UK corporate governance and narrative reporting: Key developments checklist

Key developments

In preparation for the forthcoming AGM season, in the period covered by this checklist, a number of investor bodies have published updated voting guidelines that listed companies need to be aware of. Of particular importance in the context of executive remuneration are the Investment Association’s 2025 Principles of Remuneration that have been updated in light of developing market practice.

Large private companies should find a number of the FRC’s publications in relation to their narrative reporting obligations useful, particularly the best practice reporting examples that they include. The thematic review of climate-related financial disclosures by AIM and large private companies and, for those companies that apply the Wates Principles as their corporate governance code, the FRC’s review of reporting against those Principles, are of particular note.

Of interest to all companies will be the Home Office guidance in relation to the new offence of failure to prevent fraud that is due to come into effect on 1 September 2025. That guidance was published in November 2024 and companies should now be considering their own fraud risks and how best to mitigate them.

Accounting

DBT: The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024: On 10 December 2024, the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 were laid before Parliament, together with an Explanatory Memorandum. These Regulations increase the turnover and balance sheet criteria that help determine the size of a company for the purpose of reporting and audit requirements under the Companies Act 2006 (CA 2006) and remove several reporting requirements from the Directors’ Report thar are no longer considered relevant. Further details are here.

Audit

FRC: Launch of market study examining SME audit and reporting challenges: On 3 February 2025 the Financial Reporting Council (FRC) launched a market study examining how effectively the audit market serves small and medium-sized enterprises (SMEs) and exploring opportunities to reduce their reporting burden where possible. This study represents the first phase of the FRC’s broader campaign to support SMEs to access audit services and secure the capital they need for growth. Further details are here.

Climate-related reporting

FRC: Thematic review of climate-related financial disclosures by AIM and large private companies: On 21 January 2025, following the first cycle of mandatory reporting, the Financial Reporting Council (FRC) published a thematic review of climate-related financial disclosures (CFD) made under s414C, s414CA and s414CD of the Companies Act 2006 (CA 2006) by in-scope AIM and large private companies. Further details are here.

TAC: UK endorsement of IFRS Sustainability Disclosure Standards: On 18 December 2024, the FRC, on behalf of the UK Sustainability Disclosure Technical Advisory Committee (TAC), published the TAC’s final recommendations to the Secretary of State for Business and Trade, recommending endorsement of the first two IFRS Sustainability Disclosure Standards for use in the UK. Further details are here.

IFRS Foundation: Progress on Corporate Climate-related Disclosures – 2024 Report: On 12 November 2024, the IFRS Foundation published a report prepared for the Financial Stability Board (FSB) on progress on corporate climate-related disclosures. The report continues the work of the FSB’s Task Force on Climate-related Financial Disclosures (TCFD) to record the progress of companies reporting on its 11 recommended disclosures. Further details are here.

Corporate governance

Risk Coalition:  Raising your game - Guidance to enhance risk governance, risk-taking, resilience and reporting: On 21 February 2025, the Risk Coalition, a network of not-for-profit professional bodies and membership organisations committed to raising the standards of risk governance, published new cross-sector guidance for boards and their committees with consolidated risk responsibility (whether a dedicated risk committee or an audit and risk committee). Further details are here.

FCA: Quarterly Consultation – CP 24/26: On 6 December 2024, the Financial Conduct Authority (FCA) published a consultation paper setting out proposed amendments to parts of the FCA Handbook. Among other things, the FCA is proposing amendments to both the UK Listing Rules (UKLR) and the Disclosure Guidance and Transparency Rules (DTR) so that they refer to the January 2024 edition of the UK Corporate Governance Code. Further details are here.

FRC: Review of Corporate Governance Reporting: On 26 November 2024, the FRC published its latest annual review of corporate governance reporting. This includes examples of good reporting and explores areas that could be improved to help those preparing to implement the 2024 UK Corporate Governance Code. Further details are here.

