New UK Corporate Governance Code published by FRC
31 July 2018
The Financial Reporting Council (FRC) has published its new UK Corporate Governance Code, following a consultation that began in December 2017. The new Code is largely built upon the current Code, but it is in a shorter and simpler format, with some provisions moved into the revised FRC Guidance on Board Effectiveness.
Some of the more controversial provisions from the draft published for consultation have been dropped. In particular, the FRC has reverted to the approach in the current Code of only requiring the chair to be independent on appointment (rather than on an on-going basis). The new Code also reinstates a board's discretion to consider a director independent, notwithstanding the existence of circumstances that could appear likely to impair independence.
The new Code will apply to accounting periods beginning on or after 1 January 2019, with the first annual reports under the new Code to be published in early 2020. In practice, companies are likely to seek to adopt the recommendations of the new Code early, and to enhance the disclosure in their next annual report to take account of the new Code. As with the current Code, the new Code will apply to all companies with a premium listing of equity shares. Key additions to and changes from the current Code are summarised below.