From 1 October 2012 companies will be required to
report on how they address issues of diversity in the
boardroom. As a result of its consultation on
how best to recognise the value of diversity in the boardroom,
the
Financial Reporting Council (FRC) is planning
to
alter the UK Corporate Governance Code in
2012.
Though the FRC proposed a number of possible changes in its
consultation document, the new wording affects only two
sections of the Code. It should be noted that no further
guidance on the new provision will be issued – the FRC
considers that existing guidance on
board effectiveness will be
sufficient.
The changes are as follows with new material in bold:
‘A separate section of the annual report should describe
the work of the nomination committee, including the process it
has used in relation to board appointments.
This section should include a description of the
board’s policy on diversity, including gender, any
measurable objectives that it has set for implementing the
policy, and progress on achieving the
objectives. An explanation should be given if
neither an external search consultancy nor open advertising has
been used in the appointment of a chairman or a
nonâexecutive director.
Additionally, supporting principle B.2.4 now reads with new
material in bold:
‘Evaluation of the board should consider the balance of
skills, experience, independence and knowledge of the company
on the board,
its diversity, including gender, how the board
works together as a unit, and other factors relevant to its
effectiveness.’ Presented by
ICSA UK
on 11 October 2011.