The UK Corporate Governance Code 2014 Update

The Financial Reporting Council (FRC) has issued an updated version of the UK Corporate Governance Code (the Code)

UK Corporate Governance Code

The latest update of the UK Corporate Governance Code has been issued by the Financial reporting Council and is available for download here.

The main focus for the 2014 update has been to significantly improve the quality of information available to investors about the risk management processes, the long-term health and strategic intentions of listed companies.

The FRC has continued the trend, which began with the 2006 Companies Act, of asking listed company directors to consider the long-term viability of the business, including solvency and liquidity looking forward for a period significantly longer than 12 months.

In an attempt to tackle the growing unrest amongst shareholders and particularly shareholder activists, over executive pay, boards of listed companies will also now need to ensure that executive remuneration is designed to promote the long-term success of the company and demonstrate how this is being achieved more clearly to shareholders – thus aligning executive reward with the sustained creation of value.

The key changes to the Code include:

Going concern, risk management and internal control

  • Companies should state whether they consider it appropriate to adopt the going concern basis of accounting and identify any material uncertainties to their ability to continue to do so;
  • Companies should robustly assess their principal risks and explain how they are being managed or mitigated;
  • Companies should state whether they believe they will be able to continue in operation and meet their liabilities taking account of their current position and principal risks, and specify the period covered by this statement and why they consider it appropriate. It is expected that the period assessed will be significantly longer than 12 months; and
  • Companies should monitor their risk management and internal control systems and, at least annually, carry out a review of their effectiveness, and report on that review in the annual report.
  • Companies can choose where to put the risk and viability disclosures. If placed in the Strategic Report, directors will be covered by the “safe harbour” provisions in the Companies Act 2006.*

Remuneration

  • Greater emphasis to be placed on ensuring that remuneration policies are designed with the long-term success of the company in mind, and that the lead responsibility for doing so rests with the remuneration committee; and
  • Companies should put in place arrangements that will enable them to recover or withhold variable pay when appropriate to do so, and should consider appropriate vesting and holding periods for deferred remuneration.

Shareholder engagement

  • Companies should explain when publishing general meeting results how they intend to engage with shareholders when a significant percentage of them have voted against any resolution.

Other issues

The FRC has also highlighted the importance of the board’s role in establishing the ‘tone from the top’ of the company in terms of its culture and values. The directors should lead by example in order to encourage good behaviours throughout the organisation.

In addition the FRC has emphasised that key to the effective functioning of any board is a dialogue which is both constructive and challenging. One of the ways in which such debate can be encouraged is through having sufficient diversity on the board, including gender and race. Nevertheless, diverse board composition in these respects is not on its own a guarantee. Diversity can be just as much about difference of approach and experience. The FRC is considering this as part of a review of board succession planning and will consider the need to consult on these issues for the next update to the Code in 2016.

Conclusion

The great value of the UK Corporate Code, with its ‘comply or explain’ regime, as opposed to legislation, is that it can be quickly and easily modified to reflect current Corporate Governance thinking and address shareholder concerns in a relatively short time-scale.

The fact that Bankers bonuses are still making the headlines six years after the Banking crisis which plunged the world into recession, illustrates the need for this timely reinforcement by the FRC of the basic requirements for company directors to consider the long-term implications of their actions on the sustainability of the business and to always act in the best interests of the business – as set out in the 2006 Companies Act.

The UK Corporate Governance Code 2014 Update

The Financial Reporting Council (FRC) has issued an updated version of the UK Corporate Governance Code (the Code)

Corporate Governance

The latest update of the UK Corporate Governance Code has been issued by the Financial reporting Council and is available for download here.

The main focus for the 2014 update has been to significantly improve the quality of information available to investors about the risk management processes, the long-term health and strategic intentions of listed companies.

The FRC has continued the trend, which began with the 2006 Companies Act, of asking listed company directors to consider the long-term viability of the business, including solvency and liquidity looking forward for a period significantly longer than 12 months.

In an attempt to tackle the growing unrest amongst shareholders and particularly shareholder activists, over executive pay, boards of listed companies will also now need to ensure that executive remuneration is designed to promote the long-term success of the company and demonstrate how this is being achieved more clearly to shareholders – thus aligning executive reward with the sustained creation of value.

