Joanna Tuffy (Dublin Mid West, Labour)
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Question 93: To ask the Minister for Enterprise; Trade and Innovation his response to the report, Mapping the Golden Circle, published by the research body TASC, which showed that the corporate world here was dominated by a small number of interconnected business persons which the report said posed a serious threat to corporate governance; the action he will take to ensure that corporate power does not remain concentrated in the hands of a small number of persons; and if he will make a statement on the matter. [36376/10]

Batt O'Keeffe (Cork North West, Fianna Fail)
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I have noted the findings of this report. As regards listed companies (those on the main market of the Irish Stock Exchange), these have, for many years, been subject to the Combined Code on Corporate Governance, the provisions of which applied on a "comply or explain" basis. The Combined Code has recently been reviewed in the UK and revised in light of the financial crisis. The revised code, now known as the UK Corporate Governance Code, applies to Irish listed companies with effect from 30 September 2010. While the provisions of the new code will continue to apply on a comply or explain basis it will also be necessary for companies to state in their annual report how the main principles of the code (these are separate from provisions) are applied.

The new code re-emphasises the role and responsibilities of the board. It recommends that all directors of such companies should be subject to annual re-election by shareholders. This should give shareholders a regular opportunity to take account, in deciding whether they should be re-elected, of the number of directorships held by an individual director and whether or not they are in a position to give sufficient time to the company to discharge their responsibilities effectively. In addition, the new Code stresses the leadership role of the Chairman and provides that the Chairman report personally on the role and effectiveness of the board in the annual report. Furthermore, in addition to the board undertaking a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors, the new code includes a new provision for external evaluation of the board at least every three years.

The Irish Stock Exchange (ISE) and the Irish Association of Investment Managers (IAIM), who represent institutional investors here, jointly commissioned an independent and detailed review of the level of compliance by Irish listed companies with the Combined Code in Quarter 4 2009. The review showed that while listed companies are meeting disclosure obligations, further steps could be taken by boards to enhance the quality/meaningfulness/usefulness of disclosures contained in annual reports. The ISE and IAIM published a report in the matter in March 2010, which contains a number of recommendations for consideration by the boards of listed companies. The recommendations for enhanced disclosure focus largely on board issues such as board balance and board refreshment.

The ISE has indicated that it proposes to implement these recommendations by including new provisions in their Listing Rules. Consultation on the exact nature of these provisions is ongoing but the ISE's intention is that these provisions will apply to Irish listed companies from the financial year commencing on or after 1 January 2011. Companies will be required to provide a separate statement in their annual reports on a comply or explain basis regarding these provisions.

In relation to financial institutions and insurance companies, which are the responsibility of my colleague the Minister for Finance and the Financial Regulator, the Regulator published a consultation paper setting out proposals for a Corporate Governance regime for these sectors earlier this year. One of the proposals in this paper is that the number of directorships of credit institutions and insurance companies held by a director should be limited to three.

The consultation paper also proposes certain restrictions on the number of directorships a director of a financial institution or insurance company may hold overall. I understand that the Financial Regulator received over 130 responses to the consultation paper and that it is hoped to finalise deliberations on the new regime in the coming weeks. Finally, the European Commission is actively looking at the question of whether Corporate Governance measures are needed at EU level both as regards financial institutions and listed companies, The Commission's intentions in respect of these matters are unlikely to become clear until 2011.