Central Bank of Ireland consultation on corporate governance (CP94)
Requirements for investment firms
The Central Bank of Ireland (CBI) published a consultation paper on corporate governance requirements for investment firms (CP94) on 5 May 2015. This proposed new regime of corporate governance will apply to investment firms, including all MiFID firms and non-retail investment intermediaries licensed or authorised by the CBI and designated as high, medium high or medium low impact under the CBI’s Probability Risk Impact System (PRISM). Additional requirements are proposed for firms designated as high and medium high impact. The requirements will not apply to firms designated as ‘low impact’ or to foreign incorporated subsidiaries of Irish firms. However, the former are encouraged to adopt the proposed regime while the latter are encouraged to adopt an equivalent regime.
These proposed new requirements are intended to supplement the new corporate governance requirements for investment firms which MiFID II and CRD IV are introducing.
CP94 proposes that firms will be required to comply with requirements for:
- Minimum board size;
- Board composition;
- The role of the Chairman;
- The role of the CEO;
- The frequency of board meetings; and
- The role and composition of both the risk committee and the audit committee.
The CBI proposes to introduce the new requirements on a statutory basis, subject to the transposition and imposition of MiFID II. The CBI will monitor adherence to the proposed regime through its ongoing supervision of firms. Any deviations must be reported to the CBI within 5 business days, as well as the proposed remedial action. Each firm must submit an annual compliance statement specifying whether the firm has complied with the requirements.
The consultation period for CP94 will close on 5 August 2015. Feedback from ‘Consultation on Fund Management Company Effectiveness – Delegate Oversight’ (CP86) is expected later this year. As summarised in our Newsletter, this CBI consultation proposes changes to the governance of fund service providers. It will be interesting to see the developments in this area, and how both consultations work together in practice.