The regulator has reviewed the Combined Code on Corporate Governance and suggested removing the restriction on an individual chairing more than one FTSE 100 company, and to allowing the chairman of a smaller listed company to be a member of the audit committee where he or she was considered independent on appointment.

The FRC said it found there was little need for major change to the code, and chairman Sir Christopher Hogg added that there was no room for complacency.

'While respondents strongly endorsed the flexible “comply or explain” approach, it is clear that it is not always applied as intended,' said Hogg. 'All parties share responsibility for ensuring it remains an effective alternative to regulation – companies by providing robust explanations when they choose not to follow the Code, and investors and their advisors by assessing each explanation on its merits rather than applying a rigid set of rules.'

Consultation on the proposed amendments will begin in November.

If agreed, a revised Code will come into effect in June 2008 at the same time as new FSA Part 6 Rules (which include the Listing Rules) implementing new EU requirements on corporate governance.

Further reading:

FTSE-350 still failing 'comply or explain' test on combined code