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UK Corporate Governance Reform

The UK Corporate Governance Reform has emerged as a pivotal milestone in shaping the future of corporate governance practices within the United Kingdom.

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Overview

The new UK Corporate Governance Regime, also known as UK Sox, is in the final stages of the consultation period, with a proposed application of the code commencing on or after 1 January 2025. The reform includes proposals to enhance board diversity, promote employee representation, address executive remuneration, strengthen risk management and internal controls, integrate ESG considerations, and emphasises corporate culture and stakeholder engagement.

 

The Main Changes

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Audit, Risk & Controls

  • Greater focus on the audit committee as it must follow an Audit and Assurance Policy (AAP) and follow the new minimum standard
  • Companies must establish and maintain effective risk management and internal controls
  • Emerging risks need to be identified and reported
  • Directors must evaluate the company’s risk management framework, policies and practices to identify weaknesses and areas for improvement
  • Appropriate steps must be taken to address any weaknesses or vulnerabilities that have been identified
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Division of Responsibilities

  • Strong emphasis on how companies construct the board to prevent ‘over-boarding’
  • Companies must assess the time commitment and workload of directors
  • Disclosure of all significant director appointments, to provide stakeholders with clear visibility and transparency
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Board Leadership

  • The board needs to ensure all necessary policies and practices are in place to meet objectives
  • The board needs to report on whether the company’s risk management and internal controls systems have been effective and report on any weaknesses
  • Prompt reporting of any weaknesses to enhance transparency and build trust
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Remuneration

  • Companies are required to disclose malus and clawback clauses in director’s contracts
  • Remuneration should reflect company performance, including Environmental, Sustainability and Governance (ESG) targets
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Composition, Succession and Evaluation

  • Significant emphasis on promoting diversity and inclusion within boards
  • Board’s role extends beyond meeting quotas and involves creating environment of equal opportunity
  • Board must report on diversity policy to increase transparency

How To Prepare

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Strengthen Internal Controls

Robust internal controls are essential for ensuring the accuracy and reliability of financial reporting, preventing fraud, and safeguarding company assets. Implementing strong internal controls has benefits far-reaching beyond compliance – find out more

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Develop Comprehensive Risk Management

The reform encourages companies to develop comprehensive risk management frameworks to identify and manage potential risks. Make better decisions, maintain resilience and safeguard the interests of shareholders.

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Utilise Technology

Leverage technology to automate internal control processes and make auditing, monitoring and reporting seamless. Technology will help provide real-time oversight of your entire ecosystem for better management, including Separation of Duties (SOD) monitoring.

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Develop Better Culture

A controls focused culture where every employee understands their role is crucial for accountability and transparency. Promote a controls-focused culture that will foster behaviour and processes that will enhance operational effectiveness.

For a complete guide on how to prepare and to increase your overall efficiency, download our eBook today.

Download our latest eBook for a detailed guide on strengthening internal controls and risk management.

Download the eBook

Why Fastpath?

  • Continuous Monitoring: With Fastpath, organisations can conduct continuous real-time analysis of user activities, reducing risk, and ensuring compliance with regulatory requirements.
  • Separation of Duties (SOD): Through automated SOD analysis, Fastpath identifies potential conflicts and helps establish mitigating controls, aligning with best practices in risk management.
  • Complete Oversight: Fastpath’s reporting and dashboard capabilities provide clear insights into control activities and potential issues, enabling informed decision-making.
  • Seamless Integration: Fastpath’s integration capabilities allow fast connection with various ERP and CRM systems, ensuring a centralised approach to audit and risk management.
  • Quick time to Value: We believe in configuration, not code, so you can achieve a fast ROI with easy installation, pre-built rule sets, and training.

Resources

uk-parliment-and-flag-night UK SOX

Making UK Corporate Governance Reform Work for Your Organization

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house-parliment-day UK SOX

UK Corporate Governance Reform: Four Key Changes Your Organization Needs to Make

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7851_Fastpath_ResourcesCard-1000x400 eBook

Preparing for the UK Corporate Governance Reform through Strong Internal Controls and Risk Management

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