Corporate governance watchdogs yesterday said that they would drop the demand that individuals can hold only one chairmanship of a FTSE 100 company.
The Financial Reporting Council (FRC) yesterday said that the rule – recommended by Sir Derek Higgs in his reforms to Britain's combined code on corporate governance – was "too prescriptive".
A spokesman for the FRC said: "Nomination committees need to ensure that a chairman has enough time and support to do the job and it should be up to them to decide if he or she can be chairman of more than one FTSE 100 company."
The FRC said the change had the support of investor bodies including the Association of British Insurers (ABI) and the Investment Management Association. Michael McKersie, the assistant director for investment affairs at the ABI, said that he supported the change, and that restricting someone to just one FTSE 100 chairmanship while still allowing them to head the board of any number of FTSE 250 companies was "artificial".
"It should be for companies to explain if there is concern than an individual doesn't have time to do the job properly," he said.
The demand has provoked controversy in the past. Sir Brian Stewart, for example, was chairman of Standard Life, while it was converting from a mutual insurer to a public company, at the same time as he held the same position at FTSE 100 brewer Scottish & Newcastle (S&N).
There was no restriction on him being with Standard while it was still a mutual, even though it was undergoing a complex demutualisation and flotation, because the requirement only came into play after the company had joined the market and was promoted to the FTSE 100.
However, he was widely seen as having done a good job despite his commitments at S&N, and had joined Standard at a time of considerable crisis for the insurer, stepping down at the company's annual meeting in May.
Lord Stevenson, the chairman of HBOS, was another high-profile non-complier with the rule, combining that role with the chairmanship of the publisher Pearson for several years.
Despite relaxing the rule, Sir Christopher Hogg, chairman of the FRC, warned companies against treating the code with contempt, hinting at statutory regulation. "There is no room for complacency. While respondents strongly endorse the flexible 'comply or explain' approach, it is clear that it is not always applied as intended."Reuse content