The Finncial regulator released the following statement today:
The Central Bank and Financial Regulator today announced the commencement of a public consultation on new corporate governance standards for banks and insurance companies. Consultation Paper CP41 on Corporate Governance Requirements for Credit Institutions and Insurance Undertakings sets out minimum requirements as to how banks and insurance companies should organise the governance of their institutions including membership of the Board of Directors, the role of the Chairman and the operation of various board committees.
It is proposed that the requirements will apply to all credit institutions and insurers licensed or authorised by the Financial Regulator including Irish licensed and authorised subsidiaries of international financial services groups.
The consultation paper sets out the minimum standards and expectations that will apply to the boards of directors of banks and insurers. These include:
- A minimum of five directors on the Board;
- Requirements regarding the role and number of the independent non-executive directors;
- Limits on the number of directorships which directors may hold to ensure they can comply with the expected demands of Board membership of a credit institution or insurance company;
- Clear separation of the roles of Chairman and CEO;
- A prohibition on an individual who has been a CEO, director or senior manager during the previous five years from becoming Chairman of that institution;
- Criteria for director independence and consideration of conflicts of interest;
- A requirement that Board membership is reviewed at a minimum every three years;
- A requirement that Boards set the risk appetite for the institution and monitor adherence to this on an ongoing basis;
- Minimum requirements for Board committees;
- The establishment of a remuneration committee comprising a majority of independent non executive directors;
- A requirement for an annual confirmation of compliance to be submitted to the Central Bank.
This consultation paper is part of a wider strategy to update the domestic regulatory framework applying to banks and insurers. C