Corporate governance archive

The 2014 UK Corporate Governance Code in practice

  • The first viability statements have started to appear.

Recent FRC guidance for audit committees

  • The Financial Reporting Council has released two publications designed to assist audit committees.

Governance under scrutiny: A gap between perception and reality?

  • Two recent surveys focus attention on investor stewardship and how to identify 'good' governance.

The Code begins to bite

  • Listed companies continue to prepare for reporting against the 2014 UK Corporate Governance Code.

All eyes on shareholders’ rights

  • Proposals to expand amendments to the Shareholders Rights Directive could have far-reaching consequences.

Shockwaves from ‘the right to be forgotten’

  • A trend towards more active enforcement of data privacy law means businesses need to pay close attention to the EU’s new regulatory regime.

Towards a digital single market

  • The European Commission has set out its strategy for the steps the EU could take to create a single digital market.

The next five years

  • There are three clear challenges to the Cameron government, all of which have implications for business.

Implementing EU audit reform

  • UK consultation is underway on how to implement EU audit reforms, with some significant issues for companies to consider.

Audit rotation: updated guidance from BIS

  • BIS has published updated guidance on audit firm rotation and tendering which includes some significant points of clarification.

FRC enters 2015 with a packed agenda

  • The FRC has identified numerous priority areas for 2015, covering corporate governance and stewardship, corporate reporting and audit.

Cyber security and risk: refresh your perspective

  • Organisations need to make appropriate investments to defend against internal and external cyber threats.

The 2014 UK Corporate Governance Code: time to act now

  • How much change to behaviour and processes will the 2014 UK Corporate Governance Code really require?

Audit firm rotation and tendering: how quickly will your company need to act?

  • New mandatory audit tendering and audit firm rotation rules have been published, and some companies will need to move fast.

The Kay report: we’re not there yet

  • The Government’s progress report on implementing the Kay Review finds evidence of a shift in equity market culture, but more action is needed.

FCA consults on removing the requirement for interim management statements

  • The FCA is consulting on removing the requirement for interim management statements. It will be interesting to see how market practice develops once the requirement is removed.

Establishment of the Investor Forum

  • The new Investor Forum may mean that corporates experience more and/or a different type of engagement from institutional investors and asset managers.

EU Audit Reform

  • The EU reforms include mandatory audit firm rotation and new rules around non-audit services.
  • During Q3 2014 there will be a consultation of how the UK Government intends to implement the rules. We’d encourage companies to respond.

Competition and Markets Authority

  • The CMA, the successor to the Competition Commission, published in July a consultation on its proposed remedies for audit reform.
  • The transition regime proposed is consistent with the EU’s.

Update on consultation on amendments to UK Corporate Governance Code

  • The updated version of the Code was released in mid-September, with the main area of focus being going concern and ‘viability statement’ proposals.

FCA changes the Listing Rules for companies with controlling shareholders

  • The FCA published Listing Rules (Listing Regime Enhancements) Instrument 2014 in May
  • Companies will need to enter into a relationship agreement with controlling shareholders and the election of independent non-executive directors will need to be approved under a new dual voting structure

Developments arising from the European Corporate Governance Action Plan

  • As the current European Commission and Parliament draw to a close, there has been considerable activity in connection with the Corporate Governance Action Plan published in 2012

Cyber Security – A Tier 1 threat

  • UK Government named Cyber Security as a Tier 1 threat to national security in its 2010 National Security Strategy
  • A range of cyber security and data protection related legislation is in development and set to affect the EU over the next 2-3 years

Consultation on amendments to UK Corporate Governance Code

  • The FRC has issued a consultation on amendments to the UK Corporate Governance Code
  • Focuses on implementing the Sharman Inquiry recommendation on going concern, updating the Turnbull Guidance on internal control and risk management, and the claw back and deferral of remuneration. Changes would come into effect for premium listed companies for years beginning on or after 1 October 2014

UK governance update

  • Audit committees need to keep EU developments on audit tendering and rotation under review
  • Look out for final FRC guidance on risk management, internal control and going concern

FRC: 2013 developments in governance

  • FRC review of the governance code found 57% fully comply and 85% stated compliance with all but one or two provisions
  • FRC will focus on the quality of reporting outside FTSE 100 in 2014
  • Next general update to the Code is due October 2014

FRC consults on Sharman proposals for risk management, internal control and going concern

  • Sharman principles on Going Concern have been integrated into the Guidance for Directors
  • FRC also consulting on related changes to Audit Standards and on separate guidance for banks on going concern
  • Responses to all three consultations due by 24 January 2014; changes effective from 1 October 2014

FRC Reporting Lab: report on audit committee reporting

  • Report focuses on new requirements for audit committees in the 2012 Governance Code
  • It’s a useful steer for the year-end on what investors say they find useful in audit committee reporting

Controversial EU Data Protection Regulation takes a step forward

  • MEPs voted in favour of European Data Protection Regulation in October 2013
  • Fines of up to €100m for those who fail to comply
  • Regulation likely to come into force in 2016

Health check: making the UK cyber secure

  • FTSE 350 board and audit committee chairs have participated in the Cyber governance health check.
  • The results are expected to be published by BIS in November.

Corporate governance aspects of wider initiatives

  • Competition Commission remedies to have significant impact on audit committee responsibilities
  • Parliamentary Commission on Banking Standards calls for governance reform to reinforce individual responsibility
  • Call for views by BIS on corporate responsibility & transparency
  • FRC under pressure from the market and parliament

Sharman and going concern – next steps

  • Broad support for Lord Sharman’s recommendations, but significant concern about the detail of proposals
  • Further consultation document to be issued in autumn
  • Any changes to UK Corporate Governance Code taking effect in October 2014

Green Paper on the long-term financing of the European economy

  • Paper is an opportunity to influence long-term financing and investment
  • Closing date for responses 25 June 2013

2013 changes to corporate governance and reporting – no final legislation

  • Changes due to take effect from Sept year-ends: BIS regulations potentially subject to change before legislature; Sharman recommendations unpopular (over-complex and impractical)
  • Implementation dates are impractical for business

EC Green Paper on non-financial and diversity information

  • EC proposing amendments to directives – disclosure on environmental, social and employee-related matters human rights, anti-corruption, bribery
  • No opportunity to comment. Proposals differ in detail to BIS regulations

Consultation on implementing Sharman recommendations on going concern

  • Proposals will affect management of stress testing, enhanced disclosures and definitions of ‘foreseeable future’, among others.
  • FRC consultation on implementation ends 28 April 2013

Parliamentary Commission on banking standards

  • Corporate culture and behaviour in the banking sector under scrutiny by cross-party, cross-house commission
  • Commission is likely to comment on accounting and audit standards for banks

European Commission – long-term financing of the European economy

  • Green Paper expected shortly that may share concerns identified in the Kay report - complexity of investment chain and potentially conflicting role of intermediaries
  • Risk that it will take a more regulatory approach