The Irish Funds Industry Association (IFIA) has introduced a new Corporate Governance Code designed for fund service providers.
The code has been developed in consultation with the Central Bank of Ireland and will provide a set of principles and guidance which codifies existing good practice and presents suggestions based on codes introduced in other jurisdictions.
Central to the new code is the introduction of an independent director to the board of each service provider. In addition, the framework also suggests that no individual shall have unfettered decision-making powers.
The code, which is fully supported by the Central Bank of Ireland, also ensures a clear set of responsibilities for the board, including oversight, risk and compliance. The boards are also responsible for key appointments, and the prevention of any conflicts of interest.
Whilst the IFIA feels the code will be of benefit to all funds service providers, the code is to be introduced on a comply or explain basis, which allows fund service providers a degree of flexibility as to how they meet the requirements included in the code. For those providers choosing to adhere to the code, the IFIA has recommended a transitional period of 12 months.
Pat Lardner, chief executive officer at the IFIA, says: “In today’s environment there has been an added emphasis on good corporate governance, and we believe the code will build on this idea and on the sound practices that already exist in Ireland. The code will allow all fund service providers to ensure they have best practice in place. The changes necessary to adhere to the framework will differ from firm to firm, which is why the code is being introduced on a voluntary, comply or explain, basis.
“Ireland is an exemplary jurisdiction with regards to corporate governance for funds. We hope the Code will give both the industry and investors additional peace of mind, as the framework bolsters our leading position as a domicile of choice for funds.”
Máiréad Devine, head of risk, governance and accounting policy at the Central Bank of Ireland, says: “We have been working closely with the IFIA in drafting a code that is both flexible and adds to good practices already in place. We believe sound corporate governance increases accountability, improves transparency, mitigates risk and reinforces the integrity of an organisation and the market in which it operates.”