The Financial Reporting Council in the UK (the FRC) has opened a consultation on whether the UK Corporate Governance Code (the Code) should be amended to include a requirement on listed companies to publish their policy on the issue of gender diversity on boards and to report on the progress made in achieving the objectives set out in this policy on an annual basis.

The Code sets out standards of good practice in corporate governance, including on board composition, and must be adhered to on a "comply or explain" basis. Irish companies listed on the Main Securities Market of the Irish Stock Exchange are also obliged to adhere to the Code. On the issue of gender diversity, the Code already states that "the search for board candidates should be conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of diversity on the board, including gender." However, there is currently no express requirement on companies to disclose against this recommendation.

Last year, the UK government asked Lord Davies to report on gender diversity at board level and, specifically, to identify the barriers which prevent more women from taking positions on the boards of listed companies and to make recommendations to address this issue. In his report, "Women on Boards", published in February 2011, Lord Davies recommended that the Code be amended to include a requirement on listed companies to prepare and publish their policy on this issue, which policy should set out measurable objectives for its implementation, and to report annually on progress achieved.

As a result, the FRC has taken the decision to seek the views of interested parties on whether the Code should be amended to assist in achieving more diverse and effective boards and, if so, what changes should be made and when they should be implemented (given that the Code has undergone significant overhaul so recently, in 2010).

FRC Chairman Baroness Hogg said in relation to the consultation: "Board diversity and effectiveness are closely linked. Diversity widens the perspectives brought to bear on decision-making, avoids too great a similarity of attitude and helps companies understand their customers and workforces. A board with too few women on it risks a weakness in at least one of these respects."

The FRC's consultation will close on 29 July 2011, and a decision as to whether the Code should be revised as a result of the consultation will be made later this year.

For a link to the consultation document, please click here