Following a 16-week consultation period the Financial Reporting Council has now published the 2024 edition of UK Corporate Governance Code which is applicable to all companies with a premium listing on the London Stock Exchange. In addition, many organisations that are not required to adhere to the Code still choose to do so to demonstrate robust standards of governance.
Key changes from the 2018 Code, which largely come into effect 1st January 2025, include:
- A replacement Principle C is introduced requiring governance reporting to focus on board decisions and their outcomes in the context of the company’s strategy and objectives.
- Provision 2 now states that Boards should not only assess and monitor culture, but also determine how the desired culture has been embedded.
- Principle J has been amended to promote diversity, inclusion and equal opportunity without now referencing specific groups to emphasise that diversity policies should be wide-ranging.
- Provision 23 has been amended to reflect the fact that companies may have additional initiatives in place alongside their diversity and inclusion policy. References to ‘board evaluation’ have also been replaced with the phrase ‘board performance review’.
- Principle O has been amended to make the Board responsible not only for establishing, but also for maintaining the effectiveness of the risk management and internal control framework.
- Provision 25 and Provision 26 have been updated to reflect the Minimum Standard: Audit Committees and the External Audit.
- A revised Provision 29 is included requiring the Board to monitor the company’s risk management and internal control framework and carry out a review of its effectiveness at least annually. The monitoring and review should cover all material controls including financial, operational, reporting and compliance controls. The annual report should include: a description of how the board has monitored and reviewed the effectiveness of the framework; a declaration of effectiveness of the material controls; and a description of any material controls which have not operated effectively together with the action taken or proposed. It should be noted that this provision comes into effect 1st January 2026.
- Provision 37 has been amended to state that Directors’ contracts and/or other agreements or documents which cover director remuneration should include malus and clawback.
- A revised Provision 38 now requires companies to include a description of its malus and clawback provisions in their annual report.
As previously, the Code operates on a comply or explain basis. The full code is available to view here.
Griffiths & Armour recommends that organisations review their governance arrangements in light of this new Code.
Guidance, template documentation and training on enterprise risk management and a wide range of specific risk topics is available via RMworks, which is available to all Griffiths & Armour clients.
For further information about how Griffiths & Armour can help support your organisation, please get in touch.