The key changes to the Code include:

Going concern, risk management and internal control

  • Companies should state whether they consider it appropriate to adopt the going concern basis of accounting and identify any material uncertainties to their ability to continue to do so;
  • Companies should robustly assess their principal risks and explain how they are being managed or mitigated;
  • Companies should state whether they believe they will be able to continue in operation and meet their liabilities taking account of their current position and principal risks, and specify the period covered by this statement and why they consider it appropriate. It is expected that the period assessed will be significantly longer than 12 months; and
  • Companies should monitor their risk management and internal control systems and, at least annually, carry out a review of their effectiveness, and report on that review in the annual report.
  • Companies can choose where to put the risk and viability disclosures. If placed in the Strategic Report, directors will be covered by the “safe harbour” provisions in the Companies Act 2006.*

Remuneration

  • Greater emphasis to be placed on ensuring that remuneration policies are designed with the long-term success of the company in mind, and that the lead responsibility for doing so rests with the remuneration committee; and
  • Companies should put in place arrangements that will enable them to recover or withhold variable pay when appropriate to do so, and should consider appropriate vesting and holding periods for deferred remuneration.

Shareholder engagement

  • Companies should explain when publishing general meeting results how they intend to engage with shareholders when a significant percentage of them have voted against any resolution.

Other issues

The FRC has also highlighted the importance of the board’s role in establishing the ‘tone from the top’ of the company in terms of its culture and values. The directors should lead by example in order to encourage good behaviours throughout the organisation.

In addition the FRC has emphasised that key to the effective functioning of any board is a dialogue which is both constructive and challenging. One of the ways in which such debate can be encouraged is through having sufficient diversity on the board, including gender and race. Nevertheless, diverse board composition in these respects is not on its own a guarantee. Diversity can be just as much about difference of approach and experience. The FRC is considering this as part of a review of board succession planning and will consider the need to consult on these issues for the next update to the Code in 2016.

Conclusion

The great value of the UK Corporate Code, with its ‘comply or explain’ regime, as opposed to legislation, is that it can be quickly and easily modified to reflect current Corporate Governance thinking and address shareholder concerns in a relatively short time-scale.

The fact that Bankers bonuses are still making the headlines six years after the Banking crisis which plunged the world into recession, illustrates the need for this timely reinforcement by the FRC of the basic requirements for company directors to consider the long-term implications of their actions on the sustainability of the business and to always act in the best interests of the business – as set out in the 2006 Companies Act.

About the Author

David Doughty Corporate GovernanceDavid Doughty is a Corporate Governance Expert who works with company directors and their boards to help them to be more effective. He is a Chartered Director, Business Mentor and Executive Coach.

 

How to become a Non-Executive Director – Manchester 24 September 2014

Find out how you can obtain a Non-Executive Director position by booking a place on this interactive 1-day course.

non-executive director“A well structured and presented introduction to the responsibilities, challenges and attributes required of being a NED. It was thought-provoking. I have referred back to my copious comments in the comprehensive slide hand outs many times already”

Simon C Jones, Interim Transformation Leader and Hidden Value Discoverer

The How to become a Non-Executive Director course helps you to plan and prepare for your first NED position. It instils a real sense of what is expected of NEDs, and how you can meet the challenge.

This one-day interactive course is aimed at aspiring NEDs and covers essential knowledge about roles, responsibilities, strategy and corporate governance that are key foundations for a Non-Executive board role. It also considers up to date thinking on corporate governance and the responsibilities of owners, the board and employees.

This is followed by practical sessions on identifying NED opportunities, the process of obtaining a first appointment and performing due diligence before any position is accepted. There is emphasis on the importance of presenting your experiences with clarity and relevance.

This course identifies the various ways and circumstances in which non-executive directors can make an effective contribution to a board’s work. It also examines methods for their selection and reviews their motivation, induction and reward.

Who should attend?
Individuals who are currently a non-executive director; those seeking appointment as a non-executive director and those looking to appoint a non-executive director.

What to expect?

  • Clarifies how and why non-executive directors can strengthen a board
  • Provides practical guidance on how best to secure an appointment as a non-executive director

Course objectives
Participation on this course will provide you with the knowledge to:

  • Clarify the board’s role, purpose and key tasks
  • Appreciate the contributions that non-executive directors can make to the board in different types of company and situations
  • Recognise the qualities and experience needed to fulfil a non-executive director appointment
  • Appreciate appropriate methods for finding, selecting, appointing and rewarding non-executive directors
  • Understand the preparation required to interview for or be interviewed for the post of non-executive director

Course Leader: David Doughty CDir FIoD

David Doughty - Chartered DirectorThe course is delivered by David Doughty, a Chartered Director and highly experienced Non-Executive, Chief Executive, Chair, Entrepreneur and Business Mentor. David has extensive executive and non-executive experience in small and medium enterprises in private and public sectors. He is also a board level consultant to multi-national organisations and a Chartered Director Ambassador for the Institute of Directors. See his LinkedIn profile here: (http://uk.linkedin.com/in/daviddoughty)

