From a corporate governance and compliance standpoint, 2016 will be a significant year for Irish companies. With the economy growing strongly and records for 2015 showing the highest level of new company registrations since the onset of the recession, there is plenty of reason for optimism across the corporate landscape. Yet the legal and regulatory basis that underpins it is undergoing great change, which, while hugely welcome, places an obligation on Irish companies to undertake compulsory due diligence to ensure they are compliant with this new regime.
As such, 2016 represents an important juncture between an old system replete with a host of corporate governance failures and that of a new more sophisticated legal and regulatory environment that will set new standards and introduce stricter punishments for non-compliance. An enhanced Company Law regime following the enactment of the Companies Act 2014 (the Act), along with greater direct regulatory supervision, will provide a challenge for all companies – not just banks. This must be overcome if we are to avoid some of the terrible mistakes that were made in the past.
ICSA: The Governance Institute is on hand to help companies navigate a way forward.
The Act brings significant change that affects all Irish companies and company directors. One of its most important provisions is the lawful requirement for all companies to have a company secretary who must be skilled and resourced to the level required for the fulfilment of their duties. Failure to ensure sufficient skillsets and adequate resourcing will constitute a breach of the Act for which all of the directors of the company will be legally responsible.
Aside from the legal obligation, the company secretary plays a central role in any company, large or small, comprising an invaluable source of advice, experience and support. Whether assisting a small owner-managed enterprise or acting as the link between the boardroom, the executive and non-executive directors in a large plc, they provide a voice with independence and authority. A strong and knowledgeable company secretary can guide a company through governance and compliance matters, including the transition to the Act and is one of the fundamental factors underlying the success and solidity of a company.
ICSA is both an international and local organisation that supports and develops the skills of company secretaries in many sectors from large and small corporations to those in the public sector and not-for-profit arenas. With 125 years' experience and a network of 34,000 members spread across 80 countries, we are perfectly placed to provide career-long expert advice and high-quality guidance and to open up a wide range of industry-leading support and development tools.
Experience has taught us that companies which place good governance at their core enjoy long-term success. The recent financial crisis was a grim realisation of what can happen when good governance and ethical behaviour is ignored or downplayed. What happened in the financial crisis was bad enough but there is a host of more recent high profile corporate failures such as the emissions scandal at Volkswagen and the flood of resignations and arrests connected to severe mismanagement at FIFA.
With the recovery of the Irish economy still in its early stages, shareholders and investors alike have been calling on boards to take additional measures to protect their investments against such value destruction. Robust, transparent and ethical systems of governance should be at the top of the board priority list.
In this and other respects the recession we have emerged from, as well as any number of examples of poor governance, should act as a spur to each and every company, driving them away from the mistakes of the past and towards sustainable and ethical standards of leadership, decision-making and long-term strategic planning.
This is 2016 as we see it – a year for companies to integrate a healthy and vibrant culture of good governance into every aspect of their business; to ensure that a properly skilled and supported company secretary is in place; to align with the provisions of the Act; to generate trust in their products and services; and to drive transparency and ethical leadership. The rewards this will bring include more business opportunities, enhanced company value and greater profits. In short, for all companies, this is a year of great challenge and potentially ground-changing benefit.
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