UK governance rules for listed firms

LISTED COMPANIES will have to adopt the new UK Corporate Governance Code from today, under new rules published by the Irish Stock Exchange.

The code, adopted in Britain at the end of June, deals mainly with the role of the board and executives’ accountability to shareholders.

According to David Fitzgibbon, solicitor with Dublin law firm William Fry, the code focuses on issues such as the distinction between the roles of a company’s chairman and chief executive, and between its executives and independent directors.

He explained that the chairman and independent directors are not meant merely to rubber-stamp executives’ decisions, but to challenge them and to establish directors are acting in the interests of the company as a whole.

Similarly, the chairman and independent directors are there to oversee relations between the executives and the shareholders.

Other elements of the code involve ensuring that directors have sufficient skill and knowledge to carry out their duties, have the time to do their jobs and disclose their other interests.

They will also face annual election to the board.

In a statement yesterday, the stock exchange said companies will be required to comply with the code or to explain what they are doing to guarantee high standards of corporate governance.

Mike Duignan, head of market supervision at the stock exchange, said that the UK code was an important benchmark for the international investment community.

He added that it meant “that Irish-listed companies remain subject to the most highly regarded international code on corporate governance”.

The Irish Stock Exchange is due to introduce further rules, based on recommendations made to it earlier this year, in January.