On 5^th November, the Portuguese Securities Market Commission (CMVM) published draft guidelines for public consultation regarding the compliance function and the procedures for assessing the suitability of the compliance officer.

These guidelines will apply to the following entities subject to CMVM supervision:

a) Investment firms;

b) Management companies of collective investment undertakings;

c) Venture capital companies;

d) Self-managed collective investment companies;

e) Securitisation companies;

f) Securitisation fund management companies;

g) Collaborative financing service providers.

Among the various guidelines, it should be highlighted first that the internal audit function (where it exists) is responsible for examining and assessing the adequacy and effectiveness of the compliance system.

Additionally, the compliance function (CF), i.e. the unit within the supervised entity's organisational structure which integrates the internal control system, must draft an annual training plan and an annual compliance plan.

The CF must also prepare a compliance report at least once a year and keep a timely record of non-compliances. This unit or some of the tasks it performs may be subcontracted to third parties.

Regarding the compliance officer (CO), they must be independent, must not hold positions which could affect their impartiality and must preferably reside in Portugal.

The initial and ongoing assessment of the adequacy of the CO is the primary responsibility of the supervised entities, in particular their management body, and a prior assessment report must be drawn up.

In terms of the CMVM's competence, it will only grant authorisation for a supervised entity to commence operations if it demonstrates that it will comply with the applicable prudential requirements, including the implementation of a CF with adequate resources and the appointment of a CO who meets the suitability requirements.

Furthermore, the CMVM assesses the CO’s suitability, whether they are a member of the supervised entity's staff or external to it. The CMVM may also reassess the CO’s suitability whenever it becomes aware of supervening facts which may call into question the fulfilment of the suitability requirements or when there is a significant change in the scope of the authorisation of the respective supervised entity.

The bill also establishes that the supervised entity must inform the CMVM of its compliance with the recommendations issued by them within a defined timeframe, through a detailed description of how the respective recommendations were complied with. 

The public consultation is published on the CMVM's institutional website and responses must be submitted by 25^th November to the email consultapublica2_2024@cmvm.pt.