On 29 November 2016, Prime Minister Theresa May's government issued a green paper1 (the "Green Paper") to canvass opinion on proposed reforms to the UK's corporate governance framework.
A green paper is a government consultation document that invites feedback from interested parties (both within Parliament and outside it) on legislative proposals. The document does not form part of the legislative process and is non-binding in nature, and the government has stressed that it is not currently advocating any one proposal. Therefore, while the content of the Paper provides some guidance as to the government's current thinking on corporate governance reforms, there is no guarantee that any of the proposals put forward will ultimately find their way into the regulatory framework.
In her introduction to the Green Paper, Theresa May cites a concern that "in recent years, the behaviour of a limited few [members of the business community] has damaged the reputation of many", and states that "big business must earn and keep the trust and confidence of their customers, employees and the wider public"2. The Secretary of State for Business, Energy and Industrial Strategy, Greg Clark, hails the UK's corporate governance regime as "one of Britain's biggest assets in competing in the global economy"3. Citing proposals by members of the business community to update and amend the corporate governance framework, the Secretary of State states the aim of the Green Paper as framing the discussion around possible amendments to the governance regime relating to (i) executive remuneration and incentivisation, (ii) the representation of employees and other stakeholders in company decision-making, and (iii) enhanced governance standards for large private companies. Certain of the proposals develop positions advanced by Mrs May in a speech to launch her leadership campaign on 11 June 20164, and put forward more recently in a report issued by the think tank "High Pay Centre" and authored by the conservative MP Chris Philp5. This memorandum summarises each area considered for reform in the Green Paper separately in three sections. To focus consideration and discussion, we have drawn out in relation to each area selected key questions posed as part of the government's consultation.
Download - The UK Government Consults On Corporate
Footnotes
1 Corporate Governance Reform – Green Paper, November 2016, available at
2 Green Paper, Introduction from the Prime Minister, p. 2
3 Green Paper, Foreword from the Secretary of State, p. 4
4 Available at http://www.wlrk.com/docs/TheresaMayJuly11Speech.pdf
5 Restoring Responsible Ownership – Ending the Ownerless Corporation and Controlling Executive Pay, September 2016, available at http://highpaycentre.org/files/HPC_42_WEB_amend_-_Restoring_Responsible_Ownership.pdf
This article previously appeared on the Oxford Business Law Blog (www.law.ox.ac.uk/business-law-blog).
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