The Department for Business, Energy and Industrial Strategy has published a response to its Green Paper on improving corporate governance.
The response takes into account the views expressed in submissions to the Green Paper consultation, making further recommendations on the reforms to corporate governance that could be extended to large private companies as well as public companies. The main recommendations from the Government response include:
- Requiring large companies (those with over 2,000 employees) to disclose their corporate governance arrangements, including whether they follow any formal code.
- Inviting the Financial Reporting Council to work with companies on developing a voluntary set of corporate governance principles.
- Requiring directors of large public and private companies to explain how they account for the wider interests of staff, customers and other stakeholders.
- Inviting the Financial Reporting Council to consult on ways to strengthen the voice of staff and other non-shareholders at board level.
- Requiring quoted companies to report annually on the pay ratio between the CEO and average pay of their UK workforce, along with a narrative explaining the context of pay across the company any changes in the ratio.
ACS responded to the initial consultation on the Green Paper (available here: https://www.acs.org.uk/wp-content/uploads/2017/03/ACS-Submission-Corporate-Governance-Submission.pdf), suggesting a voluntary approach to minimise the burdens on businesses. We will continue to monitor the progress of the Green Paper and consult with members as further details become available.
The Government’s full response to the Green Paper is available here: https://www.gov.uk/government/consultations/corporate-governance-reform
