A review into corporate governance by the
Financial Reporting Council
is unnecessary, according to the CBI, which has called for regulatory reviews to
be rationed when many companies are fighting for survival.
The comments come after the FRC announced a review into corporate governance
guidelines for listed companies last week.
The review by the financial reporting watchdog will examine all aspects of
the Combined Code on Corporate Governance, including its impact on company
boards, executive remuneration and companies’ assessment of risk.
The FRC review, which is due to publish its conclusions by the end of this
year, comes only weeks after the Treasury announced an independent review into
banking industry’s governance rules, led by Sir David Walker.
CBI deputy director-general John Cridland said: ‘The Walker review is looking
at corporate governance in the banking sector following recent events. Given
this review the CBI does not see a need to also review corporate governance in
the wider business community at this time.
‘We accept that the Walker review may identify issues of relevance to all
businesses, but when businesses are focused on overcoming the economic crisis
regulatory initiatives need to be targeted.’
Launching the corporate governance review last week, FRC chairman Sir
Christopher Hogg said: ‘While there is no assumption that the code is
fundamentally flawed or that a different regulatory framework for corporate
governance could have alleviated the financial crisis, we are clear that the
time is now ripe for testing the code’s content and application.’
The FRC is also seeking views on how companies provide information to
If the FRC proposes any changes to the Combined Code, or the way in which it
operates, they will be subject to further consultation.
Since its introduction in 1998, the code has been updated regularly, includ
ing in 2006 and 2008.
All companies incorporated in the UK and listed on the main market of the
London Stock Exchange are required to report on how they have applied the code
in their annual report and accounts. Overseas companies are required to disclose
the significant ways in which their corporate governance practices differ from
The Turnbull guidance advises companies on how they can comply with the code
for internal financial control and risk assessment.
The FRC has published guidance on audit committees and the Higgs report has
guidance relating to non-executive directors.
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