Both of the Corporate Governance Codes that UK listed companies can apply to their reporting - the QCA Corporate Governance Code and the FRC UK Corporate Governance Code - released an updated version this year.

Due to the changes in AIM Rules, AIM companies now have to select one of the Codes to comply with. Both codes have the same purpose - ensuring a good standard of corporate governance within listed companies to encourage investment and trust in those companies - but what similarities do the updated versions of these corporate governance codes share?

The following requirements are in both codes:

  • The board should establish a purpose, values and culture for the group
  • The culture of the company should be clearly defined and the board should monitor and assess the culture of the company to see if it aligns with the desired culture
  • There should be a focus on long-term value creation for shareholders
  • The company should engage with shareholders and the wider stakeholders of the company and use the understanding gained from that engagement to improve decision-making in the business
  • There should be a well-established risk management system to ensure the identification, assessment and management of risks
  • Directors should have relevant skills and experience and there should be a good balance of these skills and experience on the board.
  • The effectiveness of the board should be monitored through a board performance evaluation.

What are the key differences?

All the disclosures and required actions in the QCA Corporate Governance Code are contained within the FRC’s UK Corporate Governance Code. The differences between the two are the more extensive requirements and disclosures contained in the FRC’s version, which we have detailed below.

  • There should be a formal workforce engagement mechanism. The FRC suggest that companies use one of three methods - an employee director, a formal workforce advisory panel or a designated non-executive director.
  • Companies should have a diversity policy and should be ensuring that succession planning and the board appointment process support a diverse pipeline.
  • The requirements of the audit committee, such as ensuring the effectiveness of the auditor and ensuring that the Annual Report is fair, balanced and understandable, are all unique to the FRC’s UK Corporate Governance Code.
  • The FRC’s Code requires a certain approach to remuneration and a number of disclosures around remuneration in the Annual Report. The QCA Code does not contain any requirements on remuneration.
  • A required disclosure in the Annual Report is a description of the emerging, long-term risks and also long-term opportunities of the company.
  • The sustainability of the business model needs to be outlined in the Annual Report.


It is evident that the QCA Corporate Governance Code is a better choice for smaller companies that would find the requirements of the FRC’s UK Corporate Governance Code extensive. However, the most exciting conclusion is that all companies complying with one of the corporate governance codes will need to consider their purpose, values, culture and their relationships with the wider stakeholder groups of the company. This is a key change in the approach to corporate governance.

If you would like assistance with understanding how to approach this reporting, you can download our guide to the FRC's UK Corporate Governance Code or get in contact with a member of our team.

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