- within Strategy topic(s)
This week:
- The FRC has published a "mythbuster" to answer questions on Provision 29 of the UK Corporate Governance Code
- The FRC publishes updated guidance on a company's strategic report
- The Takeover Panel publishes an updated Takeover Code and notes to advisers following recent changes to the Code
- The FCA is consulting on new requirements for listed companies to report against the UK Sustainability Reporting Standards
- The Government intends to establish a voluntary sustainability assurance oversight regime
- Other items
FRC publishes "mythbuster" on UK Corporate Governance Code Provision 29
The Financial Reporting Council (FRC) has published a "mythbuster" answering key questions on new Provision 29 of the UK Corporate Governance Code 2024.
Provision 29 was introduced when the current version of the Code was published.The 2024 Code came into effect for reporting years beginning on or after 1 January 2025.However, Provision 29 was deferred by one year, coming into effect for reporting years beginning on or after 1 January 2026.
Provision 29 requires a company's board to:
- monitor the company's risk management and internal control framework;
- at least annually, carry out a review of its effectiveness, covering all material controls (including financial, operational, reporting and compliance controls); and
- include, in the company's annual report, a description of how the board has done this and a declaration of effectiveness of the company's material controls.
Provision 29 is largely seen as the UK's answer to the US Sarbanes-Oxley (SOX) Act, which (among other things) requires the board of a US public company to certify the effectiveness of the company's internal controls.
The introduction of Provision 29 has effectively superseded the Government's previous proposals (in its now-abandoned Audit Reform and Corporate Governance Bill) to require boards of companies to give a formal statement of internal controls.
Compliance with the UK Corporate Governance Code is technically voluntary.However, under the "comply or explain" approach, commercial companies listed in the UK are required to comply with the Code or explain how they have departed from it.
Access the FRC's mythbuster on Corporate Governance Code Provision 29 (opens PDF)
FRC publishes updated guidance on the strategic report
The Financial Reporting Council (FRC) has published an updated version of its guidance on the strategic report.
The guidance is designed to assist companies that are required to prepare a strategic report alongside their annual accounts.
The updates mainly reflect changes in the UK's corporate reporting landscape, including the introduction of invoice payment practice reporting in a company's annual report.
Access the FRC's updated guidance on the strategic report (opens PDF)
Updated Takeover Code published alongside notes to advisers
The Takeover Panel has published an updated version of the Takeover Code, following changes that came into effect on 4 February 2026 to cater for (among other things) companies with dual class share structures.
Alongside the update Code, the Panel has published the following update notes.
- A new note to advisers in relation to initial public offers (IPOs) and admissions to trading. The note confirms the procedure that should be followed when a company will become subject to the Takeover Code following the admission of its shares to trading on a securities exchange.
- A revised note to advisers in relation to Rule 9 waivers (which also contains a checklist for Rule 9 waivers).
The Panel has also released a beta test version of the Disclosure Table, which contains the legal entity identifier (LEI) information that must now be announced by offeree companies and, where relevant, offerors and publicly identified potential offerors under Rule 2.9 of the Code.
Read the Takeover Panel's revised note to advisers on Rule 9 waivers (opens PDF)
Access the beta test version of the Takeover Panel's Disclosure Table
Access the updated Takeover Code
FCA consults on mandatory reporting against UK Sustainability Standards
The Financial Conduct Authority (FCA) is consulting on introducing requirements for certain listed companies to report against the UK Sustainability Reporting Standards (UK SRS).
Currently, listed commercial companies are required to either report against the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) or explain the respects in which they have not done so.
The TCFD disbanded in 2023.The UK SRS will, in effect, supersede and building on the TCFD Recommendations will, in effect, be superseded when they are officially adopted.The Government consulted on exposure drafts of the first two standards – S1 and S2 – between June and September 2025.You can read more about the consultation on the new UK SRS in our separate in-depth piece.
UK SRS S1 will set out general disclosure requirements that apply to sustainability-related disclosures where no specific standard applies.UK SRS S2 will set out specific standards in relation to climate.
The FCA had previously signalled its intention to replace the existing reporting regime with a new regime that intersects with UK SRS.It is now proposing the following.
- The new requirements would apply to broadly the same companies as those currently reporting against the TCFD Recommendations. This includes commercial companies with a primary listing in the UK.
