Ruairi Quinn (Dublin South East, Labour)
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Question 35: 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 Ireland's corporate world 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. [45542/10]

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 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 will 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 code includes a new provision for external evaluation of the board at least once every three years.

In addition, the Irish Stock Exchange (ISE) has indicated that it proposes to implement recommendations contained in a report published jointly earlier this year by the ISE and the Irish Association of Investment Managers (IAIM), representing institutional investors here, by including new provisions in their Listing Rules. The recommendations are aimed at enhancing disclosures contained in annual reports of listed companies, focusing largely on board issues such as board balance and board refreshment. 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. Listed companies will be required to provide a separate statement in their annual reports on a comply or explain basis in respect of these provisions.

In relation to financial institutions and insurance companies, which are the responsibility of my colleague the Minister for Finance, the Central Bank recently issued the corporate governance code for credit institutions and insurance firms which sets out minimum statutory requirements on how banks and insurance companies should organize the governance of their institutions. The Code requirements include: · Limits on the number of directorships which directors may hold in financial and non- financial companies to ensure they can comply with the expected demands of board membership of a credit institution or insurance company · Requirements on the role and number of independent non-executive directors; · Criteria for director independence and consideration of conflicts of interest; · Clear separation of the roles of Chairman and CEO; · A prohibition on an individual who has been a CEO, director or senior manager during the previous five years from becoming Chairman of that institution; · A requirement that board membership is reviewed at a minimum every three years; · A requirement that boards set the risk appetite for the institution and monitor adherence to this on an ongoing basis; · A requirement for an annual confirmation of compliance to be submitted to the Central Bank.

Finally the European Commission are considering the question of whether Corporate Governance measures are needed at EU level in respect of financial institutions and listed companies. The Commission's intentions in respect of these matters are unlikely to become clear until 2011.