Revised QCA Corporate Governance Code

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The Quoted Companies Alliance (QCA) has published a revised version of its Corporate Governance Code (QCA Code). The QCA says that, in revising its code, it sought to reassess the needs of users and set these against the latest good practice, resulting in a revised QCA Code that “takes into greater consideration those inside and outside of the company as well as its boardroom make-up”.

Background to the QCA Code

The QCA Code was first established in 2013. It was developed to provide smaller, younger companies with a more flexible framework when compared to the UK Corporate Governance Code published by the FRC (FRC Code). The FRC Code is primarily aimed at the larger listed companies on the UK’s Main Market. Following its requirements could place an overly onerous burden on developing companies, distracting them from their key objective of growth.

By contrast, the QCA Code is less prescriptive and more principles-based than the FRC Code. Companies have reported finding it “enabling” rather than “policing”, giving them the ability to move and grow within its framework. It has proved popular with its target audience, with over 90% of the companies on AIM choosing to follow the QCA Code.

Key changes


The 2023 version of the QCA Code retains the 10 over-arching principles of corporate governance. But, by combining the previously separate principles relating to governance structures and directors’ skills, the QCA made way for a new principle about remuneration. This reflects the QCA’s 2020 Remuneration Committee Guide and requires a company to establish a remuneration policy that supports long-term value creation as well as the company’s purpose, strategy and culture.

The revised QCA Code also requires pay structures for senior management to be simple and easy to understand, and to be structured so as to foster alignment with shareholders through building and holding a meaningful stake in the company.


Reflecting an increased focus on ESG issues by investors, the requirement for a company to take into account wider stakeholder interests has been expanded to specifically include both social and environmental responsibilities. These must be integrated into the company’s strategy, risk management and business model. The board are also expected to provide quantitative and qualitative reporting of a company’s environmental and social matters in order to meet investor needs and expectation in this area.

The revised QCA Code also requires particular attention to be devoted to the company’s workforce. The company must ensure that practices towards employees are aligned with company values and that appropriate processes are in place to enable employees to raise concerns in confidence with those concerns then being properly considered and addressed where appropriate.

Board composition

The provisions on board composition continue to emphasise the need for an appropriate balance between executive and non-executive directors (NEDs). Whilst the recommended minimum of at least two NEDs remains the same, the revised Code states that at least half the board should be independent NEDs. The factors which could affect a director’s independence have been expanded and include length of tenure, size of shareholding, commercial or contractual relationships with the company or executive directors, and significant incentive pay arrangements beyond a director’s fee.

Diversity is also emphasised with a requirement for the company’s board to reflect on its own levels of diversity, considering factors such as socio-economic backgrounds, nationality, educational attainment, gender, ethnicity and age in order to avoid ‘groupthink’. However, quotas are not prescribed and the key requirement remains that the board, collectively, possesses the necessary knowledge and skillset.

The requirements relating to succession planning have been expanded to also include planning for the absence of key staff.

What does it mean in practice?

The revised QCA Code will apply for financial years beginning on or after 1 April 2024, meaning the first disclosures against the new Code will have to be made in 2025. Companies are also being given a transitional period of 12 months to adjust to the new requirements.

Companies which follow the QCA Code should review the updated code and begin the process of updating their systems and procedures to ensure they are ready for the new requirements next year.

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