scanned-in signature) is currently 4 sufficient as a basic principle. 56 Pending criminal proceedings may be disregarded in the disclosure • if they were discontinued due to lack of sufficient suspicion; • if they were discontinued due to a permanent impediment to proceedings; • if they ended with an acquittal; • if an entry made in the Federal Central Criminal Register (Bundeszentralregister – BZR) regarding them is to be removed or cancelled; or • if they do not have to be stated in accordance with section 53 of the Federal Central Criminal Register Act (Bundeszentralregistergesetz – BZRG). 57 Criminal proceedings discontinued in accordance with sections 153 and 153a of the Code of Criminal Procedure (Strafprozessordnung – StPO) and other (provisionally) discontinued criminal proceedings – with the exception of discontinuations in accordance with section 170 (2) of the StPO – must be dis￾closed, as such proceedings may also give rise to indications that the person is not of good repute (proper), particularly in the case of proceedings in connection with infringements that are punishable by law against relevant supervisory law, property or insolvency offences or tax offences. However, these proceedings do not have to be disclosed if they were concluded with a fine, condition, instruction or other decision more than five years before the beginning of the year in which the notification is submit￾ted. 58 Furthermore, any administrative fines or other administrative proceedings relevant to the Central Trade and Industry Register that were pending at the time of the disclosure may be disregarded • if they were discontinued due to lack of sufficient suspicion; • if they were discontinued due to a permanent impediment to proceedings; • if they ended with an acquittal; • if they are to be removed from the Central Trade and Industry Register or cancelled in accord￾ance with sections 152 and 153 of the GewO; • with regard to decisions to withdraw or revoke the licence to practise as a liberal professional if the reason for the withdrawal or revocation ceased to exist more than five years ago; or • if the person concerned has been exonerated of the accusation in the relevant administrative proceedings. 59 Similar matters under other legal systems with regard to criminal proceedings, administrative fines and other administrative procedures must also be disclosed. 60 The information must be complete and correct. If proceedings are to be indicated, copies of judgements, decisions, notices or other relevant documents must be attached. BaFin reserves the right to obtain further information from the competent authorities if necessary. 4 Reference is made to the Guidance notes on communicating with the Insurance Supervision Sector in all other respects. As soon as a standardised electronic submission procedure for notifications and change notifications has been established, noti￾fications and change notifications (each including the documents to be submitted to BaFin by the undertaking) must be submit￾ted via this procedure. BaFin will publish further details on its website in due course.

Page 13 VAG Circular on Members of Senior Management dated 1 December 2023 61 It is advisable to contact the division responsible at BaFin in the event of any doubt. In order to assess any conflicts of interest, the person must also dis￾close any relationships with the members of senior management and the members of the administra￾tive or supervisory board. In addition, information must be provided on qualifying holdings within the meaning of section 7 no. 3 of the VAG of the person and of their relatives within the meaning of section 11 (1) no. 1 of the German Criminal Code (Strafge￾setzbuch – StGB) in the undertaking itself and other undertakings that hold shares in the undertaking. 62 Insofar as (i) the member of senior management, (ii) a relative within the meaning of section 11 (1) no. 1 StGB, or (iii) another undertaking managed by the member of senior management or their relative within the meaning of section 11 (1) no. 1 StGB maintains business relationships with the undertaking submitting the notification that could make that undertaking economically dependent on the reporting undertaking, the nature and extent of the relationships must be described. Holding 10% or more of the capital or voting rights in another undertaking or having any other possibility of exercising a significant influence over the management of this other undertaking is equivalent to managing another undertak￾ing (based on section 7 no. 3 of the VAG). (3) “Certificate of good conduct for submission to an authority”, “European criminal record check for submission to an authority” or “corresponding documents” from abroad (a) General information on certificates of conduct 63 Depending on their nationality and place of resi￾dence, the member of senior management may need to submit a “Certificate of good conduct for submission to an authority” (document type “O”) is￾sued by the Federal Office of Justice in accordance with section 30 (5) of the BZRG (a certificate of con￾duct), a “European certificate of good conduct for submission to an authority” in accordance with sec￾tion 30 (5) and section 30b of the BZRG (a European criminal record check) and/or corresponding certifi￾cates of conduct or declarations regarding assess￾ments of reputation conducted by supervisory au￾thorities in their country of residence in consultation with the relevant division at BaFin (“corresponding documents”).5 5 The Federal Office of Justice sends the (European) certificate of conduct directly to BaFin. In contrast, the undertaking must provide BaFin with the relevant documents from abroad – as well as the extract from the Central Trade and Industry Register. The Guidance notes on communicating with the Insurance Supervision Sector apply at present. As soon as a standardised elec￾tronic submission procedure for notifications and change notifications has been established, notifications and change notifica￾tions (each including the documents to be submitted to BaFin by the undertaking) must be submitted via this procedure. BaFin will publish further details on its website in due course. Relatives within the meaning of section 11 (1) no. 1 of the StGB: a) Relatives and in-laws in the direct line, the spouse, civil partner, fiancé(e), siblings, spouses or civil partners of siblings, siblings of spouses or civil partners, even if the marriage or civil partnership that established the relationship is no longer in ef￾fect or if the relationship or in-law relationship has lapsed; b) Foster parents and foster children. Federal Central Criminal Register (BZR) The Federal Office of Justice maintains the Federal Cen￾tral Criminal Register, the details of which are regulated in the BZRG. Criminal convictions, decisions by adminis￾trative authorities and courts, notes of incapacity and in￾sanity by German courts and authorities are entered in this register. The entries are removed under the condi￾tions set out in the BZRG. Anyone can apply for a certif￾icate of good conduct pertaining to themselves, and un￾der certain conditions authorities can also request in￾formation.

