Ireland: CP120: CBI Consults On Corporate Governance Requirements For Investment Firms

On 10 May 2018 the Central Bank of Ireland (the "Central Bank") published CP120:  Second Consultation Paper on the Corporate Governance Requirements for Investment Firms and Market Operators. This contains proposals to finalise the corporate governance requirements for Irish regulated investment firms previously set out in CP94 1.

The CP94 requirements have been updated (the "revised Requirements") to reflect the European Union (Markets in Financial Instruments) Regulations 2017 ( "MiFID II Regulations"); the delegated acts issued under MiFID II (the "Delegated Acts"); and in light of the joint EBA and ESMA Guidelines on the assessment of the suitability of members of the management body and key function holders of 26 September 2017 (including the additional ESMA Guidelines on the management body of market operators and data reporting service providers of 28 September 2017) ("EBA Guidelines").

In-Scope Firms

The proportionality approach from CP94 has remained and the revised Requirements will apply to the following firms ("Firms"):

  • An investment firm authorised under MiFID II and the Delegated Acts;
  • A market operator authorised under MiFID II and the Delegated Acts; and
  • A non-retail investment intermediary authorised under the Investment Intermediaries Act 1995; classified as with High, Medium High or Medium Low Impact by the Central Bank Probability Risk Impact System ("PRISM").  Low Impact Firms will not be bound by the revised Requirements but are encouraged to adopt them. Similarly, the revised Requirements will not apply to foreign incorporated subsidiaries of an Irish Firm but adoption of equivalent good corporate governance practices is encouraged.

The revised Requirements address:

  • Board composition;
  • The chairman's role; and
  • Board committees.

Board Composition

A Board of Directors (the "Board") shall be required to be of sufficient size and expertise to adequately oversee the Firm's operations and to be composed of a majority of independent non-executive directors ("INEDs"). 

However, for Firms that are subsidiaries of groups, the majority of the Board may, depending on their PRISM rating, comprise the following:

High Impact  Firms  Group directors and INEDs provided that the Firm has at least three INEDs.
Medium High Impact  Firms  Group directors and INEDs provided that the Firm has at least two  INEDs.
Medium Low Impact  Firms  Group directors and INEDs provided that the Firm has at least one  INED.

The Central Bank will also retain discretion to require a Firm to have more INEDs than those specified above.

For INEDs, the revised Requirements set out criteria to be considered in assessing independence. 

Group directors shall be required to act critically and independently so as they exercise objective and independent judgement.


Each Board's Chairman (the "Chairman") must be an INED. However, a Firm that is a subsidiary, may appoint a group director as Chairman. The Chairman will be required to have the relevant financial services expertise, qualifications and experience or undertake comprehensive training so that he/she understands: (i) the nature of the Firm's business, activities and related risks; (ii) his or her individual direct and indirect responsibilities and the Board's responsibilities; and (iii) the Firm's financial information.

Board Committees

Requirements for High Impact Firms only

  • These Firms will be required to have an audit committee and a risk committee;
  • The same person cannot chair both committees simultaneously;
  • A remuneration committee will be mandatory and the Board must ensure that the Chairman of the Board is not also the Chairman of the remuneration committee;
  • Where possible, all members (or if not all, a majority) of the remuneration committee should be INEDs; and 
  • If the Firm is part of a wider group which has a group remuneration committee, the Firm may rely on that committee if the Board is satisfied that it is appropriate and there is evidence of this assessment. Such a decision should be notified promptly and the Central Bank can require the Firm to establish its own remuneration committee.

Requirements for Medium High and Medium Low Impact Firms only

  • These firms will be required to have an audit committee and a risk committee;
  • Where the Board comprises five or less members, the full Board, including the Chairman and chief executive officer ("CEO"), may act as the audit committee and / or risk committee subject to the Central Bank's prior written approval; and 
  • Minutes of such meetings must reflect that the Board was sitting as the audit or risk committee.

Requirements for all in-scope Firms

  • The Board shall be responsible for the oversight of each of its committees;
  • INEDs should play a leading role in the committees or where the functions are carried out at group level, they should play a leading role in satisfying the Board that the Firm's audit and risk functions are adequately carried out;
  • The audit committee and risk committee shall have at least one shared member;
  • When appointing committee members, the Board shall satisfy itself as to the relevant expertise and skills of members and their ability to commit appropriate time to the committee;
  • Committee membership shall be reviewed by the Firm and subject to renewal by the Firm frequently; and
  • Clear written terms of reference must be adopted for the Board and each committee outlining the authority, functions, membership and reporting lines of the Board and each committee as well as meeting frequency, voting rights and quorums. Such terms must be reviewed at least annually.

Audit Committee requirements

  • The Chairman must be an INED;
  • The committee shall be composed of non-executive directors, including at least one INED;
  • The audit committee as whole must have relevant financial experience and at least one member with an appropriate qualification;
  • Neither the CEO nor Chairman shall be a member of the audit committee;
  • Attendance by the CEO or Chairman at audit committee meetings will be by invitation only and managed to ensure the independence of the committee and the maintenance of appropriate relationships with other parties, particularly external auditors; and
  • Committee activities and decisions must be reported to the Board.

Risk Committee requirements

  • The Chairman must be a non-executive director or an INED; and
  • The committee must comprise a majority of non-executive directors or INEDs or a combination of both.

A summary of the revised Requirements is set out in tabular form in the attachment at Appendix 1.

EBA Guidelines

The EBA Guidelines apply as of 30 June 2018, and competent authorities were required to notify the EBA and ESMA about whether they comply, or intend to comply, with them, or otherwise with reasons for non-compliance, by May 21 2018.

In the recently updated fitness and probity guidance which the Central Bank issued in June 2018, the Central Bank clarified that the EBA Guidelines apply, in addition to the Central Bank's fitness and probity standards, to all applications to perform pre-approval control functions in credit institutions and certain investment firms. CP120 also sets out that the revised Requirements should be read in conjunction with the EBA Guidelines. In addition, the current Central Bank fitness and probity regime and CP120 cover certain aspects of the EBA Guidelines. 

The fitness and probity regime already covers some elements contained in the EBA Guidelines such as (i) adequate knowledge, skill and experience of directors; (ii) time commitment and other directorships; and (iii) reputation, honesty and integrity of directors and key function holders.

CP120 has captured certain elements from the EBA Guidelines including the independent director requirement and requirement for committees.

Other aspects of the EBA Guidelines, such as (i) the 'independence of mind' concept, (ii) the management of conflicts so as not to impede the ability to perform duties independently and objectively and (iii) ongoing assessment of Board and director performance are not explicitly addressed in CP120.

Consultation Period

The Central Bank welcomes feedback on CP120 from all stakeholders. Responses should be submitted by 31 July 2018.

Effective Date

The revised Requirements (once finalised) will apply from 1 July 2019 and there are no transitional arrangements.


1 Consultation on Corporate Governance Requirements for Investment Firms, Consultation Paper 94.

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.

Peter Stapleton
Stephen Carty
Ian Conlon
Emma Conaty
Pádraig Brosnan
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
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must 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