How the 2018 UK Corporate Governance Code and new legislation impacts premium companies

To comply with the 2018 Code companies must start planning now even though they will not report against it until their annual reports issued in 2020.

On 16 July 2018, the Financial Reporting Council (FRC) published the 2018 UK Corporate Governance Code (the 2018 Code), which finalises the ‘fundamental review’ of the Code consulted on by the FRC from the end of last year. This, coupled with The Companies (Miscellaneous Reporting) Regulations 2018 which update the Companies Act 2006, marks the culmination of the Government’s suite of governance reforms which aim to build trust in business.

Since 2017 there has been a tangible shift in sentiment by shareholders and many companies that stakeholder engagement is key to a company’s long term success. This update to the Code, along with the addition of the concept of company purpose, greater emphasis on culture and broad diversity, in many ways embeds and spreads the good practice which already exists in some companies.

As with all previous updates to the Code, the real test will be how companies take the new requirements forward.

Our paper:

• analyses the 2018 Code, highlighting the key issues and resulting considerations for premium listed companies
• covers the new secondary legislation which also impacts the reporting of a wide range of companies, including private companies meeting a certain size
• analyses changes between the 2016 and 2018 Codes.

The FRC has also updated the Guidance on Board Effectiveness (the Guidance) which provides more details on some of the areas covered in the 2018 Code. This is useful Guidance with questions for boards to consider and adds a practical dimension to each section. The FRC will consult on an update to the UK Stewardship Code later this year.