Page 14 VAG Circular on Members of Senior Management dated 1 December 2023 64 Members of senior management who have lived in several countries in the past ten years are required to provide certificates of conduct and corresponding documents from each country. Any legal obstacles to submission must be explained to the relevant department at BaFin. 65 In countries where a certificate of conduct is issued by a public sector entity, it may not be replaced by other documents. 66 The certificate of good conduct should not be confused with the “enhanced certificate of conduct” (extended criminal records check) in accordance with section 30a of the BZRG. 67 The application for a certificate of good conduct and a European criminal record check must be submit￾ted by the person themselves, either in person to the local registration office (section 30 (2) sentence 1 of the BZRG) or electronically to the Federal Office of Justice (section 30c of the BZRG). German nationals residing outside the Federal Republic of Germany can submit the application directly to the Federal Office of Justice as the registration authority (section 30 (3) sentence 1 of the BZRG). The application must be submitted to the Federal Office of Justice in good time so that BaFin receives the certificate of good conduct or the European criminal record check in a timely manner, together with the undertaking’s notification. 68 The four-digit BaFin registration number and the name of the undertaking must be entered as the reference to ensure that BaFin can allocate the certificates of good conduct received to the undertaking at which the person in question is to be appointed. The Federal Office of Justice sends both the certificate of good conduct and the European certificate of good conduct directly to BaFin. (b) Specific information on certificates of conduct 69 Specifically, the following certificates of conduct and, if applicable, corresponding documents must be submitted: Persons with... Documents German nationality and... their place of residence in Germany A certificate of good conduct issued by the Federal Office of Justice their place of residence in a Mem￾ber State of the European Union or a third country A certificate of good conduct issued by the Federal Office of Justice and the “corresponding docu￾ments” from the country of residence the citizenship of an￾other Member State of the European Union and... their place of residence in Germany A European certificate of good conduct issued by the Federal Office of Justice their place of residence in a Mem￾ber State of the European Union or a third country “Corresponding documents” from the country of residence the citizenship of a third country and... their place of residence in Germany A European certificate of good conduct issued by the Federal Office of Justice European certificate of good conduct Since 27 April 2012, it has been possible to apply for a European certificate of good conduct after the German legislator applied section 30b of the BZRG (which was last amended by Article 1 of the Act of 4 December 2022 (Federal Law Gazette I p. 2146)) to implement the provi￾sions of Council Framework Decision 2009/315/JHA of 26 February 2009, on the organisation and content of the exchange of information extracted from the criminal rec￾ords of different Member States (OJ L 93 from 7 April 2009, p. 23). The Federal Office of Justice has published explanatory notes on the European certificate of good conduct on its website.

Page 15 VAG Circular on Members of Senior Management dated 1 December 2023 Persons with... Documents their place of residence in a Mem￾ber State of the European Union or a third country “Corresponding documents” from the country of residence (4) Extract from the Central Trade and Industry Register 70 An extract from the Central Trade and Industry Register in accordance with section 150 of the GewO must also be submitted to BaFin.6 71 The application for an extract from the Central Trade and Industry Register must be submitted by the person themselves, either in person to the competent local authority – usually the registration office or Trade Supervisory Office (Gewerbeaufsichtsamt) – (sections 150 (2) and 155 (2) of the GewO in conjunc￾tion with the relevant provisions of individual state legislation) or electronically to the Federal Office of Justice (section 150e of the GewO). Persons residing outside the Federal Republic of Germany can submit the application directly to the Federal Office of Justice in its capacity as the registration authority (section 150 (3) of the GewO). It is important to ensure that a natural person applies for the register extract. 72 The following instructions on completion of the official form GZR 3 of the Second General Administrative Regulation on Fulfilment of Section XI – Central Trade and Industry Register – of the GewO (2 nd GZRVwV – instructions for completion –) of 29 July 1985 must be complied with: • Code “1” must be entered in field 01, “Document type”. • Both boxes in field 20 are to be left blank. 6 The Federal Office of Justice sends the (European) certificate of conduct directly to BaFin. In contrast, the undertaking must provide BaFin with the relevant documents from abroad – as well as the extract from the Central Trade and Industry Register. The Guidance notes on communicating with the Insurance Supervision Sector apply at present. As soon as a standardised elec￾tronic submission procedure for notifications and change notifications has been established, notifications and change notifica￾tions (each including the documents to be submitted to BaFin by the undertaking) must be submitted via this procedure. BaFin will publish further details on its website in due course.

