UK paper on comply or explain published

Wed, 15 Feb 2012

The Financial Reporting Council (FRC) in the UK has today published a paper to explain its comply-or-explain approach to corporate governance. The paper is based on discussions between senior company and investor representatives and notes a very high level of compliance with the UK Governance Code. It says that a large majority of companies who do not comply with one or more provisions of the Code provide a full explanation of their reasons. However, a minority do not and the paper is intended to help address this by setting out clearly what practitioners expect. Key elements of an explanation identified in the discussion are that it should;

set out the background,
provide a clear rationale which is specific to the company,
indicate whether the deviation from the Code’s provisions is limited in time,
state what alternative measures the company is taking to deliver on the principles set out in the Code and mitigate any additional risk.

The paper can be downloaded at: http://www.frc.org.uk/press/pub2709.html

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