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Europe > Ireland > Corporate > Governance Fiduciary Duty > Article > CORPORATE GOVERNANCE REQUIREMENTS FOR INVESTMENT FIRMS

Article: CORPORATE GOVERNANCE REQUIREMENTS FOR INVESTMENT FIRMS

CENTRAL BANKS PUBLISHES CONSULTATION PAPER ON CORPORATE GOVERNANCE REQUIREMENTS FOR INVESTMENT FIRMS


In line with the development of corporate governance standards in other sectors of the financial services industry, the latest consultation paper represents a continuation of the work of the Central Bank to develop and ensure adherence to sound corporate governance standards for investment firms.

In 2012 the Central Bank conducted a thematic review of corporate governance in investment firms and issued nine recommendations for improving standards in Ireland. While improvements were observed, it is the view of the Central Bank that weaknesses continue to exist.

The Consultation Paper sets out the proposed requirements firms will be required to comply with. The proposed requirements include:

•Minimum board size - firms should ensure that the board is sufficient size and expertise to oversee adequately the operations of the firm;

•The composition of the board – the board should be comprised of a majority of independent non-executive directors;

•The role of the Chairman – firms shall ensure that the Chairman shall have relevant financial services experience and shall ensure that the Chairman leads the board, encourages critical discussions, challenges mindsets and ensures effective communication between executive and non-executive directors;

•The role of the CEO – firms shall ensure that the CEO has the relevant financial services background or training to ensure that the CEO has the necessary knowledge, skills and experience and/or training to comprehend fully: (a) the nature of the firm’s business, activities and related risk; (b) his or her individual direct and indirect responsibilities and those of the board; and (c) the firm’s financial statements;

•The frequency of board meetings – the board should, at a minimum, meet at least four times per calendar year and at least once in every six month period;

•The role and composition of the Risk Committee – firms should ensure that the number of members of the Risk Committee shall be sufficient to handle the nature, scale and complexity of the business conducted by it, and

•The role and composition of the Audit Committee – the Audit Committee should be composed of non-executive directors, including at least one independent non-executive director and the chairman of the Audit Committee should be an independent non-executive director.

Additional requirements are proposed for firms designated as High and Medium High Impact.

Where a firm within the scope of the proposed requirements also falls within the scope of the Corporate Governance Code for Credit Institutions and Insurance Undertakings 2013 (the “2013 Code”) the relevant firm will be required to comply with the 2013 Code.

Responses are invited from interested parties by 5 August 2015.

For further information on this topic please contact Enda Newton

Last Update: 2015-May-30 Enda Newton - AMOSS Solicitors
The contents of this page do not constitute legal advice or create an attorney- client relationship with the contributor. Do not apply anything you read here without contacting a professional.
Author: Enda Newton
Law Firm: AMOSS Solicitors
Address: Warrington House
Mount Street Crescent
Dublin
Ireland
Telephone: +35312120400
Website: www.amoss.ie