FRC Open Meeting

The Corporate Governance Code On Thursday 21 September I attended the Financial Reporting Council’s Annual Open Meeting. Apart from a general update by the Chairman and the CEO of the FRC, there was a useful talk by Paul George who provided an update on the FRC’s position regarding the UK Corporate Governance Code.

It seems that the FRC plans to issue a consultation document, probably in November 2017, setting out its proposals for changes to the Code. It is likely that the Code will be shortened, with greater emphasis on the Code Principles (the Supporting Principles are expected to go). There will be fewer Code Provisions. A mark-up of the proposed changes is expected to be included.

The FRC will be aiming to include the various issues raised by the Government and also to include matters raised by listed companies. Specific areas to be covered are expected to be, amongst others:

  • A focus on directors’ responsibilities towards the wider stakeholder community.
  • Corporate culture, succession planning and diversity.
  • Directors’ responsibilities regarding remuneration, including employees’ remuneration, as well as executive – and remuneration reporting generally.
  • The proposed register of companies suffering from dissent on AGM resolutions where this exceeds 20%.

The new Corporate Governance Code is expected to be finalised by mid-2018 (maybe in the early autumn) and cover financial years ending on or after 31 December 2018.

The Stewardship Code Following this consultation, the FRC will look at the Stewardship Code. A full consultation will take place on this. A stronger line appears likely regarding stewards’ responsibilities. It was mooted that perhaps institutional investors should be required to fulfil certain duties along the lines of directors’ duties, as set out in section 172 of the Companies Act – quite a step forward!

Board Effectiveness In the New Year, the FRC also plans to review the Guidance on Board Effectiveness published in March 2011.

Seminar At Edis-Bates Associates, we are looking at the possibility of running an event on these topics early next year, if there is sufficient demand.

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