Technical Briefing July 2025

Of interest to all those working in corporate governance

NEW CGI RESEARCH

On 10 June 2025, The Chartered Governance Institute UK & Ireland (CGIUKI) published a report exploring the implications of artificial intelligence in corporate reporting. Based on surveys and focus groups, the study reveals that 74% of governance professionals are concerned about the accuracy of AI-generated content in board reporting. While AI is widely recognised for its potential to improve efficiency, the report highlights a lack of clear organisational policies, with only a minority of respondents having a defined AI strategy. The findings underscore the need for boards to develop comprehensive AI governance frameworks, invest in training, and ensure that AI use aligns with principles of transparency, accountability, and trust in corporate disclosures.

Of interest to members involved with boards, especially in large or regulated organisations

NEW CGI RESEARCH

Thank you to all those members who took part in the roundtables and workshops with Loretto Leavy FCG and Professor Ruth Sealy of the University of Exeter Business School and Henley Business School to understand board behavioural dynamics within large and regulated organisations. 

The resulting handbook was launched at our conference on 1 July and describes how to deliver Board Behavioural Dynamics to optimise Boards of large, highly regulated organisations across multiple jurisdictions.

The Institute was delighted to support this research which will provide a framework for maintaining relationships and practical advice for company secretaries and governance professionals assisting boards. 

Of interest to all those working in charity governance

The Code of Fundraising Practice, published in May 2025 and coming into force on 1 November 2025, establishes UK-wide standards for all charitable fundraising activities. It applies to a broad range of organisations and individuals, including charities, social enterprises, volunteers, fundraising agencies, and digital platforms. This revised edition adopts a principles-based approach, replacing prescriptive rules with clear, outcome-focused expectations designed to ensure that all fundraising is legal, open, honest, and respectful. Key updates include strengthened requirements around transparency, substantiating claims, donor rights, data protection, and working with third parties. The Code also sets out specific standards for various fundraising methods, such as public collections, digital campaigns, legacy giving, and prize-led fundraising. With the implementation date approaching, organisations are strongly encouraged to begin preparations now to ensure full compliance with the updated framework.

Of interest to all those working in corporate governance

On 1 July 2025, Companies House published updated guidance on the preparation and filing of annual accounts, reflecting key reforms introduced by the Economic Crime and Corporate Transparency Act 2023. These changes, which take effect from 1 April 2027, will require all companies—including dormant entities—to file their accounts using commercial software, marking the end of paper-based submissions. 

As part of this digital transition, micro-entities will be required to file both their balance sheet and profit and loss account, while small companies must submit full accounts, including the balance sheet, directors’ report, auditors’ report (where applicable), and profit and loss account. The option to file abridged accounts will be removed entirely. Companies claiming audit exemptions, including subsidiaries, will need to include enhanced directors’ statements confirming the basis for exemption and the company’s eligibility.

Additional changes include a requirement for dormant subsidiaries to file all components of their accounts together, ensuring consistency and completeness. 

Furthermore, new restrictions will be introduced on how frequently companies may shorten their accounting reference periods. From April 2027, any company seeking to shorten its accounting period more than once within a five-year span will need to provide a valid business justification, with this requirement to be implemented through separate legislation. These reforms are designed to improve transparency, enhance the quality of financial data on the public register, and support the UK’s broader efforts to combat economic crime. Companies are advised to begin preparing for these changes well in advance to ensure a smooth transition to the new digital and regulatory framework. 

Of interest to all those working in higher education

REQUEST FOR SUPPORT FROM MEMBERS

Advance HE has published a Framework for Leading in Higher Education, designed to guide leadership practices within the sector. The framework focuses on three key dimensions: knowledge and understanding, values and mindsets, and applications and skills. It serves as a resource for self-development, preparing for promotion, and supporting team and organisational development. 

Advance HE is currently seeking feedback before finalising the document in September. The Institute will be responding to the consultation. If you would be willing to help with the drafting of that response, please contact Valentina Dotto at [email protected]   

Of interest to all those working in corporate governance

In February 2024, the Financial Conduct Authority (FCA) launched a consultation on proposed amendments to its Enforcement Guide, which would have permitted the regulator to announce the opening of enforcement investigations where it deemed such disclosure to be in the public interest. However, following strong and widespread opposition from stakeholders, the FCA opted not to proceed with the proposals as originally drafted. Instead, it confirmed the retention of the existing ‘exceptional circumstances’ test and committed to further engagement with industry participants before finalising its approach. The resulting policy statement, which came into effect on 3 June 2025, introduces three additional scenarios in which the FCA may make public announcements, supplementing the original test.

