New corporate code launched
The Financial Reporting Council has agreed the final text of the Combined Code on corporate governance, which includes revisions of the recommendations set out by Derek Higgs in his report.
Link: Click here to download the new combined code
Link: Higgs report special
Also included are the recommendations by Sir Robert Smith on audit committees, and the new code will take effect from the 1 November 2003.
It includes new definitions of the role of chairmen, non-executive directors and the board and reinforces the separation of the roles of chairman and chief executive.
The principle that the chief executive should not go on to become chairman of the same company, has also been included.
Other features include closer relationships between the chairman, senior independent directors, non-execs and major shareholders and a strengthening of the role of the audit committee to monitor the integrity of the company’s financial reporting. The board chairman will now also be able to chair the nomination committee.
Companies will need to explain how they are applying the code and its supporting principles, or explain why they are not to shareholders, to meet Listing Rules.
Sir Bryan Nicholson, chairman of the FRC, described the code as a ‘positive and sensible advance in corporate governance in the UK’.
‘It will foster far-reaching changes in British boardroom practice and help to develop further the professionalism of non-executive directors.’
The full revised code is available for free on the FRC website at www.frc.org.uk