The largest private companies in the UK will need to show compliance with the UK Corporate Governance Code as of January 2019. Some of the reporting requirements of the new regulations involve complex concepts, meaning that answering the questions requires much more than just ‘ticking boxes’ or providing quantitative data. By supplying a comprehensive library on corporate governance and related subjects, the board portal can get the directors, the chairman, the company secretary and management all started on a train of thought that will lead to defining corporate purpose. The portal will offer the tools to frame such definitions and to compare how other companies in the sector have defined it. Further, the portal can provide a secure environment in which discussion on this sensitive subject, and others, can take place.
Private Companies Face a New Compliance Challenge
The largest private companies in the UK will need to show compliance with the UK Corporate Governance Code as of January 2019. That means the boards of these companies must understand what is required by law and must find the data and concepts needed to respond.
The boards of these companies have never before been asked to comply with the Code – what steps should they take? Compliance with the Code isn’t like meeting auditing requirements – what’s needed is judgement and sophisticated qualitative analysis. A high-quality board portal can be of inestimable value in gathering data and organising the discussions that will ensue.
What Is “Corporate Purpose?” Seek Help From the Board Portal
The corporate governance reporting requires much more than simply finding a section of the Code and then indicating ‘we comply.’
“While some guidance is given, the principles are designed to allow flexibility and avoid a ‘box ticking’ approach. Companies are asked not merely to ‘comply or explain’ but to ‘apply and explain.’ This is on the basis that the principles are not supported by specific provisions, like the full UK Corporate Governance Code for quoted companies. They are designed to be focussed ‘outcomes’ and to allow companies to apply them in different ways,” writes the London office of law firm Mishcon de Reya in a recent article.
For example, companies are asked to justify their “corporate purpose” and to ensure that the company’s values, strategy and culture align with that purpose.
With lots of board management software to choose from, here are the 5 most important questions to ask during your search.
This “corporate purpose” is described in the code as a “rationale for existence” to be agreed upon between key shareholders and the board. A purpose should make it “easier for companies to engage with their customers, workforce and the wider public” and is specifically also mentioned in the sixth principle – which requires “fostering good stakeholder relationships based on the company’s purpose.”
A board of directors might very well ask what is meant by ‘corporate purpose –’ the regulations do not define it. “But it appears to be more fundamental and assume a wider impact on society than merely what a company manufactures or its core values (though it informs the latter). Perhaps some inspiration might be taken from the Wates Principles, which are part of the UK governance framework. James Wates is described as “having the ultimate goal of creating a higher quality built environment, stronger communities and a better society.” Might that be reflected in the company’s purpose, too?
A recent article by the consultancy Be-Cause puts it this way: “With growing transparency, companies are increasingly rewarded or punished when their actions are converging or diverging with their promises. People want to buy from and work for companies that have clearly stated intentions they feel good about sharing.”
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It is unlikely that the board of directors of a large private company in the UK has ever been asked to “define its corporate purpose” before. Nor would it be appropriate for the board to seek third-party advice on such a fundamental issue. But this is pretty heady stuff to ask a group of businessmen to pull together.
This is where a high-quality board portal can really help. By supply a comprehensive library on corporate governance and related subjects, the board portal can get the directors, the chairman, the company secretary and management all started on a train of thought that will lead to defining corporate purpose. The portal will offer the tools to frame such definitions, and to compare how other companies in the sector have defined it.
Further, the portal can provide a secure environment in which discussion on this sensitive subject, and others, can take place. With all messaging encrypted, all communications carefully protected from hacking threats, board members can express themselves frankly without fear of leaks. What’s more, the board portal is accessible from every kind of device, all major operating systems and from any point at which the internet is available. So, directors, wherever they may be, can take part in these critical discussions.
And the board portal offers polling applications to provide questions to all the board members which they may answer in confidence.
Diligent Governance Cloud Supports Good Governance
Company secretaries seeking to practice good corporate governance for the first time should rely on the Diligent Governance Cloud.
Diligent designed the Governance Cloud with the processes of board directors, executives, general counsels and comany secretaries in mind. No other company offers such a comprehensive array of governance software tools that are cohesive and connected to fully meet the needs of today’s board directors.
The few governance solutions that are in the market today have largely been fragmented and disconnected from other processes. Board directors, general counsels and company secretaries are realising the need for governance solutions that help them manage governance activities effectively and efficiently. Boards need products to help them streamline duties for compliance, regulation and governance while keeping all processes in a highly secure, confidential platform.
The Governance Cloud, the only integrated enterprise governance management solution that enables organisations to achieve best-in-class governance, is an ecosystem of software tools that digitises the various activities and tasks for the board of directors. As organisations grow more complex and regulations more stringent, the scope of governance responsibilities evolves. The Governance Cloud allows boards of directors to meet the demands in the boardroom and beyond with the ability to select the products they need that help them perform their best and work within their allotted budgets.
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