On 24 April 2014, the Financial Reporting Council ("FRC") published a consultation document on its two yearly review of possible changes to the UK Corporate Governance Code. The FRC's proposed amendments include:
- ensuring remuneration policies are designed with the long-term success of the company in mind;
- ensuring companies put arrangements in place that will enable them to recover or withhold variable pay, and encouraging companies to give further consideration to the arrangements they have in place for deferred consideration, such as vesting and holding periods for shares;
- when announcing the results of the AGM, a company that has received a significant vote – and the FRC consultation document does not offer a definition of "significant" for these purposes – against any resolution should explain what action it intends to take to understand the reason behind the result; and
- requiring companies to state in their financial statements whether they have considered it appropriate to adopt the going concern basis of accounting.
The proposed changes will apply to financial years beginning on or after 1 October 2014.
The consultation paper is available at:
https://www.frc.org.uk/Our-Work/Publications/Corporate-Governance/Proposed-Revisions-to-the-UK-Corporate-Governance-File.pdf
The press release to the consultation paper is available
at:
https://www.frc.org.uk/News-and-Events/FRC-Press/Press/2014/April/Consultation-on-the-UK-Corporate-Governance-Code-p.aspx
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.