Irish directors back new accountability legislation

The majority of Irish company directors and business leaders are in favour of the Government’s new individual accountability legislation, according to the Institute of Directors.

A clear majority (65pc) of company directors and business leaders thinks that the Government should proceed with the introduction of the Central Bank (Amendment) Bill 2019, while 56pc are personally in favour of the concept of directors’ individual accountability, according to the latest quarterly Director Sentiment Monitor survey by the Institute of Directors (IoD) in Ireland.

Support from directors and business leaders from the financial services sector alone is even higher, at 67pc and 69pc, respectively.

“The vast majority of company directors are both cognisant of their fiduciary duties and act responsibly”

The Central Bank (Amendment) Bill 2019 includes provisions relating to the Senior Executive Accountability Regime (SEAR) and Conduct Standards on all Regulated Financial Service Providers (RFSPs). The Bill is currently at the Third (Committee) Stage in the legislative process in the Oireachtas.

Pandemic affirms role of directors in business

Blonde-haired business woman.

Maura Quinn, chief executive of the Institute of Directors in Ireland

IoD Ireland’s quarterly Director Sentiment Monitor survey, for Q1 2021, was conducted between 26th March and 12th April 2021, and was completed by 245 directors and business leaders, who are members of IoD Ireland. The Director Sentiment Monitor tracks business sentiment on a quarterly basis.

“The vast majority of company directors are both cognisant of their fiduciary duties and act responsibly. Indeed, the importance of the role has never been so affirmed as it has been during the Covid-19 pandemic,” said Maura Quinn, chief executive of the Institute of Directors in Ireland.

“Boards are working with CEOs and senior management in trying to navigate successfully through the immense challenges many companies have faced. Most directors take their responsibilities very seriously and the fact that a clear majority of those surveyed supports the Government’s Bill on accountability is indicative of that.”

The new IoD research also finds that 87pc of business leaders view Directors & Officers (D&O) Liability Insurance ‘an essential’ that all directors should have.

However, a substantial majority (63pc) say they do not have their own personal D&O Insurance in addition to that provided by the organisations on whose boards they serve.  Furthermore, 61pc of those who are currently covered by D&O Insurance say the cost has increased either marginally or significantly over the past year.

“In what is an increasingly regulated and onerous governance environment for directors, who face many risks, it is important that directors have Directors & Officers (D&O) Insurance and should, at a minimum, have insurance from the organisations on whose boards they serve,” Quinn said.

“In this context, the increased cost of D&O insurance is concerning as it may limit and prevent directors being insured.”

By John Kennedy (john.kennedy3@boi.com)

Published: 20 April 2021

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