{"id":11038,"date":"2018-03-21T09:52:46","date_gmt":"2018-03-21T09:52:46","guid":{"rendered":"http:\/\/progresomicrofinanzas.org\/?p=11038\/"},"modified":"2018-03-21T09:53:10","modified_gmt":"2018-03-21T09:53:10","slug":"11038","status":"publish","type":"post","link":"https:\/\/www.fundacionmicrofinanzasbbva.org\/revistaprogreso\/en\/11038\/","title":{"rendered":"Proposals for a revised corporate governance code for listed companies"},"content":{"rendered":"
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Over the course of last year, the British government published a swathe of papers on renewing and strengthening corporate governance in the country\u2019s firms. Among the measures proposed, the executive set the<\/span> Financial Reporting Council<\/span><\/i><\/a> (FRC) the task of revising the code of corporate governance for listed companies. Following this mandate, the FRC sent its proposals out for public consultation at the end of 2017. We analyze them below. <\/span><\/p>\n

A code for the future<\/b><\/p>\n

With its update of the corporate governance code, which applies to companies with a<\/span> premium listing<\/span><\/i><\/a> on the Stock Exchange, the FRC aims to give continuity over time to the Code so that it remains relevant for at least another 25 years. This has the two-fold objective of reinforcing market trust in British companies and of attracting investors, against the backdrop of Brexit.<\/span><\/p>\n

The new code has been reorganized into the following five sections: i) Leadership and purpose; ii) Division of responsibilities; iii) Composition, succession and assessment; iv) Audit, risk & internal control, and v) Remuneration. We take a look below at the main issues covered in the revised Code:<\/span><\/p>\n

Board of Directors and company culture<\/b><\/p>\n

The proposals contain a new principle, relating to the importance of company culture. It highlights the key role played by the Board of Directors in promoting companies\u2019 long-term success, and how the Board must oversee the purpose, strategy and values of their corporation, making sure that these are aligned with its culture.<\/span><\/p>\n

The Board must ensure that the company has the resources it needs to achieve its goals, and also be responsible for setting up effective, prudent internal control, to make the management and monitoring of risk more robust.<\/span><\/p>\n

Stakeholders<\/b><\/p>\n

The Code stresses the importance of companies being committed to a wider range of stakeholders, not just shareholders. Thus, the board should encourage regular communication with majority shareholders, and the committee Chairs should report on matters within their responsibility to the board. The Code stipulates that special focus should be put on understanding employee perspectives, for which it recommends adopting one of the following three mechanisms:<\/span><\/p>\n