The Green Paper is a chance to improve governance, says Peter Swabey
ICSA's response to the Government's Green Paper on Corporate Governance Reform was submitted on 17 February. This has been a significant effort and I am grateful to those members and others who have contributed to our drafting process.
Your help and support is much appreciated and we have done our best to incorporate your ideas into our final response, which can be found on the ICSA website. The team and I have now begun the process of reading through other people's submissions, which is very interesting. There are certainly a variety of views out there – some of which we wholeheartedly agree with, and others, well, not so much! I have written in more detail about our response in my feature 'Both opportunity and threat'.
This remains an enormous opportunity for the Government to improve governance in the UK and, at the same time, creates the risk that we will damage what is, overall, an efficiently functioning framework. We will continue to engage with the team at BEIS as they move the output from the Green Paper forward.
That framework is, however, showing signs of its age. Chris Hodge points out in his paper 'Untangling corporate governance', part of our Future of Governance series of thought leadership, that it is being stretched to perform a role that was never intended when the Cadbury Committee reported 25 years ago. Chris talks about this in more detail in his feature 'Untangling corporate governance', but his analysis of the strengths and weaknesses of the system is very helpful and will inform some of our research activities throughout the year. I am looking forward to working with our guest authors on further papers in the series.
At our launch of the Future of Governance series, Sir Winfried Bischoff, Chairman of the Financial Reporting Council, announced the FRC's plans for a fundamental review of the UK Corporate Governance Code. We will be working closely with the corporate governance team at the FRC as this gets under way.
We have taken the opportunity presented by the Green Paper to advocate three changes to support the role, and the independence, of the company secretary. First, that larger private companies should be required to have a properly qualified company secretary; second, that the remuneration of the company secretary should be the responsibility of the remuneration committee rather than any executive director; and finally, that the right to provide a statement of circumstances to shareholders, granted under the Companies Act to an auditor who ceases to hold office, should be extended to a company secretary.
We have also been working with the Department for Education on the competency framework for clerks in schools. We strongly believe the term 'clerk' is out of date in terms of the range of responsibilities these individuals are being asked to undertake, especially where they have the statutory responsibilities of a company secretary and/or a trust secretary in an academy trust, and especially in a multi-academy trust. This is a very different role from that of the traditional maintained school clerk, more likely to focus on minutes and school regulations. We are pressing the DfE to think instead in terms of the governance professional in schools of all kinds. We are running an Academy Governance Update CPD event on 22 June.
The consultation on the revised Charity Governance Code has just closed and we will be following up on this in due course and, in particular, at the Charity Governance Update on 4 May. We are also following closely the implementation of the Code for Sports Governance, which is the subject of a members' event on 9 March where we will launch a new guidance note on board effectiveness in sports bodies.
Finally, we are starting to hear some noise again about companies who have paid unlawful dividends – we will pick this up more in the next issue, but it does not add to the lustre of our profession so can I ask all concerned, please, to check that the necessary accounts have been lodged at Companies House before a payment is made.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.