FRC: UK Stewardship Code consultation: On 11 November 2024, the FRC published a consultation document setting out proposed changes to the 2020 UK Stewardship Code (Code). These changes are aimed at ensuring the Code continues to drive effective stewardship by supporting high-quality disclosures, appropriately reflects developing stewardship practice and maintains its global standing, in a way that does not place onerous reporting burdens on signatories. Further details are here.

IoD: Code of Conduct for Directors: On 23 October 2024, the Institute of Directors (IoD) published a Code of Conduct for Directors (Code). The Code was initially prepared for the IoD by a Commission chaired by Lord McNicol of West Kilbride and it follows a consultation on the Code launched in June 2024. Further details are here.

LAPFF: Investors call for say on climate vote at AGMs: On 11 September 2024, it was announced that a group of investors have called on 76 FTSE 100 companies to present their climate transition plans for investor approval. Further details are here.

Investor Forum: New Investor and Issuer Forum launched: On 6 September 2024, the Investor Forum announced that it has set up an Investor & Issuer Forum. This is a new initiative which is being created to provide a unique environment for companies and investors to enhance the effectiveness of the UK equity markets. Further details are here.

FRC: Review of reporting against the Wates Principles: On 12 August 2024, the FRC published a report setting out the results of a research project it had commissioned to assess the quality and extent of corporate governance reporting by large private companies that apply the 2018 Wates Corporate Governance Principles for Large Private Companies (Wates Principles). Further details are here.

Diversity

DBT: FTSE Women Leaders Review – Achieving Gender Balance: On 25 February 2025, the Department for Business and Trade (DBT) announced the publication of the latest FTSE Women Leaders Review report which reports on the progress by FTSE 350 companies and the 50 largest UK private companies in increasing women in senior leadership positions and on their boards. This builds on the earlier work of the Davies Review and the Hampton-Alexander Review. Further details are here.

Executive remuneration

Investment Association: IA’s Principles of Remuneration 2025: On 9 October 2024, the Investment Association (IA) published its updated Principles of Remuneration (Principles). These were last published in November 2022 and have been updated to reflect evolving market practice, as well as simplified. Further details are here.

Fair Reward Framework: Online tool launched to provide comparable data on FTSE 100 executive pay: A group of UK pension funds have collaborated with the High Pay Centre to develop a free-to-access online tool that helps investors assess companies’ annual corporate pay policies. Further details are here.

Investor guidelines

PLSA: Stewardship & Voting Guidelines 2025: On 23 January 2024 the Pensions and Lifetime Savings Association (PLSA) published the 2025 edition of its Stewardship & Voting Guidelines (2025 Guidelines). Further details are here.

ISS: Proxy Voting Guidelines 2025: On 17 December 2024, ISS announced the updates to its 2025 Benchmark Proxy Voting Policies for the UK and Ireland which will be applied to shareholder meetings on or after 1 February 2025. ISS consulted on the proposed updates in November 2024.  Further details are here.

FRC: Pre-Emption Group’s Annual Monitoring Report: On 22 November 2024, the FRC, on behalf of the Pre-Emption Group (PEG), published the PEG’s annual report monitoring the use of its 2022 Statement of Principles in disapplying shareholder pre-emption rights. Further details are here.

Glass Lewis: 2025 UK Benchmark Policy Guidelines: On 15 November 2024, Glass Lewis published its updated UK proxy voting guidelines (Guidelines), which will apply to shareholder meetings held after 1 January 2025. Further details are here.

Modern Slavery Act

Home Office: Government response to House of Lords report on the Modern Slavery Act 2015: On 16 December 2024, the Government published its response to the report on the impact and effectiveness of the Modern Slavery Act 2015 (MSA) published by the House of Lords Select Committee on 16 October 2024. Further details are here.

