The Corporate Governance Code for Collective Investment Schemes and Management Companies (the "Code") issued by the Irish Funds Industry Association (the "IFIA") in consultation with the Central Bank of Ireland (the "Central Bank") became effective on 1 January 2012. The Code applies to Irish corporate funds and corporate entities that act as fund management companies (of either UCITS or non-UCITS). The Code aims to ensure that the board of directors of each fund/management company effectively oversees the fund's activities.
The Code covers two key elements, namely, guidelines on the composition of the board and guidelines on the key measures or activities that should be undertaken by the board. The Code is voluntary however the Central Bank expects that every fund and management company will adopt the Code before 31 December 2012. Any non-adherence will need to be explained to the Central Bank and may cause that fund/management company to be closely scrutinised by the Central Bank – so non-compliance should only be considered in exceptional circumstances.
Some of the main points addressed in the Code are as follows:
In line with the aim of ensuring effective oversight of the fund/management company's activities by the board, the following measures are prescribed within the Code:
Board must meet quarterly (some exemptions for certain non-UCITS); Key strategic decisions to be taken by the board to be set out – the Code includes a non-exhaustive list and a reserved powers schedule must be formulated; A valuation policy should be adopted or a valuation committee appointed and competent persons formally approved to value the fund's assets; and Additional specific obligations on directors time commitments, conflicts of interest, internal controls, risk monitoring, compliance, audit and accounting and monitoring of delegates. Board composition
No hard limit on the number of fund directorships an individual can hold, rather it requires that each director has sufficient time to devote to each role (and the fund/management company will be required to document the time commitment it expects for each director and each director will be required to disclose in writing to the board their other time commitments); There is a rebuttable presumption that no more than eight non-fund directorships may be held without impacting on the director's time available to fulfil his or her role and functions as a director of a fund/management company...