2. Shareholders whose holdings are above specified thresholds and/or whoexert a material influence on regulated entities within that conglomerate should meet the fitness, propriety or other qualification tests of supervisors.

3. Fitness, propriety or other qualification tests should be applied at the authorisation stage and thereafter, on the occurrence of specified events.

4. Supervisors' expectations are that the entities will take the measures necessary to ensure that fitness, propriety or other qualification tests are met on a continuous basis.

1. The application of fitness, propriety or other qualification tests to managers, directors and key shareholders may vary depending on the degree of their influence and on their responsibilities in the affairs of regulated entities. It is recognised that an individual considered fit for a particular position within an institution may not be considered fit for another position with different responsibilities or for a similar position within another institution, and conversely, an individual considered unfit for a particular position in a particular institution may be considered fit in different circumstances.

2. There are significant differences in legislative and regulatory frameworks across countries as regards the functions of the board of directors and senior management. In some countries, there is a two tier board system consisting of a supervisory board which has the main, if not exclusive, function of supervising the executive body (the management board) to ensure that the latter fulfils its tasks. This means that the board has no executive functions. In other countries, with a unitary board system, the board has a broader competence in that it lays down the general framework for the management of the institution. In this regard, fitness, propriety or other qualification tests should be applied to directors in light of their role and responsibilities.

5. Where a manager or director deemed to exercise a material influence on the operations of a regulated entity is or has been a manager or director of another regulated entity within the conglomerate, the supervisor should endeavour to consult the supervisor of the other regulated entity as part of the assessment procedure.

6. Where a manager or director deemed to exercise a material influence on the operations of a regulated entity is or has been a manager or director of an unregulated entity within the conglomerate, the supervisor should endeavour to consult with the supervisors of other regulated entities that have dealings with the unregulated entity as part of the assessment procedure.

7. Supervisors should communicate with the supervisors of other regulated entities within the conglomerate when managers, directors or key shareholders are deemed not to meet their fitness, propriety or other qualification tests.

3. Such communications should take into account whether such disclosures could interfere with supervisory action.
4. Generally, channels to permit the exchange of information within sectors, e.g. banking, securities and insurance, have been established. Where there is no direct channel to a regulator in another jurisdiction, it may be possible to route information to the relevant domestic supervisor for onward transmission.

5. It may be that in some instances arrangements to exchange information between supervisors should be formalised in agreements, e.g. memoranda of understanding to establish a framework for the efficient transfer of such information.

6. Mechanisms should be in place to ensure that supervisors are advised, at the authorisation stage, of managers, directors and shareholders who can exert a material influence, directly or indirectly, on the operations of regulated entities, and thereafter, are notified of changes in such managers, directors and shareholders, on the occurrence of specified events.