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QCA Research Report: Corporate Governance on AIM

In September 2018, London Stock Exchange required all companies on AIM to adopt a corporate governance code for the first time. Of the 900+ companies on the market, around 90% chose to adopt the Quoted Companies Alliance (‘QCA’) Corporate Governance Code (the QCA Code). 

It is a rare occasion that so many companies in one country adopt a governance code at the same time and the QCA wanted to investigate what companies thought about the process and how it might have helped (or hindered) them. 
This is a survey of those AIM companies, with findings from 139 respondents, complemented by results from 15 qualitative interviews with companies and investors. 
The QCA are encouraged by what they have found. There is evidence that communication between executives and non-executives is improving within companies as a result of adopting the QCA Code. It is also apparent that it has helped prompt conversations within companies around issues like succession planning that were otherwise not being addressed. 
The QCA Code was drafted by a group of practitioners from small and mid-cap companies, investors, and other advisors in the sector and included input from NEDA with Louis Cooper (NEDA CEO) on the drafting panel. The goal was to create a flexible, principle-based code designed specifically for smaller companies on equity markets, but also suitable for private companies, particularly those that are pre-IPO.
The results of this survey confirm a framework that allows smaller companies, with less resources, to communicate their governance arrangements to stakeholders without being overly burdened with one-size-fits-all prescriptive requirements. This has saved smaller companies precious time and resources that should be dedicated to growth – creating jobs and wealth in the UK and around the world, whilst allowing them to tell their story in a way that suits them.

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