Updates to the UK Corporate Governance Code significantly scaled down

Planned changes to improve standards in corporate governance and reporting were abandoned last week, in a significant U-turn.

 

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Planned changes to improve standards in corporate governance and reporting were abandoned last week, in a significant U-turn.

 

The Financial Reporting Council (FRC) announced its decision to drop most of the 18 planned updates to the UK Corporate Governance Code. The FRC has dropped most of its proposals which included increased requirements for diversity reporting, new audit committee responsibilities for ESG issues and the need for committee chairs to engage with shareholders.

This means that changes to the Code, expected in January 2024 will be limited to minor clean-ups and more Board oversight of internal controls, although these have been scaled down.

This change in direction comes weeks after the government announced it would be rowing-back on new legislation which would require premium-listed businesses to produce an annual ‘resilience statement’. 

Significantly, it also looks like the long-awaited transition of the FRC to become the more powerful ‘Audit, Reporting and Governance Authority’ (ARGA) is off the table for the year ahead. It didn’t appear in the King’s Speech, which sets out legislation for the year ahead, and with an upcoming election in 2024 it could be gone entirely if the next Parliament decides not to proceed with it. The development of ARGA was an attempt to give the regulator broader powers to investigate and impose sanctions against company directors guilty of wrongdoing.

Full details are included on the FRC’s website here.

 

If you need any guidance on what these changes mean for your reporting, please get in touch with the Friend team.

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