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Governance in brief — FRC consults on changes to the UK Corporate Governance Code

Published on: 30 Apr 2014

This publication from Deloitte discusses changes to the UK Corporate Governance Code proposed by the Financial Reporting Council.  The proposals stem from earlier consultations on directors’ remuneration (October 2013) and risk management, internal control and the going concern basis of accounting (November 2013).  As a result of those consultations and feedback received, the FRC proposals include the following changes:

  • Remuneration: Boards should focus on the long term success of the company when setting remuneration policy and include clawback provisions.
  • AGM resolutions: Companies should set out how they intend to engage with shareholders on any resolutions which have not received a significant proportion of votes in support.
  • Going concern AND statement of ongoing viability:  It is proposed that the annual report includes two distinct statements - the board’s confirmation of the appropriateness of the going concern basis of accounting and a broader assessment by the board of the company’s ongoing viability.
  • There are no major changes to the FRC’s earlier proposals on principal risks and the board’s monitoring of the risk management system. Accordingly, the recommendation in the previous draft integrated guidance to explain actions taken to remedy any failings or weaknesses identified remains.

The proposed changes, if implemented, will apply to financial years beginning on or after 1 October 2014.

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