[Last updated: 1 January 2024, unless otherwise noted]

Market expectations

Investors will normally expect a foreign company to maintain a minimum standard of corporate governance after listing. The investment bank(s) advising on the listing will therefore often recommend that the company appoints one or more independent non-executive directors to the board of directors of the company. The process of ensuring that the company's standards of corporate governance are acceptable to investors may also require that the company adopt new constitutive documents and/or establish audit and/or remuneration committees, to the extent not already in place.

Annual corporate governance statement

An Irish company with a primary listing must state in its annual report whether or not it has complied with the UK Corporate Governance Code and the Irish Corporate Governance Annex and if it has not complied, it must provide details of the provisions which were not complied with and its reasons for non-compliance.

A foreign company with a primary listing must state in its annual report whether or not it has complied with the corporate governance requirement of its country of incorporation and the significant ways those corporate governance practices differ from those set out in the UK Corporate Governance Code and/or the Irish Corporate Governance Annex.

Irish Corporate Governance Annex (the Annex)

The Annex forms part of the Listing Rules. Its contents supplement the existing provisions which require Irish listed companies to comply or explain against the requirements of the UK Corporate Governance Code. The Annex implements the nine recommendations arising from the report commissioned by Euronext Dublin and the Irish Association of Investment Managers (IAIM) in early 2010 on compliance with the Combined Code by Irish listed companies. The additional requirements are principally concerned with board composition, board evaluation, remuneration and the work undertaken by the audit committee.

The Annex applies to companies with a primary equity listing on the main securities market of Euronext Dublin. The Annex includes the following specific provisions which reflect the recommendations from Euronext Dublin/IAIM report:

Board Composition

In the annual report companies should outline the rationale for the current board size and structure and explain why a company believes it to be appropriate and provide details of any planned or anticipated changes to the board size or structure. Where less than half of the board of a company is comprised of non-executive directors, the Company must give a reasonable explanation for this departure from the requirements of provision 11 of the UK Corporate Governance Code. There are detailed provisions requiring additional information to be included in the annual report in respect of the directors and in particular their biographies. A detailed description of the skills, expertise and experience that each of the directors bring to the board must be included in the annual report. Where a company's directors have been nominated by shareholders or government, a reasoned explanation for such appointments including a description of the skills and expertise these directors bring to the board as provided by the shareholders or government or a statement that no such description has been provided to the company must also be included in the annual report.

Board Appointments

Companies should include an explanation for each new appointee to the board of the process followed by the nomination committee in identifying a pool of candidates and selecting and recommending the candidate. Where an external search agency and advertising has been used, this should be made clear in the annual report and if none were used, an appropriate negative statement should be included.

Board Evaluation

A company should state in the annual report the objective and scope of the evaluation review and methodology applied and the rationale of the methodology. A distinction should be made between the evaluation of the board process, of individual directors and of the collective board strength. The statement should specify when the most recent externally facilitated performance evaluation was undertaken or when the board expects to engage an external facilitator. If the evaluation is conducted by the board itself, the board should include an explanation of the steps that were included in the methodology to achieve as robust and objective an approach as possible.

Board Re-election

The annual report should state the board's general policy for board renewal. Provision 10 of the UK Corporate Governance Code sets out various circumstances where the independence of a director may be compromised and where a director falls within those circumstances and the board nonetheless deemed him to be independent, the board should set out in the annual report, the factors it took into account when determining whether that director should be regarded as independent.

Audit Committee

The annual report should include a meaningful description of the work carried out by the Audit Committee and not merely recycle the committee's terms of reference. The description should explain the work done by the audit committee relating to oversight of risk management on behalf of the board. If there is a specific risk committee, a meaningful description of the work carried out by that committee should also be included.

Remuneration

Companies should provide a clear and meaningful description of their remuneration policy and not simply recycle the remuneration committee's terms of reference. Where the remuneration policy includes variable components of remuneration, companies should describe the components of bonus or other variable elements of remuneration and disclose what components of variable compensation are deferred and for how long. Companies should also describe any arrangements that are designed to achieve the recovery of variable compensation awarded on the basis of assessments or data which are subsequently found to be materially inaccurate. If there are no such arrangements, companies should provide an appropriate negative statement. The company should describe the vesting periods for shares forming part of a director's remuneration and such terms should not allow for vesting for at least three years after the award. Share options or any other right to acquire shares or to be remunerated on the basis of share price movements, should not be exercisable for at least three years after the award.

Under the Companies Act 2014 (implementing the Revised Shareholder Rights Directive (SRD II)), Irish public limited companies with shares admitted to trading on Euronext Dublin must prepare a remuneration policy (which must be put to an advisory vote at the AGM at least once every four years) and a remuneration report (which must be put to an advisory vote at each AGM).