- The requirements would not apply to closed-ended investment funds or shell companies. Companies with a secondary listing or listed depositary receipts would be subject to a separate regime (see below).
- Companies would be required to report under UK SRS 2, except in relation to Scope 3 emissions. (UK SRS 2 broadly corresponds with the TCFD Recommendations.) In essence, this would convert the current "comply or explain" regime into a mandatory reporting requirement.
- However, Scope 3 emissions reporting would operate on a "comply or explain" basis. (The FCA acknowledges that it remains difficult to access quality data for Scope 3 emissions.) Companies that do not report on Scope 3 emissions would need to explain why.
- Companies would also be required to report under those parts of UK SRS S1 that relate to mandatory disclosures under UK SRS S2.
- However, all other reporting under UK SRS S1 would operate on a "comply or explain" basis. This is because other parts of UK SRS S1 cover matters not previously addressed by the TCFD Recommendations, and the FCA wishes to give companies "time to adjust".
- Companies would be able to choose where in their annual report to include their disclosures and could incorporate information by cross-reference where permitted by UK SRS.
- Companies would also need to disclose whether they have adopted a climate transition plan and, if they have, where it can be found. If a company has not adopted a transition plan, it would need to explain why.
Separately, companies would need to confirm whether they have obtained third-party sustainability assurance over their sustainability disclosures (and, if they have, include certain information).The FCA is also seeking views on introducing mandatory assurance requirements in due course.
The Government previously consulted in June 2025 on introducing a voluntary system for firms to register as a sustainability assurance provider.You can read more about the Government's consultation on a sustainability assurance oversight regime in our previous in-depth piece. The Government has now published its response to that consultation.Read the next item in this update for more information.
If implemented, the new reporting rules would apply to accounting periods beginning on or after 1 January 2027 (to coincide with the commencement of the new UK SRS).
Transitional reliefs under the UK SRS would apply.The FCA would also introduce transitional rules for companies whose accounting periods straddle 1 January 2027.
A separate regime would apply to companies with a secondary listing in the UK or which have depositary receipts listed in the UK (which are likely to be subject to their own local disclosure requirements).These companies would therefore be required to:
- identify which overseas climate and/or wider sustainability disclosure requirements (including any transition plan requirements) they are subject to or have adopted voluntarily; and
- signpost where the relevant disclosures can be found.
If a company is not subject to climate or sustainability disclosure requirements and does not otherwise voluntarily follow any, it would need to state that fact.
The FCA has asked for responses by 20 March 2026.
Government to establish voluntary oversight regime for sustainability assurance
The Government has signalled its intention to establish a new voluntary oversight regime for sustainability assurance in the UK.
Sustainability assurance providers are independent experts that can (among other things) evaluate a company's sustainability disclosures to verify their accuracy, reliability and consistency.
The announcement follows the Government's previous consultation in June 2025.You can read more about the Government's consultation on a sustainability assurance oversight regime in our previous in-depth piece.
Following positive responses to its consultation, the Government will proceed with the proposals in its consultation.
Under the regime, which will be voluntary, sustainability assurance practitioners that meet the eligibility criteria will be able to register with the Financial Reporting Council (FRC), which will operate the regime. The register will be public and will allow registered practitioners to signal that they have the relevant skills and experience to provide sustainability assurance.
The regime will primarily serve practitioners undertaking sustainability assurance for large entities reporting against the Taskforce on Climate-related Financial Disclosures (TCFD) Recommendations, the UK Sustainability Reporting Standards or similar requirements in other jurisdictions.
The regime will be "sector-agnostic", allowing assurance providers from any industry to register.
To provide the FRC with the authority it requires to manage the regime, the Government intends to legislate to put the FRC on a statutory footing.However, pending this, the Government has tasked the FRC with establishing an "interim, non-legislative" assurance oversight regime by mid-2026, with a view to that interim register becoming operational before the 1 January 2027 reporting year.
Read the Government's response to its consultation on a sustainability assurance oversight regime
Read the Government's original consultation on a sustainability assurance oversight regime
Other items
- FCA publishes first Enforcement Watch
newsletter. The Financial Conduct Authority (FCA) has
published the first edition of its new Enforcement Watch
publication (EW1), a newsletter covering insights and themes from
its recent enforcement work. You can read more about the
highlights in the first issue of Enforcement Watch in our separate
in-depth piece.
Read FCA Enforcement Watch 1
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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