Under the revised framework, the FCA may now name individuals or firms suspected of carrying out unauthorised financial services or related criminal offences; confirm the existence of an investigation where the fact has already been made public by the subject, a connected entity, or a relevant authority in the UK or overseas; and issue anonymised announcements where doing so would serve a broader public interest—such as raising awareness or encouraging compliance across the market. This more nuanced approach aims to strike a balance between enhancing transparency and maintaining the integrity of ongoing enforcement processes. It reflects the FCA’s commitment to proportionate regulation, while responding to stakeholder concerns about reputational harm and due process.

Of interest to all those working in corporate governance

On 27 June 2025, the Company Directors (Duties) Bill, a Private Members’ Bill, was published in advance of its second reading in the House of Commons on 4 July 2025. First introduced in October 2024, the Bill proposes a significant amendment to section 172 of the Companies Act 2006, aiming to modernise directors’ duties by requiring them to balance the promotion of the company’s success with responsibilities towards the environment and employees. The proposed new section 172(1) would oblige directors to act in good faith to advance the interests of the company’s members, while also considering the natural and social environment, and the welfare of employees, including workers.

As a Private Members’ Bill, it is unlikely to become law unless sponsored by the government, but is interesting in that it will help to set expectations for future legislation. Second reading was adjourned until 12 September.  

And finally, some articles that passed across my desk and struck me as being of interest to members

AI: Some interesting case law on the use of generative AI where a Divisional Court has considered referrals arising from “the actual or suspected use by lawyers of generative artificial intelligence tools to produce written legal arguments or witness statements which are not then checked, so that false information (typically a fake citation or quotation) is put before the court.” Although the issues here relate to the arguments presented by a lawyer in Court, some of the discussion and ethical issues are relevant to governance professionals and it is, in any event, an interesting read. 

Annual reports: A research report from the Quoted Companies Alliance, Close the Book: It’s Time to Cut Annual Reports Down to Size, investigates the length of public company annual reports and accounts from the period 2018/19 – 2023/24 and “reveals the average public annual report is longer than The Hobbit.” 

ECCTA: Corporate Criminal liability: An interesting article from Macfarlanes on the implications of the new legislation. 

From identity checks to audit reform: A useful article from Herbert Smith Freehills Kramer summarising topical corporate governance issues. 

Gender Balance on Listed Company Boards Directive: Two interesting articles relevant to Irish companies, but with broader general interest, from Eversheds Sutherland and McCann Fitzgerald on the Directive which “sets specific targets for the representation of the underrepresented sex on relevant listed company boards to be reached by 30 June 2026.”

SEC Considers Narrowing Foreign Private Issuer Definition: An article from the Harvard Law School Forum on Corporate Governance discusses the recent Securities and Exchange Commission concept release seeking public comment on issues related to the definition of a foreign private issuer. 

Spending Review 2025: Implications for the Charity Sector: On 12 June 2025, the National Council for Voluntary Organisations (NCVO) released an analysis of the UK Government’s Spending Review 2025, assessing its impact on the voluntary and community sector. While the review includes some supportive measures, it largely maintains existing financial pressures. Cuts to welfare and overseas aid are projected to increase the number of people deemed to be in poverty by 250,000 people by 2029, intensifying demand for frontline services such as food banks. Charities will also face higher employer National Insurance contributions from April 2025 without offsetting support. Although local government funding will rise modestly in real terms, many councils anticipate continued budget constraints. The Department for Digital, Culture, Media and Sport’s budget will fall in real terms, while the Charity Commission’s funding will increase by over 25% to £37.9 million. NCVO warns that charities face a “triple threat” of rising costs, declining income, and growing demand. Some policy changes—such as the reinstatement of Winter Fuel Payments for certain households and the extension of free school meals to children in families on Universal Credit—offer limited relief.

Stewardship Code: Following the publication of the updated Stewardship Code last month, useful analyses by Osborne Clarke and Slaughter and May of the changes. 

UK Corporate Governance Code - Provision 29: EY have published an excellent report On track for Provision 29 compliance which assesses the steps that companies are taking to assure their internal controls. The Institute remains of the view that the requirements of Provision 29 are not rocket science and, indeed, should simply reflect the processes that a well-run company has in place, but this is a useful handbook for companies that wish to benchmark what they do.  

On the subject of further reading, it would be remiss of me not to mention the CGIUKI blogs published in June:

13 June - Spending Review 2025: A strategic bet on growth amid uncertainty
18 June - From OpenAI to Anthropic: who's leading on AI governance?