The Financial Reporting Council (FRC) Revised UK Corporate Governance Code
Background
The Financial Reporting Council (FRC) published their revised UK Corporate Governance Code on 16 July 2018.
The new Code applies to accounting periods beginning on or after 1 January 2019.
Impact
The enhanced code sets standards of good practice in relation to board leadership, effectiveness, remuneration, accountability and relations with shareholders.
‘Comply or Explain’ – Listed companies are required to disclose in their annual financial statements, how they have applied and comply with the main principles of the Code or where there is deviation from these principles, provide explanation.
The Code focusses on the following key aspects:
- Culture and Cultural Alignment
- Chairs should not remain in post for longer than 9 years
- Board should select one of three workforce engagement options
- Whistleblowing facilitation
- Remuneration committees have a broader remit and should have more power to challenge formulaic bonus and share awards
- Executive share awards should not vest until a minimum of 5 years
- The removal of lighter governance provisions for smaller companies
- Reporting on gender balance
- Restructuring of the Code with a renewed focus on principles-based ‘meaningful’ reporting and not tick-box or boilerplate compliance.
Timeline
- The Code is effective for accounting periods from 1 January 2019 for Listed Companies.