Measures to encourage greater representation of women on boards announced

Measures to encourage greater representation of women on Britain's boards were announced today as part of an overhaul of the corporate governance code. The code states for the first time that listed companies, when searching for, or appointing directors, must “pay due regard for the benefits of diversity on the board, including gender”. Baroness Hogg, chairman of the Financial Reporting Council, which drafted the code, said: “People who read the code might be inclined to ask questions of major companies who have no women on the board.”

The new UK Corporate Governance Code will also force directors to submit to annual shareholder elections and for the first time obliges large boards to be appraised by outside experts.
However, because the new requirement is phrased as a principle, not a provision, companies will not be forced to explain publicly the absence of women directors.
The council also requires large listed companies to put all their directors up for re-election each year to make them more accountable to shareholders. Most come up for re-election only every three years.
The rules apply to the financial years beginning on or after June 29, leaving the prospect of more than 3,000 directors of companies in the FTSE 350 all submitting themselves to a shareholder vote in the annual meeting season next spring.
FTSE 350 companies will also have to hire outside experts to appraise their boards at least once every three years. These could range from reports based on simple questionnaires to a more intrusive approach in which the consultant interviews all the directors and sits in on board meetings.

“Diversity is a key factor in helping us to create companies and organisations that are fit for purpose post recession argues Alison Platt, Divisional Managing Director, Europe, Bupa and Chair of Opportunity Now; “At the moment women hold only 12% of FTSE directorships, and only 5.2% of executive directorships.  25 companies in the FTSE 100 still have no women at all on their boards at all. Increasing the diversity of our boardrooms will help us to avoid identikit thinking and encourage a dynamic mix of experience, perspectives, attitudes and approaches, which ultimately leads to better leadership and better businesses. There is currently a worrying leak in the talent pipeline which filters out many talented and high performing individuals at every level.”