The Co-op has formally adopted the reforms proposed by former City minister Lord Myners which will attempt to prevent situations such as last year’s surprise £1.5 billion hole in its balance sheet happening again.
The mutual will now have a board of directors elected by its members “that is individually and collectively qualified to lead an organisation of the size and complexity of The Co-operative Group”, it said.
Critics had claimed that the group’s board lack the relevant skills in banking and retail to handle the funerals-to-food group which led to its financial difficulties.
The Co-op will now have a board composed of a majority of independent directors including an independent chair, five independent non-executive directors, two executive directors, including the group chief executive. The board will be cut from 18 members to 11.
The Co-op has also changed its voting system to a ‘one member one vote’ structure. The proposals will be voted on at a special general meeting (SGM) on 30 August.
The Co-operative Group chair Ursula Lidbetter said: “These governance reforms represent the final crucial step in delivering the necessary change to restore the Group and return it to health. This has been a process built on co-operation, focusing above all on creating a Society where every member has a voice in shaping the group’s future.”
Interim chief executive Richard Pennycook said: "The executive team welcomes today's announcement and supports the proposed reforms. This is a significant step towards meaningful reform and, if accepted by members at the forthcoming SGM, will mark the end of the rescue phase for the group, following the necessary balance sheet repair that we have recently completed.
"We look forward to the support and challenge that will be provided by the highly competent and independent board that is proposed, and to working closely with the new Council to ensure that the group once again becomes a champion of its members.”
The group will publish its half year results on 4 September.