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This week London Stock Exchange has announced that all AIM companies will be required to apply a recognised corporate governance code from 28th September 2018.

Until now, AIM companies have had the choice of either noting on their website which corporate governance code they followed, or merely stating they did not follow a code and setting out their own arrangements. The new rules mean that this second option is no longer allowed.

The updated AIM Rules for Companies can be seen here.

Which corporate governance codes do small and mid-size companies follow?

QCA research indicates that over 400 AIM companies currently refer to the QCA Corporate Governance Code.

Of the remaining companies on AIM that do not refer to the QCA Code:

  • Many choose to issue ‘boilerplate’ statements saying that they do not follow a corporate governance code due to their size and stage of development.
  • Some state that they follow the Financial Reporting Council (FRC) UK Corporate Governance Code (or at least some aspects of it)
  • A small number follow the corporate governance code of their home country (for example, from the Australian ASX Corporate Governance Council)
  • A small number follow other codes that are tailored for their sector (for example, from the Pensions and Lifetime Savings Association).

Companies listed on the Main Market of the London Stock Exchange are required under the Listing Rules to follow the FRC's UK Corporate Governance Code, but most small and mid-size companies find that this is unsuitable for their size and stage of development and are more likely to select the QCA Code.

The QCA Corporate Governance Code

The QCA Corporate Governance Code is tailored to meet the needs of small and mid-size quoted firms. As mentioned above, it is referred to by a substantial number of AIM companies on their websites, and is used by many privately-owned companies.

Since its initial release in 2013, it has become a valuable reference for growing companies wishing to follow good governance examples. It serves as a practical outcome-oriented approach to corporate governance for those quoted companies in the UK not obliged to apply the FRC's UK Corporate Governance Code under the Listing Rules.

In April 2018 a new and updated version of the QCA Corporate Governance Code will be released, it will cover:

  • What good corporate governance is
  • The 10 corporate governance principles to follow
  • Step-by-step guidance on how to effectively apply the principles within a company

Find out more

More information will be available about the new QCA Corporate Governance Code shortly and you will be able to find it here.

QCA members will benefit from additional guidance and materials on how to apply the code and principles for their company. For more information about becoming a QCA member, please see here.

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