Page 16 VAG Circular on Members of Senior Management dated 1 December 2023 73 The four-digit BaFin registration number and the name of the undertaking must be entered as the reference to en￾sure that BaFin can allocate any extracts from the Central Trade and Industry Register that it might receive separately to the undertaking at which the person in question is to be appointed. 74 In accordance with the provisions of the GewO, the Federal Office of Justice sends the extract from the Central Trade and Industry Register to the applicant rather than directly to BaFin. As soon as it has been received, an extract must be submitted to BaFin together with the other documents to be enclosed with the notification of intent. However, a later submission is also possible. 75 As a basic principle, BaFin waives the requirements to sub￾mit an extract from the (German) Central Trade and Industry Register and provide comparable foreign documents for persons who have not yet resided or worked in Germany. BaFin reserves the right to request further documents in in￾dividual cases. Application of the provisions on the Central Trade and Industry Register to undertakings subject to su￾pervision under the VAG The provisions of sections 149 et seq. of the GewO governing the Central Trade and Industry Register also apply to undertakings subject to supervision under the VAG and to natural persons working for them (see section 6 (1) sentence 3 of the GewO). The requirement to use the Central Trade and Industry Register for insurance undertakings is also based on the Second General Administrative Regulation on Fulfilment of Section XI – Central Trade and Industry Register – of the GewO (2 nd General Administrative Regulation – instructions for completion) of 29 July 1985, which was issued by the then Federal Ministry of Justice in agreement with the then Federal Ministry for Economic Affairs in ac￾cordance with section 153b (1) of the GewO (old version; now section 153c sentence 1 of the GewO). The first part, “Notifications”, contains the formal requirements for the entities subject to notification requirements that prepare notifications concerning the Central Trade and Industry Register in accordance with section 153a (1) sentence 1 of the GewO. The forms GZR 1 and GZR 2 (Appendix 1 to the 2 nd GZRVwV) contain the field 23 “Trade code”; in accordance with no. 1.26 and no. 3.10 of the 2 nd GZRVwV, a four-digit code must be entered here based on Appendix 4 to the 2 nd GZRVwV, “List of codes of trades and commercial enterprises”. The following insurance lines are listed in “Part 6: Credit institutions and the insurance industry” under the serial numbers 146–149: Serial no. Name of the trade Code 146 Life insurance, Pensionskassen and funeral expenses funds 6100 147 Health insurance 6120 148 Property and casualty insurance 6140 149 Reinsurance 6160 150 Brokering of insurance policies 6190 (5) Proof of further training (where applicable) 76 If the professional qualifications (fit) of a member of senior management were (also) obtained by com￾pleting further training courses, then corresponding proof (photocopies will suffice as a basic principle) of successful participation in the further training must be enclosed with the notification of intent. The Central Trade and Industry Register The Federal Office of Justice maintains a Central Trade and Industry Register, the de￾tails of which are stipulated in sections 149 et seq. of the GewO. Administrative deci￾sions, fines and criminal convictions in con￾nection with commercial activities are en￾tered in the register. These include the rev￾ocation of a business licence because the person proved not to be of good repute (proper), fines for a tax offence or convic￾tions under the German Act to Combat Ille￾gal Employment (Schwarzarbeitsbekämp￾fungsgesetz – SchwarzArbG). The entries are cancelled/removed under the condi￾tions set out in the GewO. Anyone can ap￾ply for an extract from the register pertain￾ing to themselves, and under certain con￾ditions authorities can also request infor￾mation.

Page 17 VAG Circular on Members of Senior Management dated 1 December 2023 proof must indicate the organiser, the content and the duration of the training course(s). The require￾ment to submit evidence only relates to further training that is relevant for the assessment of the exist￾ence of the professional qualifications (fit) required in accordance with section 24 (1) of the VAG. 4. Notification requirement upon resignation 77 The undertaking is required to communicate the resigna￾tion of a member of senior management without delay, giv￾ing the reasons in each case insofar as these are relevant to an assessment of the person’s suitability (section 24 (1) of the VAG). 78 Rather than being submitted together with a notification of appointment, the notification of resignation must be sent separately so that the two processes can be kept clearly separate for data protection purposes. 79 To prevent abuse, any deed of appointment issued by BaFin must also be returned when an authorised agent resigns. Any management board certificate issued by BaFin must be returned on the resignation of members of senior management at small mutual societies in accordance with section 210 of the VAG. 5. Allocation of departments amongst senior management 80 An up-to-date overview of the allocation of departments amongst the senior management of the undertaking must be submitted to BaFin once one of its members has taken office or after they have resigned. 81 Section 23 (1) of the VAG requires the system of governance to provide for an appropriate, transparent organisational structure with clear assignment and appropriate segregation of responsibilities. II. Requirements made of members of senior management 82 The members of senior management must be fit and proper. 83 In the case of small insurance undertakings, pension provision and funeral expenses funds, only the relevant provisions of the VAG apply. With regard to the requirements made of the members of senior management, particular at￾tention is paid to the business model, including the nature, scale and com￾plexity of the risks facing the undertaking in question based on the provisions of the VAG (section 296 (1) sentence 1 of the VAG). In the case of Pension￾skassen and Pensionsfonds, the specific characteristics of pension provision funds are taken into account (section 296 (1) sentence 2, also in conjunction with section 237 (1) sentence 1 of the VAG). The provi￾sions of the Commission Delegated Regulation (EU) and the EIOPA guidelines are not to be applied to these undertakings. 84 The principle of proportionality plays a major role, in particular when implementing the requirements for professional qualifications (“fit”). The principle of proportionality is associated with the individual characteristics of the criteria specified in section 296 (1) sentence 1 or sentence 2 of the VAG for the Legal basis: Section 47 no. 2, also in conjunction with section 212 (3) no. 10, section 232 (1), also in conjunction with section 237 (1) sentence 1, section 168 (2), section 293 (1) of the VAG Legal basis: Section 23 (1), section 305 (1) no. 1 of the VAG, section 24 (1) of the German Administrative Procedure Act (Verwal￾tungsverfahrensgesetz – VwVfG), Article 273 (3) of the Commission Delegated Regulation (EU) Legal basis: Section 24 (1) of the VAG; Article 273 (3) of the Commission Del￾egated Regulation (EU)

Page 18 VAG Circular on Members of Senior Management dated 1 December 2023 respective undertaking. 85 As it thus depends on the undertaking-specific characteristics of the criteria specified in section 296 (1) sentence 1 or sentence 2 of the VAG, a case-by-case assessment is always required. However, an assess￾ment of which form may be regarded as proportionate is not set in stone, including with regard to the individual undertaking. Rather than being done once only, the assessment must be carried out whenever a notification of intent is received on the basis of the current characteristics of the criteria of the respec￾tive undertaking specified in section 296 (1) sentence 1 or sentence 2 of the VAG. In this respect, the undertakings have to examine whether and how the available structures and processes must be further developed. 86 Proportionality has nothing to do with whether or not the applicable requirements need to be complied with. It only affects the manner in which the requirements can be fulfilled. While less stringent require￾ments are possible for undertakings with a lower level of the criteria specified in section 296 (1) sentence 1 or sentence 2 of the VAG, undertakings with a higher level of these criteria may only be able to classify more complex structures as proportional under certain circumstances. 87 The requirements that the person be of good repute (“proper”) reflect the same standards, as their reputation and integrity must always be ensured to the same degree regardless of the individual char￾acteristics of the criteria specified in section 296 (1) sentence 1 or sentence 2 of the VAG. 88 Whether a person is deemed to have the professional qualifications (fit) and reliability (proper) when a notification of intent to appoint them is made is assessed based on the documents submitted. The cri￾teria required by law must nevertheless be met not only at the time of appointment, but also throughout the exercise of the mandate.

