What are the legal or regulatory requirements for board evaluations in 2026?
There is no single universal legal requirement for board evaluations in 2026, but a growing number of jurisdictions mandate them through corporate governance codes, listing rules, or statutory provisions. In most cases, the obligation falls under a „comply or explain“ framework, meaning listed companies must either conduct a board evaluation or publicly disclose why they have not. The sections below address the most common regulatory questions Company Secretaries face when structuring and reporting on board effectiveness reviews.
Which jurisdictions mandate board evaluations by law?
No jurisdiction currently mandates board evaluations through primary legislation alone, but several major financial markets require them through listing rules or governance codes that carry near-equivalent force. In the United Kingdom, the Financial Conduct Authority’s Listing Rules incorporate the UK Corporate Governance Code, which requires premium-listed companies to conduct annual board effectiveness reviews. Similar obligations apply in Germany, the Netherlands, Switzerland, and Australia, each operating through their respective national governance codes.
In the United Kingdom, the UK Corporate Governance Code sets out the expectation clearly: boards should undertake a formal and rigorous annual evaluation of their own performance, that of their committees, and of individual directors. FTSE 350 companies face the additional requirement that external board evaluations be conducted at least every three years.
In Germany, the German Corporate Governance Code (Deutscher Corporate Governance Kodex) recommends that the Supervisory Board regularly assess the effectiveness of its own work. The Dutch Corporate Governance Code similarly expects boards and supervisory boards to evaluate their composition, functioning, and culture annually. In Switzerland, the Swiss Code of Best Practice for Corporate Governance encourages the Board of Directors to assess its own performance and that of its committees on a regular basis.
In Australia, the ASX Corporate Governance Principles and Recommendations require listed entities to disclose whether they have a process for evaluating the performance of the board, its committees, and individual directors, and to report on whether that evaluation was conducted during the reporting period. Across all these markets, the regulatory architecture is consistent: formal evaluation is expected, and non-compliance requires public explanation.
What does „comply or explain“ mean for board evaluation obligations?
„Comply or explain“ is the regulatory principle that allows listed companies to depart from governance code provisions, including board evaluation requirements, provided they publicly disclose the reason for that departure. Rather than imposing rigid statutory rules, this approach gives boards flexibility while preserving accountability through transparency. Investors and regulators can then assess whether the explanation is credible and whether the board’s alternative approach is genuinely in shareholders‘ interests.
In practice, „comply or explain“ places a significant burden on boards that choose not to conduct a formal evaluation. A vague or unconvincing explanation is unlikely to satisfy institutional investors or proxy advisers, who increasingly treat board evaluation as a baseline governance expectation rather than an optional enhancement. For Company Secretaries, this means that even where no strict legal requirement exists, the reputational and investor relations consequences of non-compliance can be substantial.
It is worth noting that „comply or explain“ does not mean „comply or ignore.“ Regulators in several jurisdictions monitor the quality of explanations provided in annual reports, and persistent non-compliance without credible justification can attract scrutiny from the relevant listing authority.
How often are companies required to conduct board evaluations?
Most governance codes require listed companies to conduct a board evaluation annually. The UK Corporate Governance Code, the Dutch Corporate Governance Code, and the ASX Corporate Governance Principles all set annual evaluation as the standard expectation. However, external evaluations are typically less frequent, with the UK code specifying at least every three years for FTSE 350 companies.
The distinction between internal and external evaluations matters here. An internal evaluation, typically facilitated by the Company Secretary or Chairman, can satisfy the annual requirement. An externally facilitated evaluation, conducted by an independent third party, is required periodically to provide an objective perspective that internal processes cannot replicate. The UK’s three-year cycle for external reviews has become a widely referenced benchmark in other markets, even where it is not formally codified.
For smaller listed companies or those outside the FTSE 350, the expectation of annual evaluation still applies under the UK code, but the requirement for external facilitation is less prescriptive. Boards in this category are nonetheless encouraged to consider independent evaluation where internal capacity or objectivity may be limited.
What must a board evaluation cover to satisfy regulatory expectations?
To satisfy regulatory expectations, a board evaluation must assess the performance and effectiveness of the board as a whole, its principal committees, and individual directors. Most governance codes specify that the evaluation should examine board composition, dynamics, information flows, decision-making quality, and the board’s relationship with management. A narrow review focused only on process or attendance records is unlikely to meet the standard regulators and investors expect.
