(An extract from Chapter 11 of the London Stock Exchange guide to Corporate Governance for main market and AIM companies.)
As a result of the introduction and evolution of the UK Corporate Governance Code (the Code) over the last 20 years, and parallel developments in UK law, the bar has been raised considerably for UK listed companies in terms of the standards that they are expected to achieve in their management and their conduct. Boards have had to raise their game, and constructing a team of directors that is able to fulfil an array of governance requirements is now a complex challenge.
What follows is practical guidance, based on the experience of The Zygos Partnership in advising on senior appointments in FTSE companies and our observations as to how the boards of a large number of our clients are structured and how they function in practice.
In attempting to capture the way in which the Code is applied by boards, there are two challenges. First, the situation is a dynamic one as new Code provisions progressively affect the shape and composition of boards. Second, there is a healthy variety in how boards ‘comply or explain’ with the Code provisions as they develop the structure that is most effective for their particular business. Nonetheless, at the time of writing some clear norms are established, and this is what we are aiming to capture here.