Company law and corporate governance

Following a review of corporate governance by the Financial Reporting Council a new corporate governance code, 'the UK Corporate Governance Code,' (previously the Combined Code) has been published.

The new Code was published on 28 May 2010 and applies to financial periods commencing on or after 29 June 2010.

Wragge & Co's public companies experts have prepared the following action points to consider:

• Companies may wish to undertake a review of their constitutional documents and the terms of reference for their board committees to ensure they are compliant with the new Provisions.
• They may also wish to consider their stance on the more controversial changes. For example, companies may adopt different approaches in relation to the new re-election provisions. Also, the new introduction of the Code expressly acknowledges that companies are free to explain rather than comply if they believe their existing arrangements ensure proper accountability and board effectiveness, or need to phase in annual re-election over a transitional period.
• Chairmen may wish to consider the style of their personal report in the annual statements to try and ensure that it achieves the objective of providing a genuine insight into board behaviours and practice and helps to facilitate improved communication.
• Finally, larger companies may wish to begin taking steps now towards addressing the new Provision that requires external evaluators to facilitate board performance every three years.