LONDON (Reuters) - Britain's audit and accounting watchdog has overhauled its corporate governance code for UK companies, it said on Wednesday, to make them safer for investors by giving more information about how they are run and an assessment of any potential risks facing the business.
Among the changes announced by the Financial Reporting Council (FRC), as part of what it said were its efforts to foster longer-term thinking by companies and investors, are a host of new rules over risk management, remuneration policy and shareholder engagement.
"The changes to the Code are designed to strengthen the focus of companies and investors on the longer term and the sustainability of value creation," said FRC Chief Executive Stephen Haddrill in a statement.
The revised Code will apply to accounting periods beginning on or after Oct. 1, 2014.
Among the changes companies will need to "robustly assess" the main risks facing their business and explain how they are being managed or mitigated, the FRC said in a statement.
It said companies should state whether they consider it appropriate to adopt the going concern basis of accounting and identify any material uncertainties to their ability to continue to do so.
In particular it said companies "should state whether they believe they will be able to continue in operation and meet their liabilities taking account of their current position and principal risks, and specify the period covered by this statement and why they consider it appropriate.
"It is expected that the period assessed will be significantly longer than 12 months," the FRC added.
On executive pay the FRC said companies should put in place plans to recoup or hold back variable pay, and place greater emphasis on designing pay plans with the long-term health of the company in mind, while firms should also say how they intend to engage with shareholders when a significant number vote down resolutions.
(Reporting by Simon Jessop; Editing by Greg Mahlich)