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Irish Central Bank calls time for fund directors

Chris Hamblin, Editor, London, 18 September 2015

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The conditions under which fund directors are to be allowed to function in Ireland are beginning to resemble the terms of the average felon's day-release from prison.

The Central Bank has published new guidance for what it calls "directors' time commitments," and "ensuring that each director has sufficient time allocated to this important role," having surveyed the Irish funds industry and found 13 people who hold 652 directorships. The total number of directors there is just over 2,000.

Brushing aside arguments that the same board can rule many similar small sub-funds and therefore need not take the same time as it would over one or two big ones with very different profiles, the regulator seems certain that the number of fund directorships a person has is the main factor.

The Bank considers that a reasonable number of working hours available for each individual is approximately 2,000 per year, i.e a nine-hour day spread over 230 working days per annum. It expects people who take on new directorships to spread this over all the jobs they do, the better to discharge their duties in full. It also expects each board to allocate a minimum amount of time for each director's attendance at each meeting, include all preparatory work and, "where appropriate," (this phrase is left maddeningly vague) travel time. If a director is a chairman, his allocated times should be greater in accordance with the extra work. On top of this, each board should also set aside spare time for directors to tackle any emergencies that might arise, a strategy that might see them twiddling their thumbs for small periods here and there.

Designated persons

Somebody on each board ought to look after managerial functions and his job should separate from that of a director. The Central Bank only urges each firm to "consider" appointing such a "designated person," but it then dictates: "A separate time commitment should be allocated for each such designated person role and should be commensurate with any additional work that this role requires, including remuneration received. The time allocated should take into account, inter alia, the on-going oversight role, daily availability, report review and onsite visits to delegates. A separate letter of appointment should issue in respect of a designated person role for managerial functions. This should include a written contract setting out the job specifications, the time expectations and the fee arrangements for the role...subject to annual review by the board."

People with many directorships should consider the additional time required to deal with the number of underlying sub funds within one investment fund, plus the type and complexity of individual investment funds and sub-funds and the expertise necessary at board level to oversee the investment fund. Obviously each board should allocate some time to each director according to the different relationships he has with clients, although this is left vague. Most importantly, one suspects, the Central Bank now expects people to be fully aware of the regulatory and legal obligations of differing types of boards and legal structures before they become directors. Every fund firm's training budget is therefore about to swell.

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