New Corporate Governance Proposals
Corporate governance has been a hot topic over the past few years, which is not surprising following the economic downturn. Numerous incentives, systems and rules have been put in place to help increase transparency and instil faith in larger corporations. Some of these examples include equal pay initiatives and the Persons of Significant Control register. The government looks to be going a step further later today, announcing those further details that seek to continue creating transparency for public listed companies ('PLCs').
Business Secretary Greg Clark said the changes would make companies 'more accountable to their employees and shareholders'.
The new corporate governance laws, which are due to come into effect by June 2018, will force all PLCs to reveal the pay ratio between bosses and workers. What is also expected is the step to ensure that staff of PLCs are represented at board level. This will be achieved by either by allowing workers to nominate a director, creating an employee advisory council or assigning a non-executive director to represent the workforce. Of course, with every decision effecting big companies, there has been varying lobbying on how this transparency should be shown, and some appear to state that the anticipated reforms originally put forward have been watered down somewhat.
Nevertheless, the full details will be released later today and in my view, any step of increasing measures to promote or increase corporate governance will always be a step in the right direction. I plan on watching closely what happens in the next two-five years and suspect this area of law and regulation to grow significantly, much like data protection regulation is.