2024 Corporate Governance Code Director Essentials

2024 Director Roles and Responsibilities Courses, 2 Days, Maximum 8 Directors

Additional Dates Available: Click Here to View All Dates



2024 Corporate Governance Code is Effective from 2025

The 2024 UK Corporate Governance Code was published on 22 January 2024, after a consultation process which focused on a few key issues. The main one being the effectiveness of the internal controls of the company. This is covered by Provision 29 of the 2024 Corporate Governance Code, which deals with the Board’s accountability for maintaining effective internal controls.

Provision 29 is quite radical. It requires the Board to make a Declaration of Effectiveness in the annual Financial Statements that the  internal controls are effective. The declaration will have to cover all material aspects of operational compliance and reporting. Boards will also have to explain in their annual report how they have performed their monitoring of the material controls.

The 2024 Corporate Governance Code is applicable to financial years beginning on or after 1 January 2025. The 2018 Corporate Governance Code will still apply to all earlier financial years. However, Provision 29 of the 2024 Corporate Governance Code will only apply to financial years beginning on or after 1 January 2026. 

The UK Corporate Governance Code (previously the Combined Code) is a formal document, published by the Financial Reporting Council (FRC), which sets out Best Practice standards for all companies.

The Definition of UK Corporate Governance

Corporate Governance is the system by which companies are directed and controlled.

This definition originated in the first version of the UK Corporate Governance Code (the Code), which was published in 1992 by the
Cadbury Committee. That same definition was adopted in a further review commissioned by the Secretary of State for Trade and Industry in 2003. That review was chaired by Sir Derek Higgs and its final report was entitled “Review of the Role and Effectiveness of Non-Executive Directors” and later came to be known as the “Higgs Report” Much of the wording from that original 2003 report can still be seen in the latest version; the UK Corporate Governance Code 2024.

The code is published by the Financial Reporting Council (FRC). The  relevant version of the code for financial years beginning on or before 31 December 2024 is the UK Corporate Governance Code 2018. The UK Corporate Governance Code 2024 will apply to financial years beginning on or after 1 January 2025. 

The Implications of Corporate Governance

Accepting the definition above would imply that for Corporate Governance to be effective, each of the main component parts of a company must be effective in their own right. These component parts are:

• The Board of Directors
• The Shareholders
• The Company as a “Separate Legal Persona”

These components must separately function effectively and also properly interact with each other:

  • The Board collectively (including the sub-committees) and the Directors individually, must perform their separate functions
  • The shareholders should perform their primary functions, which are providing risk capital, appointing new directors (for Plcs only, not for Private Limited Companies) and holding the Directors and the company to account for the management of the company. The latter is achieved by scrutinising, and where appropriate questioning, the statements and documents produced by the company and its Directors. That is why the timely filing of accurate information at Companies House, for the use of the shareholders and other stakeholders is very important
  • The company will be able to fulfil its primary functions through the actions and decisions of the Board provided the Directors are collectively properly performing their duties and responsibilities

According to BIS; The Department for Business, Innovation and Skills (BIS) as was, later BEIS until 2023:

Transparency and accountability are the most important elements of good corporate governance. This includes:

  • The timely provision by companies of good quality information
  • A clear and credible company decision-making process
  • Shareholders giving proper consideration to the information provided and making  considered judgements.

Minimum Director Standards of Corporate Governance Knowledge

All UK Directors of companies need to know and understand at least the requirements for Corporate Governance of:

  • The law in the form of the Companies Act 2006
  • The UK Corporate Governance Code

Annual Declaration of Effectiveness of Internal Controls

Provision 29 of the 2024 Corporate Governance Code requires the Board to make a declaration in the annual Financial Statements that the  internal controls are effective. This encompasses:

  • “A Declaration of Effectiveness of the material internal controls as at the balance sheet date; and
  • A description of any material controls which have not operated effectively as at the balance sheet date, the action taken, or proposed, to improve them and any action taken to address previously reported issues.”

The declaration will have to cover all material aspects of operational compliance and reporting. Boards will also have to explain in their annual report how they have performed their monitoring of the material controls.

This is essentially a nod towards the Sarbanes-Oxley (Sarbox) Act of the USA, which requires Chief Executives to make a similar personal declaration covering the published financial results of their global operations.

The 2024 Corporate Governance Code is applicable to financial years beginning on or after 1 January 2025. However, Provision 29 will only apply to financial years beginning on or after 1 January 2026.

Declaration of Effectiveness of Internal Controls; Potential Benefits

Provision 29 of the 2024 Code requires an annual Declaration of Effectiveness of the material internal controls. The preparatory work required to be able to make such a statement, should provide a solid (and perhaps stronger) basis for companies to be able to rely upon to evidence the effectiveness of their internal controls. Thereby satisfying one of the Government’s major concerns, which is “Restoring Trust in Audits and the annual Financial Statements, by enhancing transparency and improving investor confidence.”

