On 14 January 2016, the Financial Reporting Council (“FRC”) published a report on developments in corporate governance during 2015 which reviewed the impact and implementation of the UK Corporate Governance and Stewardship Codes during the last 12 months. The report highlights the FRC’s views on performance by companies and stakeholders during 2015 and addresses areas for potential improvement. The report also sets out the statistical findings of several reports conducted by professional associations and advisers.

The key points that the report makes in terms of the UK Corporate Governance Code are as follows:

  • The FRC does not intend to make any substantial revisions to the Code before 2019
  • Strict compliance with all Code provisions has dropped slightly due to newly listed companies not yet having observed all governance requirements and due to FTSE 100 companies awaiting finalisation of implementation of the EU Statutory Audit Directive and Regulation and, in particular, as regards audit rendering;
  • The FRC intends to focus on corporate culture and practices that embed good corporate behaviour over the next year; and
  • The FRC is assessing feedback to its consultation on implementation of the EU Audit Directive and Regulation and plans to release revised versions of the Code and Guidance later in 2016.

The key points that the report makes in terms of the Stewardship Code are as follows:

  • The FRC encourages investors to notify companies in advance of votes against or abstentions, following a decrease in these notifications in 2015;
  • The FRC intends to ensure that its activities capture the perspectives of long-term investors and international investors active in the UK market; and
  • The FRC intends to scrutinise the Stewardship Code signatory statements and then contact firms to allow for improvements, before making its assessments public in summer 2016.

This report can be accessed here: https://www.frc.org.uk/Our-Work/Publications/Corporate-Governance/Developments-in-Corporate-Governance-andStewa-(1).pdf