Corporate Governance Reforms - the next steps

On 29 August 2017, the Department for Business, Energy and Industrial Strategy (BEIS) published the formal response to its November 2016 green paper consultation on the governance of UK companies.

The response can be found here. It follows on from and builds on the recommendations put forward by the BEIS Parliamentary Select Committee (the “Select Committee”) in April 2017, following its own inquiry into corporate governance.

In the response, the Government has set out various proposals it intends to take forward. These include mandatory measures to require companies to report on their ratio of CEO to workforce pay, as well as to explain complex share-based incentive schemes and how their directors have complied with their statutory duty to have regard to certain categories of stakeholders.

The paper also sets out suggested changes to the UK Corporate Governance Code (the “Code”) relating to significant shareholder opposition to executive pay, greater responsibility for remuneration committees, and worker representation on boards, as well as to institute a code of corporate governance for larger private companies.

We have summarised in this article the key points arising from the response.