FRC reviews governance code after financial crisis

The governance code for UK-listed companies is under the spotlight following
the financial crisis.

The Financial Reporting
Council has announced a review of the Combined Code, which outlines
best practice for corporate governance.

Although it is not assuming that the financial crisis could have been
alleviated with changes to the code, the FRC said it was an appropriate time to
review the guidelines.

‘We are clear that the time is now ripe for testing the code’s content and
application against the fresh thinking that the crisis must provoke,’ said FRC
chairman Sir Christopher Hogg.

The FRC is inviting views on any aspect of the code, but in particular on:

The composition and effectiveness of the board as a whole;
The respective roles of the chairman, the executive leadership of the company
and the non-executive directors;
The board’s role in relation to risk management;
The role of the remuneration committee;
The quality of support and information available to the board and its
committees;
The content and effectiveness of Section two of the code, which is addressed to
institutional shareholders.

The ‘comply or explain’ principle behind whether businesses follow the
guidelines will also be reviewed for potential improvement or refinement.

Stakeholders and interested parties can comment to the FRC by 29 May, and the
review will be published by the end of the year.