On 10 May 2018, the Central Bank of Ireland (“Central Bank”) published a second consultation paper on corporate governance requirements for investment firms and market operators (CP120). The consultation paper aims to address identified corporate governance deficiencies whereby poor corporate governance structures have resulted in firms being exposed to increased risks. The requirements were consulted upon in an earlier consultation paper, issued prior to the coming into operation of the second Markets in Financial Instruments Directive (“MiFID II”) and the Markets in Financial Instruments Regulation (“MiFIR”), but no further action was taken in recognition of the vast changes these instruments would cause to the legal landscape. This second consultation paper has taken those changes into account and seeks to refine the provisions set out in the previous consultation paper on this topic (CP94), also taking into account the responses received to that consultation.
The requirements will only apply to high, medium high and medium low impact firms under the Central Bank’s probability risk impact system (“PRISM”). However, low impact firms are encouraged to apply the requirements on a voluntary basis consistent with best practice. The proposals set out detailed standards for determining director independence and requirements relating to the chairman of the board, board composition and the various board committees (audit, risk and remuneration committees).
The deadline for responses is 31 July 2018, with the draft requirements intended to take effect from 1 July 2019.