The Stewardship Code has been a catalyst for greater engagement between companies and their shareholders in 2012. Introduced in 2010, there are now over 250 signatories to the Code, including most major institutional investors.
This is one of the conclusions in the Financial Reporting Council’s annual report on its monitoring of developments in corporate governance, published today.
The FRC also found strong take-up by companies of the recommendations introduced to the UK Corporate Governance Code in 2010. Ninety-six per cent of FTSE 350 companies now put all directors up for re-election every year, and the majority of those companies will have the effectiveness of their board independently reviewed at least every three years. Overall compliance with the Code among listed companies of all sizes remains high.
Commenting on progress during 2012, FRC Chairman Baroness Hogg said:
“Companies and investors have responded positively to the changes we introduced in 2010, as they have done consistently in the twenty years since the first corporate governance code was published. In response to further consultation, the 2012 Code focuses on the role of the audit committee - its selection of auditors and how it reports – and asks companies to articulate their policies on boardroom diversity, which many are doing even in advance of the new Code taking effect. Meanwhile changes to the Stewardship Code ask investment managers to explain what use they make of proxy advisers, and ask asset owners such as pension funds to reflect their stewardship policies in the mandates they award to managers.”
Notes to editors:
The FRC is responsible for promoting high quality corporate governance and reporting to foster investment. We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work. We represent UK interests in international standard-setting. We also monitor and take action to promote the quality of corporate reporting and auditing. We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
Changes made to the UK Corporate Governance Code in October 2010 included that FTSE 350 companies should put all directors up for re-election every year and carry out an externally facilitated board evaluation at least every three years, and that all listed companies should describe their business model in the annual report. In addition the board’s responsibilities for determining the nature and extent of the risks it was willing to take in pursuit of its strategy were clarified. Changes made to both codes in October 2012 are summarised in FRC Press Notice 010: http://www.frc.org.uk/News-and-Events/FRC-Press/Press/2012/September/FRC-publishes-updates-to-UK-Corporate-Governance-C.aspx
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