The new UK Governance Code which was published by the Financial Reporting Council ("FRC") in July 2018 (the "Code") applies to accounting periods beginning on or after 1 January 2019.
The UK Corporate Governance Code sets out standards of good practice in relation to board leadership and effectiveness, remuneration, accountability and relations with shareholders.
In addition to applying to Irish companies with a premium listing on the London Stock Exchange, the Listing Rules of the Main Securities Market ("MSM") of Euronext Dublin require that companies with a listing on the MSM state in their annual reports how the principles of the Code have been applied and whether the company has complied with all relevant provisions of the Code in addition to the provisions of the Irish Corporate Governance Annex. Where a company has not complied with all relevant provisions it is required to set out the nature, extent and reasons for non-compliance.
The new Code is shorter than its 2016 predecessor and seeks to encourage companies to focus more effectively on key areas including the culture of the company; board quality, diversity and independence; sustainability and purpose; positive shareholder and stakeholder engagement and executive pay.
The FRC views the new Code as offering flexibility through the application of principles and through 'comply or explain' provisions and supporting guidance and views it as the responsibility of boards to use this flexibility wisely and of investors and their advisors to assess differing company approaches thoughtfully. The FRC advises that by reporting on the application of the principles in a manner that can be evaluated, companies should demonstrate how the governance of the...