The Quoted Companies Alliance (QCO) in the UK has published its updated Corporate Governance Code for Small and Medium-sized Companies 2013 (the 2013 Code). The QCO is an independent membership organisation that champions the interests of small to medium-sized companies. The 2013 Code replaces the Corporate Governance Guidelines for Smaller Quoted Companies 2010. The Code operates on a "comply or explain" basis and is widely recognised as an industry standard for companies for which the UK Corporate Governance Code is not applicable.
The format of the QCA Code is that it adopts key elements of the UK Corporate Governance Code, current policy initiatives and other relevant guidance and then applies these to the needs and particular circumstances of small and mid-size quoted companies on a public market. It focuses on 12 principles and a set of minimum disclosures and encourages companies to consider how or whether they should apply each principle to achieve good governance and provide quality explanations to their shareholders about what they have done.
The 2013 Code contains some revised and updated content, to take into account a number of corporate governance developments. According to the QCA, the key changes include:
- An emphasis on the benefits of good governance to a public company, including how it can build trust between the company, its shareholders and potential shareholders;
- An increased focus on the prime importance of companies delivering good quality explanations of its approach, actions and behaviour;
- An emphasis on the central role of the chairman in delivering good governance;
- Further embedding of the principle of constructive engagement between companies and shareholders in light of the UK Stewardship Code;
- Including greater detail on the characteristics of an effective board; and
- Reordering the Quoted Companies Alliance’s 12 principles of corporate governance to place greater emphasis on the delivery of growth in long term shareholder value.
Edward Craft, Partner at Wedlake Bell and Chairman of the Quoted Companies Alliance Corporate Governance Expert Group, the group that led the revision of the QCA Code, made the following comments on the launch of the 2013 Code: “Through the revised QCA Code, we want to encourage further positive engagement between companies and shareholders. This is why we have focused on the importance of companies explaining why they do what they do, rather than merely reiterating published guidance. Good disclosure and open dialogue are necessary to achieve good governance and to maintain trust between companies and shareholders.”