Since the emergence of the financial crisis corporate governance has increasingly come to the fore with new codes of conduct being applied to the financial sector.
Irish listed corporate investment funds are subject to EU corporate governance requirements as implemented under Statutory Instrument 450 which reflect existing regulatory standards in the funds industry through the Central Bank Notices and Companies Acts.
Acknowledging the regulatory requirements and best practice within the funds industry, the Central Bank has not sought to apply a mandatory corporate governance code to the funds industry. However, in April 2010 the Central Bank invited the Irish Funds Industry Association (IFIA) to produce a voluntary code for the industry.
To this end, it was decided with the Central Bank that IFIA would prepare two codes:
On 14 December 2011 the IFIA formally issued its new voluntary code for investment funds and management companies. The code becomes effective from 1 January 2012 with a twelve month transitional period until 1 January 2013. While the code will not be enforced by the Central Bank, the Central Bank considers it essential that all Irish authorised funds adopt the code.
It is anticipated that a further IFIA voluntary code applicable to fund service providers will issue for consultation at a future stage.
On 23 November 2011 the Central Bank issued its final guidance in relation to the new fitness & probity regime for regulated financial service providers, following the adoption of regulations and standards in September 2011.
The new regime is applicable to directors of funds and management companies and positions within service providers such as fund administrators and trustees/custodians.
For financial service providers that are affected, the new fitness & probity regime will require new due diligence and documentation standards as well as appropriate governance structures and processes to fulfil ongoing obligations.