February 25, 2014 / 4:32 PM / in 4 years

Corporate governance of funds under spotlight in Ireland

DUBLIN, Feb 25 (Reuters) - Ireland’s central bank will examine corporate governance and outsourcing in the investment funds industry this year, putting the world’s biggest centre for hedge fund administration under a spotlight.

Ireland has built itself up as a major international funds hub with some 2.5 trillion euros in assets administered in the country, more than double the level of 2009 and around 15 times the country’s annual economic output.

The industry’s rapid rise has highlighted the stewardship of those funds, particularly those who chose to be domiciled in Ireland, not just administered there. An Irish domicile requires that the fund have two Irish residents as directors.

A Reuters report last year showed that some people have been accumulating a sizeable portfolio of directorships, raising questions over their ability to devote enough attention to each fund.

The central bank cited on Tuesday corporate governance of investment funds and fund managers as one of a number of its areas for review this year, including also lending to small and medium-sized firms and anti-money laundering compliance.

A person can take any number of funds directorships in Ireland, but under a voluntary code effective since 2012 a fund’s board must ensure that its members can discharge their responsibilities, given all their other directorships.

Last month, the central bank sent out a survey to a sample of funds asking for details about how many directorships their directors held as well as other questions about conflicts of interest and corporate governance generally.

In an interview with Reuters last year, Gareth Murphy, the head of markets supervision at the central bank, said some people were taking on too many directorships but he said it was better to focus on the time directors devote to their duties rather than cap the number of directorships.

Reporting by Carmel Crimmins; Editing by Pravin Char

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