UK: ICSA review of the Higgs guidance - consultation responses published

Earlier this year the Institute of Chartered Secretaries and Administrators began a review of the Higgs guidance with the publication of a consultation paper titled Improving Board Effectiveness (available here, pdf). The paper set out a suggested framework for new guidance around five areas: [1] roles and responsibilities of the board and its members; [2] skill levels in the boardroom; [3] board decision-making; [4] the individual on the board; and [5] accountability.

The consultation period ended in April and responses have now been published by ICSA: see here. A further consultation paper is expected within the next month or so.

UK: ICSA's board performance evaluation report

The Institute of Chartered Secretaries and Administrators has published a report in which it reviews the manner in which the top 200 listed companies (at the end of 2009) undertook and reported their annual evaluation of the performance of the board, the audit, nomination and remuneration committees and the individual members of the board in line with Principle A6 of the Combined Code: see here (pdf).

According to the report, 16% of companies undertook some form of external board evaluation process. The Financial Reporting Council, in its 2009 report on the Combined Code, stated (para. 3.41):

... the potential benefits resulting from the greater objectivity that an external facilitator can bring to the evaluation process are such that a provision should be added to the Code recommending external facilitation of the board review at least every three years. Those companies that consider this to be unnecessary or undesirable will, of course, continue to be able to choose to explain rather than comply. Those companies that choose to comply will be free to decide what form of external involvement would be most beneficial to them".

UK: board performance evaluation - room for improvement, according to ICSA

ICSA - the Institute of Chartered Secretaries and Administrators - will this week publish the 2008 edition of its annual board performance evaluation survey (copies can be requested here). A short overview has, however, been published in the Chartered Secretary magazine and this states:

A new ICSA survey has revealed that only 16 per cent of companies in the FTSE 200 undertake an externally-developed or managed evaluation process.  The 2008 edition of ICSA’s annual board performance evaluation survey ... has revealed that only 32 of the UK’s top 200 companies used an external provider to assist with board performance evaluation last year. ICSA is concerned that, if companies do not benchmark internally - driven processes from time to time by using an external facilitator, then evaluations could become less valuable – or, in the worst case scenario, the equivalent of children ‘marking their own homework’.  The report also argues that several companies appear not to understand the important distinction between the chief executive reviewing the performance of executive main board directors in their capacity as members of the top management team, and the ‘entirely separate task’ of evaluating the effectiveness of each of the main board executive directors. ICSA says that the two tasks are quite distinct, and should be mutually exclusive".

UK: GC100 responses - FRC stewardship code consultation and ICSA Higgs review

GC100 - the Association for the General Counsel and Company Secretaries of FTSE100 companies - has published its submissions to the FRC's stewardship code consultation and ICSA's Higgs guidance review: see, respectively, here (pdf) and here (pdf).

UK: ICSA response to FRC stewardship code consultation

The Institute of Chartered Secretaries and Administrators (ICSA) has published its response to the Financial Reporting Council consultation on the stewardship code for institutional investors: see here (pdf). ICSA supports the policy objectives identified by the FRC in its consultation paper (here, pdf) and is, in general, supportive of the principles in the code.

UK: ICSA review of the Higgs guidance - Company Law Committee response

The City of London Law Society Company Law Committee has published its response to ICSA's review of the Higgs guidance: see here (pdf). The Committee agrees with the aim of the review ("to offer guidance which, without being prescriptive, assists boards in understanding and implementing the purpose of the Code and, in so doing, delivers practical advice to boards on how they can apply the Code to enhance their effectiveness").

In section 1.1 of the first consultation paper (here, pdf) published as part of ICSA's review it was stated that the revised guidance would "refer to ethical sensitivity, and the need for the board to take account of ethical issues in setting business strategy and the manner in which business is undertaken". The Committee takes the view that this would not be useful for several reasons including the fact that including material on ethical issues may put at risk the largely uncontroversial nature of the Higgs guidance.

UK: statements of capital under the Companies Act (2006) - BIS consultation

The Department for Business, Innovation and Skills has published a consultation paper concerning the financial information required in statements of capital under the Companies Act (2006). The consultation highlights problems with the current requirements - some of which were highlighted by ICSA earlier this year - and sets out a proposed response involving changes in the Act which BIS believes would simply the information required and avoid the need to disaggregate any information below the level of class of share.

UK: ICSA responds to FRC Combined Code recommendations

The Institute of Chartered Secretaries and Administrators has published its response to the final report and recommendations published by the Financial Reporting Council in respect of its review of the Combined Code: see here (pdf).

ICSA supports in general the draft Code and the approach taken by the FRC but expresses reservations concerning annual election for the board and/or chairman. In this regard, ICSA states in its submission: "our strongly preferred route is to maintain the status quo of triennial elections".

UK: ICSA review of the Higgs Guidance - consultation paper published

The Financial Reporting Council, as part of its recent review of the Combined Code on Corporate Governance, commissioned the Institute of Chartered Secretaries and Administrators to review the Higgs guidance and to consider whether additional guidance was required. As part of its review, ICSA this week published a consultation paper titled Improving Board Effectiveness: see here (pdf).

The paper sets out a suggested framework for new guidance around five areas: [1] roles and responsibilities of the board and its members; [2] skill levels in the boardroom; [3] board decision-making; [4] the individual on the board; and [5] accountability. Responses should be submitted by 16 April. In June, ICSA will publish a further consultation paper with the aim of submitting completed guidance to the FRC in October.

UK: ICSA responds to FRC Combined Code and Walker reviews

The Institute of Chartered Secretaries and Administrators has published its response to the FRC's review of the effectiveness of the Combined Code and Sir David Walker's review of bank governance. Whilst welcoming in broad terms the work of the FRC and Sir David, ICSA makes clear that some of Sir David's recommendations should not be applied to all listed companies. For example, Sir David's seventh recommendation - the chairman should be expected to commit a substantial proportion of his or her time, probably not less than two-thirds, to the business - is described by ICSA as "too prescriptive" to apply to all listed companies.

Note: Sir David will be publishing final recommendations on November 26th. 

UK: statements of capital under the Companies Act (2006)

ICSA has published a guidance note dealing with statements of capital under the Companies Act (2006). The note explains how companies can deal with the requirement to disclose the amount paid up and the amount unpaid (if any) on each share. The guidance note explains:

Companies with a simple share history are unlikely to experience any problem in completing the requirement for the amounts paid up on each share. Many older and/or larger companies will not have tracked share premium on a per share basis; in addition, where the share premium account has been used, e.g. on a reduction, there is no requirement to attribute this use to particular shares. For these reasons, it may therefore be difficult or impossible for some companies to provide a single amount per share as the amount paid up on all the shares in a particular class of shares.

The Department of Business, Innovation and Skills (BIS) will, in the longer term, review whether a change to Companies House forms or the Companies Act 2006 is necessary. In the meantime, as stated in its FAQ on this subject on the BIS website, BIS has confirmed that companies will have to do what they can to complete this element of the statement of capital. There is a recognition by BIS that companies will have to ‘provide numbers ... that provide a pragmatic allocation of their share premium reserve between shares or classes of shares'".

Note: the guidance note is available to view free of charge but some personal information must be provided in order to do so.