1. Professional qualifications (“fit”) 89 Professional qualifications (“fit”) here means that a member of senior management is capable of sound, prudent management of the undertaking based on their professional skills, knowledge and experience. In accordance with section 24 (1) sen￾tence 3 of the VAG, this requires adequate theo￾retical and practical knowledge of the insurance business as well as management experience. Pro￾fessional qualifications (fit) must be up to date. 90 A knowledge of risk management specific to the underwriting business is key for all undertakings. This also applies to information technology in view of the opportunities and risks involved. In the case of Pensionskassen and Pensionsfonds, the specific characteristics of pension provision funds are taken into account. 91 Having the professional qualifications and being “fit” encompasses continuing development, meaning that members of senior management must be able to fulfil changing or increasing requirements made of their duties at their undertaking. As a bare minimum, the undertakings are required to reassess the suitability of the relevant persons on the occasions specified in no. 13 of the EIOPA guidelines. 92 Article 273 (3) of the Commission Delegated Regulation requires the duties assigned to the individual members of senior management to be taken into account. The entire management body must always have an appropriate diversity of qualifications, knowledge and relevant experience. Each member of Legal basis: Section 24 (1) of the VAG; Article 273 of the Com￾mission Delegated Regulation (EU) In accordance with Article 273 (1) of the Commis￾sion Delegated Regulation, undertakings must en￾sure that all members of senior management pos￾sess the necessary professional qualifications (fit) and are of good repute (proper) at all times.

Page 19 VAG Circular on Members of Senior Management dated 1 December 2023 senior management must have sufficient knowledge and skills for the tasks falling within their area of responsibility. At the same time, each individual member of senior management must always have suf￾ficient knowledge of all lines of business in order to ensure corresponding control. Even if members of senior management specialise in specific departments, this does not affect the overall responsibility borne by the senior management as a whole. Delegating duties within senior management or to em￾ployees further down the hierarchy does not negate its overall or ultimate responsibility. The knowledge and experience of other members of governing bodies or other employees are no substitute for the appropriate professional qualifications (fit) of the relevant members of senior management. 93 No. 11 of the EIOPA guidelines requires members of senior management to possess appropriate skills, experience and knowledge in the following areas as a minimum: • Insurance markets and financial markets • Business strategy and model • System of governance • Financial and actuarial analysis • Regulatory framework and regulatory requirements 94 BaFin would like to make it clear that corresponding skills, experience and knowledge in a certain class of insurance A that a member designate of senior management possesses based on their career to date do not necessarily also confer sufficient skills, experience and knowledge in another class of insurance B in which the undertaking making the notification operates. Whether the skills, experience and knowledge gained to date will be sufficient in such circumstances to manage an undertaking in what is a “new” class of insurance for the member designate of senior management must be determined on a case-by-case basis. a. Factoring in other professional experience 95 According to Article 273(2) of the Commission Delegated Regulation (EU), “professional and formal qual￾ifications, knowledge and relevant experience in the insurance sector, other financial sectors and other undertakings” must be taken into account. Where relevant, the areas of insurance, finance, accounting, actuarial science and management must be taken into account. Article 273 (3) of the Commission Dele￾gated Regulation requires an “appropriate diversity of qualifications, knowledge and relevant experi￾ence” to be ensured in senior management in order to ensure that the undertaking is managed in a professional manner. 96 On the topic of IT skills in particular, see the expert article entitled “IT competency among management board members: BaFin adjusts decision-making standards for appointing IT specialists as management board members” from the BaFinJournal (December 2017 issue, pp. 15–18). b. Theoretical knowledge 97 Sufficient theoretical knowledge can be demonstrated e.g. by completed vocational training or by study programmes or courses relating to economics, business management, mathematics, tax or general law and insurance. A combination of sufficiently broad-based professional experience and further training in underwriting matters can also provide the requisite theoretical knowledge as a basic principle. c. Practical knowledge 98 Section 24 (1) sentence 3 of the VAG requires practical experience in the insurance business in order to provide evidence of professional qualifications (fit). 99 For the specific business of credit and suretyship insurance (sections no. 14 and 15 of Annex 1 to the

Page 20 VAG Circular on Members of Senior Management dated 1 December 2023 VAG), members of senior management are required to have many years of significant experience in credit checks in accordance with Federal Insurance Supervisory Office (BAV) Circular 1/96 of 22 May 1996 (Official Bulletin of the BAV 1996, pp. 135–136). 100 “Professional qualifications (fit)” includes the language skills that are required based on the undertak￾ing’s business model. d. Management experience with the rebuttable presumption under the VAG 101 “Management experience” includes providing guidance and supervision as well as the power to action decisions on one’s own responsibility. In particular, therefore, it can be gained from working as a man￾ager if the work in question was done immediately below executive level or the person concerned man￾aged sizeable organizational units at their undertaking. It also depends on whether the member of senior management has planned, organised and overseen projects, measures and workflows and has demon￾strated their ability to manage staff and to coordinate, delegate and monitor tasks. 102 A member of senior management will be deemed to possess sufficient management experience if, in their career to date, they have managed undertakings or been entrusted with the management of or￾ganisational units in which they had staff reporting to them and they had the power to act and make decisions on their own responsibility. The undertakings in question need not be insurance undertakings. 103 In accordance with section 24 (1) sentence 4 of the VAG, it can routinely be assumed that a member of senior management possesses sufficient management experience if they performed or have performed a managerial role for at least three years at a comparably sized insurance undertaking involved in a comparable business. This rebuttable presumption can also be assumed to apply if the person has man￾aged sizeable organisational units. 104 A key factor in determining the size of an undertaking is the amount of its technical reserves in personal insurance and the amount of its gross premium in property insurance. However, BaFin can also consider additional criteria such as headcount when assessing what constitutes “comparably sized”. As a basic principle, undertakings with a similar business model and a similar line in insurance business will be involved in a comparable business. e. Knowledge of the (partial) internal model 105 Responsibility for any (partial) internal model applied by an insurance undertaking lies with its senior management (section 113 of the VAG). The senior management must therefore also possess appropriate theoretical and practical knowledge. Article 225 of the Commission Delegation Regulation sets out fur￾ther provisions in this regard. When they take office, internal candidates must have relevant knowledge of the (partial) internal model actually applied by the undertaking. It is sufficient for external candidates to have relevant knowledge of (partial) internal models in general and to acquire such knowledge relat￾ing to the (partial) internal model actually applied by the undertaking without delay after taking office. 2. Reliability 106 Members of senior management must be of good repute (proper). It is not necessary to furnish positive proof that the person is of good repute (proper). This means that the person is considered to be of good repute if no facts are evident that would justify considering them not of good repute. 107 A person is to be deemed not of good repute (proper) if personal circumstances based on general life experience justify the assumption that these circumstances may make it harder for them to perform their mandate as a member of senior management diligently and properly. This must take into account the

