Remuneration Policy Statement

Euronova Asset Management (UK) LLP - Remuneration Policy Statement 2024

Introduction

The Financial Conduct Authority ('FCA') has systems and controls rules in respect of remuneration of staff of FCA authorised firms. These are intended to avoid or manage the potential of conflict of interest between the interests of an authorised firm and its key personnel and the best interests of its clients.

This includes at SYSC19G for investment management firms in scope of the UK Markets in Financial Instruments Directive (MiFID) such as Euronova Asset Management UK LLP ('Euronova'), regardless of the type of remuneration involved. This reflects the spirit and rules of the EU Capital Requirements Directives on capital adequacy. It also reflects Article 27 of the MiFID Org Regulation, transposed into UK law post Brexit by the Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019. Under the Investment Firm's Prudential Regime (IFPR), MiFID investment firms are also required to disclose their remuneration arrangements externally under MiFIDPRU8.

The FCA rules reflect a number of Principles and the FCA considers that firms need to align remuneration policies with effective risk management. This includes having a clear and documented remuneration policy which is reviewed, updated and disclosed at least annually. The policy should outline the firm's risk management systems and controls including identifying material risk takers. It should also ensure that any remuneration arrangements for such staff for the current and future years comply with these requirements.

The proportionality principle in SYSC 19G.2.4 R requires that a firm's remuneration policies and practices must be appropriate and proportionate to the nature, scale and complexity of the risks inherent in the business model and the activities of the firm. The policy also reflects that the firm does not form part of any group.

Under the IFPR for MiFID firms since 2022, Euronova has been categorised as a small and non-interconnected (SNI) firm for prudential supervision. The firm also is also authorised under the Alternative Investment Fund Managers Directive ('AIFMD') as a subthreshold AIFM with permission to manage an unregulated AIF, the Euronova Smaller Companies Fund (ESCF). The investment objective of the ESCF is to achieve capital growth by investing primarily in smaller capitalisation European listed equities.

Described below is the Remuneration Policy for Euronova (FRN 448288) for remuneration year 2023/2024 as an LLP. All Partners and Risk Takers (as defined by FCA rules) are asked to consider, and adhere to this policy. The firm has identified three risk takers during the period (one post year end) as individual partners of the LLP. There is one further corporate partner, Euronova Asset Management Ltd, (EAM Ltd), however it is not in the scope of the Remuneration Disclosure as it is not an individual.

This policy has also taken into account any other general guidance that the FCA has issued previously in relation to incentives and performance management including FCA FG 15/10 (performance management) and FSA 13/1 (incentives). Relevant guidance from the FCA website from 2016 in relation to both topics of financial incentives and performance management is also considered if relevant.

As a SNI firm, not all of the disclosure requirements under the IFPR at MiFIDPRU 8 apply to the firm's business where the rules only apply to non-SNI firms.

In line with MiFIDPRU 8.6, the firm is required to make an annual disclosure of its remuneration arrangements and this disclosure reflects the firm's arrangements for the financial year ending 31 March 2024.

Contact Details

The person to contact in respect of this policy statement is:

Amanda Swanson, Partner and Compliance Officer

Email: amanda.swanson@euronam.co.uk

Phone: 0131 524 9456

Basis of Remuneration

Euronova Asset Management UK LLP ('Euronova') is a partnership and any remuneration taken from the firm is in accordance with the Partnership agreement. Remuneration is taken from profits and not income or future inflows. The firm does not operate any bonus scheme for any staff, relating to work, investment performance or otherwise. There has been no change to the firm's remuneration arrangements during the review period.

The firm does not operate any executive incentive scheme for Risk Takers.

The firm does not have any shareholders or investors other than the Partners. Remuneration is taken from the firm in accordance with the Partnership agreement to which all parties have signed up to. Remuneration is taken from profits rather than income, with a minimum level of £94,000 partnership capital being maintained at all times.

Remuneration is taken in the first instance by way of the provision of notional drawings and in accordance with the Partnership agreement. No bonus or incentive scheme exists, thereby reflecting the firm's low/cautious risk appetite. At the year end the excess profits are divided amongst the partners as per the partnership agreement. The only discretion that can be exercised will relate to the level of profits to be taken by the corporate partner, EAM Ltd, and this will be agreed by all of the Equity members of the partnership.

The firm's remuneration policies and practices are gender neutral and do not discriminate on the basis of the protected characteristics of an individual in accordance with the Equality Act 2010. The firm encourages equality, diversity and inclusion and eliminating unlawful discrimination. This extends to equality of pay.

Risk Takers

As an SNI firm, Euronova is covered by the definition of 'non-material' risk takers compared to the definition of material risk takers for non-SNI firms.

Non-material risk takers have been identified as any partners of the firm, or any individuals who hold a significant influence function who is not a partner and also any non-SMF certified staff.

At the start of the financial year (April 2023) there were three individual partners and one corporate partner. They were all in place at the end of the financial year (31 March 2023). However since then, two individual partners have resigned due to internal business changes (June 2023) and retirement (December 2023). This is the only change in risk takers and there has been no reduction in partners capital as a result of this resignation. There are no other senior managers in the organisation nor anyone who holds a significant influence function who is not a partner or certified member of staff. Therefore at the end of the period, there is one non-material risk taker who is an individual.

Governance

Due to the nature and size of the organisation, the firm is not required to have, nor does it operate an independent Remuneration Committee, and any remuneration decisions are taken collectively by the LLP partners. This includes the firm's SMF16 Compliance Officer.

Remuneration Risk

Remuneration is taken by way of the provision of notional drawings and in accordance with the Partnership agreement, and is based on profits and not income or future anticipated inflows. No bonus or incentive scheme exists, thereby the reflecting the firm's low/cautious risk appetite.

The firm carries out an Internal Capital and Risk Assessment Process (ICARA) at least annually, which forms the basis of its risk management policy. This includes assessing the risk and potential harms to the firm's capital adequacy including market risk and liquidity risk and having a contingency funding policy, which could include for example increasing the partners minimum capital requirement or taking reduced profits. There has been no major change in the firm's financial arrangements during the review period and no change to remuneration arrangements.

Euronova is a small self contained business unit and all partners are experienced members of the financial services industry. As remuneration is taken from residual profits rather than income, all partners remuneration is directly aligned with ensuring that the firm is profitable in the short and long term including maximising the value of any partnership share should the partnership be dissolved.

Conflicts of interest

Remuneration taken from the firm is in accordance with the Partnership agreement, which is documented and sets out the terms and conditions including conflicts of interest provisions. The firm does not operate any bonus or incentive scheme for any staff. Partners remuneration is taken by way of the provision of notional drawings and otherwise based on profits of the firm thereby reducing the likelihood of short term conflicts of interest. Long term interests will include maximising the overall value of the firm should the partnership be dissolved.

Due to the nature and size of the organisation, there are no specific business units in the firm. Any individuals holding controlled functions are also investment managers. The Compliance Officer is a partner and also an investment manager. Therefore she is not independent of the investment management business itself however there is independent monitoring of the firm's compliance arrangements by a third party compliance consultant. Any individuals who hold controlled functions are partners of the firm and therefore have appropriate authority, subject to the terms and conditions of the Partnership agreement.

There are no fixed or variable remuneration arrangements linked to future income or profits of the firm therefore risk alignment effects are not considered necessary. Regardless, all material risk takers undertake not to put in place any personal hedging strategies in relation to the remuneration of the firm by adhering to this policy.

LLP Partners Approval

The 2024 Remuneration Policy Statement has been reviewed and agreed by the LLP Partners on 14 August 2024.