The Central Bank of Ireland (CBI) has published a consultation paper on corporate governance requirements for investment firms.
The background to the consultation was a thematic review of corporate governance in investment firms which was carried out by the CBI in 2012. Nine recommendations for improving standards in Ireland were issued following this. According to the CBI, while improvements were observed, weaknesses continued to exist.
The purpose of this consultation is to propose statutory corporate governance requirements for investment firms. It is proposed that the requirements will apply to all Markets in Financial Instruments Directive (MiFID) firms and non-retail investment intermediaries licensed or authorised by the CBI that are designated as High, Medium High or Medium Low Impact under the CBI's PRISM system. The requirements will not apply to firms designated as Low Impact by the CBI. However, such firms are encouraged to adopt the requirements. In addition, the requirements will not apply to foreign incorporated subsidiaries of an Irish firm but such firms are encouraged to adopt equivalent good corporate governance practices.
Where a firm within the scope of these requirements also falls within the scope of the Corporate Governance Code for Credit Institutions and Insurance Undertakings 2013, the firm will be required to comply with the latter.
While MiFID II and CRD IV introduce new corporate governance requirements for investment firms, the requirements proposed in this consultation are intended to supplement these.
The Consultation Paper sets out the proposed requirements that firms will be required to comply with, relating to:
- Minimum board size;
- The composition of the board;
- The role of the Chairman;
- The role of the CEO;
- The frequency of board meetings;
- The role and composition of the risk committee; and
- The role and composition of the audit committee.
Additional requirements are proposed for firms designated as "High" and "Medium High" Impact.
Responses are invited from interested parties by 5 August 2015.
Following this, the CBI proposes to introduce these requirements on a statutory basis, subject to the transposition and imposition of MiFID II.