The UK Corporate Governance Code (the Code) is undergoing a review by the Financial Regulatory Council (FRC) in the UK. A consultation process was announced by the FRC on 5 December, with a view to making changes to the Code to reflect the changing business environment in the UK.
Specifically, the revised Code focuses on the following:
- the importance of long-term success and sustainability;
- addressing issues of public trust in business; and
- aiming to ensure the attractiveness of the UK capital market to global investor through Brexit and beyond.
The FRC has advised that majority of proposed changes have been made to the first three sections of the current Code concerning the themes of leadership and effectiveness. Section E (relations with shareholders) has been integrated within the revised Code, as the FRC considers shareholder engagement to be a key aspect of good governance. Section 4, which deals with audit, risk and internal control, remains largely unchanged. The current Schedule A has been removed and where appropriate incorporated into the Section 5 (Remuneration).
It is planned that the consultation process will run until 28 February 2018, with a final version of the Code, incorporating appropriate amendments, being published in the summer of 2018 and applying to accounting periods beginning on or after 1 January 2019.
This is of significance and interest to Irish companies listed on the Main Securities Market of the Irish Stock Exchange, as they follow the Code on a "comply or explain" basis, along with the Irish Corporate Governance Annex to the Irish Listing Rules.