The FRC has confirmed proposals for boards to include a ‘viability statement’ in the strategic report to investors. This will require directors to explain their reasoning is intended to provide an improved and broader assessment of long-term solvency and liquidity. The regulator says it is expected that this statement ‘will look forward significantly longer than 12 months’.

If included in the strategic report, the directors’ statements will be subject to a safe harbour in accordance with companies’ legislation.

The Code references on remuneration have also been changed so that boards of listed companies will now need to ensure that executive remuneration is 'designed to promote the long-term success of the company and demonstrate how this is being achieved more clearly to shareholders'.

The revised Code will apply to accounting periods beginning on or after 1 October 2014.

Although more oversight of remuneration is included in the revised Code, the current revisions do not specifically address the issue of greater board diversity. The regulator says diversity issues will be reviewed as part of the next Code revision. There will also be a review of board succession planning which will be considered for the 2016 revisions.

FRC CEO Stephen Haddrill said: ’The changes to the Code are designed to strengthen the focus of companies and investors on the longer term and the sustainability of value creation.

'The changes on going concern implement the reforms proposed by Lord Sharman whose work has stimulated a sea change in thinking about the assessment and reporting of risk and business prospects.’

They include the requirement to state whether companies consider it appropriate to adopt the going concern basis of accounting and identify any material uncertainties to their ability to continue to do so. Companies should robustly assess their principal risks and explain how they are being managed or mitigated and are also now required to state whether they believe they will be able to continue in operation and meet their liabilities taking account of their current position and principal risks, and specify the period covered by this statement and why they consider it appropriate.

In future, companies will also have to monitor their risk management and internal control systems and, at least annually, carry out a review of their effectiveness, and report on that review in the annual report.

The Code calls for greater emphasis on ensuring that remuneration policies are designed with the long-term success of the company in mind, and that the lead responsibility for doing so rests with the remuneration committee; and must have arrangements that will enable them to recover or withhold variable pay when appropriate to do so. The onus is also on boards to consider appropriate vesting and holding periods for deferred remuneration.

There is also a call to improve dialogue with shareholders, particularly when there has been a strong vote against a particular resolution at AGMs. Companies will have to explain how they plan to engage with shareholders when a significant percentage have voted against any resolution.

The FRC also says that directors should set the right 'tone from the top' - in other words, establishing a strong board ethos which is reflected and encouraged across the organisation.

Click here to view the FRC UK Corporate Governance Code