Due to the new 'comply or explain' rule, AIM companies will be wary of adopting a code which does not reflect the requirements of their business or industry, as this will lead to disclosure of negative statements which, in turn, may, inadvertently, give activist shareholders ammunition to question the board's commitment to corporate governance. You should choose the one that gives you the correct structure and adaptability to ensure you can continue to run your business in the most efficient way possible.
Importance of choosing the most appropriate governance standardĬhoosing the right code to follow for your business is important. Therefore, all AIM companies should review the corporate governance standards they currently apply (if any) and determine whether it is the appropriate standard to use in future. This will no longer be sufficient and AIM companies will now need to provide more substantive disclosures. This will necessitate a departure from current practice for a large number of AIM companies which, previously, have stated in their annual reports that they follow either the UK Corporate Governance Code published by the Financial Reporting Council (FRC Code) or the Quoted Company Alliance Corporate Governance Code (QCA Code) "so far as appropriate for a company of this size".
Aim executive committee update#
As discussed in our recent update on corporate governance developments for AIM companies, from 28 September 2018 every AIM company will be required to adopt a recognised corporate governance code and disclose annually how it complies with that code, where it departs from its chosen code, and an explanation of the reasons for doing so.
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