# Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositaries, leverage, transparency and supervision (Text with EEA relevance), Article 42: Functional and hierarchical separation of the risk management function

Extent: E+W+S+N.I.

1. The risk management function shall be considered as functionally and hierarchically separated from the operating units, including the portfolio management function, only where all the following conditions are satisfied:
(a) persons engaged in the performance of the risk management function are not supervised by those responsible for the performance of the operating units, including the portfolio management function, of the AIFM;
(b) persons engaged in the performance of the risk management function are not engaged in the performance of activities within the operating units, including the portfolio management function;
(c) persons engaged in the performance of the risk management function are compensated in accordance with the achievement of the objectives linked to that function, independently of the performance of the operating units, including the portfolio management function;
(d) the remuneration of senior officers in the risk management function is directly overseen by the remuneration committee, where such a committee has been established.
2. The functional and hierarchical separation of the risk management function in accordance with paragraph 1 shall be ensured throughout the whole hierarchical structure of the AIFM, up to its governing body. It shall be reviewed by the governing body and, where it exists, the supervisory function of the AIFM.
3. The FCA shall review the way in which the AIFM has applied paragraphs 1 and 2 on the basis of the criteria laid down in rule 3.7.2(2) of the Investment Funds sourcebook.

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Source: https://www.legislation.gov.uk/eur/2013/231/article/42 (the official version)
Page: https://openlegislation.uk/eu-regulation-2013-231/article-42
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.