Merit, diversity & transparency to transform boardrooms
FTSE 350 directors will need to be re-elected annually by shareholders under new best practice guidelines issued by the Financial Reporting Council (FRC) last week.
Changes to the Combined Code, now rebranded the UK Corporate Governance Code, include a recommendation that boards take gender diversity into account when appointing members.
Companies will also have to demonstrate that recruitment to the board is based on merit against objective criteria and encouraged to improve risk management by making the board responsible for determining the extent of risk that the company is willing to take.
Additionally, board chairmen will be expected to hold regular development reviews with each director and will need to pencil in external board effectiveness reviews every three years.
Speaking at NLJ’s corporate governance newscast last week, Frances Le Grys, a partner at Hogan Lovells, said the new regime reflected a general move, advocated by Sir David Walker, who is leading the inquiry into the corporate governance of banks and other financial institutions,
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