Following last week’s announcement that the Financial Reporting Council (‘FRC’) will undertake a fundamental review of the UK Corporate Governance Code, they have now released further detail as part of their response to the BEIS Green Paper on Corporate Governance. The FRC proposes reform to four key areas:
- The interests of major stakeholders – Building on the duty imposed by The Companies Act on Directors to promote success of the company whilst having regard to long-term consequences, the environment, employees, suppliers and customers. It is the FRC’s view that companies should report more effectively on how Directors achieve this;
- Executive remuneration – expanding the role of the remuneration committee to cover pay throughout the organisation and improving the link between remuneration and strategy;
- Large private companies – recognising the significant public interest in these companies the FRC supports the introduction of the Corporate Governance principles for these businesses; and
- Effective enforcement of the law – The FRC is proposing an extension of its powers to investigate and prosecute all Directors, not just accountants and actuaries, for financial reporting breaches and associated issues with integrity
The FRC is clear that it wants to retain and build on, what it perceives as, the current strengths of the UK Corporate Governance Code; the unitary board and the ‘comply or explain’ approach.
FRC responds to Green Paper on Corporate Governance Reforms
View KPMG's analysis of the Corporate Governance BEIS Committee report