UK: board effectiveness - new guidance from the Financial Reporting Council

The Financial Reporting Council has today published Guidance on Board Effectiveness which replaces the Good Practice Suggestions from the Higgs Report (2006): see here (pdf). The new guidance complements existing guidance published by the FRC and is intended to assist boards in their application of the principles of the UK Corporate Governance Code. The guidance is principally concerned with Sections A and B of the Code (leadership and effectiveness of the board) and, as the FRC has stressed, it is not intended to be prescriptive but to encourage board discussion over regarding the company's governance arrangements.

UK: ICSA publishes draft guidance - improving board effectiveness

The Institute of Chartered Secretaries and Administrators has published for consultation draft guidance designed to assist boards in their implementation of the UK Corporate Governance Code. Titled Improving Board Effectiveness, the guidance is available here (pdf). It is expected that the final version of the guidance will be submitted to the Financial Reporting Council later this year to replace the existing Higgs guidance.

UK: ICSA review of the Higgs guidance - consultation responses published

Earlier this year the Institute of Chartered Secretaries and Administrators began a review of the Higgs guidance with the publication of a consultation paper titled Improving Board Effectiveness (available here, pdf). The paper set out a suggested framework for new guidance around five areas: [1] roles and responsibilities of the board and its members; [2] skill levels in the boardroom; [3] board decision-making; [4] the individual on the board; and [5] accountability.

The consultation period ended in April and responses have now been published by ICSA: see here. A further consultation paper is expected within the next month or so.

UK: GC100 responses - FRC stewardship code consultation and ICSA Higgs review

GC100 - the Association for the General Counsel and Company Secretaries of FTSE100 companies - has published its submissions to the FRC's stewardship code consultation and ICSA's Higgs guidance review: see, respectively, here (pdf) and here (pdf).

UK: ICSA review of the Higgs guidance - Company Law Committee response

The City of London Law Society Company Law Committee has published its response to ICSA's review of the Higgs guidance: see here (pdf). The Committee agrees with the aim of the review ("to offer guidance which, without being prescriptive, assists boards in understanding and implementing the purpose of the Code and, in so doing, delivers practical advice to boards on how they can apply the Code to enhance their effectiveness").

In section 1.1 of the first consultation paper (here, pdf) published as part of ICSA's review it was stated that the revised guidance would "refer to ethical sensitivity, and the need for the board to take account of ethical issues in setting business strategy and the manner in which business is undertaken". The Committee takes the view that this would not be useful for several reasons including the fact that including material on ethical issues may put at risk the largely uncontroversial nature of the Higgs guidance.

UK: ICSA review of the Higgs Guidance - consultation paper published

The Financial Reporting Council, as part of its recent review of the Combined Code on Corporate Governance, commissioned the Institute of Chartered Secretaries and Administrators to review the Higgs guidance and to consider whether additional guidance was required. As part of its review, ICSA this week published a consultation paper titled Improving Board Effectiveness: see here (pdf).

The paper sets out a suggested framework for new guidance around five areas: [1] roles and responsibilities of the board and its members; [2] skill levels in the boardroom; [3] board decision-making; [4] the individual on the board; and [5] accountability. Responses should be submitted by 16 April. In June, ICSA will publish a further consultation paper with the aim of submitting completed guidance to the FRC in October.

UK: BBA conference speeches

The British Bankers' Association held its Annual International Banking Conference yesterday. Many of the speakers considered corporate governance; their speeches are available here. In his speech, the Financial Services Secretary to the Treasury, Lord Myners, observed:

It is clear that corporate governance failures materially contributed to the financial crisis. The OECD’s assessment is stark: weaknesses in remuneration, risk management, board practice and the exercise of shareholder rights resulted in excessive risk taking. These issues must be addressed. The UK is a thought leader in addressing such issues: through the FSA’s work on remuneration and director quality; through Sir David Walker’s review of the governance of financial institutions; and with the FRC’s current review of the Combined Code.

But I believe that our journey of reflection needs to take us to a deeper level than previous expeditions under the captaincy of Cadbury and Higgs etc. In particular, many of the tenets of modern portfolio theory and the presumed strong version of the efficient markets hypothesis deserve to be questioned".