Consultation follows the Davies review of women on boards
UPDATE 11 October 2011: The FRC has confirmed its changes to the UK Corporate Governance Code and stated that companies should apply and report on the changes with immediate effect – see this post.
In February 2011 Lord Davies produced his review of “Women on boards”, which sought to identify the barriers preventing more women reaching the boardroom and to made recommendations regarding what government and business could do to increase the proportion of women on corporate boards. The Davies review, which focused on listed companies, can be read here. We discussed the Davies review and its recommendations in February in this post.
One of the Davies review recommendations was that the Financial Reporting Council (the FRC) should amend the UK Corporate Governance Code to require listed companies to establish ”a policy concerning boardroom diversity, including measurable objectives for implementing the policy, and disclose annually a summary of the policy and the progress made in achieving the objectives”.
FRC consultation
The FRC has today published a consultation document (the Consultation) on this recommendation. The Consultation can be read here. In the accompanying press release, the FRC states that:
“It was these concerns [around the lack of women on boards] that led us to add a reference to the benefits of diversity in general, with specific reference to gender, when the UK Corporate Governance Code was updated last year. But as Lord Davies noted in his report, the rate of change in recent years has been glacial. That is why we are now responding to his proposal that boards should report on their gender diversity policy by consulting on whether it would be appropriate to add this to the Code.”
In the Consultation the FRC seeks views on:
• “whether further changes to the Code are needed in order to help achieve more diverse and more effective boards;
• if so, what these changes should be. The consultation document includes some draft revisions to the Code, on which comments are sought; and
• if changes are made to the Code, when these should come into effect.”
The Consultation closes on 29 July 2011.
Other Davies review-inspired consultations
The Consultation notes that the Department of Business, Innovation and Skills (BIS) will be consulting separately on the Davies review recommendation that quoted companies should be required to disclose each year the proportion of women on the board, women in senior executive positions and female employees in the whole organisation. That consultation may be part of the wider review of corporate governance by BIS coming in summer 2011, which we discuss in this post.
Friendly Corporate PSL
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