QCA Corporate Governance Code: A reminder of the key updates and what they mean for your business

The Quoted Companies Alliance (QCA) published a revised version of its Corporate Governance Code in November 2023, the first major update since 2018. These changes will apply to accounting periods beginning on or after 1 April 2024, so will be relevant to many companies imminently.  

Importantly, the QCA has introduced a 12-month transition period. During this period, companies are encouraged to disclose proposed changes to governance structures and processes, rather than requiring full implementation in the first reporting cycle. This approach supports thoughtful adoption and provides boards with a practical window for consultation and planning—though disclosures will still need to be reviewed from an audit perspective.

The revised principles

The new Code retains its 10-principle format, although the content has been updated. Two principles from the 2018 Code (on board composition and governance structures) have been merged, and a new standalone principle on remuneration has been introduced.

• Purpose, strategy and business model: Establish a purpose, strategy and business model which promotes long-term value for shareholders. 
• Corporate culture: Promote a corporate culture that is based on ethical values and behaviours. 
• Shareholder engagement: Seek to understand and meet shareholder needs and expectations. 
• Wider stakeholder interests: Take into account broader stakeholder interests, including environmental and social responsibilities, and their implications for long-term success. 
• Risk management and internal controls: Embed effective risk management, internal controls and assurance activities, considering both opportunities and threats. 
• Board composition and leadership: Maintain the board as a well-functioning, balanced team led by the chair. 
• Governance structures and capability: Maintain appropriate governance structures and ensure directors have up-to-date experience, skills and capabilities (Note: combines former principles 6 and 9). 
• Board evaluation and improvement: Evaluate board performance based on clear objectives and pursue continuous improvement. 
• Remuneration: Establish a remuneration policy supportive of long-term value creation and aligned with purpose, strategy, and culture (Note: new principle.) 
• Governance communication: Communicate how the company is governed and performing by maintaining dialogue with shareholders and other key stakeholders. 

Key areas of change

Purpose and culture

The Code reinforces that purpose must be the foundation of governance. Under Principle 1, boards are now expected to articulate the company’s “essential reason for being,” and to ensure that the strategy and business model flow from this. Principle 2 strengthens the link between culture and purpose, requiring boards to demonstrate how corporate behaviours support their stated mission.

Principle 9 introduces remuneration as a standalone principle, requiring that reward structures support the company’s long-term success and align with its stated purpose and culture—not merely short-term performance metrics. 

Environmental and social responsibilities

The revised Code places a much stronger emphasis on ESG issues, particularly climate-related risks: 

• Principle 4 now explicitly references environmental responsibilities and requires boards to develop appropriate governance and oversight mechanisms for environmental and social issues.
• Principle 5 includes climate-related risk as a specific factor to be addressed in the risk management system.
• Principle 7 expects boards and governance structures to maintain current knowledge and skills – including those relating to sustainability and climate matters.
• Principle 10 highlights the need to communicate clearly with stakeholders on sustainability issues.

This shift reflects increasing investor focus on ESG transparency, even for companies not subject to mandatory reporting under TCFD or ISSB frameworks.

Board composition, independence and evaluation

The updated Code provides more specific guidance on board independence and performance evaluation, including: 

• At least half of the board should be made up of independent non-executive directors (INEDs). 
• Key committees (audit, remuneration, nomination) should be composed of at least a majority of INEDs and ideally be fully independent. 
• Boards are expected to offer annual re-election of all directors, giving shareholders regular oversight of the board’s composition. 
• The Code introduces specific indicators of potential threats to independence, including long tenure, significant shareholdings, previous executive roles, or performance-related pay. 
• Board evaluations should be conducted annually, and companies should demonstrate that they are acting on the findings. 
• Succession planning is a key responsibility of the nomination committee and should ensure a diverse mix of skills, experience, and perspectives. 

Boards are expected to assess diversity across factors such as gender, ethnicity, age, education, and professional background, and explain how their composition supports effective decision-making.

Minority shareholder protection

For companies with a controlling shareholder (30% or more), the QCA now encourages the adoption of a relationship agreement that sets out how the shareholder will operate at arm’s length and protect the interests of minority shareholders.

This reflects concerns from investors and governance bodies around power concentration and supports market confidence in fair decision-making. 

What this means in practice

If your company reports against the QCA Code, now is the time to: 

• Conduct a gap analysis: Identify where current practices fall short of the new principles. 
• Engage your board early: Especially on culture, purpose, ESG, and board composition. 
• Update disclosures: Your next annual report should reflect either your compliance or a clear roadmap for adoption. 
• Enhance succession and diversity strategies: The emphasis is on continual improvement. 
• Review stakeholder engagement: The Code now expects companies to engage transparently and proactively, particularly around environmental and social topics. 

Final thoughts

The 2023 update marks a shift in tone as well as content. While still principles-based and proportionate, the new Code sends a clear signal: governance is not just a compliance exercise—it must be lived, reviewed, and communicated.

Boards that embrace the new expectations will not only meet investor demands but strengthen their organisations’ long-term resilience and value creation. 

Need help navigating the new QCA Code? Contact us now to discuss how your company can prepare and comply effectively.