UK: FRC reports on corporate governance in 2011

The Financial Reporting Council has published a report titled Developments in Corporate Governance 2011 - The impact and implementation of the UK Corporate Governance and Stewardship Codes: see here (pdf). The report highlights changes that have taken place in the past year and draws upon FRC and other organisations' research to explain the changes in governance practices which have occurred and areas requiring improvement. The report notes, for example, that 80% of FTSE350 companies have adopted annual re-election of all directors and that over 230 asset managers, asset owners and service providers gave signed up to the Stewardship Code in its first year. However, the FRC reports, based on its discussions, that the majority of companies (and in particular smaller companies) say that they have seen relatively little change in institutional investors' approach to engagement.

The report also highlight areas where the FRC wishes to see improvements, including reporting by audit and remuneration committees. The FRC identifies the rights of minority shareholders in listed companies with dominant shareholders as requiring further attention, and welcomes the FTSE Group’s consultation on increasing its minimum free float requirement for UK incorporated companies.