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The FRC is the custodian of the UK’s Corporate Governance and Stewardship Codes. Since its inception 26 years ago, the UK Corporate Governance Code has been undoubtedly a force for good and has made an important contribution to the high regard today in which UK business is held globally. But it was business scandals that led to the creation of the UK’s first set of corporate governance principles back in 1992 called the Cadbury Report.
The Cadbury Report set out these principles as a direct response to corporate scandals at the time involving BCCI, Polly Peck and The Maxwell Empire. This report was followed by the Greenbury report which itself was followed by the Committee on Corporate Governance, also known as the Hampel Committee to review the extent to which the objectives of Sir Adrian Cadbury’s and Sir Richard Greenbury’s Reports were being achieved. The resulting Hampel Report led to the publication, in June 1998, of The Combined Code on Corporate Governance which subsequently became what we know today as the UK’s Corporate Governance Code. In 2003 the FRC was given the responsibility of maintaining and managing the Code.
The Code has greatly enhanced the quality of corporate governance at UK companies and is now rightly globally renowned. A key reason why global investors commit their capital to UK listed companies is the trust and confidence The Code engenders; trust and confidence which attracts global investors thereby benefiting UK society in the long-term through jobs, growth and prosperity.
The British Prime Minister, Theresa May, placed corporate governance in the spotlight by raising concerns over whether business took sufficient account of broader interests rather than just what was perceived as executives enjoying rocketing pay packages.
All of this is addressed by the new UK Code which is shorter and sharper and puts the relationships between companies, shareholders and stakeholders at the heart of long-term sustainable growth in the UK economy. It is also important as one of a range of measures to ensure the UK remains open for business after leaving the EU.
Corporate governance in the UK works in tandem with regulation and accounting and audit standards.