The Financial Reporting Council (FRC) has this week published a progress report on its review of the effectiveness of the Combined Code on Corporate Governance, which it began in March 2009.
The report summarises the results of the consultations and research that the FRC has carried out to date and invites views on various aspects of the Combined Code and its application. These are:
- The responsibilities of the chairman and non-executive directors;
- The composition of the board, including finding the right balance of independence and expertise;
- The frequency of directors' re-election;
- Board information, development and support;
- Evaluation of the board's effectiveness;
- The effectiveness of existing risk management systems;
- Remuneration policy and process;
- The usefulness of companies' reporting on corporate governance; and
- Engagement between boards and shareholders.
The FRC is also considering the implications of the consultation paper on the governance of banks and other financial institutions issued by Sir David Walker on 16 July. That report contains recommendations that could be taken forward through amendments to the Combined Code. It also recommends extending the responsibilities of the FRC and the FSA in relation to engagement between company boards and investors. The FRC is considering to what extent Sir David's recommendations are also applicable for some or all listed companies in other sectors and, with the FSA, how best to implement them.
The FRC will issue a final report before the end of the year. Any proposed changes to the Combined Code will be subject to a separate consultation.