The UK Corporate Governance Code shapes how UK listed companies 

, report on performance and provide transparent, defensible disclosures. It operates on a comply or explain basis and continues to evolve as expectations for accountability rise.

Organisations have now spent a full year working under the 

 Most have completed their first reporting cycle and refined their approach to outcomes‑based reporting, culture oversight and stakeholder communication. The final major change, 

 applies to financial years beginning on or after January 1, 2026, and will reshape how boards report on internal controls.

This blog walks through what matters most, including:

Where technology strengthens reporting and oversight

Purpose and history of the UK Corporate Governance Code

The UK Corporate Governance Code codifies 

 for businesses and investors. It’s required for UK-listed companies and gives all organizations a valuable framework for transparent, defensible management. It helps investors compare companies and encourages boards to align governance with strategy and culture. The Code is structured around five Principles that cover board leadership, division of responsibilities, composition and succession, audit and risk, and remuneration. Provisions then explain how boards should apply those Principles in practice.

The Code applies to companies listed under the UK Listing Rules in the commercial companies or closed‑ended investment funds categories. This includes companies listed in the commercial companies (ESCC) category and closed‑ended investment funds and others that adopt the Code voluntarily. To meet Listing Rule expectations, companies must apply the Principles and comply with, or explain against, the Provisions.

applied to financial years beginning January 1, 2025.

 By the end of 2025, most in‑scope companies have already reported under the new framework. Provision 29 applies to financial years beginning on or after January 1, 2026. 

The role of the Financial Reporting Council (FRC)

The FRC oversees corporate governance, audit and reporting standards in the UK. It publishes the Code, issues supporting guidance and reviews annual reports each year to highlight strengths and gaps in governance disclosures.

 the FRC and related bodies issued updated guidance on NED remuneration, going concern reporting and virtual shareholder meetings. These updates help companies understand how to meet expectations in a landscape shaped by outcomes‑based reporting and increased scrutiny of board decisions. 

A major shift in the 2024 Code is the focus on reporting outcomes, not policies. Annual reports should show the decisions the board made and the impact of those decisions on strategy, risk and culture. Culture reporting should show how values are embedded and how behaviours are monitored. Boilerplate wording is no longer acceptable. Investors and regulators expect clarity and evidence.

2. Provision 29: internal controls and risk management

Provision 29 becomes effective for financial years beginning on or after January 1, 2026. Boards will need to:

Monitor and review the effectiveness of the risk management and 

Complete an annual review of effectiveness

Declare whether material controls were effective at the balance sheet date

Describe any ineffective controls and actions taken

Material controls include financial, operational, reporting and compliance controls. This is a significant shift because the declaration is an outcome statement that must be backed by evidence that stands up to investor scrutiny. There is no external auditor attestation requirement.

Several audit‑committee‑related provisions have moved into the Audit Committees and External Audit Minimum Standard, which now sets expectations for audit oversight, tendering and independence. Boards should check that committee terms of reference reflect this shift.

 confirm that paying NEDs in shares can support alignment with shareholders, while performance‑linked pay risks affecting independence. Remuneration explanations should reflect the company’s strategy and circumstances, not generic market claims. 

5. Shareholder engagement and meeting formats

 supports companies planning virtual‑only shareholder meetings. It sets clear expectations on engagement, Q&A and disclosure while government clarifies Companies Act provisions. Boards should review their articles and AGM notices accordingly.

6. Going concern and financial resilience

New FRC guidance published in February 2025 strengthens expectations for solvency, liquidity and going concern reporting. Boards should ensure assessments and disclosures are tailored, evidence‑based and specific to the company’s financial position. 

Focus reviews on decisions and outcomes, not processes. 

Explain any departures from Provisions clearly and proportionately. 

Highlight the outcomes of board decisions and link them to strategy.

Remove duplication across the annual report.

Define material controls using a clear, risk‑based test.

Agree an evidence standard that sets coverage, thresholds and closure criteria.

Integrate assurance across first, second and third lines to avoid duplication.

Prioritise principal risks and price‑sensitive reporting.

Align listing rule disclosures with the 2024 Code.

