The FRC has launched a consultation on its proposals to reform the UK’s Corporate Governance Code. The proposals take into account the lessons of the recent fi nancial crisis that are relevant to all companies. The main proposals are:
- Annual re-election of the chairman or the whole board in order to enhance accountability to shareholders
- New principles on the leadership of the chairman, the roles, skills and independence of the non-executive directors and their level of time commitment to ensure the board is well balanced and challenging
- External facilitation of board evaluation reviews every three years and the chairman should hold regular development reviews with each director to enhance awareness of the board’s performance and strengths and weaknesses
- New principles on the board’s responsibility for and handling of risk to improve risk management
- Performance-related pay should be aligned to the long-term interests of the company and its policy on risk
Consultation on the draft ends on 5 March 2010. Readers can comment on the proposed changes by sending an email to: email@example.com. Subject to the outcome of the consultation, the FRC intends for the Code to apply to all listed companies with a Premium Listing for fi nancial years beginning on or after 29 June 2010.