D&I in focus: key considerations for governance among Irish fund managers

The Central Bank of Ireland has now published its Board Effectiveness Review, through the lens of Diversity and Inclusion for fund management companies. 

The review highlights that positive practices are in place but there is significant scope for enhancement across boards on diversity and inclusion (D&I) initiatives. 

Fund management companies should proactively assess and strengthen board effectiveness by fully integrating diversity and inclusion into their governance processes and decision-making. 

The full report is available on the Central Bank of Ireland's (CBI) website. In this briefing, Ogier counsel Dave Nolan outlines the key points of the review. 

Key takeaways from the CBI report 

• D&I is a governance responsibility and must be embedded in board composition, skills matrices, evaluation and succession planning. 
   
• Tenure for independent non-executive directors (INEDs), particularly those in situ for 10 or more years, must be formally assessed at least annually, with boards documenting how these relationships remain appropriate. Ultimately, boards need to ensure the INED is independent after such a period of tenure. 
• Succession plans fell short of CBI expectations. The CBI expects that firms must name successors, assign internal ownership, define time horizons and integrate D&I considerations. Plans that go stale following turnover are a governance failure
  
  
• Board minutes must evidence challenge. Minutes recorded decisions being approved but a number of firms did not evidence the discussion, challenge or voting process that led to the decision. Key decisions outside board meetings were inadequately documented  
  
  
• Post-decision reviews were largely absent and the CBI flagged that lessons learned should be documented, to enhance governance.
  
  

Key actions

There are some immediate actions required by boards of fund management companies to ensure readiness ahead of any pending regulatory inspection.  
 
INED tenure should not be overlooked, but instead discussed, agreed and documented at all boards where you have INEDs in situ for 10 or more years and those approaching that tenure. Can you rationalise that those directors remain independent?

How Ogier can help 

Ogier's Investment Funds team in Ireland understand the intricacies of the funds sector. Our responsive, partner-led legal team in Ireland combines domestic insight with European and global perspectives, providing commercially driven, solutions-based advice across the fund life cycle. 

Our deep bench of funds expertise enables us to provide integrated legal, regulatory and compliance solutions to our high profile, international client base. We advise on the full range of fund products. We provide structuring advice and assist with mergers and acquisitions of investment fund groups, service providers and other financial services. 

Reach out to a member of the team if you need any assistance with your review. 

About Ogier

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice