UK: QCA Publishes Revised Corporate Governance Code

The Revised Code continues to (i) adopt a pragmatic, principles-based approach, (ii) apply ten broad principles (which are substantially the same as before, with the exception of the new principle on remuneration, as described below), and (iii) ensure website and annual report disclosures are published to promote good corporate governance.

The key changes in the Revised Code include:

• Greater emphasis on corporate culture and purpose (Principle 2);
  
  
• protecting minority shareholders by recommending a relationship agreement be put in place with controlling shareholders (Principle 3);
  
  
• express reference to environmental and social considerations, such as climate related issues and diversity (although the QCA have not introduced any targets) (Principles 3 and 4);
  
  
• greater emphasis on engagement with key stakeholders including the company's workforce (Principles 4 and 10);
  
  
• more focus on internal controls and assurance (Principles 5 and 8);
  
  
• independence (including new wording setting out circumstances which might impair independence), composition of the board and its committees including their skills and experience and new wording noting that the Audit and Remuneration Committees should aim for the composition to be solely independent directors, and a new requirement for annual re-election of directors (Principles 5, 6 and 7);
  
  
• more detailed provisions in relation to succession and contingency planning (Principle 8); and
  
  
• establishing a new remuneration principle (Principle 9) which reflects the QCA's existing guidance on remuneration by noting that, in the same way as is required for main market companies, shareholders should be provided a vote on both the remuneration report and policy.

When looking ahead to applying the Revised Code, companies might want to consider the following action points:

• Deciding when to adopt the Revised Code from (the supporting documents available from the QCA's website have suggested board minutes for this).
  
  
• Appointing (and minuting) which board member(s) will be responsible for stakeholder engagement (different board members could be responsible for different stakeholders, e.g. main market companies commonly have a Non-Executive Director responsible for workforce engagement, whereas the CEO/Chair will be responsible for shareholder engagement).
  
  
• Considering the succession plan for both executives and non-executives, including their appointment and assessment of their relevant skills and experience, to ensure it meets the requirements of the Revised Code (including in relation to contingency planning) and reviewing the composition of the Board to ensure it has the requisite skills and knowledge as a whole.
  
  
• Reviewing the composition of the Committees of the Board in light of the independence criteria in the Revised Code.
  
  
• Implementing processes to ensure the disclosures included in the 2025 annual report (and the corporate governance statement on the company's website) reflect the Revised Code.
  
  
• Preparing for the Remuneration Report (and Remuneration Policy, depending on timings) to be put to a shareholder vote at the next AGM.
  
  
• Updating the company's website disclosures to ensure they align with the Revised Code, once adopted.
  
  
• Entering into a relationship agreement with any controlling shareholders (to the extent there is not already one in place).

A copy of the Revised Code is available to download on the QCA's website (it is free for members). There is also a supporting document available which sets out some further information on the changes and key FAQs.