To help address what has been described as an 'extraordinary' omission from the UK Corporate Governance Code, our Corporate Governance team is supporting an important response to the Financial Reporting Council (FRC) made by a group of General Counsel and others. Recognising the significant role General Counsel (GC) play in the corporate governance ecosystem, we have also put in our own reply to the FRC's consultation on the UK Corporate Governance Code.
Kate Higgins, Partner in our Corporate governance team, explains "One of our key reasons for supporting the GC submission, is to help secure GC's access to the board and by the board to them. Many GC have this already, but not all. As a separately regulated function, GC have a sound understanding of legal and associated (including emerging) risks across the business and across organisational boundaries. They play a pivotal role in crafting policy and practice and supporting an organisation's culture. It is important that this is recognised by the leading authority in the UK on principles of sound governance.'
In our response, we encourage the Financial Reporting Council (FRC) to explore and take account of the GC submission including:
- The value the GC role can bring to multiple aspects of a sound system of governance; and
- GC board access: We ask for acknowledgement that, as a separately regulated individual, advising and dealing with issues across the business, the GC should have direct access to the board and its committees and be appointed by the board as a whole. In our view it is important that operational reporting lines should not compromise the independence of the General Counsel.
The FRC's consultation closed on 13 September. It plans to publish a revised Code by the end of the year or in early 2024, to take effect for financial years starting in January 2025. The policymakers at the FRC are also holding roundtables on the Guidance which supports the Code this autumn. We hope to be able to engage with them as part of those round tables. We also emphasise in our response that it is important that the Code not be too prescriptive on this topic and should continue to support different models of split or combination of the role of company secretary and GC. It is also to be stressed that the role of company secretary remains an important one, pivotal as they are to supporting the chair and the effectiveness of the board. In supporting the GC's submission, we also continue to support the governance role of the company secretary.
For more on the FRC Consultation on the UK Corporate Governance code, see our UK Corporate Governance Code – FRC announces launch of consultation article.