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A group of lawyers and academics have criticized an “extraordinary” omission in proposed changes to the UK’s corporate governance code, saying a key opportunity to formalize the role of general counsel was missed.
The Financial Reporting Council, the accounting regulatory body that sets and enforces corporate governance, reporting and auditing standards, is currently consult An overhaul of the UK corporate governance code. Its goals include holding boards more accountable for accurate accounts and directors more accountable for misconduct. The consultation, which started in May, will end on 13 September.
The planned revisions come as the government consults on UK audit and corporate governance reforms in 2021 following a series of scandals at companies including outsourcer Carillion and retailer BHS.
However, more than 70 senior in-house lawyers and academics have submitted advisory opinions replycalled on the FRC to formalize the role of general counsel in regulation.
The response noted that for UK companies, the general counsel has “a particularly broad influence across all subjects that the code seeks to support, whether that is pure governance, ethical and cultural standards, or enterprise risk management”.
It added that “it is unusual that there is no specific reference to the role of the general counsel in the Code or its supporting guidance.”
The authors urge the FTC’s revised version of the Code to reflect the fact that general counsels play an “integral role” and have a “unique position” in “creating and maintaining a strong and healthy corporate culture.”
Jenifer Swallow, former chief executive of Lawtech UK, co-ordinated the consultation response, a government-backed initiative aimed at transforming the legal sector through technology.
Swallow said: “Lawyers are the foundation of corporate governance. Regulators need to reflect and codify this as a reality that is happening in business. The influence of GCs continues to grow and the reliance on their role within companies increases. More and more. This is key to responsible business and the ESG agenda.”
Vodafone Group general counsel and company secretary Maaike De Bie, who signed the response in a personal capacity, said: “The FRC’s consultation on how to strengthen UK governance provides a good opportunity for this independence and integrity to be achieved.” Provides greater clarity on the general counsel’s role in decision-making, risk management and corporate culture. “
In recent years, the role of the general counsel has become more important in many UK companies, just as in the United States, where the general counsel plays an extremely influential role. UK businesses above a certain size are required to have a company secretary – not necessarily a solicitor – and in the past businesses have often relied on advice from external solicitors.
The Financial Reporting Council will be replaced by a more powerful regulator, the Audit, Reporting and Governance Authority. The FRC said it would not comment on individual consultation responses.
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