Key items on the agenda for businesses this month include responding to the FRC’s review of the UK Corporate Governance Code, maintaining a focus on improving gender diversity at leadership level and continuing to prepare for the GDPR.
Responding to the FRC consultation on the UK Corporate Governance Code
The Financial Reporting Council (FRC) will issue its consultation on amendments to the UK Corporate Governance Code (the Code) in early December. The government’s August 2017 response set out 12 action points for corporate governance reform, including proposals for changes to the Code. The FRC was invited to consider revisions to the Code in relation to:
- How companies should respond to significant shareholder opposition to executive pay.
- Giving remuneration committees greater responsibility for demonstrating how pay and incentives align across the company.
- The form and structure of share-based remuneration.
- Strengthening the stakeholder voice in the boardroom and specific provisions for appropriate employee engagement mechanisms (a designated non-executive director, a formal employee advisory council or a director from the workforce).
The consultation, which the FRC sees as an opportunity to “shorten and sharpen” the Code, is likely to be open for responses until the end of February 2018 and a final updated Code is expected to be delivered in June 2018. The FRC is also working with several institutions (including the CBI and the Institute of Directors) to develop a voluntary set of corporate governance principles for large private companies.
In addition, the Investment Association’s public register of listed companies encountering shareholder opposition of 20% or more to a board resolution is set to go live in December.
Focus on improving gender diversity at leadership level
Following publication of the Parker Review on ethnic diversity last month, a report on gender balance in FTSE leadership provides for the first time a near-complete set of data on gender balance in FTSE 350 leadership. The report highlights progress on the Hampton-Alexander Review’s 2020 targets for:
- FTSE 350 companies to have a minimum of 33% women’s representation on their boards.
- FTSE 100 companies to have a minimum of 33% women’s representation on their leadership teams.
Over a third of FTSE 350 companies are already at 33% or more, or are on track to do so by 2020, but women’s representation on leadership teams at FTSE 100 companies has only increased fractionally this year (from 25.1% to 25.2%). The Review has now decided to extend the representation on leadership teams target to all FTSE 350 companies.
The report acknowledges that although there has been significant progress since 2011, when women held only 12.5% of board positions in FTSE100 companies, progress remains too slow and organisations need to make a step change to ensure the 2020 targets are met. The report suggests that, when it comes to improving gender diversity, successful organisations recognise that they only need to implement a few targeted initiatives, and to execute them well. It features several case studies which highlight recent innovations and different thinking seen across a variety of industries.
This is an area of focus that goes beyond listed companies, with professional services firms and other large organisations urged to look at diversity too.
Countdown to the GDPR continues
The Information Commissioner’s Office (ICO) has replaced its Overview of the GDPR with a Guide to the General Data Protection Regulation (GDPR). The Guide contains similar content to the Overview, but now includes expanded sections on consent and contracts and liabilities on the basis of the guidance it has already published for consultation. It retains the useful “What’s new” section which sets out the timetable for forthcoming ICO and Article 29 Working Party (WP29) guidance. WP29 (the group of EU data protection authorities charged with agreeing European-wide guidance on GDPR) has itself published new guidelines on imposing administrative fines.
Practical Law continues to publish content to assist organisations with their GDPR preparations, including a note highlighting key risk areas to consider when implementing a GDPR compliance programme, the terms of reference for GDPR working group and a note on getting privacy policies GDPR-ready.
The gig economy and the Taylor Review of Modern Working Practices
Two House of Commons committees have completed their inquiry into the Taylor Review of Modern Working Practices (Taylor Review) and published a report containing 11 recommendations. The Taylor Review attracted particular attention due to its focus on employment status issues and the gig economy, and the report echoes many of the recommendations it made. For example, it recommends providing a clearer statutory definition of employment status and a rebuttable presumption of worker status.
Although it is unlikely that the committees’ report will directly lead to legislative change, it demonstrates a level of parliamentary support for the types of recommendations contained in the Taylor Review (which the government has yet to respond to).
The gig economy and the concept of worker status were already in the headlines this month following two high-profile decisions. In the first, the Employment Appeal Tribunal (EAT) held that Uber drivers were workers, while in the second the Central Arbitration Committee decided that Deliveroo riders were not workers for the purposes of a union’s application for compulsory recognition. It is reported that Uber intends to appeal the EAT’s decision and that it is considering applying to appeal direct to the Supreme Court, leapfrogging the Court of Appeal.
New proposals on reducing costs, scale and complexity of disclosure
Companies should take note of proposals for a mandatory disclosure pilot scheme that aims to achieve a wholesale cultural change in the disclosure process. The pilot scheme will run for two years in the Business and Property Courts.
Among other things, the proposals introduce the concept of “Basic Disclosure” (disclosure, without the need for a search, of key limited documents relied on by the disclosing party and which are necessary for other parties to understand the case they have to meet) which may avoid the need for further disclosure in some cases. Feedback on the proposals is sought by 28 February 2018.
Consultations coming to a close
Consultations on the following matters come to a close in December:
- 6 December. HMRC Business Risk Review.
- 7 December. Internet safety.
- 8 December. Regulation of e-cigarettes.
- 15 December. Investigation into hotel booking sites.