Thought Leadership

Quoted Companies Alliance (QCA) Releases Updated 2023 QCA Code

December 6, 2023 Reports and White Papers

The Quoted Companies Alliance (QCA) has published a revised QCA Corporate Governance Code (2023 Code) that was last updated in 2018 (2018 Code). The QCA Code is designed to act as a framework for good corporate governance for small and mid-sized U.K. quoted companies and is used by nearly 900 companies, including those trading on AIM, the standard segment of the main market and Aquis Stock Exchange. It is the most commonly adopted corporate governance code on AIM, with over 90% of AIM companies having adopted the 2018 Code.

Published on 13 November 2023, the 2023 Code maintains the 2018 Code’s format with its established 10-principle structure (the Principles). Although the Principles have been reorganised and in some instances changed, they have, in substance, remained the same. The 2023 Code continues to divide the Principles into three themes: ‘Deliver Growth’, ‘Maintain a dynamic management framework’ and ‘Build Trust’. The most substantial change to the 2023 Code has been the inclusion of a remuneration-focussed principle. The 2023 Code is available from the QCA’s website at no cost for QCA members and for a fee for non-members.

Below is a side-by-side comparison of the 2023 Code and the 2018 Code:

Principles of 2023 Code

Principles of 2018 Code

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

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

Principle 2: Promote a corporate culture that is based on ethical values and behaviours. (Previously Principle 8 in 2018 Code)

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

Principle 3: Seek to understand and meet shareholder needs and expectations. (Previously Principle 2 in 2018 Code)

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

Principle 4: Take into account wider stakeholder interests, including social and environmental responsibilities, and their implications for long-term success. (Previously Principle 3 in 2018 Code)

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

Principle 5: Embed effective risk management, internal controls, and assurance activities, considering both opportunities and threats, throughout the organisation. (Previously Principle 4 in 2018 Code)

Principle 5: Maintain the board as a well-function, balanced team led by the chair.

Principle 6: Establish and maintain the board as a well-functioning balanced team led by the chair. (Previously Principle 5 in 2018 Code)

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

Principle 7: Maintain appropriate governance structures and ensure that individually and collectively the directors have the necessary up-to-date experience, skills, and capabilities. (This is a combination of the previous Principle 6 and Principle 7 in 2018 Code)

Principle 7: Evaluate board performance based on clear and relevant objective, seeking continuous improvement.

Principle 8: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement. (Previously Principle 7 in 2018 Code)

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

Principle 9: Establish a remuneration policy which is supportive of long-term value creation and the company’s purpose, strategy, and culture. (This is a new Principle)

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

Principle 10: Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other key stakeholders. (This is unchanged except for slight wording change)

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

Key changes to QCA Code

Some of the key changes to the 2023 Code include, but are not limited to:


The 2023 Code includes the establishment of a new remuneration principle (Principle 9). While this principle broadly reflects the QCA’s existing guidance in relation to remuneration, it also recommends that:

  1. companies establish an effective remuneration policy;
  2. senior management’s pay structures are easily understood and align with shareholder values; and
  3. the annual remuneration report, remuneration policies and any amendments to existing employee share schemes or long-term incentive plans should be put to a shareholder vote.

Wider Stakeholders’ Interests

Principle 4 of the 2023 QCA Code (previously Principle 3 in the 2018 Code) contains a greater focus on ‘the workforce’ as a key stakeholder and states that companies should ensure that practices towards employees are consistent with a company’s values. The 2023 Code is more prescriptive in its expectation for appropriate arrangements to allow employees to raise concerns and procedures to ensure that these concerns are dealt with appropriately. Overall, this a recognition of the necessity of an engaged and motivated workforce to help deliver shareholder value.

Environmental, Social and Governance (ESG) Considerations

The revised 2023 QCA Code includes express references to ESG issues, including for example those relating to climate change, and recommends that ESG issues should be integrated into strategy, risk management and business models. It is made clear that the board of a company is responsible for governance and ensuring there is appropriate oversight in relation to ESG issues. Further, relevant disclosures should now be included in annual reports including a description of ESG issues that the board have identified as being material to the company.

Board Independence and Composition

There is a continued focus in the 2023 Code on board independence and composition. While independence was referred to in the 2018 Code, this has now been expanded on further into specific principles for companies to follow, which include but are not limited to the following:

  1. It is recommended that at least half the board comprise independent non-executive directors (INEDs).
  2. It provides a new non-exhaustive list of indicators that a board of company should consider when determining independence (e.g., director shareholding, length of board tenure, size of shareholding and others).
  3. It is recommended certain key committees like the audit and remuneration committee should at least comprise a majority of INEDs but should ideally aim for full independence.
  4. Ultimately, boards should continually consider and ensure they have the necessary skills and experience needed to fulfil their governance responsibilities and adapt accordingly.

Succession and Contingency Planning

Succession planning under the 2023 Code, for both executive and non-executive directors, as well as senior management and key staff, is now considered an essential task for the board. The 2023 QCA Code expands the scope of Principle 8 (previously Principle 7 in the 2018 Code) by extending it to cover contingency planning for the absence of key staff.

The skills, experience, capabilities and background for directors and senior management to support the next stage of a company’s development should be identified and factored into succession planning. Further, companies should look to disclose in their annual report and accounts the company’s succession planning processes, including for example indicative times for expected appointments.

Implementation and Timeline

Generally, companies currently applying the 2018 Code are being encouraged to migrate to the 2023 Code. However, the QCA recommends that any company that intends to begin applying the Code in respect of account periods on or after 1 April 2024 should apply the 2023 Code. From 1 April 2024, there will be a 12-month transition period to allow companies the flexibility to adjust to the new requirements of the 2023 Code and to update their governance disclosures appropriately. Beyond this transition period the 2018 Code will become redundant and the QCA has confirmed that in the future they intend to stop supporting the 2018 Code.

The QCA has also announced the introduction of the new QCA Code “Badge” which will indicate the company is an Official User of the QCA Code. Any company which purchases the 2023 Code can display the new QCA Code Badge on their company website and/or in their annual report, which is expected to become a recognisable mark for investors and wider stakeholders.

How We Can Help

Armstrong Teasdale’s team is well versed in guiding and assisting clients with corporate governance codes and other related corporate advice. If you have any questions regarding implementing the 2023 Code or other matters discussed within this article, or if you need further guidance in relation to corporate governance or the 2023 Code, please contact your regular AT lawyer or one of the authors from our U.K. Capital Markets team.

Disclaimer: This publication is provided by Armstrong Teasdale Limited for informational purposes only. The information contained in this publication should not be construed as legal advice. Any questions or further information regarding the matters discussed in this publication can be directed to Armstrong Teasdale’s U.K. Capital Markets team.

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