The London Stock Exchange recently announced that all AIM-listed companies will be required to apply a recognised corporate governance code from 28th September 2018. Up until now, AIM companies could choose to either note on their website which corporate governance code they followed, or merely state that they did not follow a code, setting out their own arrangements. The new rules mean that this second option is no longer available.
Which corporate governance codes do small and mid-size companies follow?
QCA research indicates that over half of the current 900+ AIM companies 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 also used by a number of privately-owned companies.
Since its initial release in 2013, it has become a valuable reference for growing companies wishing to follow good governance practice. 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.
Now, a revised version of the QCA Corporate Governance Code is available. It includes 10 corporate governance principles that companies should follow, and step-by-step guidance on how to effectively apply these principles.
The Code has been put together by the QCA’s Corporate Governance Expert Group and a standalone Working Group comprising leading individuals from across the small & mid-size quoted company ecosystem.