The Central Bank of Ireland (Central Bank) has published a Consultation Paper on Corporate Governance Requirements for Investment Firms (CP94).

The Central Bank states that, in its supervisory capacity, it continues to observe deficiencies in corporate governance practices in investment firms.  In order to deal with these deficiencies, the Central Bank is now proposing to introduce statutory corporate governance requirements for investment firms and these are outlined in CP94.  The Central Bank is inviting all stakeholders to submit responses to CP94 by 5 August 2015.

CP94 sets out the proposed requirements for firms in relation to the following areas: 

  • 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.

Scope of CP94

  • The requirements set out in CP94 will apply to all Markets in Financial Instruments Directive (MiFID) firms and non-retail investment intermediaries, licensed or authorised by the Central Bank, that are designated as High, Medium High or Medium Low Impact.
  • There will be additional requirements for all firms that are designated as High or Medium High Impact by the Central Bank are set out in Appendix 1 of CP94.
  • The requirements set out in CP94 will not apply to firms designated as Low Impact by the Central Bank, but those firms are encouraged to adopt the requirements set out in CP94.
  • If a firm within the scope of CP94 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.

Legal Basis

  • The Central Bank proposes to introduce the requirements set out in CP94 on a statutory basis, subject to the transposition and imposition of the MiFID II Directive. The Central Bank will monitor adherence to the requirements through its ongoing supervision of firms.
  • Any firm that becomes aware of a material deviation from the requirements of CP94 shall without undue delay, and in any event within five business days, report the deviation to the Central Bank, advising of the background and the proposed remedial action.
  • Each firm shall submit an annual compliance statement as set out in Section 24 of CP94, in accordance with any guidelines issued by the Central Bank, specifying whether the firm has complied with the requirements of CP94.