On 23 December 2013 the Central Bank of Ireland (the “Central Bank”) published a revised “Corporate Governance Code for Credit Institutions and Insurance Undertakings” (the “Code”). The revised Code will come into force on 1 January 2015, until which time the provisions of the existing Code apply.
The Code currently applies, as the revised Code will continue to apply, to every credit institution and insurance undertaking which is licensed or authorised by the Central Bank, including reinsurance undertakings but excluding captives (each, a "specified institution"). The Code sets out minimum regulatory requirements on how a specified institution should organise its corporate governance.
The principal changes that the revised Code makes to the existing Code are that:
- each specified institution will be required to appoint a Chief Risk Officer (CRO), the role and responsibilities of whom are set out in the revised Code but which include responsibility for a specified institution’s risk management function and for maintaining and monitoring the effectiveness of its risk management system;
- the specified institution’s risk committee will have to be composed of a majority of non-executive and/or independent non-executive directors, one of whom must be the chair of the committee;
- the specified institution’s risk committee and the audit committee each will be required to have a minimum of three members;
- each specified institution will be required to ensure that there is at least one shared member between the risk committee and the audit committee. Also, an High-Impact specified institution (within the meaning of the Central Bank’s PRISM system) will be required to have at least one shared member between the risk committee and the remuneration committee;
- each specified institution will be required to introduce a diversity policy for board membership;
- the minimum number of board meetings required for an High-Impact specified institution has been reduced from eleven to six per annum;
- the chair of the board of a specified institution will be permitted to hold the role of chair in other specified institutions within the relevant group, subject to the prior approval of the Central Bank; and
- the chief executive officer of a Medium-Low or Low-Impact specified institution (as classified by the PRISM system) will be permitted to hold up to two additional CEO positions simultaneously, provided each is in a Medium-Low or Low-Impact specified institution, subject to the prior approval of the Central Bank.