Corporate Governance Code For Irish Funds

Author:Mr Carl O'Sullivan, Kevin Murphy, Sarah Cunniff and Dara Harrington
Profession:Arthur Cox

Recently the Irish Funds Industry Association published a corporate governance code for the Irish funds industry. The code was developed against the backdrop of a request made by the Central Bank of Ireland for specific sectors of the financial services industry in Ireland to develop corporate governance codes to provide a framework for the operation of these businesses. A steering committee of the IFIA led the project to develop the code, consulting extensively with both industry and the Central Bank. This briefing summarises the key requirements of the code. Application Although the code is referred to as being a voluntary code it recommends that the requirements of the code are adopted by all Irish funds and Irish management companies, both UCITS and non-UCITS. To the extent that a board adopts the code but decides not to apply any particular provision of the code, the reasons for departing from the code's requirements must be specified either in the directors' report in the audited annual accounts or must be published through a publicly available medium (such as a website) which is referred to in the annual accounts. For these reasons it is expected that most Irish funds and Irish fund management companies will seek to implement the terms of the code. The main changes which will be required to be adopted by boards to reflect the new requirements are described below. Scope The aim of the code is to provide a framework for the organisation and operation of funds to ensure that funds operate efficiently and in the interests of shareholders. Rather than introducing a completely new corporate governance regime many of the code's requirements reflect existing corporate governance practices, particularly the practices and procedures required for UCITS funds by virtue of the UCITS IV Directive. There are some new requirements relating in particular to the constitution and operation of the board. Most boards would not currently comply with some of these requirements which will necessitate changes to the boards' practices. However, we believe that the adoption of the code should not prove too onerous for any board. Timing of implementation The Central Bank has accepted that there should be a transitional period of 12 months to allow boards to comply with the code and this should be sufficient time for any board to implement the new requirements. A review is expected to be carried out by the Central Bank within 18 months of the code's issue to assess its...

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