UK Corporate Governance Code Explained: An Overview For 2024

The UK Corporate Governance Code is a set of principles and provisions that guide the behaviour and performance of companies listed on the London Stock Exchange. The Code aims to promote good governance practices that enhance the long-term success of companies, the trust and confidence of investors and other stakeholders, and the reputation and competitiveness of the UK as a place to do business.

It’s less a rigid set of rules, but rather a flexible framework that operates on a ‘comply or explain’ basis. This means that companies are expected to apply the principles of the Code and comply with the provisions, or explain why they have deviated from them in their annual reports. The code is overseen and updated by the Financial Reporting Council (FRC), the UK’s independent regulator for corporate reporting and governance.

In this article, we’ll explore:

Why the UK Corporate Governance Code is important

What’s changed in 2024

How the UK Corporate Governance Code has evolved over time

What’s next beyond 2024

Why is the UK Corporate Governance Code important?

The UK Corporate Governance Code reflects the expectations and standards of good governance that are essential for the sustainability and resilience of companies and the economy. Good governance helps companies achieve their strategic objectives, manage risks and opportunities, create value for shareholders, and fulfil their social and environmental responsibilities.

It also influences the behaviour and culture of companies and their boards, which in turn can have a significant impact on performance and reputation. The Code encourages companies to adopt a purposeful, stakeholder-oriented and long-term approach to governance, rather than a short-term, compliance-driven and box-ticking mentality. 

What’s changed in 2024?

Following its consultation on the revisions to the 2018 Code, the FRC has noted that the 2024 Code has been designed to take a targeted approach, focusing on a limited number of changes to ensure the right balance is struck between UK competitiveness and positive outcomes for companies, the wider public and investors. In their words:

“We have taken a more streamlined approach to the 2024 Code, focusing on the elements that will deliver the biggest impact whilst minimising the reporting burden. This ensures that the Code strikes the right balance between delivering on our objectives to enhance trust and confidence in governance whilst supporting UK economic growth and competitiveness.”

The principal Code changes impact four key areas. Most of the changes will be effective from 1st January 2025, with new provision relating to internal controls taking effect a year later in 2026. 

Board leadership and company purpose

Principle C means that governance reporting should focus on board decisions and their outcomes in the context of the company’s strategy and objectives. Clear explanations are required when reporting on departures from the Code’s provisions.

Provision 2 has been amended to include assessing and monitoring how the desired culture has been embedded.

Composition, succession and evaluation

Principle J has been amended to promote diversity, inclusion, and equal opportunity without specifying particular groups, in adherence to the fact that diversity policies can be wide-ranging.

Provision 23 has been amended to acknowledge additional initiatives alongside diversity and inclusion policies.

Audit, risk and internal control

Principle O has been amended to make the board responsible for maintaining the effectiveness of the risk management and internal control framework.

Provision 25 and Provision 26 have been updated to reflect the Minimum Standard: Audit Committees and the External Audit. Duplicative language has also been removed.

New Provision 29 requires the board to monitor the company’s risk management and internal control framework, conducting an annual review by January 2026. The review should cover all material controls, and the board must provide specific information in the annual report.


Provision 37 has been amended to include malus and clawback provisions in directors’ contracts or agreements covering director remuneration.

New Provision 38 requires companies to include in the annual report a description of malus and clawback provisions, including circumstances of use, the period for malus and clawback, and whether the provisions were used in the last reporting period, with a clear explanation if used.

How has the UK Corporate Governance Code evolved over time?

The Code has a long and rich history that dates back to 1992, when the first Code of Best Practice was issued by the Cadbury Committee, following a series of corporate scandals and failures.

Since then, the Code has been revised and updated several times, in response to changing business and societal expectations, new challenges and opportunities, and emerging best practices. 

Key milestones

1995: The Greenbury Report introduced provisions on directors’ remuneration and performance-related pay.

1998: The Hampel Report consolidated the previous codes and reports into a single document, the Combined Code, and emphasised the importance of applying the principles rather than complying with the provisions.

2003: The Higgs Report added provisions on the role and independence of non-executive directors and the separation of the roles of chairman and chief executive.

2010: The Code was renamed as the UK Corporate Governance Code and incorporated the recommendations of the Walker Review on the governance of banks and other financial institutions, following the global financial crisis. The Code also introduced the concept of board effectiveness and the annual board evaluation.

2012: The Code was amended to include provisions on board diversity, especially gender diversity, and the role of shareholders in engaging with companies and voting on governance matters.

2014: The Code was revised to include provisions on risk management and internal control, following the guidance of the Sharman Panel, and to align with the new UK Stewardship Code for institutional investors.

2016: The Code was updated to reflect the changes in the UK Audit and Assurance Council’s Ethical Standard and Auditing Standards, which enhanced the independence and quality of external audit.

2018: The Code was substantially rewritten and restructured to focus on the application of the principles and the quality of reporting, rather than the compliance with the provisions. The Code also introduced new expectations on board leadership and company purpose, stakeholder engagement, culture, succession planning, and remuneration.

What’s next?

It’s worth noting that over half of the FRC’s initial suggestions, such as changes regarding the responsibilities of audit committees in environmental, social, and governance matters, as well as adjustments to existing code provisions on diversity, over-boarding, and Committee Chairs engaging with shareholders, will not be implemented.

Additionally, several other proposals will not move forward, as the government decided last month to discard draft reporting regulations, considering them to be too burdensome. These regulations included mandates for companies to create a new strategic report, a resilience statement, and a directors’ report containing an audit and assurance policy statement, a policy on material fraud, and distributions. So, it’s possible that some of these measures will be addressed through future regulatory initiatives.

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