The UK Financial Reporting Council (FRC) has issued updated guidance on 'comply or explain' reporting under the UK Corporate Governance Code.
The guidance sets out how companies should provide explanations when departing from the Code and emphasises to investors that departures can be positive indicators if the rationales provided are clear and transparent.
FRC CEO Richard Moriarty stated: “The UK Corporate Governance Code is a global standard precisely because it offers companies the flexibility to govern in a way that suits their circumstances.”
“A well-reasoned explanation for departing from a provision is not a red flag - it is evidence of a board thinking seriously about what good governance means for their company,” he added. “We want to support companies and investors alike to embrace that spirit with confidence.”
