UK - Corporate governance report author Derek Higgs has bowed to pressure from firms to amend his code.
Higgs told delegates at the latest NAPF Investment Conference, Edinburgh, that his review was not perfect and he would amend the rules to make objectives of the code clearer.
He said: “There are areas of clarification that need to be addressed. The drafting could be clearer in some places.
“My message to boards is that if some of the rules don’t fit, and you choose not to follow aspects of the code, then explain why in plain language, not in lawyer speak.”
The move follows the publication of a highly critical report from the Confederation of British Industry, which found that 82% of FTSE100 companies thought Higgs’s proposals would undermine the role of chairmen and their ability to run an effective board.
But many delegates felt that any move by Higgs to change the proposals in his review would be seen as a “watering down”.
Higgs also said he “fundamentally disagreed” with the NAPF – a staunch supporter of his review – over its call to limit the number of non-executive directorships any one person should hold.
He said: “A much better approach is to set out what each individual has to do in terms of job roles and time.”
But NAPF Investment Council chairman Ken Ayers claimed any differences in opinion were purely semantic.
He said Higgs based his view on the principle that each non-executive director should only hold the position for a “justification of time”, but the NAPF chose to put a specific number on that.
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