Last Updated Nov 26, 2009 8:25 AM EST
Corporate governance codes are a reaction to crises: Cadbury produced the original rulebook after Maxwell's collapse, Higgs revised it after Enron and Walker is the response to the banking collapse. But the Financial Reporting Council, custodian of the Combined Code, is currently rewriting the rules and Walker has produced a readymade set of new regulations that will be pasted into the updated code.
The new code for all companies will be published in December and will apply to all accounting period starting after June 2010.
And there will be codes within the code - new rules for non-executive directors and a special section for investors on how to attack boards.
While Walker was asked to produce rules to help prevent another financial crisis, banks are only public companies and most of his proposals can apply equally easily to every other plc. Indeed, bankers -- resigned to being clobbered -- are leading the call to widen the Walker rules to all.
If bank chairmen must seek re-election every year, why not other chairmen? The new code is likely to lift that idea. Walker's recommendation that remuneration-committee chairman stand for re-election if their report receives less than 75 per cent support from shareholders would have affected several FTSE directors over the past year too.
The new Combined Code is also likely to follow Walker in looking at pay disclosure, chief executives becoming chairman, and give guidance on succession planning.
His earlier idea that all bank non-executives devote 30 to 36 days to their part-time jobs has been watered down even if it creates two-tier boards -- important directors who can't spare the time and the unimportant who can -- but new code for all companies will include a sub-code telling non-executives how to perform their duties and boardroom training could become the norm.
And the separate "stewardship code" will for the first time tell shareholders to engage with directors, changing their role from being the beneficiary of board decisions to becoming part of the decision-making process.
But the greatest upset to the current governance regime contained in Walker's report is ripping up the "comply or explain" principle on which the current code is based. He is putting his pay proposals into law because he doesn't trust banks to comply. That thinking will be reflected in the FRC's code for all companies too: it not only considers companies more ready to explain than comply, it thinks directors explain they are not complying without explaining why. Rewriting that rule could be the biggest change boards face from 2010.
Companies operate in a changing world but constant revision of the code is not good for consistency and knee-jerk reactions to the latest crisis are not a good basis for writing new rules. It is going to happen however: every boardroom will be made to pay for the banks' excesses.