The Financial Reporting Council (FRC) is the UK body responsible for promoting high quality corporate governance and reporting to foster investment. It sets the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work. The FRC also monitors and takes action to promote the quality of corporate reporting and auditing. It operates independent disciplinary arrangements for accountants and actuaries; and oversees the regulatory activities of the accountancy and actuarial professional bodies.
The UK Financial Reporting Council's Corporate Governance Code (“the Code”), published in September 2014, is a voluntary code which sets out the principles relating to good corporate governance the purpose of which is to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the company.
Corewest welcomed the publication of the Code, is supportive of its objectives and has committed itself and its subsidiary companies to the Code. The principles of the Code, which is applied on a “comply or explain” basis, are:
The Role of the Board
Every company should be headed by an effective board which is collectively responsible for the long-term success of the company.
Division of Responsibilities
There should be a clear division of responsibilities at the head of the company between the running of the board and the executive responsibility for the running of the company’s business. No one individual should have unfettered powers of decision.
The Chairman
The chairman is responsible for leadership of the board and ensuring its effectiveness on all aspects of its role.
Non-Executive Directors
As part of their role as members of a unitary board, non-executive directors should constructively challenge and help develop proposals on strategy.
The Composition of the Board
The board and its committees should have the appropriate balance of skills, experience, independence and knowledge of the company to enable them to discharge their respective duties and responsibilities effectively.
Appointments to the Board
There should be a formal, rigorous and transparent procedure for the appointment of new directors to the board
Commitment
All directors should be able to allocate sufficient time to the company to discharge their responsibilities effectively.
Development
All directors should receive induction on joining the board and should regularly update and refresh their skills and knowledge.
Information and Support
The board should be supplied in a timely manner with information in a form and of a quality appropriate to enable it to discharge its duties.
Evaluation
The board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors.
Re-election
All directors should be submitted for re-election at regular intervals, subject to continued satisfactory performance.
Financial and Business Reporting
The board should present a fair, balanced and understandable assessment of the company’s position and prospects.
Risk Management and Internal Control
The board is responsible for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives. The board should maintain sound risk management and internal control systems.
Audit Committee and Auditors
The board should establish formal and transparent arrangements for considering how they should apply the corporate reporting and risk management and internal control principles and for maintaining an appropriate relationship with the company’s auditors.
The Level and Components of Remuneration
Executive directors’ remuneration should be designed to promote the long-term success of the company. Performance-related elements should be transparent, stretching and rigorously applied.
Procedure
There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his or her own remuneration.
Dialogue with Shareholders
There should be a dialogue with shareholders based on the mutual understanding of objectives. The board as a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place.
Constructive Use of General Meetings
The board should use general meetings to communicate with investors and to encourage their participation.
To view, download and save the full version of the UK Corporate Governance Code click here or visit www.frc.org.uk