Ireland's first Corporate Governance Code (the Irish Code), drafted specifically for the Irish market, has been published. The Irish Code will apply to Irish-incorporated companies with an equity listing on Euronext Dublin for financial years beginning on or after 1 January 2025. If a company is dual-listed in both Ireland and the UK, the Euronext Dublin listing rules permit the company to follow either the Irish or the UK Corporate Governance Code 2024 (the UK Code).
While the final version of the Irish Code is broadly similar to the draft published for consultation earlier in the year (and discussed in our previous article here), there are a few notable changes. This article considers where the Irish Code has changed from what was contained in the draft published as part of the consultation in April 2024 to the final version formally launched on 24 September 2024. It also highlights the key differences between the Irish Code and the UK Code, which existing Irish listed companies and issuers will need to consider.
- Shareholder dissent: The Irish Code raises the threshold for addressing shareholder dissent from 20% (UK Code) to 25% of votes cast against a board recommendation. This aligns the Irish Code with the votes needed to defeat a special resolution under the Companies Act 2014 (the 2014 Act).
- Six-month shareholder update: The Irish Code removes the requirement for publication of a six-month update on shareholder discussions and proposed actions. Following the consultation, an additional requirement has been inserted, which requires the company to detail the engagement process undertaken to consult with shareholders.
- Speak-up policy: The Irish Code includes a requirement for the board to review its policy on ‘speaking-up’.
- Role of the chair in the provision of information: Additional wording specifies that the chair must ensure that directors receive “relevant, accurate, timely and clear information” before and between meetings so directors can “make a knowledgeable and informed contribution to board discussions”.
- Engagement with the workforce: While the Irish Code does not feature the prescribed method of engagement with workforce set down in the UK Code, the following has been inserted into the final version of the Irish Code: “For engagement with the workforce, the board should explain what arrangements are in place and why it considers them to be effective.
- Approval of external appointments: The Irish Code contains the original requirement in the UK Code that all external appointments must be approved by the board, with the reasons for permitting significant appointments or appointments which could reasonably be expected to give rise to a conflict of interest explained in the annual report.
- Commissioning a board review: While the draft Irish Code proposed more flexible wording requiring the chair to "consider" rather than "commission" a board review, this was criticised by respondents to the consultation. The Irish Code has reverted to the wording of the UK Code that the chair should commission a regular externally facilitated board performance review.
- Risk management and internal control: The wording of the UK Code has also been followed in the Irish Code in specifying that the board "should establish and maintain an effective risk management and internal control framework”.
However, the UK Code’s new provision 29 (effective from 1 January 2026), which requires public disclosure of further details surrounding the board’s annual review of the company’s risk management and internal control systems, has been excluded from the Irish Code.
- Independence of audit committee: Like the UK Code, the Irish Code stipulates that an audit committee should have at least three independent non-executive directors (iNEDs), with smaller companies required to have at least two iNEDs. Euronext proposed changing the provision to require the majority of the committee to be iNEDs and the chair to be independent, but this approach was not favoured by respondents to the consultation.
- Diversity and inclusion policy: The Irish Code features a requirement for a company to have a diversity and inclusion policy "with regard to gender and other aspects of diversity of relevance to the company such as, age, disabilities and educational and professional background which should include measurable objectives for implementing such a policy". The board is expected to monitor the implementation of this policy and review it annually to ensure it remains fit for purpose.
- Remuneration: The vesting and holding period for share awards is reduced from five years (UK Code) to three years in the Irish Code. The Irish Code does not contain the UK Code’s new provision 38 (effective from 1 January 2025), which is more prescriptive as to the nature of the description of clawback and malus required in annual reports.
- Pensions: Like the UK Code, the Irish Code features a provision on pensions as follows: “Only basic salary should be pensionable. The pension contribution rates for executive directors, or payments in lieu, should be carefully considered when compared with those available to the workforce.” It was initially proposed to omit such a provision.
Existing listed companies will be relieved to see that the Irish Code does not deviate significantly from the UK Code with which they will be familiar. However, companies should consider the two codes carefully and ensure they are cognisant of the differences ahead of the 1 January 2025 start date.
