Thursday 18 May 2017

UK: Corporate governance and the Conservative Party's manifesto

The Conservative Party published its election manifesto today: see here (pdf). This sets out several commitments concerning corporate governance - under the banners of "fairer corporate governance" and "better corporate governance" - that we can expect to see in a white paper when/if the Party is re-elected to Government (if the election had not been called, it's likely that we would have had the white paper by now, following on from the green paper last autumn). There are also commitments to reform the rules on takeovers and mergers.

With regard to governance, there appears to be a commitment to introduce through legislation an annual binding vote on remuneration (the wording in the manifesto is not as clear as it could be); it is also said that companies will be required to publish pay ratios. Change to the law is also promised to require listed companies to introduce a mechanism for greater employee voice on the board. Several options for achieving this are given including having an employee nominated director, creating an employee advisory council or assigning responsibility for employee representation to one of the non-executive directors. There is also a pledge to consult on how to strengthen the governance of private companies.

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