FRC updates EC on UK 'comply or explain' governance framework

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16 Jul, 2015

At the request of the Department for Business, Innovation and Skills (BIS), the UK Financial Reporting Council (FRC) has responded to the European Commission (EC) Recommendation on the quality of corporate governance reporting.

In April 2014 the EC published 'Recommendation on the quality of corporate governance reporting (‘comply or explain’) 2014/208/EU', alongside proposed revisions to the Shareholder Rights Directive. At the time that it was published, the FRC commented that the Recommendation would “help to enshrine good corporate governance throughout Europe”.  They also noted that the concept of 'comply or explain' was already a key feature of the UK corporate governance framework, underpinning the UK Corporate Governance Code (the Code).

In its formal response to the EC, the FRC states that it considers that the Code meets the provisions of the Recommendation.  In particular, it welcomes the commission's focus on the quality of explanations given under a 'comply or explain' framework and highlights the changes that it made in this respect to the Code as part of its 2012 updates.

The full response letter can be found on the FRC website.

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