The U.K.’s Financial Reporting Council (FRC) has made public approved changes to the UK Corporate Governance Code (formerly known as Combined Code). According to the regulator, the amendments are intended to maximize the efficiency of boards of directors and their accountability to shareholders.
The FRC has reportedly improved the way the boards report to company owners, with a focus on the directors’ responsibility for risk-taking. Membership requirements have become tougher; to be a director one must possess a certain level of knowledge and experience determined by the regulator.
It is also strongly recommended (rather than mandated to avoid negativism in business circles) that the directors of the country’s largest companies (FTSE 350) undergo annual re-election process.
Presenting the amended version of the Code FRC Chairman Christopher Hogg said, “Smartly guided by my predecessor the Council competently countered the financial crisis; corporate governance deficiencies were analyzed and the Code revised. Today we finally endorse its key principles and uphold the ‘comply or explain’ approach in all of its flexibility. Today’s changes are aimed at boosting the quality of the boards of directors, putting a special emphasis on risk-taking and accountability to owners. We now expect shareholders to take more active part in the discussion of the Stewardship Code scheduled for publication by the end of June.”
The latest revisions to the Corporate Governance Code take effect on June 29 for all reporting periods that follow.
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