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One year on from the introduction of more stringent corporate governance rules:

  • 84% of firms now identify independent directors, up from 58% last year
  • However, just 46% identify the qualities and capabilities of their board

AIM listed companies have dramatically improved their corporate governance disclosures over the last year* says UHY Hacker Young, the national accountancy group. Some of the improvements that have been made include:

  • 84% of companies now identify independent directors, up from just 58% last year
  • 98% of companies detail how they intend to engage with shareholders, up from 56% last year
  • 92% disclose the time commitment required from directors, up from 80% last year
  • 84% detail the number of meetings of the board and its directors, up from 58%

The research by UHY Hacker Young and the Quoted Companies Alliance (QCA) shows how, one year on from the introduction of the new rules*, AIM companies have significantly increased the amount of information they disclose in relation to their governance.

The new rules mean companies must either disclose how they have complied with each principle under their chosen corporate governance code or explain why they have not.

UHY Hacker Young says the improved standard of disclosure from companies on AIM is good for both companies and investors. Adopting the QCA Code enables boards to address important issues and ensure the company is effectively communicating how it is run, without distracting it from growth.

The area of focus for the research was the strategic report which includes KPIs, culture, stakeholder engagement, board dynamics, board expertise and succession planning; six of the ten QCA Code principles.

Martin Jones, Partner at UHY Hacker Young, says: “The majority of AIM companies have successfully overhauled their corporate governance reporting to meet the new requirements.”

Companies made an average of 11.2 disclosures on corporate governance out of a possible 17 this year, suggesting there is still some work to be done. Some areas that still need to be improved include:

  • Just 46% of companies identify the qualities and capabilities of their board member
  • Only 48% of businesses make public their succession planning for board members and senior management
  • Whilst just 52% identify how their board keeps their skills up to date 

UHY Hacker Young adds that whilst AIM companies have improved in a range of disclosures, it can take time to implement the appropriate processes to produce in-depth customised disclosures in some areas.

Martin Jones, Partner at UHY Hacker Young, says: “Despite a number of disclosures still not being made by all companies, the overall trend is positive.”

Tim Ward, CEO at the Quoted Companies Alliance, says: “We’re seeing an impressive improvement in AIM companies’ governance disclosures. As a result we’re seeing improved engagement with investors. This has got to be good for the perception and integrity of the UK’s small-cap growth market.”

*Analysis of annual reports and corporate websites of 50 small and mid-sized companies with equity securities admitted to trading on the London AIM market

**Changes to AIM Rule 26


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