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.
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” .
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?
Disclaimer
This article is intended for general information purposes only and does not constitute legal advice. For advice specific to your situation, please contact our team at T & M Legis for a consultation with our Legal Experts.
