Directors must be re-elected annually, says new FRC code

THE CITY has widely welcomed new corporate governance rules set out by the Financial Reporting Council (FRC).

Replacing the former Combined Code, the FRC is introducing the new UK Corporate Governance Code in a bid to make companies more accountable to their shareholders.

Among the changes are recommendations that all directors at FTSE 350 companies be put-up for re-election every year, pay become aligned to long-term company interests and improving risk management.

FRC chairman Baroness Hogg said: “The changes we have made are designed to reinforce board quality, focus on risk and accountability to shareholders. In return, we look to see a step up in responsible engagement by shareholders under the Stewardship Code.”

Supporters in the City yesterday backed the code, calling it a “step change” and adding it will provide transparency and an “enhancement” to shareholder communication.

Business minister Edward Davey said: “Corporate accountability and transparency is integral to rebuilding public trust in the corporate sector and today’s new Corporate Governance Code marks an important step towards rebuilding that trust.”