Page 21 VAG Circular on Members of Senior Management dated 1 December 2023 member of senior management’s personal behaviour and business conduct in financial terms and under criminal, property and supervisory law. Criminal or administrative offences – especially those in connec￾tion with activities at undertakings – are of particular relevance within both the German and foreign legal systems. 108 Not being of good repute (proper) does not assume the person is at fault. 109 If relevant circumstances arise or have arisen, BaFin will determine on a case-by-case basis whether the member of senior management is not or no longer to be deemed of good repute (proper) with regard to the performance of their duties. 110 Criteria for not being of good repute (proper) include: • Supervisory measures that BaFin is taking or has taken against the member of senior manage￾ment or an undertaking in which the person serves or has served as a member of senior man￾agement or member of an administrative or supervisory body • Property- or tax-related criminal or administrative offences, money laundering offences or seri￾ous crime • Conflicts of interest 3. Conflicts of interest 111 Conflicts of interest exist if a member of senior management’s personal circumstances or their own economic activity are likely to compromise the independence of their work and their duty to act in the undertaking’s best interests. Permanent conflicts of interest prevent a person from pursuing their work. 112 A conflict of interest can consist in a member of senior management be￾ing related to one or more of the following persons at the undertaking submitting the notification or at its parent company or subsidiary: • other members of senior management; • members of the administrative or supervisory body; or • persons responsible for key functions. 113 Whether a relationship prevents the person from performing their work must be determined on a case￾by-case basis. 114 A conflict of interest can also exist if (i) the member of senior management, (ii) a relative (section 11 (1) no. 1 of the StGB) of the member of senior management, or (iii) another undertaking managed by the member of senior management or their relative maintains business relationships with the undertaking submitting the notification that could make that undertaking economically dependent. Holding 10% or more of the capital or voting rights in another undertaking or having any other possibility of exercising a significant influence over the management of this other undertaking is equivalent to managing another undertaking (based on section 7 no. 3 of the VAG). 115 Conflicts of interest affecting the member of senior management, especially any connected with their own economic activity (e.g. if they are also working as a broker) may be relevant to assessing whether they are of good repute (proper). Legal basis: Section 24 (1) of the VAG; Article 258 (5) of the Commission Delegated Regulation (EU)

Page 22 VAG Circular on Members of Senior Management dated 1 December 2023 116 Members of senior management are expected to act early in disclosing potential conflicts of interest to the chair of the administrative or supervisory body as a bare minimum. The administrative or supervisory body is required to record in an appropriate form the conflicts of interest affecting the member of senior management and how these conflicts are to be handled. 117 Reference is also made in particular to the three MaGo circulars that contain additional guidance notes on conflicts of interest affecting members of senior management within their respective scopes. 118 The guidance notes on restricting the activities of board members of a legal expenses insurer must be followed for members of the senior management of such undertakings (published in German in the BaFinJournal (August 2010 issue, pp. 3–4) as “Hinweise zur Tätigkeitsbeschränkung von Vorstandsmitgliedern eines Rechtsschutzversicherungsunternehmens”, which can be found under the fol￾lowing link under “Zusatzinformationen” (“Additional information”) under the heading “Spezielle Hin￾weise” (“Specific guidance notes”). 4. Availability in terms of time 119 Members of senior management will only be able to perform their mandate diligently and properly if they have enough time to dedicate to it. 120 Members of senior management must devote sufficient time to their work. This means that they must generally be able to dedicate sufficient time to their duties, taking into account their professional and social obligations, and also that they actually do spend the requisite time on them. As a basic principle, each individual member of senior management has a responsibility to only accept a mandate if they will be able to devote the necessary time to it. The requirement to have sufficient time available applies irrespective of any restrictions on mandates for senior management members. This means that a mem￾ber of senior management may be prevented from taking on an additional mandate on time grounds even if they have not reached the maximum number of mandates permitted under the VAG. Any man￾dates given preferential treatment or not to be considered within the scope of the restrictions on man￾dates must also be included in an assessment of whether sufficient time is available. 5. Temporary absence due to maternity protection, parental leave, caring for family members or illness 121 The act designed to supplement and amend the regulations governing the equal participation of women and men in man￾agement positions in the private and public sectors (the Sec￾ond German Management Positions Act (Zweites Führungspo￾sitionen-Gesetz – FüPoG II)) gives members of senior manage￾ment the option of standing down for a certain length of time if they are covered by maternity protection, take parental leave, care for family members or are ill and then being reappointed at the end of this period (see section 84 (3) of the AktG for stock corporations, including in conjunction with section 188 (1) sentence 2 of the VAG for mutual societies; for SEs, see Article 9 (1) lit. c) ii) of the SE Regulation and Article 40 (6) of the SEAG). This option does not exist at small mutual societies within the meaning of section 210 of the VAG, because section 210 (1) sentence 1 of the VAG does not make any reference to section 188 (1) sentence 2 of the VAG. 122 If a member of senior management makes use of the option of a temporary leave of absence, they and the undertaking supervised by BaFin must bear a few points in mind: Legal basis: Section 84 (3) of the AktG, also in con￾junction with section 188 (1) sentence 2 of the VAG or Article 9(1)(c)(ii) of the SE Regulation; the second sentence of Arti￾cle 16(1), Article 40(6) of the SEAG

