On 13 November 2023, the Quoted Companies Alliance (QCA) published the third and latest version of its corporate governance code (2023 Code) aimed at 'UK Growth companies'. The 2023 Code, published after wide consultation with stakeholders, replaces the previous 2018 corporate governance code (2018 Code). 

The QCA recommends that companies claiming to apply the QCA code in respect of accounting periods commencing on or after 1 April 2024 apply the 2023 Code, with the first disclosures expected in 2025. There will be a 12 month transition period from 1 April 2024, intended to allow companies the flexibility to adjust to the 2023 Code and build the necessary capability to apply its Principles.

The 2018 Code applies to almost 900 companies, whose shares are largely traded on AIM and the Acquis Stock Exchange (AQSE). 

Companies listed on AIM are required to include on their website 'details of a recognised corporate governance code' that its board of directors has decided to apply, how it complies and, where it departs from its chosen code, the reasons for doing so.

Companies listed on the Access segment of the AQSE Growth Market are required to have due regard for the principles laid down by a recognised corporate governance code in so far as appropriate to that company, and where the company departs from the recognised corporate governance code in respect to the composition of its board, the company must publish on its website an explanation as to why it believes the composition of the board is appropriate and suitable.   

Therefore, companies that currently apply the 2018 Code, and particularly those listed on stock exchanges that require adherence to a recognised corporate governance code, should begin to consider the new 2023 Code, and any potential changes required to ensure compliance with the 2023 Code (to the extent required) when it comes into effect. While many of the Principles set out in the 2018 Code remain substantively the same, they have become more prescriptive. For example, Principle 6 now provides that shareholders should be given the opportunity to vote annually on the (re-) election of all individual directors to the board.

However, the most significant change to the 2018 Code is a new Principle 9, which requires companies to "Establish a remuneration policy which is supportive of long-term value creation and the company's purpose, strategy and culture". 

The 2023 Code is free for QCA members and available to purchase otherwise. Further information may be found here.