Following consultation the Financial Reporting Council (FRC) has released a revised corporate governance code* for premium listed companies. The new code, which will come into effect for accounting periods beginning on or after 1 January 2019, highlights the importance of relationships with stakeholders and employees as well as looking towards culture as a means of aligning company values with strategy.
One area of the code which has been considerably strengthened is that relating to boardroom composition. There is now a requirement to look towards diversity and succession planning. This includes a recommendation to a maximum nine-year term of office; subject to a ‘comply or explain’ provision which enables boards to extend an appointment in order “to facilitate effective succession planning and the development of a diverse board.”
In releasing this new corporate governance code the FRC believes that it will deliver corporate governance which is fit for the future. Commenting on the release FRC Chairman Sir Win Bischoff said “This new Code, in its new shorter and sharper form, and with its overarching theme of trust, is paramount in promoting transparency and integrity in business for society as a whole.”