The FRC has published its annual review of corporate governance reporting against the UK Corporate Governance Code (the Code). The review covers reporting during 2024 against the 2018 version of the Code, which remains in effect for annual reports in 2025. The new 2024 Code will become applicable for financial years from 1 January 2025 (other than new Provision 29 which will apply for financial years from 1 January 2026).

• Code Compliance – the FRC emphasises the continued importance of the Code’s “comply or explain” approach, noting that while companies are making good use of this flexibility, the quality of explanations for departures could still be improved.
• Corporate Culture – the review notes that disclosure around how boards are promoting corporate culture is generally very low and encourages more thorough and transparent reporting in this area, including better signposting in the directors’ report.
• Shareholder & Stakeholder Engagement – the FRC is positive in relation to reporting on shareholder and other stakeholder engagement but encourages reporting in more detail on the nature of board engagement with shareholders and on how the board specifically (rather than management or other employees) engages with different stakeholders, including examples of outcomes.
• Over-Boarding – the majority of companies reviewed provided specific information on external commitments of their directors. The review notes a significant amount of boilerplate reporting regarding the time commitments of directors and the FRC encourages transparency in this area.
• Risk Management and Internal Control – there were no early adopters of updated Provision 29 of the 2024 Code, which will require enhanced reporting on risk management and internal controls, but several companies reported on their preparations for the new requirements. The FRC reminds companies that the board remains ultimately responsible for the effectiveness of risk management and internal control systems, but that the Code permits delegation to board committees.
• Minimum Standard for Audit Committees – the FRC’s Minimum Standard for Audit Committees will form part of the 2024 Code. The review found that some companies are reporting fully or partially following the minimum standard on a voluntary basis and the FRC encourages early adoption.
• Remuneration – the FRC emphasises the importance of clear and understandable reporting on the rationale behind key decisions on remuneration.

How can we help?

We offer specialised legal and consulting expertise to assist companies align their arrangements with the requirements of the Code, including the new 2024 Code. To discuss how we can support you please contact Golda Hession, Of Counsel, Corporate M&A or any member of the Governance and Consulting Services Group