The Financial Reporting Council (‘FRC’) have announced a fundamental review of the UK Corporate Governance Code.
Such a review was expected following indications made during the release of the annual report for 2016 on Developments in Corporate Governance and Stewardship. The review will focus on:
In their press release the FRC highlighted the importance of Boards taking 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 Directors where there have been financial reporting breaches.
Sir Win Bischoff, Chairman of the FRC, commented that the review 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.”
The FRC will commence a consultation on its proposals later in 2017.
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