Yesterday saw the publication of the Financial Reporting Council’s (the FRC) guidance to the UK Corporate Governance Code (the Guidance).
See our bulletin from last week on the revised UK Corporate Governance Code (the Code).
In this bulletin, we provide our views on certain aspects of the new Guidance, specifically the guidance relating to risk management and internal controls, as well as board statements on the effectiveness of their material controls.
We believe that the Guidance is a welcome development in providing clearer, more easily accessible and user-friendly guidance on applying and complying (or explaining non-compliance) with the Code.
The Code and Guidance sets the framework for more constructive discussion between companies and investors, but ultimately it is for market participants to make governance and stewardship work.
The Guidance, very deliberately, does not guide boards on which frameworks or standards to use when assessing the effectiveness of material controls. The FRC does not wish to be prescriptive – preferring companies to decide for themselves how best to review and report on the effectiveness of their controls.
In practice, however, the market may…
