The role of culture in corporate governance
The role of culture in corporate governance

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • The role of culture in corporate governance
  • Background
  • UKCG Code
  • What is culture?
  • The role of the board and management
  • Monitoring culture
  • Reporting on culture
  • FRC annual review of the UKCG Code

Background

Following the 2008 financial crisis and a number of high-profile corporate failures, there has been increased focus in recent years on the role of corporate culture in delivering long-term business and economic success. One manifestation of this was the Financial Reporting Council’s (FRC) ‘Report on Culture and the Role of Boards’ in July 2016 (FRC Culture Report), which included a number of recommendations on how boards can promote a healthy culture within their companies.

This Practice Note considers the role of boards and other bodies in shaping corporate culture, including best practice guidance published by the FRC and others. For further details on the role of culture in financial services firms, see Practice Note: The FCA’s expectations around culture in financial services firms.

UKCG Code

In July 2018, the FRC published a revised version of the UKCG Code, which applies to premium listed companies with accounting periods beginning on or after 1 January 2019 (although companies may choose to comply with some or all of the provisions before this date). The FRC also published an updated its Guidance on Board Effectiveness, which replaces the 2011 version.

Companies with accounting periods beginning before 1 January 2019 may continue to report against the 2016 version of the UKCG Code.

The importance of culture in delivering the long-term success of the company is