The Financial Reporting Council (FRC) has announced it will review the Corporate Governance Code, days after MPs called for reforms to protect pension fund members after the BHS collapse.
It comes as the government's green paper on strengthening corporate governance closes to responses tomorrow.
The FRC said it will start consulting on any changes to the code later this year based on the outcome of its review and the government's forthcoming response to its green paper.
The code first came into being in 1992 and operates on a ‘comply or explain' model, setting out good practice across issues such as remuneration and shareholder relations.
Speaking at the launch of the Institute of Chartered Secretaries & Administrators' work on The Future of Governance, FRC chairman Sir Win Bischoff said: "The Prime Minister has a vision of an economy that, in her words, ‘works for everyone'. This needs UK businesses to thrive so that all stakeholders including workers, customers, suppliers and society itself benefit through jobs growth and prosperity."
He went on to say that the review of the code will consider the appropriate balance between the code's principles and provisions.
"In pursuing any changes, the current strengths of UK governance: the unitary board, strong shareholder rights, the role of stewardship and the ‘comply or explain' approach, must be preserved. We must not throw out the baby with the bathwater.
"Any changes to the regulatory frameworks and to the code will be done carefully and through full consultation with a wide range of stakeholders."
The FRC's response to the government's green paper will highlight the importance of helping boards to take better account of stakeholder views, and linking executive remuneration with performance.
It comes after the Work and Pensions Committee urged the government to force private companies with large defined benefit (DB) pension schemes to comply with the Corporate Governance Code, which only applies to public listed firms.
It wants company directors to have a new requirement to report on the exercise of their duties to trustees to reduce the risk of members being neglected in corporate decision-making.
These are to prevent another BHS-style corporate failure, after the WPC found poor corporate governance in the retailer which was a big private company, and lack of publicly available information about the state of its pension fund.
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