FRC consultation on the UK Corporate Governance Code

The draft Code is the latest piece in the jigsaw of the Government-initiated overhaul of UK corporate governance. The draft Code is shorter and sharper but still consists of Principles, that set out high-level recommendations, and 41 Provisions that continue to be “comply or explain” oriented.

There is significantly greater focus on aligning the company’s purpose, strategy and values in order to achieve long-term success. Companies will be expected to adopt one of three approaches (or an appropriate equivalent) for ensuring the employee voice is heard in the boardroom. And the draft Code also broadens the remit of the remuneration committee to include oversight of workforce policies and practices.

Key proposed changes to the Code focus on five main areas, which are summarised in the briefing below. These areas are:

• Stakeholder engagement
• Responding to a significant vote against a resolution
• Board composition
• Diversity
• Remuneration

Consultation on the draft Code ends on 28 February 2018. It is proposed that the draft Code will be finalised in early summer 2018 and be effective for accounting periods beginning on or after 1 January 2019.