This expectation is supported by the results of a survey report published by the Washington based Center for Audit Quality detailing the outcomes arising from the implementation of the Sarbanes-Oxley (Sarbox) Act in the USA. Those results were:

  • 79% of Chief Financial Officers (CFOs) said that it had improved the quality of information in the financial statements
  • 85% of CFOs agreed that it had improved the internal financial controls
  • 34% of CFOs thought that it had greatly helped their company
  • 26% of CFOs said that it had helped to build trust among stakeholders and customers
  • 21% of CFOs thought that it had facilitated more accurate financial reporting
  • 21% of CFOs said that it had helped to streamline the processes

The number of companies that must follow the Corporate Governance Code is relatively small. However, the big four audit firms are likely to increase their focus on the internal control environment of all companies and hence highlight more “areas of concern,” regarding the internal control environment. It would be a high risk approach for any company to ignore the internal control recommendations of their auditors. Especially, if ignoring those recommendations would be likely to increase the risk of future financial losses to the creditors, shareholders or employees. This will also focus the minds of the shareholders and bankers on the effectiveness of the internal controls, thereby increasing the pressure on companies to take a more robust approach to reviewing and monitoring the effectiveness of those internal controls.

All Boards of Directors are “responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.” This  implies that the Directors should know that their internal controls are effective, at least insofar as they might impact the Financial Statements of the company.

Around 1200 Directors a year are disqualified from being directors, due to insolvency related issues, which arguably might have been avoided if the internal control environment has been more effective. Partly for this reason there is a standard Statement of Director Responsibilities, which sets out the responsibilities of all company Directors for the financial affairs of their company.

Corporate Governance Sources in the UK

There are several influential inputs to the advancement and development of Corporate Governance in the UK. These are:

  • The Companies Act 2006; this is UK law and therefore must be obeyed
  • The listing rules of the Stock Exchange, which are the responsibility of the Financial Conduct Authority (FCA). Previously they were the responsibility of the Financial Services Authority (FSA)
  • The UK Corporate Governance Code 2024 (previously the 2018 Code), which sets out standards of Best Practice for board composition, director development, remuneration, shareholder relations, accountability and audit. The code is published by the Financial Reporting Council (FRC). It is aimed at listed (quoted) companies, but offers Best Practice guidance for all companies
  • EcoDA Corporate Governance is an EU wide standard aimed at unlisted companies in the EU. It is published by ecoDa, a not for profit association, which represents several national director institutes within Europe. It also offers Best Practice guidance for all companies
  • The International Accounting Standards Board (IASB), which is an independent, private-sector body that develops and approves International Financial Reporting Standards (IFRSs). These standards are compulsory for listing on any of the major stock markets in the western world and in Japan and Hong Kong (formerly?). When the UK was in the EU, it automatically amended UK standards to follow any IFRS accounting changes. When the UK left the EU, it ceased to automatically follow the IFRSs. Instead the UK introduced a new legal term, ”UK adopted international accounting standards” for IFRS Accounting Standards as adopted by the UK. The UK parliament has made a commitment to continue to follow IFRS accounting, but without fixing any firm timetable

Compliance Requirements in the UK

Unquoted companies need only to comply with the Companies Act 2006, unless they have voluntarily opted for IFRS accounting. In which case they must also follow the IFRS accounting Standards (all of them). However it would be wise for unquoted companies to also pay attention to good Corporate Governance, as any significant departures from the UK Corporate Governance Code could be deemed to give rise to poor decision making, or possible even “Grossly Negligent” decision making, if the Directors are being sued by the creditors, due to a liquidation. The creditors be trying to blame the Directors and therefore strip away the limited liability protection normally enjoyed by UK Company Directors.

Quoted companies must always comply with the IFRS accounting Standards. They must also adopt and comply with a published Corporate Governance Code, but it can be any of the several possible published Corporate Governance standards. These companies must also comply with the Listing Rules of the London Stock Exchange (again all of the rules).

Directors could learn more about UK Corporate Governance by attending one of or 2024 Director Roles and Responsibilities Courses which would explain exactly what Corporate Governance is and the implications for Board Directors. Plus all the other skills and knowledge that are needed by Directors. These courses provide the knowledge and skills necessary for Directors to lead and manage their companies successfully. This knowledge and expertise will be confirmed and embedded through extensive case studies, that allow Directors to experience and to work through a range of realistic and likely business scenarios.

The course that specifically deals with the Director Duties and other obligations is the Director Roles & Responsibilities ” course.

The course that provides the financial knowledge to allow Directors to understand and to fulfil their legal financial Responsibilities, as well as to provide the knowledge to understand and read any Profit & Loss Account or Balance Sheet is the Finance for Non-Finance Directors course; also known as Finance for Board Directors or Finance for All Directors. It does not require any previous financial knowledge and will bring every director up to a high standard of financial expertise, including being able to assess and to value any potential company acquisition.

Our scheduled courses can also be run as in-house courses at your offices or at a convenient venue.

Please click here to see the courses we offer as internal single company courses, at a date and location convenient for your Board of Directors
Please click here to see the scheduled courses we provide for “Director Duties and Responsibilities”
Please click here to see the scheduled finance courses we offer to all Board Directors (no previous financial knowledge required) “Finance for Non-Finance Directors”
Please click here for more information about the Statement of Director Responsibilities. These are purely the Financial Responsibilities under the Companies Acts.

Institute of Leadership and Management Approved Training Centre

CPD – Formal Certificates of Professional Development will be issued. These certificates will be accepted as evidence for CPD purposes by most professional institutes and associations.  Our clients regularly award our courses an “Excellent” overall rating

Chartered Management Institute Recognised Training Centre for Director Training Courses.