A revised corporate governance code for UK companies will be wasted without
good guidance on how to use and implement it, according to the Institute of Chartered Secretaries and Administrators.
“It can sit there and it might be read by people, and it might not be,” said Seamus Gillen, director of policy at Icsa. “I’ve no doubt the new code is an improvement but nothing will have changed [unless more people read and comply with it].”
Icsa has instituted a working group to issue guidance on what might be wrong with boards and how to use the code, revised last week by the Financial Reporting Council.
The “transformational role of the chairman”, making sure boards are functioning as teams, board composition, decision-making and behaviour are the key areas identified by Icsa’s working group.
Board composition, building diversity among board members, has been a controversial issue, with many commentators objecting to the FRC’s specific inclusion of gender diversity in this area. Icsa is “not approaching diversity from the gender perspective, although there might be a gender solution”, said Mr Gillen.
The most controversial point of the new code is a call for directors of FTSE 350 companies to stand for annual re-election, which asset owners such as Railpen and USS say could lead to short-termism.
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