Senior executives face a ban on selling shares for up to five years under a new regime drawn up in the wake of the Carillion scandal to discourage short-term decision making. The Financial Reporting Council’s (FRC’s) revamped Corporate Governance Code will require remuneration committees to consider imposing bans on executives selling shares given through long-term incentive plans soon after they step down. The move comes after a series of scandals, including the dramatic collapse of Carillion, the outsourcing giant, in January, that have sparked outcries over the behaviour of company bosses. Richard Adam, Carillion’s former finance director, sold £800,000 worth of shares after stepping down in 2017, less than a year before it perished. The plans were first reported by Sky News. They would not be mandatory but those companies wishing to opt out would be forced to explain to shareholders why they did not think they were necessary. They will come as part of a wider overhaul of the code which is expected to include other measures on remuneration including a clampdown on the size of bosses’ pensions and extensions to the amount of time they have to hold on to share awards before they vest. The FRC revealed its initial proposals for the revised code in December, when Sir Win Bischoff, its chairman, said the shake-up would “be essential to restoring trust in business, attracting investment and ensuring the long-term success of companies for members and wider society.” The overhaul is partly the result of a push by Theresa May, the Prime Minister, to make companies more accountable and crack down on bad behaviour in the UK’s boardrooms. Previous plans to force companies to put workers on their boards have been watered down, but those with a premium stock exchange listing who don’t want to do so will be forced to either nominate a non-executive director responsible for representing staff or create a separate “employee advisory council”. Other measures the government has pressed ahead with include making companies report the ratio between boss and workers’ pay and creating a public register to “name and shame” companies that face investor opposition to their pay proposals. Lloyds, BT and AstraZeneca are among the blue-chip companies to have seen a revolt in recent months. The FRC has also been asked to draw up a separate code that will apply to large privately-held businesses, seen partly as a response to the controversial collapse of Philip Green’s department store chain BHS in 2016. Last month it revealed six principles for the new code put together by James Wates, chairman of the family-owned property developer Wates Group, which have been put out for consultation until September. Published in Daily Times, July 16th 2018.