Ireland: publication of the Corporate Governance Code for Credit Institutions and Insurance Firms

The Central Bank has published its Corporate Governance Code for Credit Institutions and Insurance Firms: see here (pdf). The Code sets out, amongst other things, a minimum board size; requirements on the role and number of non-executive directors; criteria for director independence and consideration of conflicts of interest; limits on the number of directorships which directors may hold in financial and non financial companies; separation of the roles of Chairman and CEO; minimum requirements for board committees including audit and risk committees; and a requirement for an annual confirmation of compliance to be submitted to the Central Bank.

Unlike many other governance codes, this new Code will not operate on the 'comply or explain' basis. Instead it sets out minimum standards which apply to existing directors and boards with effect from 1 January 2011 although some institutions will have until 31 December 2011 to comply with particular requirements (e.g., board changes).

With regard to enforcement of the Code, failure to comply may be subject to supervisory action and disciplinary procedures by the Central Bank, including its new regulatory powers to refuse to appoint directors, or to suspend, remove or prohibit directors under the Central Bank Reform Act 2010. Some useful background on the development of the Code was given by the Bank's Head of Financial Regulation, Matthew Elderfield, in a speech delivered yesterday: see here.