The Code sets high standards for Corporate Governance. It recognises that companies have differing circumstances and so offers flexibility through its ‘comply or explain’ approach to reporting.

The FRC encourages companies to embrace the flexibility offered by the Code so that investors and wider stakeholders benefit from reporting that clearly demonstrates a commitment to good governance, and clearly sets out a company’s circumstances.

The regulator has said it is important that companies embrace the flexibility offered by the Code and develop bespoke governance processes and practices which raise standards.

It added that firms should make it easy for readers to find out which Provisions of the Code they have departed from in their annual report.
Ensure that they provide full, clear and meaningful explanations for any such departures.

This new guidance builds on the findings of the FRC’s Review of Corporate Governance Reporting issued in November.

These reports are part of the FRC’s ongoing drive to promote good practice and support companies to continually improve their reporting against the Code.