The Financial Reporting Council (FRC) has today announced plans for a fundamental review of the UK Corporate Governance Code. This will take account of work done by the FRC on corporate culture and succession planning, and the issues raised in the Government’s Green Paper and the BEIS Select Committee inquiry. The review will build on the Code's globally recognised strengths developed over the past 25 years while considering the appropriate balance between its principles and provisions and the growing demands on the corporate governance framework.
To guide this review, the FRC will seek input from a wide range of stakeholders including its recently established Stakeholder Advisory Panel of high profile representatives from a wide variety of sectors.
In its response to the Government’s Green Paper on Corporate Governance Reform the FRC will highlight the importance of helping boards take better account of stakeholder views, linking executive remuneration with performance, and extending the FRC’s enforcement powers to ensure that disciplinary action can be taken against all directors where there have been financial reporting breaches.
Speaking at the launch of ICSA’s work on The Future of Governance, Sir Win Bischoff, Chairman of the FRC said,
“The Prime Minister has a vision of an economy that, in her words, ‘works for everyone’. This needs UK businesses to thrive so that all stakeholders including workers, customers, suppliers and society itself benefit through jobs growth and prosperity.
With all this in mind, we will conduct a review of the current UK Corporate Governance Code. This will consider the appropriate balance between the Code’s principles and provisions. In pursuing any changes, the current strengths of UK governance: the unitary board, strong shareholder rights, the role of stewardship and the ‘comply or explain’ approach, must be preserved. We must not throw out the baby with the bathwater.
Any changes to the regulatory frameworks and to the Code will be done carefully and through full consultation with a wide range of stakeholders.”
The FRC will commence a consultation on its proposals later in 2017, based on the outcome of the review and the Government’s response to its Green Paper.
Notes to editors:
- The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment. The FRC sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promote the quality of corporate reporting; and operates independent enforcement arrangements for accountants and actuaries. As the Competent Authority for audit in the UK the FRC sets auditing and ethical standards and monitors and enforces audit quality.
- Members of the Stakeholder Advisory Panel include the Chartered Institute of Internal Auditors, Share Action, CIMA, Barclays, Co-operative UK, TUC, RPMI Railpen, Institute of Customer Services, Centre for Corporate Governance, London Business School, CIPD, IBE, ACAS, High Pay Centre, Resolution Foundation, City Values Forum, CBI, Joseph Rowntree Foundation, GHO Capital Partners.
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