On 16th July 2018 the FRC published a new version of the UK Corporate Governance Code. The main changes include:
- Methods by which companies and their boards should engage with their workforce.
- The requirement for boards to create a culture that aligns company values with strategy.
- The greater promotion of diversity on boards with an emphasis on independence and succession planning.
- Addressing public concern over executive remuneration, revisions to remit of remuneration committees.
- Greater application of the Code to smaller companies.
Peter Swabey FCIS, Policy and Research Director at ICSA states that:
A leaner UK Corporate Governance Code seeks to refocus attention on the objective of governance, rather than merely ticking boxes
Following these updates the FRC has also published a revised version of its Guidance on Board Effectiveness to support the changes that have been made to the Governance Code. The FRC has also amended its Guidance on the Strategic Report, encouraging companies to consider wider stakeholders and broader matters that impact performance over the longer term.
Additional corporate governance changes will also be introduced by the Companies (Miscellaneous Reporting) Regulations 2018, which were published on 19 July 2018. The regulations introduce additional corporate governance reporting disclosures that companies must make in relation to:
- Section 172 of the Companies Act 2006.
- Engagement with employees.
- Engagement with suppliers and customers.
- Corporate governance arrangements.
- CEO pay ratio.
- Outcomes from share-based incentive schemes.
For advice and assistance on how these changes may impact your company please contact Ian Farrelly, Director of Legal & Company Secretarial Services, on firstname.lastname@example.org or 0207 637 5216 for a free initial consultation.