UK Corporate Governance Code: Are you ready to comply?

A significant shift is underway in the UK's corporate landscape. Driven by a renewed focus on transparency and trust after a series of high-profile corporate failures, the 2024 UK Corporate Governance Code introduces the most substantial changes to corporate accountability in years. For finance and compliance leaders, this isn't just another update to the rulebook; it's a signal to urgently re-evaluate the processes that protect your entire organisation.

Here, we’ll help you navigate through the new requirements, critical deadlines, and the essential steps your organisation must take to steer through this new era of governance successfully.

The 2024 Code is a significant moment for UK businesses, created in the wake of corporate failures that shook public confidence. In response, regulators are demanding a new standard of transparency, shifting the focus from intent to evidence and from collective responsibility to individual accountability.

Core Changes in the 2024 Code

The overarching goal is to enhance audit quality and corporate reporting. A key element of this is the plan to replace the Financial Reporting Council (FRC) with a new, more powerful statutory regulator: the Audit, Reporting and Governance Authority (ARGA). ARGA is expected to have stronger enforcement powers, including the authority to directly investigate and sanction directors for breaches of their duties related to corporate reporting and audit, holding leadership to a higher standard than ever before.

Enhanced Director Accountability

The most critical change is the dramatic increase in personal responsibility for directors, a move widely described as the UK's version of the US Sarbanes-Oxley Act ("UK SOX"). Previously, accountability was often viewed collectively. Now, the onus is on individual directors to personally attest to the effectiveness of their company's risk management and internal control systems. This isn't limited to just financial controls. It explicitly includes a company's financial, operational, and compliance controls, demanding a holistic, enterprise-wide view of risk.

Expanded Reporting Obligations

Alongside director accountability, the Code expands what companies must report. This includes the introduction of "Resilience Statements," which require boards to provide a comprehensive outlook on their company's viability over the short, medium, and long term, assessing their ability to withstand strategic challenges. Furthermore, the Economic Crime and Corporate Transparency Act 2023 has introduced a new corporate offence of "failure to prevent fraud." This requires organisations to implement and prove they have "reasonable fraud prevention procedures" in place, adding another critical layer to the compliance and reporting burden.

The transition to the new Code is unfolding in stages. With the first deadline now passed, the focus shifts entirely to the most significant challenge yet: the January 2026 implementation of Provision 29. This makes the remainder of the year the final and most critical window for preparation.

January 1, 2025: Main Code Provisions Take Effect

For financial years beginning on or after January 1st, most of the 2024 UK Corporate Governance Code's provisions have already begun to apply. This was the starting gun for companies to ensure their broader governance frameworks, board compositions, and committee structures are aligned with the new standards.

January 1, 2026: Provision 29 Implementation

This is the deadline that finance leaders cannot afford to ignore. For financial years starting on or after this date, Provision 29 comes into force. This is the "UK SOX" provision that mandates the board's annual declaration on the effectiveness of their material internal controls across financial, operational, and compliance systems.

Ongoing Enforcement and Monitoring

With the future establishment of ARGA, companies can expect heightened external scrutiny. ARGA will have enhanced powers to investigate and sanction directors for breaches related to corporate reporting and audit failures, raising the stakes for non-compliance significantly.

While the Code sets a benchmark for all businesses, compliance is specifically required for the following entities on a "comply or explain" basis.

Premium Listed Companies

The Code directly applies to all UK companies with a premium listing on the London Stock Exchange, including the FTSE 100 and FTSE 250.

Large Private Companies

The reforms are expanding their reach. The largest private companies (those with over 750 employees and an annual turnover exceeding £750 million) are being brought into the scope of "Public Interest Entities" (PIEs), subjecting them to more rigorous audit and reporting standards.

Financial Services Organisations

The Code places special emphasis on financial institutions. Because their health is vital to the wider public interest, entities like banks and insurance undertakings are formally designated as Public Interest Entities (PIEs). This classification means they are already held to a higher standard of regulatory oversight, and the new Code deepens these requirements.

Achieving compliance requires a proactive and structured approach, starting now.

Assess Your Current Governance Framework

Begin with a thorough gap analysis of your existing governance structures. This includes evaluating board composition, director independence, and the effectiveness of key committees like the audit committee to ensure they align with the 2024 Code.

