A regulatory turn, Irish edition

Ireland, you may not have noticed, appears to be making something of a break with 'comply or explain'. The always useful Corporate Law and Governance points out that the Fine Gael-Labour programme for government includes the following commitment:

We will make good corporate governance the law, not an optional extra, and enact legislation to provide for binding code of practice for corporate governance, which will be obligatory for companies wishing to be listed on Irish stock exchange.

A bit of Googling around revealed that this was actually a proposal in Labour's election manifesto, which is interesting in itself. A bit of further Googling turned up this paper (PDF), which sets our Labour's response to the crisis, including what would be covered in a binding code.

Labour in government would enact legislation that would provide for a binding code of practice for corporate governance, which would be obligatory for companies wishing to be listed on the Irish stock exchange.

Labour’s proposed Corporate Governance (Code of Practice) Bill will:

 Provide for the drawing up of a binding code of practice for corporate governance

 End the practice of cross-directorships

 Limit the number of boards on which a non-executive director may sit

 Prohibit the positions of chairman and chief executive of a company being held by the same person

 Prohibit a former chief executive from being elected chairman

 Prohibit non-executive directors from serving on a board for more than seven consecutive years

 Require companies to establish independent auditing committees, comprised of members with relevant expertise

 Require the chairman and chief executive to assume direct responsibility for ensuring good corporate governance and transparency in corporate reporting

 Require non-executive directors to demonstrate the time and skills necessary to contribute effectively to the board

 Regulate the appointment of non- executive directors who are connected to the company’s bank or auditors

Regulating issues like board tenure, combined roles chief execs becoming chairs etc is, of course, a significant shift away from the UK model. It will be interesting to see how much of this actually makes it into law, I wouldn't bet against the whole lot.

More generally this is a big shift in corp gov policy by a sister party. In my opinion Labour in the UK should at least review whether 'comply or explain' is still doing the job here.