The Financial Reporting Council (FRC) has launched a consultation over proposed changes to the UK Corporate Governance Code. These changes are based on the findings of the Culture Report published by the FRC in 2016.
The FRC explains that the amended code reflects current best practice in how company boards can:
- ‘Establish a company’s purpose, strategy and values and satisfy themselves that these and their culture are aligned;
- Undertake effective engagement with wider stakeholders, to improve trust and achieve mutual benefit, and to have regard to wider society;
- Gather views of the workforce;
- Ensure appointments to boards and succession plans are based on merit and objective criteria to avoid group think, and promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths;
- Be more specific about actions when they encounter significant shareholder opposition on any resolution, including those on executive pay policies and awards; and
- Give remuneration committees broader responsibility and discretion for overseeing how remuneration and workforce policies align with strategic objectives.’
“The UK is globally renowned for its corporate governance framework, which is underpinned by the UK Corporate Governance Code,” explained Sir Win Bischoff, Chairman of the FRC. “At this critical time and as the country approaches Brexit, a revised Code will be essential to restoring trust in business, attracting investment and ensuring the long-term success of companies for members and wider society. We have engaged with many stakeholders and incorporated suggestions from the Government’s Green Paper on Corporate Governance Reforms, to produce a Code which is shorter and sharper and fit for purpose.”
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