Board Review Code of Practice
Published by Advanced Boardroom Excellence
An effective board creates value. It is more likely to make the high-quality decisions which will help the company achieve its objectives, manage its risks, and safeguard its reputation. Effective boards – and successful companies – build trust and confidence among investors, employees, customers and all those who have a stake in the company’s on-going success.
Board evaluations – as set out in the UK Corporate Governance Code – are one of the principal methods for building board effectiveness. There is a perception, however, that the scope and service quality of evaluations is variable, and a there is a concern about standards.
The draft Code of Practice seeks to begin a discussion to address and resolve this perceived lack of market confidence, and install a more coherent framework to allow companies and consultants to work more effectively together.
With reference to the Financial Reporting Council’s (FRC) Guidance on Board Effectiveness, the Code sets out the issues which should drive a high-quality board evaluation – professionalism of approach; competencies and capabilities; expectations of the clients by the consultants; and clarifying the terms of the engagement.
The document suggests a mechanism for providing independent oversight of the application of, and adherence to, the Code.
The Board Review Code of Practice will be subject to a process of public consultation to which all market participants will be invited to contribute.
The Draft Code has been formally handed to Institute of Chartered Secretaries and Administrators (ICSA) who will run a public consultation to which all market participants and interested parties will be invited to contribute. The consultation and consolidation process is expected to run up to the end of 2015.
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