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Improving reporting against the UK Corporate Governance Code

Premium Listed Companies are required to report against the 2018 UK Corporate Governance Code (2018 Code) for periods commencing on or after 1 January 2019. Companies are advised to consider the points raised in the Financial Reporting Council’s (FRC) Annual Review of the UK Corporate Governance Code which assesses the quality of reporting against the 2016 UK Corporate Governance Code (2016 Code) and early-adoption of the 2018 Code.

"(The FRC) wish to see a much greater focus on the activities and outcomes of implementing the Principles of the 2018 Code, particularly on the board’s effectiveness and decision-making, and how this has led to sustainable benefits for shareholders and wider stakeholders.”

Key FRC recommendations

Company purpose

The company purpose should be clearly communicated including:

Corporate culture

Companies should include details of how they assess and monitor culture, including:

Workforce engagement

Detailing the methods used to engage with the workforce (such as staff surveys, site visits, employee AGMs and employees attending board meetings) is important but companies should also give real examples to demonstrate:

Section 172 reporting

Section 172 reporting should cover:

Board composition

Companies should include:

Diversity

Companies need to be aware that diversity goes beyond gender. There should be clear disclosure of any diversity targets and details of actions being taken to achieve those targets.

Remuneration

Remuneration should be linked to long-term success and non-financial metrics.

This year’s reports should cover:

In their review, the FRC highlighted as good practice examples that included:

Risk management

Risk management should include explanations of:

Viability statement

Companies should explain why they have a reasonable expectation that they will be able to continue in operation and meet any liabilities as they fall due by:

Comply or explain

Explanations of departures from the Code should provide:

Explanations (and how any issues will be addressed) are particularly required in circumstances where:

How RSM can help

For further information and for any assistance with corporate governance please speak to Lee Marshall.

authors:lee-marshall