30 May 2011: The Central Bank of Ireland (“Central Bank”) has published its much anticipated “Frequently Asked Questions” (“FAQs”) document to accompany its Corporate Governance Code for Credit Institutions and Insurance Undertakings (“Code”).
The FAQs have been published to provide further guidance on the requirements of the Code in response to queries raised by industry participants and professional advisors. We briefly refer in this note to some of the aspects of the Code on which guidance has been provided in the FAQs.
- The FAQs clarify for reinsurers that they will be subject to both the requirements of the Code and the Corporate Governance for Reinsurance Undertakings paper published by the Central Bank in 2007
- Reinsurers are required to meet the higher of the two standards. This is helpful clarification given that the Code is silent on the application of the existing reinsurance document.
- On the issue of directors’ attendance at board meetings, while the Central Bank has acknowledged in the FAQs that it may not always be possible due to location for directors to attend board meetings in person, and that in light of technological advances attendance via video or telephone conferencing will be permitted on occasion, this should not to be regarded as a softening of the Central Bank’s requirements, as, at a minimum, the Central Bank expects directors to attend the majority of all board meetings
- With regard to the roles of the Chairman and the CEO, the Central Bank has stated that while the Code does not explicitly prohibit a Chairman or CEO from holding a deputy Chairman or CEO position in another institution, it would usually be inappropriate to hold both positions as circumstances may arise where an individual may end up chairing two boards or being the Chairman of one and the CEO of another. On the question of whether a Chairman or CEO of a company may also hold the role of Chairman or CEO of another company within the same group, the Central Bank has indicated it may specifically permit this where the Central Bank is satisfied time commitments will allow it
- The Central Bank has stated in the FAQs that it will consider requests from companies in run-off, on a case by case basis, to disapply parts of the Code
Other aspects of the Code on which guidance has been provided in the FAQs include guidance in respect of appointments to and composition of the board, composition of committees of the board, the role of the board and meetings of the board and committees. In respect of the annual compliance statement, the Central Bank is liaising with industry and will issue further guidance in this area.