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Strengthening the UK's Governance Framework in a Changing Market - Reinforcing accountability and investor confidence through principles-based reform
Insights from the
International Corporate Governance Network (ICGN)
The United Kingdom has long been regarded as one of the world's most mature governance markets: principles-based, accountability-centred, and underpinned by a regular and constructive dialogue between boards and investors. This foundation remains strong. Yet, like all established systems, it is being tested - through regulatory reform, shifting market dynamics, and renewed debates about rights, responsibilities, and where the balance between flexibility and accountability should lie.
The Updated UK Corporate Governance Code: Steadying the Core
The latest reforms to the UK Corporate Governance Code strengthen several of the
system's central beams. The increased focus on internal controls, audit and assurance, board effectiveness and risk oversight is a positive development. Equally welcome is the reaffirmation of a proportionate, principles-based “comply or explain” approach to governance, the longheld UK approach of trusting boards and investors to exercise judgment rather than merely to follow a rules checklist.
Crucially, the renewed focus on quality over quantity in reporting is widely supported by global investors. The Code remains a constructive framework that encourages companies to focus on the substance of governance rather than its choreography.
The growing shift towards virtual-only AGMs is a cause for concern. Many investors believe these formats limit transparency, narrow the scope of challenge, and give companies too much control over the flow of questions and debate.
The Revised UK Stewardship Code: Ambitious, High-Performing, and Needing Balance
Much like its governance counterpart, the revised UK Stewardship Code continues to set a global benchmark. The updated Code has updated the UK definition of stewardship to: “Stewardship is the responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries”. This clear focus, along with a sharper reporting framework that allows a focus on activities and outcomes and seeks to reduce the reporting burden on signatories, has been broadly welcomed by the investment community.
Listing Rule Reforms: Competitiveness at the Expense of Rights
The UK's recent listing rule reforms aim to revitalise the market and attract more IPO activity. These objectives are understandable. Yet some changes, such as relaxed dualclass share protections and reduced shareholder approval rights for related-party and significant transactions, have been widely opposed by investors and represent a step backwards for investor rights and board accountability.
Global investors are acutely aware of the competitive pressures facing the UK market, but competitiveness cannot come at the cost of meaningful rights. Investor confidence is a form of capital; once diminished, it is hard to rebuild. ICGN believes that policy should therefore reinforce, not dilute, the accountability architecture that has supported the UK's reputation for decades.
The Move Toward Virtual-Only AGMs: A Misstep for Market Integrity
Technology can and should enhance participation at Annual General Meetings (AGMs). Hybrid models, in particular, have proven effective in broadening access while preserving real exchange between boards and investors.
However, the growing shift towards virtual-only AGMs is a cause for concern. Many investors believe these formats limit transparency, narrow the scope of challenge, and give companies too much control over the flow of questions and debate. As we see more companies seeking to move to a virtual only platform – ICGN urges caution.
An Accountability System That Still Works
Despite these pressures, the UK's accountability-based model continues to function well.
Evidence shows:
• Consistently high levels of investor-company engagement
• Strong responsiveness from boards
• Relatively low average votes against management, indicating that issues are largely resolved through dialogue long before they reach the ballot box.
This is one of the underappreciated strengths of the UK system: governance here is a continuous conversation, not a once-a-year showdown. It reflects cultural norms that value candour, accessibility and early escalation.
New Dialogue Platforms: Strengthening Understanding Along the Investment Chain
The establishment of the Investor–Issuer Forum reflects both the maturity and humility of the UK market. These platforms help address misconceptions about how the investment chain works and dispel persistent myths. Importantly for example, the exaggerated idea that proxy advisors are the hidden hands guiding shareholder votes.
Such efforts bring investors and companies back into a shared space, fostering transparency and reducing friction. At a time when global markets are becoming more polarised and regulatory systems more fragmented, these bridges matter.
Governance here is a continuous conversation, not a once-a-year showdown. It reflects cultural norms that value candour, accessibility and early escalation.
Conclusion: High Standards Worth Protecting
Standing back, the UK's corporate governance landscape remains robust. It is a market known for accessible boards, accountable leadership, informed stewardship and a willingness to confront difficult issues through open dialogue.
Yet this strength cannot be taken for granted. Reforms must reinforce the system's integrity rather than strain it. Investor rights must remain meaningful. Stewardship must be recognised and supported as a core element of fiduciary duty. And forums for genuine engagement must be preserved - whether in boardrooms, through the AGM, or via new collaborative structures.
The UK continues to set global expectations for governance and stewardship. Maintaining that leadership will depend on ensuring that its accountability-based model remains strong, coherent and trusted by all who rely on it.
Back to HomeAuthor
Ms. Jen Sisson
Chief Executive Officer International Corporate Governance Network (ICGN), UK
Owned by: Institute of Directors, India
Disclaimer: The opinions expressed in the articles/ stories are the personal opinions of the author. IOD/ Editor is not responsible for the accuracy, completeness, suitability, or validity of any information in those articles. The information, facts or opinions expressed in the articles/ speeches do not reflect the views of IOD/ Editor and IOD/ Editor does not assume any responsibility or liability for the same.
