The FRC published the revised UK Corporate Governance Code (the 2024 Code) following its consultation last May and its announcement in November that it would take forward a small number of the proposed amendments to the 2018 UK Corporate Governance Code (the 2018 Code).
The 2024 Code includes changes in the following areas:
- Board leadership and company purpose: Governance reporting to focus on board decisions and outcomes in the context of company strategy and objectives. Boards to not only assess and monitor culture but how it has been embedded.
- Composition, succession and evaluation: Board appointments and succession plans should promote diversity, inclusion and equal opportunity (references to specific diversity categories removed).
- Audit, risk and internal control: Board responsible not only for establishing, but also maintaining effectiveness of, risk management and internal control framework. Boards asked, in an updated Provision 29, to make a declaration and include a description in the annual report on the effectiveness of their material internal controls.
- Remuneration: Director's contracts or other remuneration agreements or documents to include malus and clawback. Companies to include in annual report details of malus and clawback provisions.
The above changes and other amendments are further summarised here and the FRC also published this guide. Further guidance will be published on 29 January 2024.
The 2024 Code will apply to financial years beginning on or after 1 January 2025 (reporting 2026) save for Provision 29 which will apply to financial years beginning on or after 1 January 2026 (reporting 2027). The 2018 Code remains in place in the interim.
The Code applies, on a comply or explain basis, to companies with a premium listing on the LSE. Companies listed on Euronext Dublin are required to comply with the Code together with the Irish Corporate Governance Annex on a comply or explain basis.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
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