Refresh audit committee terms against the Minimum Standard.

Set the foundations
Agree material controls. Define evidence requirements with the audit committee.

 Test and remediate
Run targeted testing. Fix issues early and track retesting.

 Dry‑run declaration
Prepare draft wording and the supporting evidence pack. Refine both with the audit committee.

 Finalise disclosure
State the board’s conclusion plainly. Explain any ineffective controls and the actions taken.

This phased approach makes the year‑end declaration clearer, more credible and easier to complete. 

Technology strengthens governance, reduces manual effort and improves evidence quality. With Diligent you can:

 and connect findings directly to audits so evidence quality improves without noise

See how Diligent can streamline and strengthen your UK Corporate Governance Code efforts: 

Diligent for internal controls and risk management

Diligent for board and leadership collaboration

, the platform that brings it all together.

The UK Corporate Governance Code: Key provisions and updates

This article originally appeared in our December 18th edition of the Diligent Minute Newsletter. For more insights like these, delivered straight to your inbox, subscribe 

As we close out 2025, I’ve been reflecting on what this year taught us and the word that comes to mind is “unprecedented.” Insights from the Diligent Institute’s research show how directors navigated multiple unprecedented challenges – often simultaneously – while also driving major change. The lessons we learned this year aren’t just a look back. They can be a compass pointing to the directional shifts boards will need to embrace as governance moves into a faster, more AI-enabled era.

Five governance shifts boards must prepare for in 2026

What will change: Boards will move beyond passive reporting and lean into more 

 Predictive analytics and scenario planning will become part of everyday conversations, helping directors navigate volatility before it hits.


Why? Director confidence hit historic lows in 2025. Our 

 conducted in partnership with Corporate Board Member, landed at just 4.8 out of 10, among the lowest since the pandemic. That’s a wake-up call for faster, smarter decision-making. If you’re curious whether sentiment is shifting, our Q4 results will be live by the time this issue hits your inbox. Check them out to see if optimism is making a comeback.

What will change: Dashboards won’t just summarize risks. They’ll surface them within hours, and crisis protocols will kick in during the first 72. AI-powered assurance will scan massive datasets to catch anomalies as they happen, and directors will be able to ask complex questions in plain language and get instant answers. Oversight will move from reacting after the fact to staying ahead of the curve, a fundamental change in risk management.

 7.9 out of 10. Quarterly updates aren’t enough anymore. Boards need early-warning systems and integrated intelligence to keep pace.

3) AI governance moves to the top of the agenda

What will change: Agentic AI is moving fast, from assisting to acting. Boards will need to build AI literacy, test for bias and keep humans in the loop to manage less visible risks.

Why: Two-thirds of directors used AI tools in 2025, but 

, 57% of respondents said their organizations had deployed AI in one or more areas of the business, but only 36% had audited usage.As AI deployment climbs higher on the priority list for 2026, closing this governance gap is critical.

4) Integration becomes a growth essential

What will change: M&A ambitions will stall without tech integration. Boards that prioritize scalable platforms will unlock faster, cleaner transactions and reduce risk during rapid growth periods as integration readiness becomes a board-level KPI.

 conducted in partnership with Wilson Sonsini and NetSuite, found only 4% of organizations had fully integrated GRC and financial systems.

What will change: Board agendas will shift toward forward-looking conversations powered by predictive analytics and cultural insights. Directors will widen their lens beyond financials to include culture and workforce resilience, using anonymized data to spot risks before they surface.

Why: The ability to anticipate, not just react, will define effective governance in 2026. Boards that lean on AI-driven scenario modeling and continuous feedback loops will stay aligned with fast-changing realities.

Turning 2025 board lessons into a 2026 action plan

2026 will reward boards that act, not just react. That means pairing human judgment with AI-driven foresight, embedding continuous assurance and integrating systems for scalability. Governance is moving from static to dynamic – and the boards that thrive will be ready to keep pace.

Check out the full blog on trends shaping governance in 2026.

From risk to strategy: The governance agenda for 2026 

Boardroom confidence surges in final quarter despite tepid 2026 expectations 

After three quarters at a five-year low, director confidence jumped 23 percent in December—yet the outlook for 2026 remains muted. One director's advice: 'Defend and survive.'

