A public consultation paper on corporate governance has been published, which is set to shake-up the finance sector.
Banks and insurers should have no fewer than five board members and the number of directorships that one person can hold should be limited.
The paper was published by the Central Bank and Financial Regulator Matthew Elderfield.
The consultation paper is part of a strategy to update the rules that apply to banks and insurance companies.
One of the causes of the international financial crisis was inadequate oversight of credit institutions and insurance companies, according to Mr Elderfield.
The boards of those companies did not understand the risks they were taking or what the cost of those risks would be to themselves or the wider economy.
The Regulator said that because of this, enhanced regulation and governance is needed.
In the consultation paper, which is open to the public for comment until the end of June, the Regulator says the roles of chief executive and chairman should be clearly separated.
Anyone who has been a CEO, a director or senior manager of a company would not be eligible for the chairman's role until five years after they left their previous senior position.
Remuneration committees should mainly be made up of independent directors and criteria for their roles and their independence needs to be outlined to avoid conflicts of interest, it says.