Page 23 VAG Circular on Members of Senior Management dated 1 December 2023 • First and foremost, BaFin endeavours to take the specific circumstances of an individual case into account, particularly where it involves a temporary absence. Not least for this reason, there￾fore, it is a good idea to contact the division responsible in good time so that any unresolved issues or specific circumstances of an individual case can be addressed and agreed. • The notifications under section 47 no. 1 and 2 of the VAG can be done in a simplified form with regard to the resignation and intended reappointment of the member who is to be temporarily absent. All the undertaking needs to do is to inform the division responsible about the withdrawal of the person’s mandate and the date of their intended reappointment. The notification of the person’s temporary absence must also indicate who is to assume responsibility for the depart￾ment(s) previously overseen by the resigning member. Insofar as these duties are to be assigned to other members of senior management, the same member of senior management cannot be permitted to hold conflicting responsibilities at department level – the proper segregation of duties within the meaning of section 23 (1) sentence 3 of the VAG must be ensured at all times. With regard to the member of senior management who has stood down temporarily, undertak￾ings must – as usual – review on their own responsibility whether and to what extent they will continue to possess the necessary professional qualifications (fit) and be of good repute (proper) after their reappointment or whether, as an exception, this will no longer be the case. The results of this review must be communicated to BaFin in good time before the member in question is reappointed. Insofar as an undertaking has justified doubts concerning the person’s professional qualifications (fit) and/or good repute (proper), the documents required to assess these aspects must be submitted in updated form. 7 If not, nothing need be resubmitted. In addition, BaFin would like to make it clear that the member of senior management to be reappointed is also obliged to notify it of any relevant changes since their last declaration on the “Personal state￾ment including information on fulfilling the fit and proper requirements” form; they must do this unprompted by submitting a correspondingly updated version of the form. • If the department(s) that is/are to be left without a manager is/are to be taken over by one or more members of senior management to be newly appointed, this will require standard notifi￾cations to be made as a basic principle, including the documents and evidence that need to be submitted. The new member who is “standing in” will often only be in office for a relatively short time. Potential candidates include other members of senior management who are very familiar with the undertaking and the duties involved. Given that this appointment is envisaged from the outset as being short-term in nature, BaFin will assess the professional qualifications (fit) of these persons based on the specific situation. The general requirements apply to determining whether the persons are of good repute (proper). If persons are to take office for a short period of time, the undertakings are responsible for checking whether relevant provisions of company law governing the minimum length of man￾dates are being complied with. BaFin must be told how long the “stand-in” is to be in office for. 7 For clarification purposes: the simplifications described under I.1. in margin numbers 18 and 19 are to be applied.

Page 24 VAG Circular on Members of Senior Management dated 1 December 2023 • In section 84 (3) sentences 6 and 7 of the AktG (in conjunction with section 188 (1) sentence 2 of the VAG for mutual societies and Article 16 (1) sentence 2 or Article 40 (6) sentence 6 of the SEAG for SEs), the FüPoG II stipulates that a member of senior management can still be absent on the grounds of maternity protection etc. even if this would leave the undertaking with fewer senior management members than is permitted under general company law or its articles of association. However, this provision does not apply – either directly or analogously – to specific provisions of supervisory law governing the minimum number of senior management members (see in particular section 188 (1) sentence 1 of the VAG, including in conjunction with section 33 (1) of the VAG). The dual control principle is essential from a supervisory perspective and cannot be ignored as a basic principle, even temporarily. Undertakings with two-member senior man￾agement teams must therefore ensure that cover is put in place if one is absent temporarily on maternity protection grounds etc. • BaFin would like to make it clear that the supervisory body is required to check whether it needs to adapt its supervisory activities in light of the temporary absence of a member of senior man￾agement, any cover put in place for that member or any other circumstances. 6. Supervisory measures 123 Violations of the regulations and orders specified in section 303 of the VAG (in addition to the standards of the VAG and the Commission Delegated Regulation (EU), these also include, e.g., those for the pre￾vention and combating of money laundering and terrorist financing) can – in addition to other supervi￾sory measures – lead to warnings, dismissal requests and activity bans under the conditions specified there. 7. Special attention to the requirements of the Money Laundering Act 124 Certain insurance undertakings are obliged entities within the meaning of the German Money Launder￾ing Act (Geldwäschegesetz – GwG). These include, pursuant to section 2 (1) no. 7 of the GwG, Solvency II insurance undertakings and domestic establishments of such undertakings with their registered office abroad, in each case in accordance with lit. a) to d). These obliged entities must comply with the require￾ments standardised in the GwG and in sections 52 to 55 of the VAG. BaFin has published the Interpreta￾tion and Application Guidance on the German Money Laundering Act as well as a special section for insurance undertakings (Auslegungs- und Anwendungshinweise zum Geldwäschegesetz – Besonderer Teil für Versicherungsunternehmen – AuA BT VU) on its website. III. Multiple mandates 125 A person cannot be appointed as a member of senior management if they are already a member of senior management at two insurance undertakings, Pen￾sionsfonds, insurance holding companies or special purpose insurance compa￾nies. If the undertaking involved forms part of the same insurance or corporate group, BaFin may permit multiple mandates to be held. The relevant statutory provision is a repressive prohibition with exemption option. The provision in section 24 (3) sentences 1 and 2 of the VAG corresponds to the previous section 7a (1) sentences 5 and 6 of the VAG (old version), which was introduced in 2009. Information on interpretation can be found in the materials relating to the legislative procedure (Bundestag printed papers 16/12783, p. 18, and 16/13684, p. 31). Legal basis: Section 24 (3) of the VAG

