10 April 2017 by Peter Swabey
An opportunity to raise governance’s profile, says Peter Swabey
Last month, I focused on our response to the Government’s Green Paper on Corporate Governance Reform. I understand that the Department for Business, Energy and Industrial Strategy (BEIS) has received something of the order of 400 responses, which it is now working through and I think it will be a little while yet before we see any output. However, we expect the report of the Parliamentary Select Committee to be published shortly, so we can anticipate more, rather than less, corporate governance in the news in the coming weeks.
This creates two issues for company secretaries and governance professionals. In the first place, people at dinner parties are more likely to understand what we do.
Second, and to my mind far more importantly, it creates an opportunity for us all to take advantage of this, to evangelise the importance of our profession, and raise the profile of the governance role, not just in companies, but in organisations of all kinds. The team at ICSA has a number of speaking engagements to this end and will garner what publicity we can, but this is an opportunity for each and every one of us to raise the profile of our profession in our own organisations. Our own engagement with the teams at BEIS and the Financial Reporting Council continues.
On 9 March, we launched our new guidance note ‘Board effectiveness for sports bodies’ to support and augment the guidance given to sports bodies in ‘A Code for Sports Governance’ issued by UK Sport and Sport England. Sports bodies vary in size and legal form, from small voluntary associations, to charities and large private and public companies. As such, they may be subject to company law and/or charity law and to their respective statutory and regulatory obligations, in addition to the requirements of the Code. That variation in size also means there will be differences in the resource available to support Code compliance. Our guidance is intended to assist with this.
Also in March, we published a revised model terms of reference for the audit committee of a company seeking to comply fully with the requirements of the UK Corporate Governance Code. This was developed with the assistance of a working group comprising ICSA members and representatives from Slaughter and May. We are grateful for that help. These model terms of reference are intended as a guide for companies to adapt to their needs, but have been updated to reflect the April 2016 revision of the UK Corporate Governance Code and the updated FRC Guidance on Audit Committees. Work continues on updating our other terms of reference.
Last issue, I also mentioned the issue of unlawful dividends. I covered the topic in detail in a Technical Briefing on 28 March – please read that if you have not done so. Mud, unfortunately, sticks and there will be considerable work for the company secretary to rectify the matter. As I said in that Technical Briefing: ‘These errors are also of significant interest to institutional investors … Although it is usual to rely on finance colleagues and/or the auditor to confirm that a proposed dividend can be paid, it is clear that this point can be – and has been – overlooked. We therefore strongly recommend that all company secretaries check that all the necessary legal and regulatory requirements – including an appropriate filing – have been made before proceeding to payment.’ You can also read more on this story in the news analysis, ‘Not a harmless slip up’.
As you will have seen from Simon Osborne’s article 'Good governance worldwide', he has been visiting some of our Associated Territories. I will also be on my travels, speaking on minute taking at our Guernsey conference on 26 April, our Jersey conference on 27 April, and our Isle of Man conference on 10 May. I hope to see some of you there. May I also remind you about the charity governance update on
4 May – Louise Thomson will be launching the guidance about ‘red flags’ for culture in charities there, which you can read more about in her article 'Warning flags'.
Visit the ICSA website to find out more about the various projects the ICSA policy team is working on, including consultations, events and guidance.