Corporate governance key updates | July 2026 – October 2026

Glass Lewis has published its UK benchmark voting guidelines for 2026. The revised guidance introduces several changes to its approach to corporate governance and shareholder voting recommendations.

• Committee composition: recommendation to vote against the re-election of audit or remuneration committee chair where committee membership numbers are too low or is considered insufficient in relation to gender diversity.
• Board diversity: enhanced scrutiny of board diversity arrangements and disclosures.
• Alternative Investment Market (“AIM“) companies: recommendation to vote against certain director elections where half or more of the board is not independent.

Listed and AIM companies should review board composition, committee structures and diversity metrics ahead of the 2027 AGM season to reduce the risk of adverse voting recommendations and increased shareholder scrutiny.

The Economic Crime and Corporate Transparency Act 2023 (“ECCTA“) continues to drive the transformation of Companies House. A number of significant implementation measures are expected to take effect from Spring 2026 to 2027 as Companies House expands its regulatory and verification functions.

• Identity verification: compulsory identity verification for presenters filing documents.
• Authorised Corporate Service Providers (“ACSPs“): mandatory registration of third-party filing agents as Authorised Corporate Service Providers.
• Director restrictions: restrictions on filings submitted by disqualified directors unless documents are delivered by an ACSP for specific filings permitted by law.
• Limited partnerships: expanded disclosure and information requirements.
• Enhanced powers: continued development of Companies House powers to query information and share data with public authorities.

Utilities and infrastructure businesses should ensure directors and regular filers are prepared for identity verification requirements and increased scrutiny of information held on the public register.

The Financial Reporting Council (“FRC“) has revised ISA (UK) 700, 701 and 720, with the changes taking effect from 15 December 2026. The reforms are intended to make auditors’ reports shorter, clearer and more useful to investors whilst aligning UK requirements more closely with international standards.

• Auditors’ reporting: shorter and more focused reporting, removing unnecessary boilerplate disclosures.
• Corporate governance: increased commentary regarding the role of companies’ controls in the audit process.
• Internal controls: greater emphasis on identifying and reporting significant control deficiencies where appropriate.
• Supplementary guidance: publication of guidance relating to Provision 29 of the UK Corporate Governance Code and withdrawal of superseded governance bulletins.

Boards and audit committees should continue preparing for greater scrutiny of internal controls reporting, particularly in light of the UK Corporate Governance Code’s material controls reporting requirements.

The UK Government has accepted the first-stage recommendations of the Dematerialisation Market Action Taskforce (“DEMAT“), continuing the transition towards a fully digital share ownership framework.

• Digital registers: publicly traded companies are expected to maintain digital share registers.
• Paper certificates: paper share certificates will cease to constitute evidence of share ownership.
• Implementation: legislation is expected before the end of 2027.
• Shareholder protections: existing shareholder rights will remain unaffected during digital implementation.
• Operational standards: DEMAT is expected to develop standards governing digital share registers.

Publicly traded companies, registrars and market participants should begin preparing systems and processes for compulsory digital registers and monitor forthcoming legislation and DEMAT standards.

The UK Government has launched a consultation on modernising the corporate reporting framework with the objective of supporting economic growth, enhancing international competitiveness and reducing unnecessary administrative burdens. The consultation closes on 30 November 2026.

• Financial reporting: review of existing reporting requirements.
• Non-financial reporting: consideration of disclosure obligations beyond financial statements.
• Corporate governance disclosures: examination of governance reporting requirements.
• Remuneration reporting: potential reforms to executive remuneration disclosures.
• Digital reporting: increased emphasis on digital reporting and accessibility.

Companies should assess whether the proposed reforms could materially affect existing reporting obligations and consider responding to the consultation process before it closes.

The Financial Reporting Council’s (“FRC“) Annual Report highlights a broader shift towards a more outcomes-focused approach to corporate governance and audit regulation, aimed at promoting investor confidence whilst supporting UK economic growth.

• UK Stewardship Code 2026: increased focus on stewardship outcomes and reduced reporting burdens.
• Audit supervision: revised inspection approach centred on firms’ systems of quality management rather than individual file audit scores.
• Audit reform: implementation of changes to the Audit Enforcement Procedure.
• SME audits: measures intended to improve proportionality and efficiency.
• Innovation and AI: launch of the FRC Innovation & Improvement Hub and publication of guidance regarding the responsible use of generative AI in audit engagements.

Companies, audit committees, auditors and institutional investors should monitor the FRC’s continuing focus on reducing unnecessary reporting burdens whilst maintaining governance and audit quality standards. Technology, innovation and AI are also likely to play an increasingly important role in reporting, assurance and governance activities.

In Saxon Woods Investments Ltd and others v Costa [2026], the Supreme Court confirmed that a director’s genuine belief that their actions promote the success of the company does not necessarily prevent a breach of section 172 Companies Act 2006 where their conduct is disloyal or undertaken in bad faith. The Court found that a director who covertly sought to undermine an agreed company strategy had breached their fiduciary duties.

• Section 172 duties: good faith is not assessed solely by reference to a director’s stated belief.
• Board decision-making: emphasis on collective board responsibility and governance processes.
• Fiduciary obligations: directors must act loyally and consistently with agreed corporate strategy and must raise any concerns through appropriate board processes.
• Governance procedures: boards should ensure there are clear delegation, approval and escalation processes.

Companies should ensure governance frameworks clearly document decision-making, delegation and escalation procedures. Directors should disclose relevant information and seek formal board approval before materially altering company strategy, as actions taken outside of established governance processes may give rise to personal liability.