January 2024 saw the publication of a revised UK Corporate Governance code. It was notable for its tone – the emphasis on proportionality of any measures adopted, the stress on “explain” as a legitimate option within the “comply or explain” rubric and the retreat from many of the topics on which the regulator consulted.
In short, it felt like a high-water mark had been reached after the steady growth in regulation of companies going all the way back to the Cadbury report in 1992.
The regulator – the Financial Reporting Council – is now engaged with the related task of reviewing the Stewardship code. We shall hear more about this in due course, but the mood music of the past 18 months – including the Stewardship report published by Teneo (then Tulchan) in the autumn of 2022 – would suggest a less prescriptive approach is likely. A similar shift in the tone of the discussion has been evident in recent months around executive remuneration.
In parallel with these debates around governance and stewardship has been an anguished inquiry into the state of London’s equity markets. Fewer companies have been coming to market, while a steady stream have de-listed/been taken private (the so called “de-equitisation” trend). Contributing to these effects (and adding to the general gloom): the UK market has been trading at a discount to many other markets, and the phenomenon of the drastically reduced pension fund allocations to UK equities persists.
In this short video, Teneo Senior Managing Director Philip Gawith and Senior Advisor Mark Burgess discuss these topics.