America's corporate directors ended 2025 on an unexpectedly optimistic note.

After languishing at a five-year low for three consecutive quarters, the Director Confidence Index—a quarterly poll conducted by Corporate Board Member and Diligent Institute among U.S. public company board members on their sentiment for business—surged 23 percent in December, climbing from 4.9 out of 10 to 6.0 and finally breaking into "Good" territory. 

A better understanding of how tariffs are impacting businesses and the economy, lower interest rates and increased CapEx spending are the most common factors directors shared to explain this rebound. 

“[There’s] an expectation that companies will be able to work through any tariff impacts without significantly raising prices,” explained one director participating in the poll.

It's a remarkable turnaround for a year that tested boardroom resolve. 

Yet even with the late rally, 2025's average confidence level landed at just 5 out of 10—well below 2024's 6.2 average and significantly short of the 6.9 that directors had predicted this time last year.

The 105 directors surveyed December 6-11 overwhelmingly point to one issue that slowed down business this year: tariffs. 

Three quarters cited it as a top contributor to lower-than-expected business conditions, well ahead of any other factor, noting that standard playbooks don’t work when the environment keeps changing.

“No matter how much you try to prepare for the unexpected, you can never truly assess all outcomes,” said one director on the board of a publicly traded tech company. “We did not see the substantial impact the ever-changing tariff environment (much of which was likely unconstitutional) would have on our customers CapEx spending plans.”

“I have never experienced what we are seeing in our industry in my 30+ years,” said one director at a Nasdaq-traded life sciences company. “Pharma/biotech has always been recession-proof and has not been impacted by which party was in power at the time.”

Despite December's surge, directors aren't banking on momentum carrying into the new year. Their forecast for business conditions by this time in 2026 sits at 6.0—essentially flat from today's level.

This is an interesting delta when compared to CEO sentiment. When polled by sister publication Chief Executive the first week of December, 

CEOs said they forecast conditions will improve by

 in 2026, to land at 6.4 out of 10 next December.

Overall, 44 percent of CEOs are optimistic that conditions will improve, vs. 32 percent of board members.

Among those directors who are optimistic, we observe a strong AI focus in their responses, far outpacing macro fears that are atop the list of concerns among directors who expect conditions to deteriorate in 2026. As for those neutral directors, the uncertainty they expect to continue in the year ahead rivals inflation as a key theme.

To navigate 2026 successfully, directors are prioritizing adaptability, deeper engagement and faster learning, recognizing that compounding risks demand boards connect dots more quickly than ever. "Work hard and smart, keep expenses tight, and survive until a rebound comes around," advised one director.

“Defend and survive,” concluded another.

The Director Confidence Index five years later

To mark our fifth year of running the Director Confidence Index, we asked respondents this quarter to reflect on how their roles had shifted since we first fielded this survey at the end of 2020. Directors say they are spending far more time on risk in a “more complex and faster‑moving” environment—cybersecurity, AI, geopolitical shocks, supply‑chain integrity and policy volatility are now routine board agenda items, not edge cases. 

Many describe a shift from “managing the present” to “understanding and planning for the future,” with scenario planning and strategic resilience now core to the role. Several also point to rising scrutiny from activists and a broader investor base, which has widened the mandate from overseeing financial performance to stewarding culture, human capital and corporate character.

Directors repeatedly flag the steep learning curve this entails. In their open‑ended comments, they emphasize the need to be more tech‑savvy on AI and cyber, more fluent in geopolitics and regulation, and more intentional about ongoing education just to remain effective in the boardroom. Committees are “very busy,” topics are broader, and some directors note a clear move away from informal business development toward disciplined governance, succession planning and risk oversight. 

While a minority insist the formal role has not changed, the weight of the written responses is unmistakable: being a director today is more time‑intensive, strategically demanding and consequential than it was in 2020, and possibly than it has ever been. 

Diligent

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The UK Corporate Governance Code: Key provisions and updates

The UK Corporate Governance Code: Key provisions and updates

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