The Quoted Companies Alliance (QCA) Corporate Governance Code

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • The Quoted Companies Alliance (QCA) Corporate Governance Code
  • Application
  • Principles
  • Roles and responsibilities
  • The board
  • The chair
  • The senior independent director
  • The non-executive director
  • Compliance
  • Corporate governance statement
  • More...

The Quoted Companies Alliance (QCA) Corporate Governance Code

The Quoted Companies Alliance (QCA) is an independent membership organisation that champions the interests of small to mid-sized quoted companies. One of its aims is to promote high quality corporate governance in quoted companies.

On 25 April 2018, the QCA published a revised version of its corporate governance code (QCA Code) which updated and replaced the Corporate Governance Guidelines for Smaller Quoted Companies which was last published in May 2013.

The QCA Code aims to be a pragmatic and practical corporate governance tool. It takes key elements of good governance and applies them in a manner which is workable for the different needs of growing companies.


Unlike the UK Corporate Governance Code which applies to companies with a premium listing, the QCA Code does not apply to any specific category of company, although in practice it is more likely to be adopted by small and mid-sized quoted companies that do not have a premium listing.

In addition, following the government’s initiatives to encourage larger private companies to adopt a recognised corporate governance code, the QCA has suggested that its code may be adapted for use by privately owned companies that wish to adopt good governance practices (in particular companies contemplating an IPO in the future).

For general information on the corporate governance regime applicable to a public limited company admitted to trading

on AIM, including the requirement for AIM companies to report against a recognised corporate governance code, see Practice Note: Corporate governance for an AIM company.


The QCA Code is framed around ten principles of corporate governance (Principles) which fall under three headings:

  1. deliver growth

    1. Principle 1: establish a strategy and business model which promote long-term value for shareholders

    2. Principle 2: seek to understand and meet shareholder needs and expectations

    3. Principle 3: take into account wider stakeholder and social responsibilities and their implications for long-term success

    4. Principle 4: embed effective risk management, considering both opportunities and threats, throughout the organisation

  2. maintain a dynamic management framework

    1. Principle 5: maintain the board as a well-functioning, balanced team led by the chair

    2. Principle 6: ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

    3. Principle 7: evaluate board performance based on clear and relevant objectives, seeking continuous improvement

    4. Principle 8: promote a corporate culture that is based on ethical values and behaviours

    5. Principle 9: maintain governance structures and processes that are fit for purpose and support good decision-making by the board

  3. build trust

    1. Principle 10: communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

Roles and responsibilities

The QCA Code also includes commentary on the roles of the board, the chair, the senior independent director (SID), the non-executive directors (NEDs), the executive directors, the board committees, the company secretary and shareholders. Some of the key recommendations are discussed below.

The board

Normally boards will include at least two NEDs who are identified as independent; larger boards will require more independent NEDs. Shareholder expectation is that at least half of directors of a board will be independent NEDs.

The fact that a director has served for more than nine years does not automatically affect independence, although concurrent tenure with management could hinder the ability to be objective. The board should make a decision regarding such a director’s independence and ensure that this is discussed with key investors well before the AGM. It is good practice for any such director to be re-elected on an annual basis, if this is not already a board policy for all directors.

An effective board:

  1. has a clear purpose and strong leadership by the chair

  2. has the right balance of skills, experience and independence

  3. has directors who work as a team

  4. understands the business and supports the creation and delivery of the strategy of the company

  5. regularly informs and engages with shareholders and other key stakeholders

  6. evaluates its performance and acts on the conclusions

The chair

The chair must have adequate separation from the day-to-day business to be able to make independent decisions.

Save in exceptional (and well justified and explained) circumstances, the chair should not also fulfill the role of chief executive. If there is a need to combine these roles then this should be temporary and discussed beforehand with shareholders.

The senior independent director

Companies should consider whether it is appropriate to have an SID. SIDs act as a sounding board and intermediary for the chair or other board members, as necessary. The key responsibilities of the SID also include leading the performance evaluation of the chair, or the search for a new chair, and chairing the (usually annual) meeting of the NEDs without the chair being present. The SID can act as a deputy chair, whether formalised or not.

The non-executive director

NEDs should be independent to be able to provide appropriate oversight and to deliver their role. NEDs should expect to:

  1. have a formal appointment process and a structured induction process, including meetings with key shareholders

  2. commit an appropriate amount of time to the company (particularly where the NED has more than one directorship) and to be available to shareholders

  3. be appointed to board committees that have formal terms of reference

  4. receive high quality information sufficiently in advance of board and committee meetings, which is accurate, clear, comprehensive, up-to-date and timely

  5. have access to the executive directors, the company secretary and the company’s advisers

  6. be able to call upon independent professional advice at the company’s expense if they consider it necessary to discharge their responsibilities as directors

  7. receive ongoing training and development

  8. have their performance assessed on a regular basis (along with the executive directors)


The QCA Code provides brief details of how each Principle may be applied and the disclosures that companies complying with the code are expected to provide.

Disclosures should not be regarded as a compliance exercise. Boards must include clear, well signposted disclosures in order to claim that the QCA Code has been adopted. Companies may choose to publish these disclosures in the company’s annual report, include them on their website or adopt a combination of the two approaches. Where disclosures are presented outside of the annual report, there should be clear signposting to where on the company’s website other information can be found.

Corporate governance statement

In addition to the disclosures suggested against each Principle, the QCA Code recommends that a corporate governance statement from the chair is included in the annual report which should:

  1. clearly articulate the chair’s role and demonstrates his/her responsibility for corporate governance

  2. explain, at a high level, how the QCA Code is applied by the company and how its application supports the company’s medium to long-term success

  3. explain, in a clear and well-reasoned way, any areas in which the company’s governance structures and practices differ from the expectations set by the QCA Code

  4. identify any key governance related matters that have occurred during the year, including any significant changes in governance arrangements

Annual report and accounts

In addition to the corporate governance statement, the QCA Code recommends that the following disclosures be made in the annual report against the Principles:

  1. Business model and strategy (Principle 1)—the company’s business model and strategy, including key challenges in their execution (and how those will be addressed)

  2. Risk Management (Principle 4)—how the board has embedded effective risk management in order to execute and deliver strategy. This should include a description of what the board does to identify, assess and manage risk and how it gets assurance that the risk management and related control systems in place are effective

  3. Independent Directors (Principle 5)—those directors who are considered to be independent; where there are grounds to question the independence of a director, through length of service or otherwise, this must be explained

  4. Time commitment (Principle 5)—the time commitment required from directors (including non-executive directors as well as part-time executive directors)

  5. Meetings and Attendance Records (Principle 5)—the number of board and committee meetings held during the year, together with the attendance records of each director

  6. Details of Directors (Principle 6)—the identity of all the directors

  7. Relevant Skills and Experience (Principle 6)—the relevant skills, experience and personal qualities and capabilities that each director brings to the board; details of how each director keeps their skill set up to date

  8. External advice (Principle 6)—details of any external advice taken by the board or any committee on a significant matter; details of any external advisers to the board or committees

  9. Internal responsibilities (Principle 6)—any internal advisory responsibilities, such as the roles performed by the company secretary and the senior independent director, in advising


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