UK's FRC Introduces New Governance Rules for Company Directors

Directors Required to Annually Sign Off on Internal Controls, with Changes Taking Effect in 2026

UK's Financial Reporting Council (FRC) has introduced new governance rules for company directors, requiring them to annually sign off on the effectiveness of their companies’ internal controls.
The changes, which are a watered-down version of the original proposals, are set to take effect in 2026.
The FRC has emphasized the 'comply or explain' principle, allowing firms to deviate from strict adherence to the rules if they can justify their actions.
The FRC dropped plans to give auditing committees new responsibility over environment, social and governance issues, and scrapped proposals for diversity and inclusion reporting.
The new rules are seen as a response to past corporate failures and scandals, aiming to enhance accountability and transparency within companies.