Anyone set to become an executive director or a member of the administrative or supervisory body of an institution must be “fit and proper” in the eyes of BaFin (the German Federal Financial Supervisory Authority): professionally qualified, reliable and with sufficient time for the role. The appointment notification under § 24 para. 1 no. 1 KWG (German Banking Act) requires disclosure of the facts material to the assessment — and this is precisely where it is decided whether the procedure runs smoothly or ends in queries and objections. Anyone who only starts researching at the notification stage risks delays in the appointment process.
The standards: § 25c and § 25d KWG
For executive directors, § 25c para. 1 sentence 1 KWG stipulates: they must be professionally qualified and reliable and must devote sufficient time to the performance of their duties. For members of the administrative or supervisory body, § 25d para. 1 sentence 1 KWG sets out the parallel requirements — reliability, the expertise to control and oversee the management, and sufficient time. In addition, the suitability guidelines of the EBA and ESMA as well as the relevant BaFin guidance notes specify how the supervisor interprets these terms and which documents it expects.
Important for a proper understanding: reliability is not a status acquired once, but a question of fact that the supervisor assesses on the basis of the overall picture — including professional history, financial circumstances and any interconnections. Moreover, the requirements apply not only at the time of appointment but continuously throughout the term of the mandate; institutions should therefore also have a process for sitting board members that identifies and assesses material changes.
The appointment notification under § 24 para. 1 no. 1 KWG
Institutions must notify the supervisor of the intention to appoint an executive director — together with the facts material to the assessment of reliability, professional qualification and sufficient time availability. The institution thus bears the burden of presentation: it must know the relevant facts before it can disclose them. Incomplete or subsequently corrected information burdens not only the specific procedure but the relationship of trust with the supervisor as a whole. On top of this comes practical time pressure: an appointment waiting on supervisory queries blocks succession planning, board composition and, in doubt, the institution’s capacity to act.
Checklist: what should be verified before nomination
Robust fit-and-proper preparation researches and documents the material sources before the candidate is nominated:
- Register data: commercial and comparable registers on current and past mandates, board positions and shareholdings — also as the basis for counting mandates and assessing time availability.
- Career history and qualifications: verifiability of the positions and degrees from which professional qualification is derived.
- Press and adverse media: coverage of previous roles, corporate crises or proceedings — dated and sourced, not as a search-engine impression.
- Network interconnections and conflicts of interest: shareholdings, interlocking board positions and close relationships that may affect independence or the oversight function.
- Sanctions and watchlists: screening of the person and companies attributable to them.
The depth of screening may be tiered by institution and mandate — an executive director of a significant institution requires more comprehensive research than an additional supervisory mandate with a limited remit. Every result — including a negative one in the sense of “no findings” — belongs in a documented file. Because what counts vis-à-vis the supervisor is not only the result but the traceability of your own review; why this makes the difference in a dispute is explored in the article “A decision you can defend”.
Recommended course of action
Anchor the fit-and-proper research as a fixed step before nomination, not as an attachment to the notification: first the documented review of the sources listed above, then the board decision, then the notification under § 24 para. 1 no. 1 KWG. This way, you identify points needing clarification while they can still be addressed internally — and present the supervisor with a notification whose factual basis has already been verified. Indicium supports this step with audit-proof reports with dated sources and human final review (Art. 22 GDPR) — from €79 per report; for your specific appointment case, feel free to book a demo.
This article provides general information and does not constitute legal advice.