22 August 2016 by Peter Swabey
A fresh look at the boardroom is long overdue, says Peter Swabey
Almost immediately after Brexit we found ourselves with a new Prime Minister and one with strong views on corporate governance. It is fantastic to see corporate governance appearing high on the political agenda and I look forward to Mrs May’s trenchant comments ushering in new thinking on issues such as remuneration and board composition.
However, some of the issues we face are structural and not susceptible to simple solutions. A fresh look at the boardroom is long overdue, and although I agree with the objectives that underpin the new Prime Minister’s proposals to address the issues of executive pay and stakeholder engagement, I cannot help wondering whether these changes will have the anticipated effects. Much will depend on how they are implemented.
As Chris Hodge, ICSA Policy Advisor, commented in his recent blog ‘The future of governance’, we need to distinguish between the objectives and the means of achieving them. Questions need to be asked about whether the specific mechanisms and systems we have put in place remain effective. ICSA: The Governance Institute is beginning to reflect on a number of these questions as we commence work on a report on the future of governance, which we plan to publish early next year.
The starting point for Chris’ blog was the FRC’s publication of its recent report, ‘Corporate Culture and the Role of Boards’. This was the result of work by the various organisations drawn together in the ‘culture coalition’, including ICSA. The report emphasises the importance of culture in organisations of all kinds, particularly in the current climate of a lack of trust.
The charity sector has been particularly exercised about a loss of public confidence following media revelations about Kids Company and questionable fundraising practices. ICSA has long been involved in the development of the sector’s own code of good governance, and a revised version of it should be available for public consultation in the autumn.
Thanks to members, two new guidance notes will also be available to charities to assist them in enhancing their governance arrangements: ‘Specimen skills audit guidance’ and a ‘Trustee competency matrix’. Similar issues have plagued the academy sector and we will shortly be publishing two new guidance notes aimed at multi-academy trusts to improve understanding and practice: ‘Building good governance’ and ‘MAT board effectiveness’.
August saw the first implementation stage of the Charities (Protection and Social Investment) Act 2016. Significant new powers for the Charity Commission to suspend, remove and disqualify trustees, alongside the potential to direct charities not to take specific actions, transfer assets and even wind up came into effect. Future implementation dates are identified for October and November, and April 2017. Consultations on how these powers will be utilised are currently open. Our Charities (Protection and Social Investment) Act 2016 Conference on 8 September will cover the new Act in detail.
This month, I hoped to give you a flavour of the findings of our consultation on the minuting of meetings, which closed on 24 June. The vast number of responses mean that I cannot do that just yet. It is tribute to the importance of good governance that so many people, from many sectors, are prepared to spend time contributing their views. The insight that we have gained is really helpful, particularly in seeing the similarities and contrast between minuting in a wide range of companies.
Your responses cover an enormous range of subjects. Some respondents favour highly prescriptive guidance, including standard forms of language; others want simply to see some suggestions. We are grateful to all those who have shared with us their wisdom gained from minuting countless meetings. We will be launching our revised guidance at an event at Saffron House on 19 September. There will also be an accompanying webcast.
Finally, nominations are open for the ICSA Awards 2016. This year we introduced two new categories recognising the achievements of governance professionals, alongside our established awards for individuals and teams of company secretaries. We also continue to celebrate the best in company reporting. If you know someone who deserves to be recognised for their contribution to the profession, now is your chance – you can nominate via the ICSA website.