Value of UK Corporate Governance Code flexibility highlighted in latest reporting review
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Published: 12 November 2026
In its first review of reporting against the 2024 Code, the FRC found that 39 of the 100 companies sampled departed from at least one Code provision, compared with 25 last year. The most common departures concerned chair independence, chair tenure and annual board performance reviews.
The flexibility of the UK Corporate Governance Code allows companies to adopt governance approaches that reflect their individual circumstances, provided they explain their choices clearly to investors.
The review found examples of companies clearly explaining why an alternative approach was appropriate, the risks involved, the mitigating action taken and whether the arrangement was temporary. However, the quality of explanations was inconsistent and continues to require improvement.
Mark Babington, Executive Director of Regulatory Standards“Flexibility is a core strength of the UK Corporate Governance Code. It allows companies to adopt governance arrangements that reflect their individual circumstances while remaining transparent with investors about the choices they have made.
“This review shows companies making active use of that flexibility, including smaller companies applying the Code proportionately. What matters is not the number of departures, but whether companies give investors a clear and convincing explanation of their approach.
“We are also seeing encouraging work by boards preparing for the new Provision 29 requirements. The next step is for reporting to give investors greater insight into the impact of board decisions and how governance is working in practice.”
For the first time, the review includes a dedicated assessment of reporting by small-cap companies, finding that these companies made particular use of the Code’s flexibility, including slightly higher levels of departure, while providing examples of concise and insightful reporting. The review also found encouraging evidence of governance developing in practice. 92 of the 100 companies reported activity to prepare for Provision 29, which strengthens board accountability for risk management and internal controls.
The FRC also examined how companies report the outcomes of board decisions. It identified good examples, particularly in reporting on shareholder engagement and board performance reviews, but found that reporting too often stopped at what boards had reviewed, discussed or decided without explaining what changed as a result.
The review found that boards are increasingly overseeing cyber and AI-related risks. Mentions of artificial intelligence increased from 86 companies last year to 95 this year, and 68 considered AI within their risk frameworks.
The most effective reports were not necessarily the longest. Clear structure, concise explanations and company-specific insight were more important than volume, with smaller companies also providing examples of high-quality reporting without unnecessary complexity.
Read the Annual Review of Corporate Governance Reporting.
Register for the FRC’s upcoming webinar discussing the review’s findings before a live Q&A.