UK Corporate Governance Code: FRC update

Today, the Financial Reporting Council  (FRC) issued a policy update on its approach to revising the UK Corporate Governance Code (UKCGC).

Summary

The FRC has decided to change course. It will progress a small number of the original 18 proposals set out in the consultation on the current version of the UKCGC. It will not develop the remainder. 

Detail

The FRC has explained that:

• There will be a small number of changes to the UKCGC which streamline and reduce duplication associated with the Code. It notes that these were overwhelmingly supported by stakeholders in the interests of reducing burdens.
• The main substantive change which the FRC will progress is its proposal on internal controls. Their decision has been informed by stakeholder feedback to ensure that the FRC produces a more targeted and proportionate Code revision. This includes allowing more time for the implementation of the revised UKCGC and ensuring the UK approach clearly differentiates from the much more intrusive approach to internal controls implemented in the US.
• The FRC will not take forward the remainder, over half, of the original proposals. These include:
  • those relating to the role of audit committees on environmental and social governance and
  • modifications to existing code provisions around diversity, over-boarding, and Committee Chairs engaging with shareholders. 

The FRC has also made it clear that a number of other proposals will not be taken forward as a result of the Government’s recent decision to withdraw its Statutory Instrument relating to:

• an audit and assurance policy
• reporting on distributable profits and 
• resilience statement requirements.

Timing

The FRC plans to publish an updated UKCGC in January 2024.

Further information

If you would like to discuss this development or corporate governance generally, please speak to your usual contact at Burges Salmon or contact Nick Graves, head of the firm's Corporate Group.