Combined code to be revised
Review finds 'no appetite' for major changes as corporate governance improves
The Financial Reporting Council has said that it will suggest just two
amendments to the combined code on corporate governance next year, following a
review of its effectiveness so far.
The study into how the code is bedding down, since its introduction in 2003,
found that there was ‘no appetite for major change’ at this point and that there
had been an improvement in the quality of corporate governance among listed
companies since the code was published.
As a result, in January the FRC will consult on possible amendments to the
code, the main proposals being to allow the chairman to sit on the remuneration
committee and the inclusion of a ‘vote withheld’ box on AGM proxy voting forms.
The board also said it was working through the implications of the scrapping
of the mandatory operating and financial review on the code. There have been
calls for the OFR to be included in the code as best practice, but the FRC is
waiting until the dust settles to make a decision.
Sir Bryan Nicholson, retiring chairman of the FRC, said the review ‘is a
strong endorsement of the “comply or explain” approach to improving standards of
corporate governance’.