UK: Company Law Committees respond to FRC Combined Code proposals

A joint committee formed by Company Law Committee of the Law Society of England and Wales and the City of London Law Society Company Law Committee has published its response to the changes proposed to the Combined Code on Corporate Governance by the Financial Reporting Council: see here (pdf).

The joint committee expresses its broad support for the approach of the proposed changes and provides comments concerning the legal and practical issues associated with their implementation. For example, with regard to the proposal to amend Main Principle A1 to include a reference to the "long term" success of the company, the joint committee observes:

In legal terms the duty of a director to promote the success of a company is not so circumscribed. Is it correct that a board must always be responsible for long-term success? How should they consider bid proposals or administration/ insolvency events? Can a company not be formed to undertake a particular venture? We query whether it is appropriate to include the qualifying reference to the long-term, when the board is also responsible for success in the short and medium term".