British boards of listed firms will need to make wider and more signficant viability statements as part of the updated UK Corporate Governance Code rolled out in September, as reported in the WSJ.
The changes were hotly contested by the Instite of Directors and others as asking too much of directors. The article reports also that such reps lengthen board reports and make them more complex than they should optimally be. Key viability statements go beyond standard going concern reps and cash/capital for 12months out, and now add new representations for longer periods for value preservation plus identify and evaluate the principal business risks. The reforms were proposed by Colin Sharman, former chairman of KPMG International.
The Code continues to follow the principle of "Comply or Explain" and states that alternatives to the Code can be undertaken if explained to shareholders including mitigation for any risks undertaken.
The changes were hotly contested by the Instite of Directors and others as asking too much of directors. The article reports also that such reps lengthen board reports and make them more complex than they should optimally be. Key viability statements go beyond standard going concern reps and cash/capital for 12months out, and now add new representations for longer periods for value preservation plus identify and evaluate the principal business risks. The reforms were proposed by Colin Sharman, former chairman of KPMG International. The Code continues to follow the principle of "Comply or Explain" and states that alternatives to the Code can be undertaken if explained to shareholders including mitigation for any risks undertaken.
The WSJ article can be found here: http://blogs.wsj.com/moneybeat/2014/09/16/u-k-steps-up-rules-on-corporate-governance/ while the actual new UK Corporate Governance Code may be found here: https://www.frc.org.uk/Our-Work/Publications/Corporate-Governance/UK-Corporate-Governance-Code-2014.pdf.
I will be posting more on the code and reaction over time.
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