MIFIDPRU 8 Disclosure

MIFIDPRU Regulatory Disclosures

Introduction

The FCA’s Investment Firms Prudential Regime (“IFPR”) came into force on the 1st of January 2022 as a new prudential regime for UK firms authorised under the Markets in Financial Instruments Directive (“MiFID”). The IFPR was implemented by the FCA in the MIFIDPRU sourcebook of the FCA Handbook. MIFPRU seeks to ensure firms are prudently managed to mitigate potential harms posed by investment firms to their clients and the markets in which they operate. MIFIDPRU contains disclosure requirements for firms to improve transparency for the benefit of other market participants and for clients so they can understand how firms operate.

ProMeritum Investment Management LLP (“ProMeritum” or the “Firm”) is classified under MIFIDPRU as a small and non-interconnected investment firm (an “SNI firm”) under MIFIDPRU, which influences which specific disclosure requirements apply to the Firm. In addition, it is noted that the Firm has not issued and does not have any outstanding AT1 instruments, which further limits the scope of the disclosure requirements.

As such, the Firm is required by MIFIDPRU 8 to disclose only a limited range of regulatory information regarding its compliance with MIFIDPRU, which primarily relates to information with respect to its remuneration policy and practices.

Remuneration Policy and Practices

As an SNI MIFIDPRU Investment Firm, ProMeritum is subject to the basic requirements of the MIFIDPRU Remuneration Code (as laid down in Chapter 19G of the Senior management arrangements, Systems and Controls sourcebook in the FCA Handbook (“SYSC”)). The Firm is also an alternative investment fund manager, classified as a collective portfolio management investment firm (“CPMI firm”), and as such, is also subject to the AIFM Remuneration Code (SYSC 19B). The Firm took on this status on 7 October 2024, prior to which it was a Collective Portfolio Management (“CPM”) firm only, at which point only the AIFM Remuneration Code (SYSC 19B) would have applied. There is no corresponding MIFIDPRU disclosure requirement for CPM firms.

CPMI firms are required to make a remuneration disclosure in respect of the whole of their business, i.e. MIFID and AIFMD. The disclosure requirements have been prepared in line with both remuneration codes under SYSC 19B and SYSC 19G. The remuneration policy includes the most stringent requirements of each Remuneration Code.

The Firm’s remuneration policy and practices are designed to support the following goals:

Promoting effective risk management in the long-term interests of the Firm and its clients;

Discouraging risk-taking which is inconsistent with the risk profile of the funds under management;

Supporting positive behaviours by individuals within the Firm (senior and junior, with an emphasis on risk takers) and healthy firm cultures; and

Discouraging behaviours that can lead to misconduct (financial and non-financial) and poor client outcomes.

This is achieved by ensuring that the overall remuneration policy is consistent with the business strategy, objectives, values, and interests of the Firm, stakeholders and of its clients, and by maintaining effective remuneration policy and practices to enable clear decisions regarding remuneration to be made, including decisions that have implications for the risk and risk management of the Firm.

ProMeritum recognises that remuneration is a key component in how the Firm is able to attract, motivate and maintain high-calibre employees and to sustain consistently high levels of performance, productivity, and results for its customers, who are placed at the heart of its business.

Finally, the Firm’s remuneration policy and practices are gender neutral and do not discriminate on the basis of the protected characteristics of any individual in accordance with the Equality Act 2010.

How staff remuneration is determined

Staff remuneration at ProMeritum is made up of fixed and variable components. The fixed component is set in line with market competitiveness at a level to attract and retain skilled staff. This can include salaries, fixed members’ drawings, pension arrangements and various other allowances where applicable. Fixed remuneration is determined at the point of hire, and on an annual basis thereafter based on the previous year’s appraisal, which includes an assessment of performance.

The variable portion of each individual's remuneration may include bonuses and discretionary profit shares. This variable remuneration is determined on a discretionary basis by way of an annual performance review that all staff are subject to. The ratio between fixed remuneration (i.e. base salary and fixed drawings) and the amount of variable remuneration that is subsequently awarded is determined separately for each individual, without any minimum or maximum ratio being applied at firm level.

The assessment of performance to determine variable remuneration considers financial as well as non-financial criteria, in accordance with the Firm’s Remuneration Policy. Where relevant, this includes regulatory compliance, risk management and adherence to mandates. In keeping with the Firm’s long-term objectives, the assessment of performance will consider longer-term performance appropriate to the life cycle of the products and services manufactured by the Firm.

Where remuneration is performance-related, then in addition to the performance of the individual the Firm will also consider the performance of the business function in which the individual is engaged, the overall results of the Firm, and where relevant the performance of any portfolio that the individual is responsible for or materially engaged in the management of.

In the case of early termination of a contract, any payments will reflect performance achieved over the relevant time period.

Governance and Oversight

Following an assessment of the size, internal organisation and the nature, scope and complexity of ProMeritum, the Firm’s Governing Body (the “Management Committee”) has determined that it is not required to appoint a Remuneration Committee. The Management Committee shall be responsible for determining appropriate levels of remuneration and for ensuring that the Firm’s Remuneration Policy complies with the requirements of the SYSC 19B and SYSC 19G Remuneration Codes.

The Firm’s remuneration policy and practices are reviewed annually by the Management Committee.

Quantitative Remuneration Disclosure

For the remuneration performance year 1 April 2023 to 31 March 2024, the total amount of remuneration awarded to all staff was £5,512,100, of which £1,404,178 was fixed remuneration and £4,107,922 was variable remuneration. For these purposes, ‘staff’ is defined broadly, and includes all individuals who perform work for and under the supervision of the Firm. This includes partners, members and employees of other entities in the group where appropriate.