On 17 December, the Irish Stock Exchange (“ISE”) published new listing rules which require Irish listed companies to comply or explain against additional corporate governance provisions. 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 18 December 2010 will be required to comply or explain against the Irish specific Corporate Governance provisions. As previously advised, the requirement to comply with the UK Corporate Governance Code (the “UK Code”) is already in place having applied to Irish listed companies with accounting periods beginning on or after 30 September 2010.
The Irish Corporate Governance Annex (the “Annex”) contained in the new rules implements the nine recommendations arising from the report commissioned by the ISE and the IAIM 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.
The Annex 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. The ISE does make clear, however, that the new disclosure regime “should not be interpreted as imposing an obligation on companies to change the wording of their corporate governance disclosures simply for the sake of change. However, companies should always have considered where the circumstances have remained sufficiently constant that no wording changes are required.”
William Fry is preparing a more detailed briefing on the Annex which should be available in early January 2011.
For further information, please contact David Fitzgibbon or Susanne McMenamin or your usual William Fry contact.
