The Quoted Companies Alliance (QCA) published its revised corporate governance code last week (QCA Code). The QCA Code is used by nearly 900 companies across AIM, the Aquis Stock Exchange and the Main Market, making it a significant voice in the corporate governance space.
The QCA Code sets out ten broad principles, accompanied by an explanation of what the principles involve and includes a set of prescribed disclosures. It asks companies to apply each principle on a “comply or explain” basis. Where a company chooses to depart from the application for a principle it must provide a clear and well-reasoned explanation for doing so.
The overarching theme of the QCA Code is to deliver growth in long-term shareholder value whilst taking into consideration wider stakeholder interests both within and outside of the company. To achieve this, the QCA Code requires companies to have an efficient, effective and dynamic governance framework and to build trust through effective communication.
The ten principles are broadly in line with those in the earlier 2018 code but with:
a greater emphasis on ESG issues
a new principle to establish a remuneration policy, which supports long-term value creation and the company’s purpose, strategy and culture, having regard to its stage of development
extended disclosures in the chair’s corporate governance statement, including an explanation of key governance-related developments during the year and any positive or negative outcomes
additional guidance to support companies in the application of the principles.
The QCA recommends that a company’s corporate governance statement is published both in its annual report and on its website.
The QCA Code will apply for financial years beginning on or after 1 April 2024, with initial disclosures against the revised QCA Code expected to be published during 2025. The QCA has confirmed that there will be a 12-month grace period to allow companies time to apply the updated principles.
The QCA has also introduced a new QCA Code Badge which will be used to indicate an Official User of the QCA Code. Anyone that has bought a verified copy of the revised QCA Code can display the QCA Code Badge in their annual report and/or on their website. The QCA intends the QCA Code Badge to become a recognisable mark for investors and wider stakeholders and to improve the integrity of the QCA Code.