In a significant move aimed at reducing red tape, the FRC has kept changes to the Code to the minimum that are necessary, saying that effective governance must be targeted and proportionate.

The FRC has prioritised revisions to the Code focusing on internal controls and has dropped earlier proposals for revisions to the Code related to the role of audit committees on environmental, social and governance issues; expanding diversity and inclusion expectations; over-boarding provisions, and expectations on audit committee chairs’ engagement with shareholders.

The main substantive change requires boards to explain in a declaration in their annual reports how internal controls have been implemented and the outcomes.