Page 25 VAG Circular on Members of Senior Management dated 1 December 2023

1. Relevant mandates 126 The provision applies to mandates at undertakings based in Germany and to German subsidiaries of undertakings based in a third country (equivalence in accordance with section 68 (2) sentence 2 of the VAG). The various types of authorised agent mandates are to be distinguished as described in III.5. Guar￾antee schemes (sections 221 et seq. of the VAG) are not covered by the provision.
2. Considering mandate limits under other acts at the same time 127 An undertaking intending to appoint a member of senior management and submitting a notification to this effect is required to comply with the mandate limits under other acts, such as the AktG and the KWG, as must the member themselves. The mandate limits under the VAG do not replace those under the other acts. 128 Neither is it possible to apply the mandate privileges under the VAG and the KWG on a mutual basis. The privilege afforded under the VAG does not apply to an assessment under the KWG of whether man￾date holders are of good repute (proper). Only the relevant statutory privilege can be claimed for each appointment. Even if a corporate group or group of undertakings contains some undertakings subject to the provisions of the VAG and others subject to the provisions of the KWG, the maximum number of mandates is always assessed separately in accordance with the VAG and the KWG. This must be ensured in particular because the different privileges afforded under the KWG and the VAG can produce a situa￾tion in which a mandate is permitted under the KWG but not under the VAG or vice versa. 129 BaFin would like to make it clear that mandates at foreign undertakings subject to foreign supervision may also be governed by different mandate limits imposed by the relevant supervisory law in each case.
3. Details on the approval 130 Reference is made to the following aspects: • “Permit” within the meaning of section 24 (3) sentence 2 of the VAG means “grant prior approval to”. Approval is granted on a discretionary basis. • Approval can be granted with ancillary provisions in accordance with section 36 of the VwVfG in conjunction with section 310 (1) of the VAG and revoked in accordance with section 49 of the VwVfG. • Any affected undertaking is required to submit an application for approval. Approval is to be requested by the undertaking itself, represented by its management board. One undertaking can be represented by another, such as the parent undertaking of a group. If one or more affected undertakings are represented, the four-digit BaFin registration number and the name of all affected undertakings must be entered as the reference. If the application in accordance with section 24 (3) sentence 2 of the VAG is linked to a notification within the meaning of section 47 no. 1 of the VAG, these various legal proceedings are to be expressly identified in the cover letter. • Only the third and any subsequent mandate requires approval. Thus the undertaking is required to determine the two mandates that are permitted under the law in its application for approval.

Page 26 VAG Circular on Members of Senior Management dated 1 December 2023 • Rather than overall approval being granted to the group (e.g. “three additional mandates”), BaFin issues individual approvals to the respective undertakings. 4. Criteria for exercising discretion 131 The criteria below are based on the aim of the statutory provision to ensure that holders of multiple mandates can properly perform all the duties of a member of senior management. Given the diverse nature of the organisational structures of insurance groups and other groups of undertakings, however, it may be necessary to take additional criteria and aspects into account in individual reviews. • The discretionary decision is to be based on the guiding principle enshrined in law of two man￾dates as a member of senior management. • Holding one or both statutory mandates at external undertakings while exercising additional mandates within the group is not possible. One necessary precondition – albeit not the only one – for a positive discretionary decision is that all mandates as a member of senior management held by the person concerned, i.e. the two that do not require approval plus any that do, are held at undertakings belonging to the same group. • The requirement for single management that applies in every group, albeit with different characteristics, is not by itself determinative as far as the approval of multiple mandates is con￾cerned. Stock corporations can also secure this single management by concluding a control agreement. • The unique features of horizontal groups (“Gleichordnungskonzerne”) must be taken appropri￾ately into account, particularly if they involve mutual societies. “Single management” in this re￾gard relates to the identities of the personnel on the management boards. However, this only applies to the legally independent undertakings that head the group, not to their dependent subsidiaries. As subsidiaries can only be run as corporations, concluding control agreements is an option here too. Conscious that horizontal groups had been around for some years, the leg￾islator introduced the provision in 2009 and did not provide for any special regulations. • For reasons of efficiency and quality of work and to ensure integrated management in the in￾terests of the beneficiaries, the legislator intends it to be possible for one person to be a member of the management board of all pension schemes of the corporate group or group of under￾takings. • The total number of relevant mandates as a member of senior management is to be calculated, as is the number of other mandates, e.g. mandates as a member of senior management at ser￾vice companies or mandates as a member of an administrative or supervisory body. An overall picture of the duties involved and the responsibilities held in this regard must be produced, especially in the case of working as a member of an administrative or supervisory body. It is not possible to conscientiously perform several mandates at the same time without limit. The holder of the mandate must meet the requirements of each individual activity and perform the function in person. Having colleagues prepare documents and meetings is no sub￾stitute for engaging closely with the relevant issues oneself. Although mandates as a member of senior management at insurance holding companies within the meaning of section 7 no. 31 of the VAG qualify as mandates within the meaning of section

