Legal Updates

Commercial Law  – Revised Combined Code – Financial Reporting Council

Recently, the Financial Reporting Council (“FRC”) announced that it will be updating a number of provisions in a piece of legislation called the Combined Code (to be published at the end of June 2008) to deal with the following issues:

• The Combined Code will remove any restrictions on individuals responsible for chairing more than one FTSE 100 company;
• It will allow the chairman of a listed company outside the FTSE 350 to be a member of the audit committee as long as the chairman was considered independent on appointment (although it should be noted not chair).
• The updated Combined Code means that references to reflect revisions to the Financial Services Authority's Disclosure Rules and Transparency Rules (“DTR”) and Listing Rules (LR) (which are responsible for the implementation of EU requirements on audit committees and corporate governance statements) will be included in Schedule C to the Code.
• The Combined Code will now reflect some of the findings of the FRC's 2007 review of the impact and implementation of the Combined Code (for example to reinforce the "comply or explain" approach) in the Preamble to the Code.

It should be noted that the FRC confirms that the revised Combined Code will be published at the end of June, which is the same time as the revisions to the DTR and LR are to be released. The revised Combined Code will apply to accounting periods beginning on or after the 29th of June 2008.

In practice, this means that most companies will begin to apply it in 2009, and will report against it for the first time in 2010.

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© RT COOPERS, 2008. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.