After a number of high profile corporate governance failings, such as those relating to BHS and Sports Direct, the UK Parliament’s Business, Innovation, and Skills (BIS) Committee recently launched a corporate governance inquiry.

The inquiry will look at a number of key issues, but in particular will be focused on executive pay, directors’ duties, and the composition of boardrooms, including worker representation and gender balance in executive positions.

Terms of Reference

With regards to directors’ duties, the terms of reference of the inquiry include:

On the subject of executive pay, the inquiry will examine:

With regards to the composition of boards, the areas to be examined include:

Need for Good Corporate Governance

"Private enterprise and a respected business community is vital to the UK's future prosperity and contributes to the funding of our schools, hospitals, and infrastructure,” explained Chair of the BIS Committee, Iain Wright MP. “Irresponsible business behaviour and poor corporate governance ill serves workers, but it also tarnishes the reputation of business and undermines public trust in enterprise.”

“We need to look again at the laws that govern business and how they are enforced,” he added. “Good corporate governance shouldn't be a hindrance to business; it can contribute to companies' long-term prosperity and performance as well as showing to the world that a business is transparent, accountable and responsible.”

Reaction to the Inquiry

Both the Institute of Directors (IoD) and the TUC welcomed the launch of the inquiry.

Simon Walker, Director General of the Institute of Directors commented that the reputation of corporate Britain has not recovered from the financial crisis, and there are important questions that need to be addressed on issues including transparency, executive pay and board diversity.

Frances O’Grady, TUC General Secretary, described the inquiry as “important and timely” and said that the TUC was looking forward to contributing to the Committee’s discussions.

Contains Parliamentary information licensed under the Open Parliament Licence v3.0.

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