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16 July 2018

The Financial Reporting Council ("FRC") have published a comprehensive 50 page feedback document to accompany the revised UK Corporate Governance Code which was published today, July 16th.

In response, the ICSA:The Governance Institute have released the following press release welcoming the revisions to the Code and guidance on Board effectiveness. Of particular note is the important role of the Company Secretary in the revised code:

London, 16 July 2018 – ICSA: The Governance Institute has today issued commentary on the Financial Reporting Council’s updated UK Corporate Governance Code and its Guidance on Board Effectiveness.

According to Peter Swabey, Policy and Research Director at ICSA:

“The new code has been a significant piece of work with the FRC working very hard to take account of the views of all segments of the market. We are proud to have been involved in the process and that the FRC have seen fit to incorporate a number of the suggestions that we made during the consultation process, such as recognising the unique role of the chair and the importance of the role to both the company and the individual holding the position. Greater flexibility regarding a chair’s time as a NED prior to appointment as chair when assessing tenure is welcome as it will help to prevent chairs being asked to move on at a point when they are at their most effective and may help to increase boardroom diversity. We are also delighted that the section in the Board Effectiveness guidance on the role of the company secretary recognises the value that the company secretary can add to the effectiveness of the board.”

The guidance highlights the role of the company secretary as being responsible for ensuring that board procedures are complied with, advising the board on all governance matters, supporting the chair and helping the board and its committees to function efficiently. Particular responsibilities are as follows:

  • Report to the chair on all board governance matters
  • Ensure good information flows within the board and its committees and between senior management and non-executive directors, as well as facilitate induction, arrange board training and assist with professional development as required
  • Arrange for the company to provide the necessary resources for developing and updating its directors’ knowledge and capabilities in a manner that is appropriate to the particular director, and which has the objective of enhancing that director’s effectiveness in the board or committees, consistent with the results of the board evaluation processes
  • Ensure that directors, especially non-executive directors, have access to independent professional advice at the company’s expense where they judge it necessary to discharge their responsibilities as directors of the company. Committees should be provided with sufficient resources to undertake their duties
  • Assist the chair in establishing the policies and processes the board needs in order to function properly. The chair and the company secretary should periodically review whether the board and the company’s governance processes…are fit for purpose, and consider any improvements or initiatives that could strengthen the governance of the company.

Peter concludes:

“The overarching theme of trust in the revised UK Corporate Governance Code is reflected in the guidance, which highlights the unique position of the company secretary between the executive and the board. Not only does the guidance draw attention to the fact that a vital part of the company secretary’s role is building relationships of mutual trust with the chair, the senior independent director and the non-executive directors, while maintaining the confidence of executive director colleagues, it also stresses that company secretaries are well placed to take responsibility for concerns raised by the workforce about conduct, financial improprieties or other matters. Of particular note is the fact that the pay of the company secretary should now be decided by the remuneration committee; this is a positive step in ensuring the independence of the company secretary.”

The revised Code can be found here.

The FRC commentary on the feedback received from respondents during the consultation process on the Code can be found here.