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February 20, 2017

UK FRC to launch a review of the UK corporate governance code

By aziz rahman

The UK Financial Reporting Council (FRC) has announced it will launched a review of the UK corporate governance code later this year, but no specific date has been communicated.

The FRC said in a statement that the review will build on the issues raised in the Government’s Green Paper on corporate governance reform which was open for consultation between November 2016 and 17 February 2017.

The outcome of this public consultation has not yet been released but the FRC said its own response to the consultation highlighted “the importance of helping boards take 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 all directors where there have been financial reporting breaches”.

Speaking at the launch of ICSA’s work on The Future of Governance, Win Bischoff, chairman of the FRC said 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. We must not throw out the baby with the bathwater,” he continued. “Any changes to the regulatory frameworks and to the Code will be done carefully and through full consultation with a wide range of stakeholders.”

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