The Financial Reporting Council (‘FRC’) has issued advice for companies on how to report transparently and effectively when departing from certain provisions of the UK Corporate Governance Code.
The Code sets high standards for Corporate Governance. It recognises that companies have differing circumstances and so offers flexibility through its ‘comply or explain’ approach to reporting. The FRC encourages companies to embrace the flexibility offered by the Code so that investors and wider stakeholders benefit from reporting that clearly demonstrates a commitment to good governance, and clearly sets out a company’s circumstances.
It is important that companies:
- Embrace the flexibility offered by the Code and develop bespoke governance processes and practices which raise standards.
- Make it easy for readers to find out which Provisions of the Code they have departed from in their annual report.
- Ensure that they provide full, clear and meaningful explanations for any such departures.
This new guidance builds on the findings of the FRC’s Review of Corporate Governance Reporting issued in November 2020. These reports are part of the FRC’s ongoing drive to promote good practice and support companies to continually improve their reporting against the Code.
To read the advice please click on this link.