Corporate governance key updates | February 2025 – April 2025

On 25 February 2025, the Financial Reporting Council (FRC) published an updated ‘Guidance on the Going Concern Basis of Accounting and Related Reporting, including Solvency and Liquidity Risk’ (Guidance).

For context, the last published Guidance was published in 2016. While non-mandatory, the Guidance aims to address concerns related to going concern assessments, solvency and liquidity risks. The update aims to offer a practical and proportionate framework to support directors of UK companies, by incorporating requirements and provisions of company law, accounting and auditing standards, listing rules, the UK Corporate Governance Code, and other applicable regulations to help companies improve the quality of related disclosures.

The key changes established are as follows:

• the Guidance applies to all UK companies, excluding small companies and micro-entities, as companies applying the UK Corporate Governance Code fall within scope. It encloses a table outlining the specific requirement for each type of company and highlights sections that may assist the board to identify and adhere to reporting obligations;
• incorporates changes in accounting and auditing standards;
• provides further guidance on overarching disclosing requirement; and
• provides further insights into techniques that may support the board’s assessment process.

The updated Guidance highlights the FRC’s broader commitment to enhancing transparency and fostering greater trust in UK financial reporting, as it is intended to help companies improve the clarity of disclosures related to going concern assessments and financial position. By offering a consolidated and practical approach, the FRC aims to support companies in preparing high-quality, tailored disclosures that reflect their specific circumstances.

This, in turn, enables investors, regulators, and other stakeholders to gain a clearer understanding of a company’s financial position, including its exposure to solvency of liquidity risks and the plans in place to manage those risks.

On 8 April 2025, Companies House launched a new voluntary online service allowing individuals to verify their identity directly through its platform.

This development follows the introduction of identity verification measures under the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023). ECCTA 2023 was a significant legislative reform to UK company law aimed at tackling financial crime and improving corporate transparency.

While identity verification is not yet mandatory, it will become a legal requirement from autumn 2025. At that point, all individuals who are company directors, members of a Limited Liability Partnership, persons with significant control, or those authorised to file on behalf of a company will be required to verify their identity before their next confirmation statement date.

However, in the meantime, Companies House is encouraging individuals to verify their identity early. The voluntary rollout is intended to save time and reduce future administrative burdens on businesses once the requirements become compulsory.

The introduction of voluntary identity verification marks a key step in Companies House’s enhanced power to become a more robust gatekeeper of corporate information. By offering individuals the opportunity to verify their identity digitally ahead of the upcoming new requirements, Companies House is taking proactive steps to:

• increase the accuracy and trustworthiness of the information held on the register;
• improve transparency around who owns, controls, and manages UK companies;
• prevent abuse for illegal purposes, including fraud and money laundering; and
• reduce the administrative burden on businesses by encouraging early compliance.

Ultimately, this service forms part of a broader effort to enhance the integrity of the UK business environment.

The Institute of Directors (IoD) announced the establishment of a new commission to examine the role of non-executive directors (NEDs) and how it may need to evolve to meet the current and future needs of businesses in the United Kingdom.

Currently, NEDs are responsible for providing independent and objective advice to the board of directors, supporting sound decision-making that serves the interests of both shareholders and stakeholders, without involvement in the day-to-day operations of the business.

The IoD is seeking to assess whether the existing role of NEDs remains sufficient to meet modern business demands. The key aims of the commission are to:

• identify the challenges faced by NEDs in fulfilling their duties and explore potential solutions;
• evaluate how and where NEDs are adding value to corporate governance and board effectiveness; and
• make recommendations to boards and policymakers on how to enhance the role of NEDs and improve processes to increase their impact within organisations.

The commission will conduct its analysis and report its findings in autumn 2025.

The IoD recognises the vital role that NEDs play in upholding good corporate governance and driving business success. By launching this commission, the IoD is acknowledging that as the business landscape evolves, the expectations and responsibilities placed on NEDs may also need to adapt.

Although NEDs are widely used across both large, listed companies and the not-for-profit sector, their role must be continually reviewed to ensure they are well positioned to provide effective oversight, strategic insight, and accountability. This commission highlights the importance of ensuring that NEDs are equipped to deliver maximum value to the organisations they serve.