Sir Win Bischoff, the FRC chair, has an article here today. Sad to see the same old platitudes trotted out with the same old phrases - "tone at the top", "constructive challenge". Time for a new language and a new conversation.
Here's the big question: can a legal and regulatory framework developed around 19th century corporate structures provide the corporate accountability needed for the 21st century? Shouldn't we stop tinkering at the margins with audit and with boards and have a constructive debate about the role of the corporation now that owners are so different and now that so many different groups are affected globally by corporate activities?
Why not encourage boards to get on with directing and controlling their companies as they see fit, developing strategies and structuring themselves in a way that best serves their objectives, using any consequent departures from the Code as the basis for a proper conversation with those who have an interest in what they are doing? Make the conversation open and ongoing.
And let's open up the investment intermediary chain, so that all the intermediary accountabilities are transparent and governance structures can be seen. Pensioners need to know a great deal more about how their investments are managed.
Waffling on about corporate culture isn't going to change anything!
I'm very disappointed that the FRC's press release on their annual review of developments in Corporate Governance and Stewardship carries the headline "FRC reports on better compliance with UK Corporate Governance Code..." (emphasis added)
ReplyDeleteThe beauty of the UK Corporate Governance Code is that it permits companies to explain precisely why they haven't complied with it. And shareholders can then decide whether to tell the board to go away and comply or to accept the explanation. If the FRC really believes that compliance is "better", why not simply require compliance and be done with it?