The government is currently reforming the Corporate Governance Code which, subject to Parliamentary approval, will come into effect on 1st January 2019.
The aim of the reforms is to improve on three key areas: strengthening the voice of employees’ and stakeholders, a new code for the governance of large private companies, and executive pay.
The changes mean that UK listed companies with over 250 employees will be legally required to annually disclose and justify the pay difference between their chief executives and their average worker.
In addition, the directors of all large companies will also have to demonstrate exactly how they are acting in the interests of employees and shareholders.
The government also plans to establish a new a coalition of industry and wider society bodies to develop and oversee the new code for the corporate governance of large private companies.
The government wishes to ensure the UK remains a world-leading place to invest and do business, and therefore these reforms are part of their modern Industrial Strategy.
Business Secretary Greg Clark: “One of Britain’s biggest assets in competing in the global economy is our deserved reputation for being a dependable and confident place in which to do business. […] Requiring large companies to publish their pay gaps will build on that reputation by improving transparency and boosting accountability at the highest levels, while helping build a fairer economy that works for everyone.” (www.gov.uk)
If you are interested in how the corporate governance reforms will impact your business, the Institute for Family Business are running a webinar on 26th June 2018, between 2pm and 3:30pm.
In the webinar, the IFB’s Director of Policy and External Affairs, Fiona Graham, will discuss: the new principles for corporate governance in private businesses, the reporting requirement for large private companies to disclose their corporate governance arrangement, and the new duty for directors to explain how they engage with stakeholders. There will also be the opportunity for viewers to ask their own questions.
To find out more about the webinar, or to register your interest, click here.