Corporate Governance Reporting: Succession Planning

What’s the issue?

Under the UK Corporate Governance Code (the Code), UK-listed companies must explain their approach to succession planning in their annual reports. This can be a difficult area on which to give useful information but is one investors value particularly when the situation is most sensitive. Like other provisions of the, disclosure here is on a comply or explain basis, so while companies aren’t forced to make the specific disclosures recommended by the Code they are required to disclose that they have not.

Background

Section 3 of the UK Corporate Governance Code 2024 (the 2024 Code) covers matters relating to board composition, succession planning and evaluation. UK-listed companies are required to explain their approach to succession planning for the board and management in their annual reports or provide reasons if their approach does not align with the Code’s provisions.

Provision 23 of the 2024 Code encourages companies to describe the work of the nomination committee, particularly in relation to the board appointment process, the approach to succession planning, policies and initiatives on diversity and gender balance among senior management and their direct reports.

What does this mean?

Succession planning is a continuous process, which involves continues monitoring to ensure the board and its committees have the right combination of skills, experience and knowledge to perform their duties

When discussing succession planning in their annual reports, preparers should consider including the following:

• Governance arrangements related to succession planning and appointment processes.
• Diversity and inclusion policies such targets for female or ethnic minority representation on boards or in senior positions.
• Board composition and length of service (Use of graphics can be highly effective in these areas).
  • Provide a skills map derived from the board performance review, and explain how the existing skill sets support the company’s future strategy and how a pipeline for the board and senior management was developed to ensure alignment with that strategy.
  • Describe the tenure of board members and prepare explanations for situations in which this runs beyond the guidelines in the code.
• Time commitment. Describe how the nomination committee considers the time commitment required of current and future directors to discharge their responsibilities particularly where there are external appointments

In addition, preparers should discuss succession planning and the development of the board and senior management following or in anticipation of events such as retirement or resignation from the board.

Where can I get more guidance?

The Financial Reporting Council published the UK Corporate Governance Code 2024 and its guidance on its website. Examples of corporate governance reporting (aligned with the UK Corporate Governance Code 2018) related to succession planning can be found in the Annual Review of Corporate Governance Reporting, published in November 2025.

When is it effective?

The 2024 Code applies to accounting periods beginning on or after 1 January 2025.

Who is applicable to?

The 2024 Code will apply for accounting periods beginning on or after 1 January 2025 i.e. this will be for companies with a calendar year ending 31 December 2025.