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The QCA Corporate Governance Code: November 2023 Update

Posted on 19 December 2023

Following a six-month consultation period, the Quoted Companies Alliance (the QCA) released a new QCA Corporate Governance Code (the Code) on 13 November 2023. The QCA's aims for the Code are to create a practical, outcome oriented and principles-based approach to governance for small to medium companies. The Code is typically applied by public companies but can still be useful guidance for private companies, especially those looking to list in the future. The QCA have reported that nearly 900 companies across AIM, the Aquis Stock Exchange and the Main Market (including 93% of AIM listed companies) apply a version of it.

The Code was last updated back in 2018 and although the QCA consider that the old Code was generally fit for purpose, they decided to update it in order to: (i) improve and simplify its structure; (ii) create new responsibilities for board members and executives; (iii) address key issues highlighted in the forum; and (iv) incorporate key feedback from stakeholders.

The Code has maintained the concept of '10 Principles of Corporate Governance' although historic Principles 6 (directors' skills) and 9 (governance structures and processes) have been combined into a new Principle 7 and a new Principle 9 has been created covering remuneration (previously covered in supporting guidance). Please see below a non-exhaustive summary of the key updates:

Environmental and Social

The QCA has acknowledged the demands of investors and stakeholders in respect of environmental and social matters throughout their amends to the new Code:

  • Principle 1 – the board is expected to clearly articulate a company's corporate purpose.
  • Principle 2 – greater disclosure requirements in respect of culture; how it supports a company's corporate purpose and how it is cultivated.
  • Principle 3 – 'quantitative and qualitative reporting' on environmental and social matters required to meet stakeholder and investor demands.
  • Principle 4 – consideration of wider stakeholder interests (including those stemming from climate change) to be integrated into a company's risk management, strategy and business model, noting however that shareholder primacy remains key.
  • Principle 5 – potential risk to be considered 'on a proportionate and material basis', including climate change related risk. Increased reporting required to explain a company's strategy to risk.
  • Principle 6 – boards are required to reflect on diversity; the Code now specifically calls out social-economic backgrounds, nationality, educational attainment, ethnicity and age considerations, as well as gender.
  • Principle 7 – the board is required to consider the evolving skill needs of a company, including amongst other things, with respect to sustainability and climate change.
  • Principle 10 - corporate disclosures need to satisfy the reporting needs of investors, including but not limited to, sustainability matters.


The QCA acknowledges that a company's workforce is often its most important asset, and it is important to keep employees engaged and incentivised. Updates to Principle 4 require companies to take into account wider stakeholder interests, including its workforce. The Code encourages companies to incorporate appropriate feedback systems e.g. satisfaction surveys, regular feedback meetings and whistleblower processes that allow staff to report issues and feel supported through the process.

Board representation

The updates to Principle 6 largely reflect previous guidance on this area, with the Code now providing for the re-election and/or election of directors annually. The Code now explicitly states that at least half of the board should be independent non-executive directors (which could include the chair, if independent upon appointment) and notes that as a minimum there should be at least two non-executive directors that the board considers independent. Board committees should 'ideally' be fully independent and at the very least constituted by a majority of independent non-executives.

What is 'independent' remains a matter for the judgement of the board, however, the Code now explicitly includes a number of matters that the board should take into account when assessing independence, including 'length of board tenure; size of shareholding; prior and/or current commercial or contractual relationships with the company; prior and/or current commercial or contractual relationships with executive directors; and significant incentive pay arrangements beyond a director’s fee.' 

The new Code requires increased annual reporting on board composition and specifically any restrictions on both executives and non-executives in connection with external roles.

Succession planning

The new Code reiterates the importance of succession and contingency planning. The amendments to Principle 8 require companies to consider contingency planning for key staff absences. Increased reporting on this area is also required and companies are expected to provide indicative timelines for expected appointments.


A new Principle 9 has been included in the new Code which largely mirrors the previous remuneration committee guidance. The Code suggests that pay structures for senior management should be simple and easy to understand. Remuneration policies should also promote the long-term growth of shareholder value and be aligned with a company's purpose and culture and annual reporting and disclosure should explain how this is achieved. The annual remuneration report should be put to an advisory shareholders vote as should the company's remuneration policy (some companies may be required or chose to table the policy to a binding vote). The establishment or amendment of share schemes and long-term incentives should also be put to a shareholder vote.

FAQs, date effective and 'QCA Code Badge'

The supporting guidance in the Code has been updated to provide greater clarity and the QCA has also published Supporting information and FAQs. The QCA has also published a QCA Code Badge which companies applying the code can display on their company website or in their annual report (see the FAQs).

There will be a 12-month transition period for companies to review and update their internal policies and procedures with the new Code and related disclosures applying for financial years commencing on or after 1 April 2024.

As ever, it is the primary responsibility of the investors and stakeholders to monitor the application of the Code and to hold companies accountable.

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