A consultation paper has been published by the Irish Stock Exchange in which it proposes the introduction of an Irish Corporate Governance Code, a draft copy of which has been published. The proposed Code supplements the existing Combined Code (being renamed the UK Corporate Governance Code) with some of the key recommendations of the report commissioned by the Irish Stock Exchange and the Irish Association of Investment Managers, published earlier in 2010.

The key additions are:

• Two additional paragraphs in the preface seeking an end to boiler plate explanations.

"The tendency for companies to replicate the language of the Code when describing their reasons for diverging from its provisions is common to all companies irrespective of their industry or size. Whilst the ISE understand how this practice has come into being, the ISE would expect that companies would now seek to include explanations that more clearly reflect the environment within which they operate. In circumstances where the company intends to comply with the provisions of the Code in the future, it should provide an indication of how and when it will be in a position to do so. Where a company has decided not to implement a particular provision of the Code it should include a full and robust justification for its position.

The ISE encourages Companies to provide meaningful, evidence-based descriptions of how they apply the provisions of the Code. The ISE asks that companies move away from the practice of recycling descriptions that replicate the wording of the Code’s provisions and provide more informative disclosures that will provide shareholders with greater insight into the company and the environs in which it operates".

• Five additional provisions under section B1 on the composition of the Board.
• Two additional provisions under section B2 on appointments to the Board.
• Two additional provisions under section B6 on Board evaluations.
• Three additional provisions under section B7 on Board re-elections.
• Two additional provisions under section C3 on the Audit Committee and Auditors.
• Two additional provisions under section D1 on the level and components of remuneration.

The rationale behind the proposed additions is strong - seeking more meaningful reporting on processes and explanations for non-compliance -  and and will likely be backed by investors. However a number of these provisions tend to duplicate or overlap with existing provisions and it will be interesting to see if the current drafting survives the consultation process.

The most disappointing aspect of the proposals is the failure to include a recommendation that companies put the remuneration report to an advisory vote at the AGM. Perhaps this is an indicator that this will be dealt with through either company law or the listing rules.

Manifest's response to the consultation can be viewed Here >>