Consultation on Combined Code

The Financial Reporting Council (FRC) is seeking comments from interested parties on their experience in implementing the Combined Code on Corporate Governance. The main purpose of this review and consultation is to consider whether the Code facilitates entrepreneurial success and the management of risk.

Background to the Combined Code

Companies listed on the London and Dublin Stock Exchanges are required to report on how they have applied the Combined Code in their annual report and accounts. The principles contained in the Code are widely regarded as illustrative of good practice in corporate governance and are extensively followed by other organisations in the private and public sectors.

The main text of the Combined Code was published in 2003 and incorporated recommendations from the Higgs Report on the role of non-executive directors and the Smith Report on guidance for Audit Committees. After a period of consultation the new edition of the Code was published in 2006 and contained few changes.

Current Consultation Process

While the current consultation invites comments, by 20 July 2007, on any aspect of the Code, there is an emphasis on the following issues

  1. Does the Code support better board performance over time?
  2. Is the "comply of explain" approach working effectively?
  3. What impact has the Code on smaller companies?
  4. Do disclosures on the Combined Code in annual reports provide useful information to shareholders at proportionate cost to companies?

A copy of the consultation paper on the impact and implementation of the Combined Code can be accessed here.