History of the UK Corporate Governance Code

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:
Consultation Paper (December 2017)
The public response letters
Feedback Statement (July 2018)

A revised UK Corporate Governance Code (PDF) was published in April 2016 and applied to financial years commencing on or after 17 June 2016. The Code was revised to reflect the changes needed to implement the EU Audit Regulation and Directive.

To support this the Guidance on Audit Committees (PDF) was also revised.

For further information please see the following:
Consultation Paper (September 2015)
The public response letters are available upon request from codereview@frc.org.uk
Feedback Statement (April 2016) (PDF) – this includes in the Appendix a summary of the differences between the 2014 and 2016 editions of the Code.

A revised UK Corporate Governance Code (PDF) was published in September 2014 and applied to financial years commencing on or after 1 October 2014. The Code was revised to enhance the quality of information received by investors about the long-term health and strategy of listed companies. It also updated the remuneration section to ensure executive remuneration is designed to promote the long-term success of the company and to demonstrate how this is being achieved more clearly to shareholders.

For further information please see the following:
Consultation paper (April 2014)
The public response letters are available upon request from codereview@frc.org.uk
Feedback Statement (September 2014) (PDF) – this includes in the Appendix a summary of the differences between the 2012 and 2014 editions of the Code.

This update followed earlier consultations on:
Directors’ Remuneration (October 2013) and Risk Management, Internal Control and the Going Concern Basis of Accounting (November 2013).

A revised version (PDF) of the Code was published in September 2012 and applied to financial years commencing on or after 1 October 2012. The changes included better reporting by Audit Committees; confirmation by Boards that the annual report and accounts taken as whole are fair, balanced and understandable; and that companies explain and report on progress with their policies on boardroom diversity.

For further information please see the following:

Consultation Paper (April 2012) plus appendices: Draft Revised Guidance on Audit Committees (PDF) and Draft Revised UK Corporate Governance Code (PDF)

The public response letters are available upon request from codereview@frc.org.uk

Feedback Statement (September 2012) (PDF) – this includes in the Appendix a summary of the differences between the 2010 and 2012 editions of the Code.

In March 2011 the FRC announced the launch of an enquiry led by Lord Sharman to identify lessons for companies and auditors addressing going concern and liquidity risk. See the Sharman Inquiry for further details.

In June a revised version (PDF) of the Code was published in June 2010 and applied to financial years commencing on or after 29 June 2010. Changes included a revised format to give clearer advice on board composition; that all FTSE 350 directors be put forward for re-election every year; and improved risk management reporting provisions.

For further information please see the following:

Call for evidence as part of a review of the effectiveness of the Combined Code (March 2009)
Summary of the main responses (July 2009) (PDF)
Summary of FTSE Chairs meetings (July 2009) (PDF)
Progress Report on the Code effectiveness review (July 2009)
Final Report on the Code effectiveness review (December 2009) (PDF)
Consultation Paper (December 2009)
The public response letters are available upon request from codereview@frc.org.uk
Feedback Statement (May 2010) (PDF) – this includes in the Appendix a summary of the differences between the 2008 and 2010 editions of the Code.

A revised version (PDF) of the Combined Code was published in June 2008 and applied to financial years beginning on or after 29 June 2008. Changes reflected new EU requirements relating to Audit Committees and corporate governance statements.
 
For further information please see the following:

Consultation Paper (April 2007) (PDF) and
Consultation Paper (December 2007) (PDF)
Summary of responses (December 2007) (PDF)
Changes to the Code (June 2008) (PDF)

A revised version (PDF) of the Combined Code was published in June 2006 and applied to financial years beginning on or after 1 November 2006.
 
The changes to the Combined Code were made following two consultation exercises, the first on the overall impact of the 2003 Code (PDF) (held between July and October 2005) and the second on draft amendments to the Code (held between January and April 2006).

The summary of response to both were also published in January (PDF) and June (PDF) 2006.

The Turnbull Guidance was fully reviewed in 2004-5 and an updated Guidance (PDF) was published in October 2005. While there were no significant changes to the scope and content of the guidance, it was instead amended to encourage more informative disclosure, including by requiring boards to confirm that necessary action has been or is being taken to remedy any significant failings or weaknesses identified from the annual review.

For further information please see the following:
 
The consultation document (PDF)
An evidence paper (PDF)
A summary of responses (PDF)

NB. The Turnbull Guidance was superseded in September 2014 by the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting (PDF)

Sir Derek Higgs was commissioned by the UK Government to review the roles of independent directors and of audit committees. The resulting Report proposed that:

• at least half of a board (excluding the Chair) be comprised of non-executive directors;
• that the non-executives should meet at least once a year in isolation to discuss company performance;
• that a senior independent director be nominated and made available for shareholders to express any concerns to; and
• that potential non-executive directors should satisfy themselves that they possess the knowledge, experience, skills and time to carry out their duties with due diligence.

The revised Combined Code published in June 2003 brought in these changes and applied to financial years beginning on or after 1 November 2003.
 

The Turnbull Committee was established to provide direction on the internal control requirements of the Combined Code, including how to carry out risk management.
 
The resulting Guidance helps boards meet the Code’s requirements that they should maintain a sound system of internal control, conduct a review of the effectiveness of that system at least annually, and report to shareholders that they have done so.
 

The Hampel Committee was established to review the extent to which the objectives of the Cadbury and Greenbury Reports were being achieved. The resulting Hampel Report led to the publication, in June 1998, of The Combined Code on Corporate Governance (the Combined Code) (PDF), which applied to all listed companies. It added that:

• the Chair of the board should be seen as the "leader" of the non-executive directors;
• institutional investors should consider voting the shares they held at meetings, though rejected compulsory voting; and
• all kinds of remuneration including pensions should be disclosed.

The Greenbury Committee was established in 1994 by the Confederation of British Industry in response to growing concern at the level of salaries and bonuses being paid to senior executives. Its key findings were that Remuneration Committees made up of non-executive directors should be responsible for determining the level of executive directors' compensation packages, that there should be full disclosure of each executive's pay package and that shareholders be required to approve them. Remuneration should be linked more explicitly to performance, and set at a level necessary to 'attract, retain and motivate' the top talent without being excessive. It also proposed that more restraint be shown in awarding compensation to outgoing Chief Executives, especially that their performance and reasons for departing be taken into account.

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.