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October 10, 2011

FRC strengthens diversity in UK Corporate Governance Code

The Financial Reporting Council (FRC) has decided to amend the UK Corporate Governance Code to strengthen the principle on boardroom diversity, first introduced in June 2010.

The amendments will require listed companies to report annually on their boardroom diversity policy, including gender, and on any measurable objectives set for implementing the policy.

The FRC will also update the code to include diversity as one of the factors to be considered when evaluating a board’s effectiveness.

The previous code included recommendations on merit and gender but the new code will be revised following Lord Davies of Abersoch’s review of gender diversity of UK boards.

 “We believe this gives a further opportunity to show that Britain’s ‘comply or explain’ code-based approach can deliver a flexible and rapid response and is therefore preferable to detailed legal regulation, and we urge companies to demonstrate this as quickly as possible,” FRC chairman Baroness Hogg said.

The new provisions on diversity will apply to financial years beginning on or after 1 October 2012.

 

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