UK Corporate Governance reform

As we move through 2026, the UK landscape for corporate governance continues to evolve. Companies are under sustained - and, in many areas, heightened - pressure to uphold robust governance standards. We highlight the key reforms and developments for boards and legal teams to consider in planning corporate governance strategies for the year ahead, including the anticipated consultation on the Audit Reform and Corporate Governance Bill, implementation of Provision 29 of the UK Corporate Governance Code 2024 and changes that may impact how companies hold their AGMs.

These developments reflect the ongoing challenge of striking the right balance between strengthening governance and ensuring that regulation does not act as a barrier to commercial success. While new requirements aim to enhance oversight, transparency and accountability, they are also shaped by a clear recognition that effective corporate governance should be robust but proportionate. By refocusing regulatory frameworks and reporting obligations, the UK aims to create an environment where companies can respond swiftly to emerging risks and opportunities while remaining competitive in a rapidly changing market.

Audit and corporate governance reforms

Audit and corporate governance reform has been on the agenda since 2018, following Sir John Kingman’s review of the Financial Reporting Council (FRC) after major corporate failures such as Carillion, Thomas Cook and BHS. Progress seemed likely in 2025, with the Audit Reform and Corporate Governance Bill announced in July 2024 and expected to be introduced for pre-legislative scrutiny in the current Parliamentary session. However, in July 2025 the Minister for Employment Rights, Competition and Markets confirmed this would not happen, referring to the volume of legislation before Parliament. The Minister also stressed the need to ensure reforms “strike the right balance between oversight and assurance” without overburdening businesses. Highlighting the ongoing tension between the UK government’s stated desires of strengthening the UK’s audit and corporate governance framework and, at the same time, positioning the UK capital markets as a more attractive and better place to do business.

Reforms returned to the spotlight in September 2025 when the Minister signalled in a letter to the Chair of the Business and Trade Committee that a consultation would be published in “the autumn” (though at the time of writing (early January 2026) it is still awaited).

An important aspect of the new framework was the transition of the FRC into the new Audit, Reporting and Governance Authority (ARGA) with additional powers. The Minister’s letter indicated that the new regulator would become a “revamped modern regulator”, which the government now intends to call the Corporate Reporting Authority (CRA).

More significantly, the Minister indicated that the consultation will seek views on granting the CRA authority to hold company directors accountable for serious failures of existing corporate reporting duties via a new regime of civil regulatory sanctions. Although we are awaiting further details, these new powers - which will give the regulator significant new powers to enforce Companies Act 2006 breaches without court proceedings - are likely to be a focus of attention and attract discussion from boards and legal teams alike.

The letter also indicated that the consultation would seek comments on:

Extending public interest entity (PIE) status to the largest unlisted businesses, companies and LLPs with more than 1000 employees and a turnover of £1 billion or more, a significant increase on the previously trailed 750:750 threshold.

Whether PIE status should be extended to other businesses based on sector or type of business rather than size.

Measures to address the poor functioning of the audit market, especially for large, listed companies.

The need to balance increased administrative and other costs against the benefits to the UK was identified as a contributing factor in the decision not to pursue proposals related to managed shared audits and market share caps, which some organisations may welcome.

Provision 29 of the UK Corporate Governance Code 2024

Although the originally planned changes were scaled back, revisions to the 2024 UK Corporate Governance Code relating to risk and internal control were an integral part of the audit and corporate governance reforms. At the heart of these revisions is Provision 29 of the 2024 Code, which moves beyond narrative disclosure to requiring boards to provide a formal declaration on the effectiveness of material controls. The stated emphasis is on strengthening board accountability and oversight in reporting. Changes have also been made to Principle O, which make it clear that the board must not only establish, but also maintain, an effective risk management and internal control framework.

The 2024 Code applies to listed companies on a “comply or explain” basis for financial years beginning on or after 1 January 2025. However, Provision 29 has a delayed implementation date and applies to financial years beginning on or after 1 January 2026. Therefore, the first (mandatory) reporting under Provision 29 will appear in annual reports for 2026 year-ends, published in 2027. This delay has provided companies time to prepare and ensure that additional processes and procedures are in place during the first reporting period (i.e. 2026). Although many companies may choose to report on preparations relating to implementation of Provision 29, there is no expectation that boards make the new declaration in 2026.

How should companies prepare for these changes?

Update the board and its committees on their new responsibilities.

Review and refine the internal control framework.

Revisit principal risks and material controls focusing on those most critical to the company’s resilience and stakeholder interests and identify any gaps.

Identify any additional internal, or external, assurance activities - such as testing or validation - required to support the board’s declaration. These may change year on year.

Plan for ongoing monitoring throughout the year, including the frequency and format of reporting to the board.

Review governance structures and processes and update committee terms of reference to reflect new responsibilities.

Conduct a dry run of the board declaration and enhanced disclosures ahead of the effective date to identify gaps and refine processes.

Modernisation of Corporate Reporting

Alongside audit reform, a broad consultation under the Modernisation of Corporate Reporting programme is expected in 2026. The programme extends the existing review of non-financial reporting to the whole annual report as part of a holistic review of the UK corporate reporting framework. The goal is to refocus annual reports on concise, decision-relevant information for investors and creditors while removing unnecessary burdens, further reflecting the overarching theme of balancing robust governance oversight with business agility and UK market competitiveness.

Overall, the UK government aims to modernise and simplify the corporate reporting framework. Announced proposals include:

Removing the requirement for all companies to produce a directors’ report, with some content relocated elsewhere in the annual report.

Exempting wholly-owned subsidiaries that are included in the reporting of a UK parent and most medium-sized companies from producing a strategic report.

The outlook for AGMs

Physical AGMs remain the dominant format in the UK, rising to 72% of FTSE 350 meetings in 2025. Hybrid meetings account for 15%, while virtual only meetings remain rare (1%) due to practical and legal hurdles. The remaining 12% of meetings in the 2025 sample were physical meetings with a live webcast, broadcast or dial-in facility (Practical Law, November 2025). In contrast, virtual only AGMs are widespread in Hong Kong, common in the US and increasingly adopted across Europe, particularly in Germany.

Boards should monitor legislative developments, as the UK government proposes to amend the Companies Act 2006 to clarify that fully virtual meetings are permitted. Although the timing of the amendment is unclear given delays to the Audit and Corporate Governance Reform Bill, some companies may choose to renew and, where necessary, update their articles during the 2026 AGM season to enable virtual meetings should they choose to do so in future. Engagement with shareholders will be key, with investor bodies continuing to express concern about virtual meetings reducing board accountability in the UK. In December 2025, the GC100 published guidance on best practice for virtual shareholder meetings, which focuses on enabling shareholders to question and hold boards to account in the context of a virtual meeting.

Embracing the evolving corporate landscape

The audit and corporate governance reform journey that started in 2018 is set to continue in 2026. Although the pace of change may seem glacial, and timelines for key changes still remain unclear, 2026 is set to be a pivotal year for UK corporate governance with changes to Provision 29 finally becoming effective and signals from the UK government that other key reforms are progressing. At the heart of these changes, the UK must balance appropriately robust oversight and assurance with the need to foster, encourage and enable a competitive business environment. For boards, senior executives and legal teams, an emphasis on transparency, accountability and stakeholder engagement, and having their voice heard through participating in the upcoming consultations, will be paramount.

Read more on AGM trends and outlook for 2026 here.