Kathleen Lynch (Cork North Central, Labour)
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Question 43: To ask the Minister for Enterprise, Trade and Innovation when he will publish the legislation promised (details supplied) to clamp down on crony capitalism, to restrict cross-directorships and to prevent one person fulfilling the dual role of chair and chief executive of any company; and if he will make a statement on the matter. [45551/10]

Batt O'Keeffe (Cork North West, Fianna Fail)
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As regards credit institutions and insurance companies, which come within the aegis of my colleague the Minister for Finance, the Deputy may be aware that 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 new Code will apply to existing directors and boards with effect from 1 January 2011 but there is provision for transitional arrangements for those institutions needing more time to implement changes to systems and structures to become compliant.

The Code adopts a two tier approach by imposing minimum core standards upon the boards of directors of banks and insurers in general with additional requirements defined for firms that the Central Bank designates as major institutions. Included among the requirements of the Code are 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. The Code also provides for a clear separation of the roles of Chairman and CEO.

There is also a requirement for an annual confirmation of compliance to be submitted to the Central Bank. Failure to comply with the requirements of the Code may be subject to supervisory action and disciplinary procedures by the Central Bank, including sanctions under powers available to the Bank. In addition, cross directorships and separation of the roles of Chair and Chief Executive are among issues also being considered by the European Commission as part of a possible corporate governance initiative at EU level on financial institutions generally.

In relation to Irish listed companies (those trading on the main market of the Irish Stock Exchange), the corporate governance code that applies on a "comply or explain" basis has recently been revised following the financial crisis. Among the changes introduced is a provision recommending that all directors of listed companies should be subject to annual election by shareholders. The revised Code continues to provide that the same individual should not exercise the roles of Chairman and CEO. In the area of company law, the Companies Consolidation and Reform Bill currently being drafted will implement the recommendations of the Company Law Review Group in that the fiduciary duties owed by directors to the company will be set out in the new companies code.

Currently, company law does not prohibit cross directorships. The general position is that a person may not be a director of more than 25 companies subject to certain specific exceptions. Neither do the Companies Acts prevent a person fulfilling the dual role of chair and chief executive of a company. This would in my opinion be unworkable for smaller companies. The Government is committed to ensuring that our corporate governance regime for the corporate sector generally, accords with best international practice.