Directors Corporate Governance History of the UK Corporate Governance Code

History of the UK Corporate Governance Code

The Committee on the Financial Aspects of Corporate Governance was set up in May 1991 by the Financial Reporting Council, the Stock Exchange and the accountancy profession in response to continuing concern about standards of financial reporting and accountability, particularly in light of the BCCI and Maxwell cases.

Its subsequent report (published in 1992), which became known as the Cadbury Report after Sir Adrian Cadbury who Chaired the Committee, developed a set of principles of good corporate governance which were incorporated into the LSE’s Listing Rules. It also introduced the principle of ‘comply or explain’. It made the following three basic recommendations:

  • the CEO and Chair of companies should be separated;
  • boards should have at least three non-executive directors, two of whom should have no financial or personal ties to executives; and
  • each board should have an audit committee composed of non-executive directors.
The first Code, the Combined Code on Corporate Governance, was issued in 1998 and has been updated multiple times following various consultations.

The current UK Corporate Governance Code (PDF) was published in July 2018, following a comprehensive review of the Code, along with extensive outreach and consultation. It applies to financial years commencing on or after 1 January 2019. To support this the Guidance on Board Effectiveness (PDF) was also revised.

For further information please see the following: