The winds are changing for the U.K. corporate governance system.
The Department of Business, Energy and Industrial strategy recently published the U.K government response to the 2016 green paper consultation, regarding the corporate governance system of the U.K.
The response focuses upon specific areas such as:
– Executive pay
– Strengthening the employee, customer and wider stakeholder voice
– Corporate government in large privately held businesses.
Within these specific areas, Theresa May and Greg Clark (above) have outlined a nine-point plan, in which they hope that these reforms will come into effect by June 2018.
Following from this, it could be suggested that the urgency to publish the green paper response follows from the ongoing resentful attitude following from the previous Brexit vote, in which has increased the pressure upon Britain to have a stronger corporate governance system, so to survive post-Brexit.
However, one notable aspect of the green paper response and the reforms that it outlines is that following from its enactment, it will be obligatory to publicise the pay-ratios between a chief executive and the average worker, so to compare the two.
Yet, it could be argued that if the aim of the green paper response is to strengthen corporate governance, in which is based upon a form of unity between the public and private sectors, surely the publication of these pay ratios could bring unnecessary turmoil in the attitude of the average worker towards those on a higher salary – in which could create internal disruption within the British economy instead. Being so, this may not be the desired outcome anticipated by the U.K. government, as it could bring unnecessary animosity to the already unstable progression of Brexit negotiations.
If you would like to read more about the recently published Green paper response, have a look at the official document on this link: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/640631/corporate-governance-reform-government-response.pdf
Alternatively, you can also speak to one of our specialist corporate solicitors who would be happy to answer any questions you may have surrounding corporate law and the recent green paper response on: email@example.com or call us on: (020) 3318 5799.
Author: Portia Vincent-Kirby