Quoted Companies Alliance new Corporate Governance Code – Not just of interest to quoted companies

21st May 2013

The Quoted Companies Alliance’s (the QCA) new corporate governance code (the QCA Code) is not just for small to medium sized quoted companies but also a useful guide for unquoted companies with aspirations of being admitted onto AIM or ISDX.

Early implementation by an unquoted company of good corporate governance procedures will undoubtedly help the transition when such a company applies for admission and as a result the new QCA Code should be of interest to many SMEs.

The QCA is an independent membership organisation that champions the interests of small and mid-size quoted companies. The new Corporate Governance Code (the QCA Code) updates the code previously published by the QCA in September 2010. Since that time, much has developed in respect of corporate governance and the new QCA Code seeks to address this in a way that is manageable, effective and robust for small to medium sized quoted companies.

The QCA Code

The QCA Code is broadly based on the UK Corporate Governance Code, which applies to all premium listed companies, but is aimed at satisfying the particular needs and circumstances of small and mid-size companies quoted on a public market which includes AIM and ISDX. Both of these markets are aimed at “high-growth” companies and the QCA Code seeks to set out a framework for the corporate governance required to satisfy the needs of investors (institutional or otherwise) but still allow the company to operate in the entrepreneurial and dynamic way that is required to meet its high-growth potential.

The principles

The QCA Code is based on twelve principles aimed at delivering growth in the long term shareholder value by “maintaining a flexible, efficient and effective management framework within an entrepreneurial environment”. The twelve principles are as follows:

  1. Setting out the vision and strategy
  2. Managing and communicating risk and implementing internal control
  3. Articulating strategy through corporate communication and investor relations
  4. Meeting the needs and objectives of your shareholders
  5. Meeting stakeholder and social responsibilities
  6. Using cost effective and value added arrangements
  7. Developing structures and processes
  8. Being responsible and accountable
  9. Having balance on the board
  10. Having appropriate skills and capabilities on the board
  11. Evaluating board performance and development
  12. Providing information and support.

The new QCA Code also sets out the “characteristics” of an effective board, which is broken down into six individual characteristics based on, amongst other things, board make-up, independence and communication.


The QCA Code provides a non-obligatory code of corporate governance specifically aimed at small to medium sized companies quoted on the public markets. Although abiding by it is optional for such companies, it is highly regarded by investors as the industry standard for small to medium sized quoted companies. Failure to implement the QCA Code or follow the “comply or explain” structure will undoubtedly reduce a company’s ability to build long term trust and maximise its relationship with its investors. Further to this, fully embracing and implementing the QCA Code will hold a company in good stead should it progress through to a premium listing on the LSE.

The QCA Code is also a useful guide for unquoted companies with aspirations of being admitted to AIM or ISDX. It is never too early for a company to implement and adapt to good corporate governance procedures. Any company which does will be more attractive to investors and better placed to embrace the further operational and regulatory requirements of a company admitted to trading on AIM or ISDX should it wish to apply for admission.


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