Following Derek Higgs’ Review of the Role and Effectiveness of Non-executive Directors and Sir Robert Smith’s Audit Committees Combined Code Guidance, July saw the publication of the Combined Code on Corporate Governance. The section dealing with remuneration, which is largely based on common sense principles, will interest human resources departments and their legal advisers.
According to the preamble, the Financial Services Authority has confirmed that the Code, which replaces the Combined Code issued by the Hampel Committee on Corporate Governance published in 1998, will be annexed to the listing rules and will apply for reporting years, beginning on or after 1 November, 2003. Some of its provisions may be disproportionate in the case of smaller companies and will not apply to companies below Ftse 350. The Code is divided into principles supported by provisions relating to directors, remuneration, accountability and audit, relations with shareholders and institutional shareholders.
