The UK Corporate Governance Code has been in place since 1992. Whilst the Code is globally renowned and has been copied and adopted by many other major economies, we live in increasingly complex and dynamic times, and the Financial Reporting Council (FRC) believes that now is the right time to make changes to "reflect the business environment and help UK companies achieve the highest levels of governance".
The Code proposed is shorter and sharper and builds on the findings from the FRC's Culture Report published in 2016. The revised Code also focuses on the importance of long-term success and sustainability, addresses issues of public trust in business and aims to ensure the attractiveness of the UK capital market to global investors through Brexit and beyond.
Governance using Principles avoids the temptation to tick governance boxes and allows a company to be adaptable and able to cope with changing circumstances - yet retain responsibility and the need to exercise judgement - both key for the resilient organisation.
The revised Code is built on an updated set of Principles emphasising the value of good corporate governance to the sustainable growth of a company. By applying these Principles, companies will be better able to report how their governance structure contributes to its long-term success and achieves objectives. The Code is supported by the revised Guidance on Board Effectiveness. (The consultation also includes questions to inform the future direction of the UK Stewardship Code, which will be published for consultation in late 2018).
According to the FRC: "The revised Code acknowledges that the activities of companies have a wide-ranging impact and it is important that boards consider the way their companies interact with the workforce, customers, suppliers and wider stakeholders".
Airmic will be submitting a response to the FRC consultation and will achieve this through a process including a facilitated roundtable which will take place 15 February 2018.
Airmic members who would like to take part in this roundtable are invited to approach Julia Graham by 19 January via firstname.lastname@example.org. Spaces are limited!