Strengthen Internal Control Systems

This is the most significant undertaking. Moving beyond a simple "box-ticking" exercise requires a strategic effort.

• Risk Management Framework Development: Formally identify and document the material risks to your organisation.

• Control Environment Enhancement: Design and implement robust controls to mitigate those risks across your financial, operational, and compliance processes.

• Documentation and Testing: Establish a systematic process for documenting every control and testing its effectiveness on an ongoing basis.

Prepare for Enhanced Reporting Requirements

Align your internal reporting capabilities to meet the new external disclosure demands. This includes preparing for new statements on governance, providing detailed disclosures on risks and controls, and integrating ESG (Environmental, Social, and Governance) metrics into your formal reporting.

A successful compliance programme is built on clear ownership, modern tools, and a well-informed team. A reactive, check-the-box approach is no longer sufficient; a proactive, embedded strategy is now essential.

Establish Clear Accountability Lines

Accountability must be driven from the top down. This means going beyond a simple RACI chart and creating a formal governance charter that defines the roles and responsibilities of the board, the audit committee, and senior management. The "tone from the top" is critical in fostering a culture where risk management is everyone's responsibility, and a clear line of sight exists from day-to-day control activities to the board's final attestation.

Invest in Technology and Automation

In an era of heightened scrutiny, manual, spreadsheet-based processes are a significant liability. They are inefficient, prone to human error, lack transparency, and cannot provide the immutable audit trail required for a confident board-level declaration. Investing in technology is no longer an option—it's a necessity. A unified platform for financial automation transforms compliance from a periodic, painful exercise into a continuous, automated process.

• Standardise and Enforce: Technology allows you to build standardised templates and mandatory workflows for every control. This moves your control framework from disparate documents into a centralised, enforced system where controls cannot be bypassed.

• Gain Real-Time Visibility: Instead of waiting for a year-end review to find problems, automation provides real-time dashboards that give management immediate visibility into the health of the control environment, allowing them to identify and remediate exceptions as they occur.

• Create a Single Source of Truth: A dedicated platform serves as a centralised evidence hub, linking every control activity to its supporting documentation. Every action—preparation, approval, review—is captured in an unchangeable, digital audit trail, providing the irrefutable proof needed to support your board's declaration.

Develop Comprehensive Training Programmes

A robust framework is only as good as the people who operate within it. A continuous training programme is crucial to embed a culture of compliance.

• Director Education: Empower board members with dedicated training on their expanded duties, personal liabilities under the new code, and what "effective" internal controls look like in practise.

• Management Development: Equip managers with the skills to identify risks in their areas, own the controls they are responsible for, and communicate the importance of compliance to their teams.

• Organisation-Wide Awareness: Foster a true culture of compliance and integrity through broad-based training on topics like fraud prevention and the importance of speaking up, ensuring that every employee understands their role in protecting the organisation.

For more in-depth perspectives on the regulation and what it means for UK businesses, we recommend exploring the analysis from our partners and leading advisory firms who are guiding clients through this transition.

Deloitte: Read their overview, FRC finalises updates to the UK Corporate Governance Code, to understand the key changes and their implications.

EY: Get practical advice from their guide on preparing for the 2024 UK Corporate Governance Code's risk management and internal control changes.

The UK's new Corporate Governance Code should not be viewed as a regulatory burden. Instead, it is a powerful catalyst for building a more resilient, efficient, and valuable organisation. The act of strengthening your internal controls and enhancing transparency is a strategic investment that pays dividends far beyond simply satisfying a regulatory requirement.

Organisations that proactively embrace these reforms will emerge with a significant competitive advantage. They will benefit from a more robust risk management framework, leading to better-informed strategic decisions. They will unlock operational efficiencies by automating manual tasks and streamlining outdated processes. Most importantly, they will earn a higher degree of trust from investors, customers, and partners, strengthening their corporate reputation and protecting shareholder value.

With the 2026 deadline for Provision 29 looming, the time to act is now. The groundwork for a confident declaration in 2026 must be laid in 2025. Is your organisation's current framework of spreadsheets and manual processes robust enough for this new era of accountability?