Key Details
Duration: 1 day
Location:

Manchester One
53 Portland Street
Manchester
M1 3LF 

Price
£330.00 (ex VAT)

Payment with Booking Price

£300.00 (ex VAT)

Tier1 Member Price
£280.00 (ex VAT)

Book Now
To see course dates and to book your place now follow this link:

Course Registration
The fee includes lunch, refreshments and a copy of the course handbook

Attendance counts as 6 CPD hours of structured learning


How to become a Non-Executive Director – Bristol 16 September 2014

Are you thinking of becoming a Non-Executive Director as part of a Portfolio Career or to develop your boardroom skills prior to taking up an executive director role?

How to become a Non-Executive Director

Join us on Tuesday, September 16 2014 to find out how you can become a Non-Executive Director

“Unlike many courses I have attended in the past, How to become a Non-Executive Director went beyond just the technical aspects of being a ‘Non-Exec’, and reflected on the differences in the approach required compared to being an Exec Director.
It allows you to make a fully informed decision on whether a Non Exec role is right for you, and if it is, how to go about finding opportunities.
An invaluable day of learning!”

Alastair Lewis Director at Smaointe Ltd

The How to become a Non-Executive Director course helps you to plan and prepare for your first NED position. It instils a real sense of what is expected of NEDs, and how you can meet the challenge.

This one-day interactive course is aimed at aspiring NEDs and covers essential knowledge about roles, responsibilities, strategy and corporate governance that are key foundations for a Non-Executive board role. It also considers up to date thinking on corporate governance and the responsibilities of owners, the board and employees.

This is followed by practical sessions on identifying NED opportunities, the process of obtaining a first appointment and performing due diligence before any position is accepted. There is emphasis on the importance of presenting your experiences with clarity and relevance.

This course identifies the various ways and circumstances in which non-executive directors can make an effective contribution to a board’s work. It also examines methods for their selection and reviews their motivation, induction and reward.

Who should attend?
Individuals who are currently a non-executive director; those seeking appointment as a non-executive director and those looking to appoint a non-executive director.

What to expect?

  • Clarifies how and why non-executive directors can strengthen a board
  • Provides practical guidance on how best to secure an appointment as a non-executive director

Course objectives
Participation on this course will provide you with the knowledge to:

  • Clarify the board’s role, purpose and key tasks
  • Appreciate the contributions that non-executive directors can make to the board in different types of company and situations
  • Recognise the qualities and experience needed to fulfil a non-executive director appointment
  • Appreciate appropriate methods for finding, selecting, appointing and rewarding non-executive directors
  • Understand the preparation required to interview for or be interviewed for the post of non-executive director

Course Leader: David Doughty CDir FIoD

David Doughty - Chartered DirectorThe course is delivered by David Doughty, a Chartered Director and highly experienced Non-Executive, Chief Executive, Chair, Entrepreneur and Business Mentor. David has extensive executive and non-executive experience in small and medium enterprises in private and public sectors. He is also a board level consultant to multi-national organisations and a Chartered Director Ambassador for the Institute of Directors. See his LinkedIn profile here: (http://uk.linkedin.com/in/daviddoughty)

Key Details
Duration: 1 day
Location:

Orchard Street Business Centre
14 Orchard Street
Bristol BS1 5EH

Price

£330.00 (ex VAT)
Payment with Booking Price
£300.00 (ex VAT)
Tier1 Member Price
£280.00 (ex VAT)

Book Now

To see course dates and to book your place now follow this link:
Course Registration
The fee includes lunch, refreshments and a copy of the course handbook

Attendance counts as 6 CPD hours of structured learning


Alibaba talks corporate governance to potential IPO investors

You are here: EU Home > News > Alibaba talks corporate governance to potential IPO … VIDEO: Police reopen historic abuse inquiry (bbci.co.uk).

From:: <a href=https://www.google.com/url?rct=j&sa=t&url=http://ibnmoney.com/eu/2014/09/09/alibaba-talks-corporate-governance-to-potential-ipo-investors/&ct=ga&cd=CAIyHDUyYzg5YzY4NWJmNjI1ZWY6Y28udWs6ZW46R0I&usg=AFQjCNGdsCUBULBApyeUf7fwMV5oksxe_w target="_blank" title="Alibaba talks corporate governance to potential IPO investors” >Alibaba talks corporate governance to potential IPO investors

    

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