On 17 December, the Irish Stock Exchange (ISE) published new listing rules which require Irish listed companies to comply with additional corporate governance provisions, or to explain why they are not doing so. These new rules, which are contained in a new Irish Corporate Governance Annex, supplement the existing provisions which require Irish listed companies to comply, or explain against, the requirements of the UK Corporate Governance Code. The new rules are effective immediately and therefore Irish listed companies with accounting periods commencing on or after 17 December 2010 will be required to comply with the Irish specific Corporate Governance provisions. As previously reported, the requirement to comply with the UK Corporate Governance Code (the UK Code) is already in place, applying to Irish listed companies with accounting periods beginning on or after 30 September 2010.
The Annex implements the nine recommendations in the report commissioned by the ISE and the Irish Association of Investment Managers in early 2010 on compliance with the Combined Code on Corporate Governance by Irish listed companies. The additional requirements are principally concerned with board composition, board evaluation, remuneration and the work undertaken by the audit committee. It also includes interpretive provisions for companies that are of an equivalent size to companies that are included in the FTSE 100 and FTSE 350 Indices.
The Annex applies to companies with a primary equity listing on the main securities market of the ISE. It generally reflects the proposed terms set out in the feedback statement published by the ISE in September 2010 in response to submissions to the ISE’s proposals for a standalone Irish Corporate Governance Code, however, there have been certain changes of emphasis and several additional provisions have been included under the heading of “Remuneration” as regards disclosure of variable elements of compensation. The Annex also specifically provides that share options or any other right to acquire shares or to be remunerated on the basis of share price movements, should not be exercisable for at least 3 years after the award.
The Annex also reinforces the ISE’s continued emphasis on improved disclosure in respect of compliance with the UK Code and the Annex – such disclosure to provide meaningful; descriptions and to avoid the practice of recycling descriptions that replicate the wording of the UK Code or the Annex.
William Fry is preparing a more detailed briefing on the Annex which should be available early this month.
