Updates to UK Corporate Governance Code: Key Changes Unveiled by FRC

On January 22, 2024, the Financial Reporting Council (FRC) announced key revisions to the UK Corporate Governance Code. These changes are explicitly intended to elevate the transparency and accountability of UK companies, by providing a more vivid vision of what corporate governance needs to look like. A central focus of the changes is on internal controls, with boards required to monitor the company's risk management and internal control framework and provide related declarations in the annual report. A second change is its removal of the list of specific diversity characteristics, leaving it to companies to compose their own ‘wide-ranging' diversity policies specific to their own unique organizational needs. In remuneration, new provisions require directors' contracts to include malus and clawback, and companies must describe these provisions in the annual report. The revised code will come into effect on January 1, 2025, with board declarations on internal controls starting from January 1, 2026. To guide companies through this update, the FRC will publish a digitally accessible guideline on January 29 and lead a webinar on internal controls on January 30.