Page 27 VAG Circular on Members of Senior Management dated 1 December 2023 24 (3) sentence 1 of the VAG, they carry much less weight than mandates as a member of senior management at insurance undertakings or Pensionsfonds. Supervisory body mandates at undertakings outside one’s own group carry more weight than those at undertakings in the same group. The assessment of the legislator set out in section 24 (4) sentence 2 half-sentence 1 of the VAG is assumed to apply in the case of supervisory body mandates at undertakings outside one’s own group, meaning that, as a basic principle, the total of five mandates per person may not be exceeded in order to combat the abstract risk of conflicts of interest and support the efficiency of supervision work. Intragroup supervisory body mandates are to be assessed based on their actual number. The special regulation set out in section 24 (4) sentence 2 half-sentence 2 of the VAG is only relevant to appointments to the supervisory body, not to any discretionary decision on additional man￾dates as a member of senior management. In the case of both intragroup supervisory body mandates and those outside one’s own group, mandates as chair of the supervisory body are to be counted double in light of their higher workload; see the legislator’s assessment in section 100 (2) sentence 3 AktG. Mandates at foreign undertakings likewise carry more weight than simple mandates on a German supervisory body, since complying with the respective national legal system requires additional care to be taken to ensure that the mandate is exercised properly. • Size of management boards: if there is only one other member of senior management on most or on all relevant management boards, the group is exposed to a significant operational risk. If the person who holds multiple mandates as a member of senior management resigns, e.g. due to a serious illness, several undertakings in the group will be simultaneously breaching the stat￾utory provision in section 188 (1) sentence 1 and section 33 (1) of the VAG requiring the man￾agement board of an undertaking to comprise at least two persons. A suitable successor is un￾likely to be able to be found at short notice for all governing bodies affected. • The number of mandates permitted can be increased in the case of specialised subsidiaries where conflicts of interest can be ruled out. This is conceivable if they cover different classes of insurance in accordance with Annex 1 to the VAG or if they have distinct target groups, use different channels of distribution or focus on different regions (see below). However, this does not mean that all permutations that are theoretically possible in terms of having different target groups, channels of distribution and divisions of territory are permissible at the same time. As each specialised undertaking will incorporate corresponding unique fea￾tures into its business model, the workload involved determines the maximum number of man￾dates that can be held. • In any event, specialised subsidiaries at which conflicts of interest can be ruled out will be those that cover different classes of insurance within the meaning of Annex 1 to the VAG. • A specialisation as defined above will also generally be deemed to exist if the undertakings cover the same class(es) of insurance but have different target groups. • If the only difference lies in their channels of distribution or regional focus, a detailed check must be made based on the circumstances of the individual case of whether these are really “specialised” companies at which conflicts of interest can really be “ruled out”.

Page 28 VAG Circular on Members of Senior Management dated 1 December 2023 • The only reason for the lack of specialisation might be that a group acquired another undertak￾ing and the necessary restructuring of the group and integration of the new company has not yet been completed by the time the decision is made regarding approval. In such a case, BaFin will check whether approval can be granted with ancillary provisions relating to an integration process to be completed within a tight timeframe. • A group’s tax or marketing-related considerations are not relevant to the assessment under supervisory law. Retaining well-known brand names following mergers and acquisitions is a business decision that an undertaking makes itself. Insofar as a strategic move of this kind can lead to abstract conflicts of interest between the individual companies, however, the protective purposes of the VAG shall take precedence over the right of undertakings to structure them￾selves as they see fit. • Financial situation and importance of the undertaking in question: performing the role of mem￾ber of senior management properly is also contingent on the relevant undertaking’s financial situation, the scope of its transactions and the riskiness of these transactions. The results of stress tests and scenario modelling must also be taken into account in particular. 5. Authorised agent mandates 132 The following distinctions must be made in the case of authorised agent mandates at foreign branches of German undertakings or German branches of foreign undertakings: a. German undertakings (1) Branch in an￾other member or EEA signatory state Mandate within the meaning of section 24 (3) sen￾tence 1 of the VAG The legal definition of the term “members of the senior management” in section 24 (2) sentence 2 of the VAG also includes authorised agents of this kind. However, it does not matter at how many EU-/EEA-based branches of the same undertaking a person holds the po￾sition of authorised agent. Based on the wording of section 24 (3) sentence 1 of the VAG, whether someone holds more than two mandates as a member of senior manage￾ment is immaterial. Instead, it depends on whether some￾one serves more than two undertakings as a member of their senior management. (2) Branch in a third country Not a mandate within the mean￾ing of section 24 (3) sentence 1 of the VAG The legal definition in section 24 (2) sentence 2 of the VAG only applies to authorised agents of branches in a member or EEA signatory state. b. Undertakings domiciled in another member or EEA signatory state Branch in Ger￾many Not a mandate within the mean￾ing of section 24 As a general principle, German branches of undertakings domiciled in another EU/EEA country are not “insurance undertakings” within the meaning of the VAG. The corre￾sponding undertaking domiciled in another member or

Page 29 VAG Circular on Members of Senior Management dated 1 December 2023 (3) sentence 1 of the VAG EEA signatory state (see section 62 (1) and section 169 (4) of the VAG) cannot be used as a basis to argue otherwise. c. Undertakings domiciled in a third country Branch in Ger￾many Mandate within the meaning of section 24 (3) sen￾tence 1 of the VAG The authorised agents of German branches of this kind must meet the personal requirements made of a member of the senior management of a German undertaking in ac￾cordance with Section 68 (2) sentence 2 of the VAG. 133 If there is a requirement to obtain approval as a result of other mandates as a member of senior man￾agement being held, authorised agent mandates of this kind must be factored into the discretionary decision. IV. Written internal policy 134 Undertakings – apart from small insurance undertakings, pension provision funds and funeral expenses funds – must have written internal guidelines in place that set out responsibilities and the procedures for assessing the pro￾fessional qualifications (fit) and good repute (proper) of the members of their senior management. Among other things, these must record which docu￾ments the undertaking uses to ensure that the requirements specified here are complied with. 135 The written internal guidelines must be regularly reviewed and, if necessary, adapted to current devel￾opments in the undertaking. 136 In all other respects, reference is made to no. 13 of the EIOPA guidelines on system of governance. Legal basis: Section 23 (3) of the VAG; Article 273 (1) of the Commission Dele￾gated Regulation (EU)