Ireland: New Voluntary Corporate Governance Code For The Funds Industry

The finalised corporate governance code (the "Code") for the Irish funds industry was published today, 14 December 2011. The Code was prepared in response to an invitation to the Irish Funds Industry Association ("IFIA") by the Central Bank in April 2010 to formulate an appropriate code for Irish investment funds. Michael Jackson served as a member of the steering group established by the IFIA to develop the Code. A draft of the Code was circulated for comment on 13 June 2011 and the consultation closed on 24 June 2011. The finalised Code does not contain significant changes to the draft Code.

The Code will apply to Irish authorised investment funds and Irish authorised management companies. Although the Code is voluntary, its adoption is strongly recommended by the IFIA. It operates on a "comply or explain" basis so that, where the board of any company decides not to comply with any provision of the code, the reasons for non-compliance should be set out in its directors' report or on its website. The Code becomes effective from 1 January 2012 and a transitional period of 12 months will apply.

The Code represents a codification of existing practice combined with what is seen as best international practice. The vast majority of the requirements set out in the Code are therefore already being complied with by Irish authorised funds, but boards of funds and management companies will have to review the Code and consider whether to adopt it in full.

Composition of the Board

There are a number of new requirements in respect of the composition of the board. The board must have:

a minimum of three directors;

a majority of non-executive directors; and

at least one independent director.

Independent Directors

The Code provides criteria to be considered in determining if a director is independent. Prior to the introduction of the Code, the only substantive requirement in this regard was that there be two Irish-resident directors (this requirement remains). While these directors tended to be independent of the fund promoter as a matter of practice, this was not a formal requirement. The requirement in the Code that at least two directors be "reasonably available to meet the Central Bank at short notice, if so required" is also likely to be met by having two Irish-resident directors.

The Code also requires that at least one director should be an employee of the promoter or investment manager, to ensure that there is a good balance of skills and expertise on the board. An independent director may not be an employee of any service provider firm receiving professional fees from the fund. The frequently asked questions ("FAQs") relating to the Code clarify that an independent director of a management company can also qualify as an independent director of a fund to which the management company provides management services where the promoter of the fund and the management company are related or affiliated entities.

No numerical restriction

The Code does not introduce a numerical restriction on the number of directorships which may be held but requires that each director shall have sufficient time to devote to the role of director and associated responsibilities. Funds should specify at the outset and on a periodic basis the time commitment it expects from each director. Directors are required to disclose to the board their other time commitments.

There is a rebuttable presumption that no more than eight non-fund directorships may be held. Where a director holds in excess of eight non-fund directorships, he will be required to explain in the director's report that the holding of such directorships does not impact the director's time available to fulfil his role and functions as director of the fund. For the purposes of this requirement, non-fund directorships shall not include group directorships.


A further new requirement is that the board must ensure that all directors receive sufficient training to enable them to discharge their duties.

Review of Board Composition

There should be an informal annual review of the board membership and a formal review every three years.


The Code requires that a non-executive chairman be appointed to the board. This represents a new requirement for non-UCITS funds. The chairman should be reviewed at least once every three years.


It is recommended that board meetings take place at least quarterly (depending on the nature, scale and complexity of the fund or management company). For non-UCITS funds, the Code provides that the board could meet less frequently if it believes this is justified, but this must be disclosed in the "comply or explain" statement in the annual report.

Directors are expected to attend and participate at meetings and an attendance schedule should form part of the annual informal board performance review process. The FAQs which accompany the Code clarify that directors who reside abroad may attend via telephone or video conference but would be expected to attend at least one meeting per year in person.

Conflicts of Interest

The Code requires conflicts of interest to be taken into account in making appointments to the board, that there be documented procedures for dealing with conflicts, and an annual review of compliance with these procedures. If there are ongoing conflicts impacting on the ability of the board to act in the best interests of shareholders, the board should consider changing its membership.


The Code specifies that, while the board may delegate all or part of the management of the fund to third parties (eg investment management, administration, distribution), the board cannot abrogate its responsibility for functions delegated.

Reserved Powers

It is recommended that the board establish a formal schedule of matters specifically reserved to it for decision, which should be updated regularly.

Review of Board Performance

There should be a review of the overall board's performance and that of individual directors annually, with a formal documented review taking place at least once every three years.


The financial crisis has led to heightened scrutiny and the Central Bank has prioritised the development of corporate governance codes for the financial services sector. The development of a tailored corporate governance code for the funds industry is consistent with the Central Bank's risk-based approach to regulation and recognises that the funds sector poses a different risk profile than that of banks or insurance companies. While the Code for the most part codifies existing practices, boards will need to conduct a detailed review of its provisions to determine whether it ought to be adopted in full or, where it is decided not to comply with a provision, to establish clear reasons for non-compliance which can be set out in the directors' report or on the fund's/management company's website. Many boards will already have conducted this review in light of the circulation of the draft Code in June 2011. As mentioned above, the final Code does not contain substantial amendments to the draft Code.

A copy of the Code and the FAQs is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions