COMPANIES in Britain must strive to rein in excessive executive pay and make boards more diverse under a new “short and sharper” corporate code, published yesterday.

The Financial Reporting Council (FRC) has updated its code of corporate standards for publicly listed companies, which must comply with it or explain to shareholders if they do not.

The new code comes as the watchdog, which oversees company governance standards and accountants, faces a review to see if it can uphold high corporate standards to maintain Britain’s attractions as a place to invest after Brexit.

British lawmakers have called for tougher corporate govenance standards following a row between food retailer Tesco and its suppliers and the collapse of retailer BHS and outsourcer Carillion. And shareholders have become much more active in terms of rejecting some executive pay deals.

“To make sure the U.K. moves with the times, the new code considers economic and social issues and will help to guide the long-term success of U.K. businesses,” FRC Chairman Win Bischoff said.

“This new code, in its short and sharper form, and with its overarching theme of trust, is paramount in promoting transparency and integrity in business for society as a whole.”

There is a new provision for greater board engagement with the workforce to understand their views — aimed at reinforcing an existing provision in law since 2006 which has had a patchy impact.

This, along with a requirement to have “whistleblowing” mechanisms that allow directors and staff to raise concerns for effective investigation, mark the biggest broadening of corporate standards in many years, the FRC said.

“The new code is much stronger on abilities to raise concerns in confidence,” said David Styles, FRC director of corporate governance.

It also emphasizes the need for boards to refresh themselves, become diverse and plan properly for replacing top jobs.

(SD-Agencies)