IoD welcomes targeted changes to the UK Corporate Governance Code

Institute of Directors. The Financial Reporting Council has today published the 2024 UK Corporate Governance Code, which replaces the 2018 edition.

Only a limited number of changes to the code have been made. Most of the changes will be effective from 1 January 2025, although the new provision relating to internal controls takes effect in 2026.

The most important addition to the Code is Provision 29. It states that the board should monitor and report on the company’s risk management and internal control framework and, at least annually, carry out a review of its effectiveness. Other provisions have been amended to strengthen the Code’s approach to malus and clawback, which are important features of the governance of executive pay.

Commenting on the changes, Dr. Roger Barker, Director of Policy and Corporate Governance at the Institute of Directors, said:

“Overall, the FRC has sought to find a balance between upholding high standards of governance and ensuring the competitiveness of UK listed companies.

“Our view is that this latest Code release has done a good job in reconciling these objectives. Some of the more prescriptive proposals, which the IoD challenged in our consultation response last Summer, have been dropped. Also, it made no sense to undertake a more wide-ranging revision at this time if broader reforms of corporate reporting were not being pursued by the Government.

“Beyond the Code, most of the post-Carillion reforms of corporate governance and audit remain in limbo, and are unlikely to be taken forward this side of a General Election. In their absence, the FRC has delivered a sensible revision to the UK Corporate Governance Code.”