Corporate Governance Code Consultation Paper (Banks and Deposit Companies Act 1999) (2011-12)

Summary

This is a 2011 consultation paper issued by the Bermuda Monetary Authority (BMA) proposing a draft Corporate Governance Code for banks licensed under the Banks and Deposit Companies Act 1999. The draft Code sets out 13 principles, with supporting guidance, covering board practices, senior management oversight, risk management and internal controls, compensation, complex or opaque corporate structures, and disclosure and transparency. The BMA states that sound corporate governance is already an implicit statutory licensing requirement (that a bank conduct business prudently), and that the Code is intended to give banks guidance on how to meet that existing requirement rather than create a new one.

• Board practices: Principles on the board's overall responsibility for strategy, risk tolerance, corporate values, oversight of senior management, board qualifications, composition, committees (including an audit committee), and the role of the chair.
• Risk management and internal controls: Expectations for a bank's risk management framework, internal control functions, and their independence and communication with the board.
• Compensation: Guidance on aligning compensation structures with sound risk management and long-term viability.
• Complex or opaque corporate structures: Board oversight expectations where a bank operates through complex group structures or activities that are difficult to monitor.
• Disclosure and transparency: Expectations that banks disclose governance structures, board composition and qualifications, risk appetite, and related information to shareholders, depositors and other stakeholders.

As a consultation paper, the document itself does not yet impose binding requirements; it invites industry comment on the draft Code before finalisation. The BMA indicates it will consider compliance with the eventual Code when assessing whether a bank is conducting its business prudently, and that implementation may vary by institution size, complexity and risk profile.

Key obligations

• Interested parties must submit comments on the Consultation Paper and draft Corporate Governance Code to policy@bma.bm by 29 February 2012.

Applies to

banks, deposit companies

Deadlines

• 29 February 2012: Deadline for submitting comments on the Corporate Governance Code Consultation Paper to policy@bma.bm.