Governance Briefing — May 24, 2023

Executive briefing: On 24 May 2023 the Financial Reporting Council opened a consultation on updating the UK Corporate Governance Code. The proposals reinforce board accountability for internal controls, expand audit committee reporting on assurance and sustainability information, and clarify expectations around remuneration outcomes, diversity, and stakeholder engagement.

Key proposals

Internal control declaration. Boards would provide a declaration on the effectiveness of internal controls and describe monitoring and remediation processes.
Audit committee reporting. Audit committees must explain assurance over sustainability information and their role in narrative reporting.
Remuneration and culture. Remuneration committees must evidence how pay outcomes align with culture, ESG objectives, and long-term strategy.

Implications for boards

Premium-listed companies. Boards should assess readiness for internal control attestations and sustainability assurance oversight.
Asset managers. Investors can leverage the proposals to refine stewardship expectations for UK holdings.
Public and nonprofit entities. Organisations using the Code voluntarily should review proposed guidance on engagement and workforce reporting.

Action checklist

Prepare consultation responses by the September 2023 deadline, focusing on internal control declarations and assurance requirements.
Benchmark internal control frameworks against the proposed declaration and monitoring expectations.
Align audit committee agendas with enhanced sustainability assurance responsibilities.

Sources

Zeph Tech helps UK issuers evaluate internal controls, audit committee reporting, and ESG oversight in line with the proposed Code revisions.