1 April 2024 – revised QCA Corporate Governance Code (3rd Edition) for small and mid-size publicly traded companies

Key areas of change in the revised Quoted Companies Alliance corporate governance code, that enters into effect from 1 April 2024 with a 12 month transition after that:

• Board independence

(a matter for board judgement, no tenure cut-off times prescribed but quality of relationships and impediments to independence, independent chair can be counted in the board numbers, fully independent committees are ideal, with many NEDs. NEDs should not participate in remuneration conversations)

• Risk management

Additional disclosure expected, of risk and resilience processes in the company concerned, which is a minor change to the Code, in the sense risk management has always been expected and is already encouraged. 

Principles 9 and 6 folded together into Principle 7.

• Succession and contingency planning

The enouragement to develop succession plans of executives and NEDs, in Principle 8.  A way of doing this, is to Map skills to prepare for the next corporate stage, and it is strongly enouraged that diversity matters here.

• ESG

Principles 1 and 2 on purpose and culture, remain the focus for ESG. The Code expects companies and boards exected to appropriate quantitiative and qualitative reporting on the topic of ESG.

Diversity of people management, is encouraged but not prescribed. Principle 6 has been updated to call upon Boards to reflect on socioeconomic, gender, national and age diversity. 

Companies should describe in their Governance Statement whether they have the right mix of people in the sense of working toward diversity.

• Remuneration

A new Principle 9 has been added to the Code, which encourages the use of simple, easy to understand, pay structures aligned with shareholder interest.

There is some formalisation in the new Principle of attention to this topic in the Annual remuneration report and remuneration policies every 3 years. 

• Stakeholder management

The revised Code encourages firms to think about the satisfaction, motivation and engagement of employees, corporate culture and purpose.

Principle 4 refers to managing wider stakeholder interest for long term success, echoing s172 Companies Act.