The UK Government has announced a range of new measures, expected to come into force June 2018, designed to enhance the public trust in business by increasing accountability on listed firms in the UK.
The Government expects the reforms to increase transparency in lusted firms and that this will lead to greater understanding for the shareholders, employees and the public at large.
The reforms set out by the Business Secretary, Greg Clark will include;
New laws will force all listed companies to reveal the pay ratio between bosses and workers
All listed companies with significant shareholder opposition to executive pay packages will have their names published on a new public register
New measures will seek to ensure employee voice is heard in the boardroom
The government will introduce new laws that will require all listed companies;
- to publish data showing the pay rations between the average earnings of UK employees and the CEO.
- to publish information of how they take employees and shareholder interests into account.
in addition all “larger” companies will be required to publish information as to their “responsible business arrangements”
The Financial Reporting Council (FRC) which is responsible for the UK Corporate Governance Code will be asked to include a new requirement in the code that employees interests are properly represented at Board level.
Greg Clark further commented;
One of Britain’s biggest assets in competing in the global economy is our deserved reputation for being a dependable and confident place in which to do business. Our legal system, our framework of company law and our standards of corporate governance have long been admired around the world.
We have maintained such a reputation by keeping our corporate governance framework under review. Today’s reforms will build on our strong reputation and ensure our largest companies are more transparent and accountable to their employees and shareholders.
The new proposals have been broadly welcomed by the Institute of Directors (IOD), The Confederation of British Industry and the Manufacturers Organisation (EFF)