The Financial Reporting Council (‘FRC’) annual review found that there was a general improvement in reporting against the UK Corporate Governance Code (‘the Code’).
FRC has seen year-on-year improvements in reporting, and importantly more companies are disclosing the areas within the Code that they have chosen to explain rather than comply. However, the report also found that too few companies are providing meaningful explanations.
A common theme throughout the report is the lack of disclosure in relation to the outcomes and impacts of governance policies and practices. Companies need to demonstrate, within their reporting how their governance has been improved.
The FRC was also disappointed to see minimal disclosure about board engagement with major shareholders - with some companies simply stating that there had been meetings without providing further information on their engagement and its outcome. Such explanations are important to give investors and the public information which is critical for market confidence and lowering the cost of capital.
The assessment, which comprised 100 randomly chosen FTSE 350 and Small Cap companies, supports the FRC’s growing body of evidence on those areas where companies report well and where improvements could be made. That evidence will help inform the work of the FRC as it consults on revisions to the Corporate Governance Code next year.
To read more of the FRC Report click on the link.