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Governance in brief — FRC issues updated UK Corporate Governance Code and Guidance on Risk Management, Internal Control and Related Financial and Business Reporting

Published on: 23 Sep 2014

This publication from Deloitte discusses the updated version of the UK Corporate Governance Code, issued by the Financial Reporting Council (FRC).  This update is the final part of the FRC's two year review of the Code and follows earlier consultations on directors' remuneration and risk management, internal control and the going concern basis of accounting.

The changes to the UK Corporate Governance Code and supporting guidance will apply for periods commencing on or after 1 October 2014:

  • 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 received a significant proportion of votes opposing.
  • Going concern AND statement of longer term viability: Going forward the annual report will include 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.
  • Risk management and internal control: Boards will have to monitor risk management and internal control systems on an ongoing basis, rather than once a year, and will need to explain actions taken to remedy any failings or weaknesses identified. Many companies started to review their internal control monitoring systems based on the direction of travel in the consultation — the final guidance should prompt all to do so.

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