In November 2009, Sir David Walker published his Final Recommendations on corporate governance in UK banks and other financial institutions (BOFIs). These set out the final conclusions and recommendations following a consultation on his preliminary report published in July 2009. The Final Recommendations aim to bring about significant cultural and organisational changes in corporate governance.

The Final Recommendations are proposed as best practice for all BOFIs with particular focus on those which are UK-listed. The Final Recommendations do address the issue of the need for differentiation among BOFIs – more specific guidance is given in some cases as to which recommendations are applicable only to FTSE 100-listed banks and life assurance companies, rather than all BOFIs generally. The Final Recommendations also refer to the need for non-bank financial entities to use their discretion in assessing the applicability of specific recommendations. The recommendations in relation to institutional shareholder engagement are said to have been prepared with particular regard to shareholdings in BOFIs, but have wider relevance for their holdings in other UK companies.

The key recommendations cover four areas: (i) board of directors; (ii) role of institutional shareholders; (iii) governance of risk; and (iv) remuneration.

For more details please see our e-bulletin http://www.herbertsmith.com/NR/rdonlyres/DE285538-5596-4B11-BED1-B297F277297A/13617/2009corporate_ebulletin_issue_31.html.