Breach of corporate governance code will cost institutions
FINANCIAL institutions could face fines of up to €5m if they fail to comply with the new Corporate Governance Code, it has emerged.
Business professionals at the William Fry breakfast briefing yesterday morning were told that individuals found to be responsible for a failure to comply could face fines of up to €500,000.
The code, which was published on Monday afternoon by the Central Bank, will come into effect from January 1, 2011 and applies to both major and non-major institutions.
However, the Central Bank has carved out separate rules for both groups in an effort to ensure "proportionality".
The code, in which almost all of the International Financial Services Centre companies' concerns were addressed, was welcomed by John Larkin, a partner of William Fry.
He said it brings "clarity to companies that wish to ensure they have good corporate governance".
He advised companies affected by the code to "get to grips" with the regulations as soon as possible in order to ensure a smooth transition to being fully compliant.
The code could also lead to a reluctance in individuals to become non-executive directors due to increased time commitment. Maura Roe of William Fry's employment department advised employers in financial services to take this "new regime" into account when recruiting.