Consulting on corporate governance

The Corporate Governance code has been around, in various forms, since 1992. With the aim to spread boardroom best practice and to continue the UK’s high level of corporate governance, all companies, under the listing rules, are required to report on how they have applied the code to their reporting.

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The most recent changes to the code occurred back in 2012, which we summarised - along with the changes to the Stewardship Code - in one of our Need to know articles. Now the time has come again to review changes to the code, to be rolled out for reporting years beginning on or after 1 October 2014.

Some of the key recommendations laid out in the consultation on the proposed changes include:

  • Greater emphasis on remuneration and long term success.
  • Looking at going concern and state whether they consider it appropriate to adopt in financial statements.
  • Robust assessment of risk and explain how such risks are managed and mitigated.

These changes come off the back of consultations that took place late last year on both Directors Remuneration and Risk Management, Internal Control and Going Concern basis of accounting which provided key areas of discussion and feedback from investors. Further changes around the audit committee were scheduled to be implemented but have been delayed until 2016, due to the delay by the Competition and Markets Authority to implement findings from its review of competition in the market for audit services in FTSE 350 companies.

With the consultation now closed the FRC is collating the responses in order to roll out the changes later in the year. Until then why not take a look at the consultation paper and keep an eye out for our monthly updates.