UK corporate governance code set for ‘fundamental’ shake up

Business-Corporate-Board-Room-Meeting-Hire-Hiring-700x450.jpg

Executive pay, stakeholder engagement and disciplinary procedures are set to come under the spotlight as the Financial Reporting Council launches a “fundamental review” of the UK Corporate Governance Code.

The regulator announced today that it will begin consulting with stakeholders later in the year for a review of code, which launched 25 years ago.

Win Bischoff, chairman of the FRC says UK businesses need to work for all stakeholders including workers, customers, suppliers and society itself.

“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.”

The FRC says it is keen to highlight the importance of helping boards take better account of stakeholder views, linking executive remuneration with performance, and extending the its enforcement powers so that disciplinary action can be taken against all directors where there have been financial reporting breaches.

The FRC’s stakeholder advisory panel will also provide input to the review. Its members include Share Action, the Centre for Corporate Governance, London Business School, the High Pay Centre, the City Values Forum and the CBI among others.