Monitor has issued a revised Code of Governance (the "Code") which replaces the 2006 Code of Governance. The Code comes into force on 1 April 2010. As previously, the Code is issued by Monitor as best practice advice. It is not mandatory guidance and therefore non-compliance will not in itself give rise to a breach of the Foundation Trust's ("FT") Terms of Authorisation. The Code is enforced on a "comply or explain" basis, meaning that an FT will require good reasons for departing from the advice within it.

The Changes

We have developed a comprehensive document which highlights all the amendments made to the previous code of governance. Our document allows FT's to quickly identify the specific and detailed changes to the substantive provisions of the Code. Please contact us if you would like a copy of our comparison document.

For quick reference, however, we have set out a basic overview of the key amendments below:

  • New timescales and timetables have been incorporated, such as a review of the FT's strategic aims must now be conducted at least annually, and the Board of Governors must now meet at least four times a year as a full board;
  • New provisions requiring the Board of Directors to ensure that proper tools are developed so as to understand and assess progress and delivery of performance;
  • New provisions emphasising the duty of Non-Executive Directors in challenging actions by the Board and applying high standards of quality and care in their role;
  • New obligations relating to the interaction between the Board of Governors and the Board of Directors;
  • New requirements to be adopted where an FT has two Nomination Committees and the use of independent external advisors on these;
  • New obligations for review and appraisal of the performance of Executive Directors;
  • New provisions relating to the resignation of Directors;
  • New provisions relating to the remuneration of Directors;
  • New provisions relating to input on the FT's "Forward Plan;"
  • New provisions relating to the use of independent assessors when terminating the tenure of Governors;
  • New reporting requirements for the Audit Committee;
  • New reporting and disclosure requirements;
  • New guidance on the role of the Nominated Lead Governor.

What does it mean for the FT?

FTs should review their internal governance arrangements and documentation to ensure that these comply with the Code. In particular FTs should consider whether the Code impacts upon their:

  • Constitution;
  • Standing Orders for Directors and Governors;
  • Codes of Conduct for Directors and Governors;
  • Standing Financial Instructions (in particular the operation and composition of Nominations Committees and the Audit Committee – including their terms of reference);
  • All associated policies, procedures and guidance.