MiFID investment firms, non-retail investment intermediaries, and MiFID market operators will be subject to the new Central Bank Corporate Governance Requirements for Investment Firms and Market Operators 2018 from 1 July 2019 (the Requirements).
The Requirements are almost identical to those proposed by CP 120, which were summarised in our May 2018 Briefing: Corporate Governance Requirements for Investment Firms: 2nd Central Bank Consultation. The only small change relates to Audit Committees.
CP 120 proposed that the Audit Committees for all in-scope firms (High Impact Firms, Medium High Impact Firms, and Medium Low Impact Firms) comprise non-executive directors, at least one of whom must be an independent non-executive director (INED). The Requirements instead stipulate as follows:
- Medium Low Impact Firm: the requirement is as stated in CP 120 (i.e. the Audit Committee must comprise non-executive directors, at least one of whom is an INED);
- Medium High Impact Firm: the Audit Committee must comprise non-executive directors, the majority of whom are INEDs; and
- High Impact Firm: the Audit Committee must comprise non- executive directors, the majority of whom are INEDs.
As mentioned above, the Requirements will apply from 1 July 2019. There will be no transitional period after that date. Low Impact Firms are not obliged to comply, but the Central Bank has encouraged them to do so. Foreign- incorporated subsidiaries of in-scope firms also need not comply, but are encouraged by the Central Bank to adopt equivalent corporate governance practices.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.