New ‘Guidance on board effectiveness’ published today, 3 March 2011

The Financial Reporting Council (FRC) has, today, published ‘Guidance on Board Effectiveness’, the purpose of which is to help boards of UK companies avoid some of the problems that contributed to significant value destruction during the recent financial crisis.

The Institute of Chartered Secretaries and Administrators (ICSA) played a leading role in formulating ‘Guidance on Board Effectiveness’, having been commissioned by the Financial Reporting Council (FRC) in December 2009 to develop the guidance. The FRC’s intention is that the guidance should be consulted by boards when implementing the UK Corporate Governance Code. It contains practical suggestions on matters such as the leadership role of the Chairman and decision-making by boards. ‘Guidance on Board Effectiveness’ replaces the Higgs guidance and is one of four pieces of FRC guidance associated with the UK Corporate Governance Code.

The guidance was drafted by ICSA with the help of a Steering Group chaired by Sir John Egan, recent Chair of Severn Trent Plc, and follows extensive consultations with chairmen, directors and company secretaries from many of the UK’s leading companies, as well as investors and professional advisers to boards.

Sir John Egan, Chair of the Steering Group, said:

‘Today’s publication concerns board effectiveness and is the result of a year’s consultation and hard work. It is hoped that this guidance will help boards deliver good leadership and make well-informed and high quality decisions’

Given the links between the UK Corporate Governance Code and the Monitor Code of Governance for NHS foundations trusts, Healthcare Governance Review believes it is only a matter of time before the new guidance is commended, albeit perhaps with some modification to reflect the NHS context, to NHS boards.

Download the Financial Reporting Council’s Guidance on Board Effectiveness here.

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