The Financial Reporting Council has published a consultation paper on a revised version of the Combined Code. The changes are to implement some of the recommendations from Sir David Walker’s final review of the corporate governance of banks and other financial institutions (see here for more background) and to take into account comments received on the FRC’s own review of the Combined Code.
The key proposals are as follows:
- No provisions specific to the banking sector: one code for all companies
- New principles on roles of chairman and non-executive directors and on need for board to have appropriate mix of skills, experience and independence
- Consultation on whether chairman or whole board should stand for re-election annually
- More stress on commitment levels of directors but no minimum time prescribed
- External board evaluation reviews to be conducted every three years
- Chairman to hold regular development meetings with all directors
- Additional focus on risk but no requirement for board risk committees
- New requirement to report on business model and financial strategy
- Performance-related pay to be aligned to long-term interest of the company
- Separate consultation on Stewardship Code
A full briefing note is available here.
