UK Corporate Governance Code 2024: What Every Board Director Must Do Now

The Financial Reporting Council’s revised UK Corporate Governance Code came into force for financial years beginning on or after 1 January 2025. The most significant change in over a decade — a new internal controls declaration — requires board-level action before the first reporting cycle closes. Here is what directors must understand and do.

What changed in the 2024 Code

The FRC’s January 2024 revision introduced targeted but substantive changes. Most headlines focused on the new internal controls requirement, but directors should note the full scope of changes:

• Provision 29 — Internal controls declaration. Boards must now make an annual declaration on the effectiveness of their material internal controls framework. This is not a box-tick: it requires a documented, evidenced process.
• Provision 29 — Audit committee oversight. The audit committee must review and report on the board’s internal controls declaration. Accountability for the internal controls declaration rests collectively with the full board.
• Principle A — Board composition. Strengthened expectation that boards demonstrate diversity of skills, experience, and perspectives — with reporting obligations on how composition decisions are made.
• Provision 5 — Workforce engagement. Companies must explain how the board engages with the workforce and how this engagement has informed board decisions. The “designated director” model has been clarified.
• Remuneration provisions. Expanded requirements around remuneration policy transparency and post-employment shareholding enforcement.

The internal controls obligation in plain terms

Under Provision 29, the board must state in the annual report whether it considers the company’s material internal controls to be effective — and if not, what remediation is underway.

This is structurally different from the previous requirement, which required only a description of the control framework. The new obligation requires a conclusion. That conclusion must be supported by evidence.

What constitutes adequate evidence? The FRC has not prescribed a specific methodology, but its thematic guidance and peer reviews indicate that boards will be expected to demonstrate:

• A defined scope of “material controls” — what has been assessed and why
• A documented assessment process — who performed it, what criteria were used
• Board-level review — that the board, not just management, has engaged with the findings
• Clear disclosure of any identified weaknesses and the remediation timeline

What “comply or explain” means under the 2024 Code

The UK Corporate Governance Code operates on a comply-or-explain basis. Directors sometimes misread this as permission to depart from provisions without consequence. It is not.

The FRC’s monitoring of 2025 annual reports (covering the first cohort of companies reporting under the 2024 Code) identified that explanations for non-compliance were assessed on quality, not just presence. A boilerplate explanation that the board “considered the provision but determined it was not appropriate” will attract scrutiny from institutional investors and proxy advisers.

For the internal controls provision in particular, the FRC has signalled it will conduct targeted thematic reviews of companies that either disclose weaknesses or give minimal explanations.

Nomination committee: the composition and succession obligations

The 2024 Code strengthens expectations around board composition with two practical implications for nomination committees:

Skills matrix transparency. The Code now expects that the skills and experience the board requires — and has — should be clearly articulated. Many nomination committees maintain a skills matrix; the expectation is that this is meaningfully discussed in the annual report, not presented as a green-tick table.

Succession planning for key roles. Provision 23 requires the nomination committee to oversee succession planning for the board and senior management. In the post-pandemic era of executive turnover, boards that cannot demonstrate a credible succession plan for CEO, CFO, and other material roles face investor challenge.

Remuneration: the post-employment obligation boards underestimate

The 2024 Code tightens the requirement for remuneration committees to enforce post-employment shareholding requirements. Companies have historically adopted post-employment shareholding policies but faced practical and legal challenges enforcing them when executives depart.

The Code now requires remuneration committees to explain how post-employment shareholding requirements have been enforced — including for executives who have already left. Remuneration committee chairs should review their enforcement mechanisms and ensure they are legally robust before the next reporting cycle.

Timing: when does your board need to act?

The 2024 Code applies to financial years beginning on or after 1 January 2025. However, Provision 29 (the internal controls declaration) has a staggered start: it applies to financial years beginning on or after 1 January 2026. For a December year-end company, the first internal controls declaration is therefore for FY2026, to be published in the annual report in early 2027 — not FY2025.

For a March year-end company, the reporting deadline falls in 2026. Boards in this cohort still have time to ensure their internal controls assessment is properly evidenced before the annual report is finalised.

Regardless of year-end, nomination committee work on composition and succession, and remuneration committee work on post-employment enforcement, should be addressed in the next scheduled board cycle.

The investor lens: what proxy advisers are watching

ISS and Glass Lewis updated their UK proxy voting guidelines for 2026 to reflect the 2024 Code. Directors should be aware of the following pressure points:

• Internal controls. Both ISS and Glass Lewis have indicated they will scrutinise the quality and specificity of internal controls disclosures. Vague declarations will be noted.
• Board diversity. Both advisers maintain minimum thresholds for gender and ethnic minority representation on boards. Companies falling below these thresholds should expect vote recommendations against the chair of the nomination committee.
• Long-tenured NEDs. Directors serving beyond nine years who are classified as independent will face continued scrutiny. Boards should be prepared to provide substantive explanations for extended tenures.