CGIUKI gives a cautious welcome to new Governance Code

CGIUKI has welcomed the FRC’s new Corporate Governance Code but cautioned that governance and regulatory reform remains incomplete.

Peter Swabey, Policy & Research Director CGIUKI said  “We welcome the new Corporate Governance Code published this morning.

The new Code includes a clearer focus on outcome-based reporting and malus and clawback arrangements as well as some helpful emphasis on internal controls, the latter having a deferred implementation date of 1 January 2026 to ensure that companies’ arrangements are sufficiently robust.

We do, however, feel a sense of a lost opportunity for more radical reform. What is missing from the new Code is perhaps more significant than what is included.

The announced code changes are all useful and the FRC has played a poor hand well, but they are just a shadow of the reform we hoped for in 2024. The government has failed to progress legislation to create a regulator with the powers that it needs and, six years after the collapse of Carillion, the UK has still not implemented its lessons.

The Code operates within a complex system of regulation of both companies and advisors. Whilst these code revisions are welcome, they cannot fix the shortcomings of the wider system. 2024 was meant to bring a new regulator on a statutory footing, which would underpin a much-strengthened system of governance.  The Post Office Horizon Scandal is a stark reminder that governance operates within a wider system of law. We will continue to press for substantial reform to the regulation and oversight of auditors, actuaries and directors.”

The new code can be downloaded here: https://www.frc.org.uk/library/standards-codes-policy/corporate-governance/uk-corporate-governance-code

For further information, please contact:

Daniel Valentine
dvalentine@cgi.org.uk

Notes to Editors:

1. The Chartered Governance Institute UK & Ireland is the qualifying and membership body for governance with over 125 years’ experience of educating and supporting governance professionals. With a Royal Charter purpose of leading ‘effective and efficient governance and administration of commerce, industry and public affairs’, we provide professional development, guidance and thought leadership, and work with regulators and policy makers to champion high standards.
   
   The Institute has divisions in Australia, Canada, Hong Kong/China, Malaysia, New Zealand, Singapore, Southern Africa, the United Kingdom and Zimbabwe. The division headquartered in London represents and supports members in the UK, Republic of Ireland, Crown Dependencies and associated territories, which include the Caribbean, sub-Saharan Africa, the Middle East, Mauritius and Sri Lanka. Website: www.cgi.org.uk 
2. The word ‘Institute’ is one of the ‘sensitive words or expressions’ restricted under the Companies Act 2006. s1194(1) of the Act provides that “A person must not, without the approval of the Secretary of State, carry on business in the United Kingdom under a name that includes a word or expression for the time being specified in regulations made by the Secretary of State under this section.” As a Royal Charter body, The Chartered Governance Institute UK & Ireland is legally entitled to use this term and has no connection with other training providers with similar names, calling themselves an ‘Institute’ without the necessary approval to do so.