House of Lords: Report of Select Committee on review of Modern Slavery Act 2015: On 16 October 2024, the UK House of Lords Select Committee (Select Committee) published its report on the review of the UK Modern Slavery Act 2015 (MSA). It found that the UK has “fallen behind” on international due diligence developments and recommends that the UK adopts modern slavery due diligence legislation, as well as forced labour import bans, in part recognising that many UK companies are already subject to such requirements in other jurisdictions. Further details are here.

Narrative reporting

FRC: Guidance on the Going Concern Basis of Accounting and Related Reporting (including Solvency and Liquidity Risks): On 25 February 2025, the FRC published updated 'Guidance on the Going Concern Basis of Accounting and Related Reporting, including Solvency and Liquidity Risks' (Guidance). This provides guidance on the going concern basis of accounting for all companies, including those that apply the UK Corporate Governance Code, as well as guidance on the reporting of solvency and liquidity risks. Further details are here.

Parliament: Reporting on Payment Practices and Performance (Amendment) Regulations (Regulations) 2025: On 29 January 2025 the Reporting on Payment Practices and Performance (Amendment) Regulations 2025 (Regulations) and associated explanatory memorandum were published. Further details are here. On 19 September 2024, the Department for Business and Trade (DBT) published updated guidance on the statutory reporting requirements relating to business payment practices and performance which apply to qualifying UK companies and limited liability partnerships. Further details are here.

FRC: Assurance of Sustainability Reporting Market Study: Final Report: On 5 February 2025 the FRC published its final report on its sustainability assurance market study, including remedies to support the functioning of the market (Report). The Report sets out four key findings as well as its remedies. Further details are here.

DBT: Value of non-financial reporting to investors – Research and analysis: On 14 October 2024, DBT published research and analysis in relation to the value of non-financial reporting information (NFR) to investors. Further details are here.

DBT: Simpler corporate reporting consultation – Summary of responses: On 14 October 2024, DBT published a summary of responses to its May 2024 corporate reporting consultation. That consultation sought views on proposals affecting medium-sized companies and these included whether to raise the employee threshold that help determine company size from 250 to 500 employees for medium-sized companies and whether to exempt medium-sized private companies from having to prepare a Strategic Report as part of the annual reports and accounts. Further details are here.

FRC: Annual Review of Corporate Reporting: On 24 September 2024 the FRC published its Annual Review of Corporate Reporting which describes the activities and findings of its corporate reporting review function for the 12 months to 31 March 2024.  Its aim is to help companies improve their corporate reporting by highlighting the key areas for improvement and matters on which companies should focus on during the coming year, with a particular focus on the top ten areas where the FRC has challenged companies most frequently, or where requirements are complex or changing. Further details are here.

FRC: Opportunities for future UK digital reporting – Discussion Paper: On 13 August 2024, the FRC published a Discussion Paper which looks at the future of digital reporting in the UK. The Discussion Paper aims to help shape the future of digital reporting in the UK, ensuring it meets the needs of all users while promoting transparency, comparability, and efficiency in corporate reporting. Further details are here.

Nature-related reporting

TNFD: Discussion paper on nature transition plans: On 27 October 2024, The Taskforce on Nature-related Financial Disclosures (TNFD) published a discussion paper setting out draft guidance on nature transition planning for companies and financial institutions developing and disclosing a transition plan in line with the TNFD recommended disclosures and guidance published in September 2023. Further details are here.

TNFD: The TNFD supports the use of cross-reference tables for corporate reporting: On 16 September 2024, the TNFD announced its support for the use of cross-reference tables in corporate reporting to help simplify and streamline the presentation of TNFD-aligned recommended disclosures in existing voluntary or mandatory corporate reporting. Further details are here.

Prevention of fraud

Home Office: ECCTA 2023 - Guidance to organisations on the offence of failure to prevent fraud: On 6 November 2024, the Home Office published guidance under section 204 Economic Crime and Corporate Transparency Act 2023 (ECCTA). This sets out procedures that relevant organisations can put in place to prevent persons associated with them from committing fraud offences under the new failure to prevent fraud offence introduced by ECCTA.  Further details are here.