On 11 October 2011, the Financial Reporting Council in the UK (the FRC), following feedback from its consultation paper, Gender Diversity on Boards, announced changes to the UK Corporate Governance Code aimed at promoting greater gender diversity at board level.
As a result of the changes, listed companies will be required to include in their annual report a description of their board's policy on diversity, including gender, any measurable objectives that it has set for implementing the policy, and progress on achieving these objectives. Companies must also now consider diversity of the board, including gender, when evaluating board effectiveness.
The changes will be incorporated into an updated version of the code which will be published in 2012 and will apply to financial years beginning on or after 1 October 2012. However the FRC is encouraging companies to voluntarily apply and report on these changes before that date.
The FRC introduced the new UK Corporate Governance Code in May 2010 to replace the old Combined Code and it became effective in the UK for accounting periods beginning on or after 29 June 2010. On 30 September 2010, the Irish Stock Exchange announced that, from that date, Irish companies listed on its Main Securities Market must also adhere to the new UK Corporate Governance Code on a "comply or explain" basis. The new code imposed several new requirements on listed companies and included for the first time a principle recognising the value of diversity in the boardroom (Supporting Principle B.2) which states that "the search for board candidates should be constructed, and appointments made, on merit, against objective criteria and with due regard for the benefits of diversity on the board, including gender".
For a link to the FRC feedback statement which outlines the changes, please click here.
For a link to the FRC press release, please click here.
For a link to the UK Corporate Governance Code, please click here.