The UK Corporate Governance Code provides the most detailed framework, indicating that evaluations should consider the balance of skills, experience, independence, and knowledge on the board, as well as how the board works together and the effectiveness of the Chairman. Committee evaluations typically focus on whether each committee is fulfilling its terms of reference and contributing appropriately to board oversight.
Individual director evaluations should address each director’s contribution, preparedness, and ongoing development needs. This is a dimension that many boards underweight, yet it is increasingly scrutinised by institutional investors who want evidence that the board is not simply assessing itself collectively but holding each member to account individually.
Beyond the structural requirements, regulators and governance commentators increasingly expect evaluations to address board culture, the quality of challenge and debate, and the board’s approach to long-term strategic oversight. A credible board effectiveness review in 2026 should demonstrate that the process was genuinely rigorous, not a formality.
How should board evaluation findings be disclosed in annual reports?
Annual reports should disclose how the board evaluation was conducted, what the key findings were, and what actions the board has taken or intends to take in response. Regulatory expectations have moved well beyond a single sentence confirming that an evaluation took place. Investors and governance bodies now expect substantive disclosure that demonstrates the evaluation was meaningful and that the board is acting on its conclusions.
The UK Corporate Governance Code is explicit on this point: companies should describe the process adopted for the board evaluation, whether it was conducted internally or externally, and the nature of any actions taken as a result. For externally facilitated evaluations, the name of the external provider should be disclosed, along with a statement confirming whether that provider has any other connection to the company.
Good practice disclosure typically includes the scope of the evaluation, the methodology used, the principal themes or findings, and a summary of agreed actions with an indication of progress against prior year commitments. Disclosure that is vague, formulaic, or that simply repeats the previous year’s language is likely to attract critical commentary from proxy advisers and institutional shareholders.
Company Secretaries play a central role in drafting this disclosure and in ensuring it accurately reflects the evaluation process and outcomes. The quality of annual report disclosure is increasingly treated as a proxy for the quality of the evaluation itself.
What role does the company secretary play in meeting evaluation requirements?
The Company Secretary is typically the primary officer responsible for ensuring that board evaluation requirements are met, both procedurally and in terms of regulatory disclosure. This includes planning the evaluation timeline, coordinating with the Chairman and any external provider, managing the questionnaire and interview process, collating findings, and drafting the annual report disclosure. In many organisations, the Company Secretary also tracks progress against prior year action plans.
Beyond administration, the Company Secretary serves as a governance adviser to the board on evaluation matters. This means providing guidance on what the applicable code or listing rules require, advising on the appropriate evaluation methodology given the company’s size and circumstances, and ensuring the board understands the distinction between internal and external evaluations and when each is appropriate.
Where an external evaluation is commissioned, the Company Secretary typically manages the relationship with the external provider, facilitates access to board members for interviews, and ensures the provider’s findings are presented to the board in a way that supports constructive discussion and follow-through. The Company Secretary is also well-placed to advise on how findings should be framed in the annual report to satisfy regulatory expectations without disclosing commercially sensitive deliberations.
Given the increasing scrutiny of board evaluation quality, the Company Secretary’s role in this area has grown considerably in strategic importance. Governance professionals who can manage the evaluation process with rigour and advise the board with confidence are a material asset to any organisation subject to formal evaluation requirements.
How Better Boards supports board evaluation compliance
Better Boards‘ board evaluation platform is designed to help governance professionals meet regulatory requirements with confidence and efficiency. Whether your organisation needs to satisfy annual evaluation obligations, prepare for an externally facilitated review, or produce credible annual report disclosure, the platform provides the structure and depth required.
- Customisable, research-based questionnaires aligned to the dimensions regulators and investors expect to see covered
- Individual director reports that satisfy the expectation of personal performance assessment
- Benchmarking against anonymised industry and regional data to contextualise findings
- Better Boards is ISO/IEC 27001:2022 certified by TUV Rheinland of North America. We apply information security controls to manage and protect board information
- Full support for both internal evaluations and externally facilitated reviews, with flexibility to match your governance cycle
- Analytics and reporting tools that support the preparation of substantive annual report disclosure
For Company Secretaries managing evaluation requirements across complex boards or multiple jurisdictions, the platform offers a structured, auditable process that demonstrates genuine rigour to regulators and institutional investors alike. Discuss your board evaluation requirements with the Better Boards team to find the right approach for your organisation.
