As of September 2018, all companies on AIM were required to name on their website which corporate governance code they follow to be in line with a newly updated rule from London Stock Exchange.
According to AIM Rule 26, companies can choose which “recognised” corporate governance code they adopt. They have to state publicly which code it is and explain how they apply it. But which codes have these companies chosen to adopt?
To answer this question, we reviewed the websites of all 927 companies on AIM. We found out:
- 89% follow the QCA Corporate Governance Code
- 6% follow the FRC’s UK Corporate Governance Code
- 5% follow a variety of other codes, such as the code of another country or territory
See the chart below for the full breakdown:
Which corporate governance codes to the 50 biggest companies on AIM follow?
Of the 50 biggest companies on AIM (by market capitalisation):
- 30 follow the QCA Code (60%)
- 19 follow the FRC's UK Code (38%)
- 1 follows the Guernsey Financial Sector's Code (2%)
Corporate Governance Codes followed by AIM companies
The QCA Corporate Governance Code
The QCA Corporate Governance Code was updated and released in April 2018. It is authored by the QCA’s Corporate Governance Expert Group and a standalone Working Group comprising individuals from the small & mid-cap market segment.
- See here for more details on the QCA Code
- We have also conducted some analysis to review the level of compliance with the QCA Code by the AIM companies that have adopted it - see here for the results
A small number of companies (three) stated that they had adopted the previous version of the QCA Corporate Governance Code from 2013.
The UK Corporate Governance Code
The Financial Reporting Council’s UK Code is the second most followed code on AIM. It was reviewed and updated in 2018.
Association of Investment Companies (AIC) Code of Corporate Governance
The AIC code is for investment companies and is followed by eight companies on AIM.
Corporate Governance Codes of other countries and territories
30 AIM companies follow the corporate governance codes of other countries, namely Australia, Bangladesh, Canada, Ireland, Singapore, South Africa, or Norway. In addition, a small number follow the codes or principles of Guernsey or Jersey.
The respective codes are:
- ASX Corporate Governance Principles and Recommendations
- Canadian National Instrument 58‑101 ‑ Corporate Governance Disclosure
- Guernsey Finance Sector Code of Corporate Governance
- BSEC Corporate Governance guidelines
- Jersey Financial Services Commission Code of Practice
- Monetary Authority of Singapore Code of Corporate Governance
- King IV Report on Corporate Governance for South Africa
- Irish Corporate Governance Annex
- Norwegian Code of Practice for Corporate Governance
The list of all companies on AIM at the end of October 2018 was downloaded from London Stock Exchange’s website. The websites of the 927 companies on AIM were then manually reviewed in November 2018 to record which code they had applied.
Our thanks to Max Simmonds for conducting this research.
Further analysis on the level of compliance of the QCA Code by AIM companies as part of this review can be seen here