Britain unveils “short and sharper” code for companies

The new code considers economic and social issues and will help to guide the long-term success of UK businesses. (AFP)
Updated 16 July 2018
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Britain unveils “short and sharper” code for companies

  • The new code emphasises the need for boards to refresh themselves, become diverse and plan properly for replacing top jobs
  • Company remuneration committees should also take into account workforce pay when setting director pay

LONDON: Companies in Britain must strive to rein in excessive executive pay and make boards more diverse under a new “short and sharper” corporate code, published on Monday.
The Financial Reporting Council (FRC) has updated its code of corporate standards for publicly listed companies, which must comply with it or explain to shareholders if they do not.
The new code comes as the watchdog, which oversees company governance standards and accountants, faces a review to see if it can uphold high corporate standards to maintain Britain’s attractions as a place to invest after Brexit.
British lawmakers have called for tougher corporate govenance standards following a row between food retailer Tesco and its suppliers and the collapse of retailer BHS and outsourcer Carillion. And shareholders have become much more active in terms of rejecting some executive pay deals.
“To make sure the UK moves with the times, the new code considers economic and social issues and will help to guide the long-term success of UK businesses,” FRC Chairman Win Bischoff said.
“This new code, in its short and sharper form, and with its overarching theme of trust, is paramount in promoting transparency and integrity in business for society as a whole.”
There is a new provision for greater board engagement with the workforce to understand their views — aimed at reinforcing an existing provision in law since 2006 which has had a patchy impact.
This, along with a requiremnent to have “whistleblowing” mechanisms that allow directors and staff to raise concerns for effective investigation, mark the biggest broadening of corporate standards in many years, the FRC said.
“The new code is much stronger on abilities to raise concerns in confidence,” said David Styles, FRC director of corporate governance.
It also emphasises the need for boards to refresh themselves, become diverse and plan properly for replacing top jobs.
It introduces a requirement for companies to explain publicly if a board chair has remain unchanged for more than nine years.
Company remuneration committees should also take into account workforce pay when setting director pay.
“To address public concern over executive remuneration... formulaic calculations of performance-related pay should be rejected,” the watchdog said.


LIVE: Future Investment Initiative opens in Saudi Arabia

Updated 1 min 29 sec ago
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LIVE: Future Investment Initiative opens in Saudi Arabia

DUBAI: The three-day Future Investment Initiatives (FII), which starts today, is expected to attract thousands of delegates and see deals worth hundreds of billions of dollars.

The three-day event will likely see investment partnerships from Russia and China being forged, as noted by Ellen Wald, president of the Transversal Consulting think-tank and author of the recent book “Saudi Inc,” with executives still looking to do business at the Riyadh meeting despite some having pulled out.

 

 

Executives from the Russian Direct Investment Fund, Russia-China Investment Fund and electronics giant Samsung are listed to speak at the event, joining Saudi speakers including Energy Minister Khalid Al-Falih, Yasir Al-Rumayyan, head of the Public Investment Fund, and sports official Princess Reema bint Bandar.

 

 

“Investing in transformation,” “technology as opportunity” and “advancing human potential” are among the FII’s themes. Held at the Ritz-Carlton hotel in Riyadh, the three-day event is billed as a “blueprint for the 22nd century.”

 

 

Click for more of our coverage of the Future Investment Initiatives.

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