The QCA Corporate Governance Code is the governance standard for companies too small for the UK Corporate Governance Code and too public to have none. Its 2023 edition applies to accounting periods commencing on or after 1 April 2024, it runs on ten principles, and over 90% of AIM-quoted companies choose to adopt it.
What it is for
The QCA describes the Code as tailored for "smaller, growing companies whether already traded on a public market or privately owned", and reports that it is used by almost 700 companies across AIM, the Main Market, the Aquis Stock Exchange and private companies that may float in future.
The design problem it solves is proportionality. The UK Corporate Governance Code assumes a board with several independent non-executives, three functioning committees and a resourced internal audit function. A company with a £60 million market capitalisation and forty employees cannot staff that without governance consuming the business. The QCA Code asks the same questions at a workable scale.
How it works
Companies are expected to apply the ten principles and to publish related disclosures that "describe the company's own position and why they have chosen it". Where a company cannot apply a particular principle, it may explain why rather than face a strict compliance mandate.
Disclosures may appear in the annual report, on the website, or across both with clear cross-referencing. The website route is used more than people expect, and it introduces an obligation nobody diarises: a governance statement on a website is a live document, and one that still names a director who left eighteen months ago is worse than no statement at all.
The AIM rules themselves provide issuers with flexibility in how they report their governance approach across key disclosure areas, which is why adoption of the QCA Code is a choice rather than a mandate — and why the overwhelming take-up is itself the market signal.
Explain properly, or do not explain
The comply-or-explain model only works if the explanations are real, and this is where most QCA Code disclosure fails. A statement that the company "does not currently consider a separate audit committee to be appropriate given its size" is not an explanation. It states a conclusion and gives no reasoning.
A usable explanation does three things: it says what the company does instead, it says why that is adequate for this company at this stage, and it says what would have to change for the company to adopt the principle in full. That last element is what makes the disclosure credible to an investor, because it shows the board has thought about the trajectory rather than the exemption.
Boilerplate is easy to spot and it is read as an answer about the board's seriousness rather than about the committee.
Where smaller quoted companies actually struggle
Four areas account for most of the difficulty, in our experience.
Board independence. A founder-led company with two executives, one investor-nominated director and one long-serving non-executive has an independence question it cannot solve by assertion. The honest disclosure names the position and explains the mitigations.
Committee capacity. Where the same two non-executives staff audit, remuneration and nomination, the committees are formally distinct and practically identical. Saying so, and explaining how conflicts are handled, is better than presenting a structure that does not exist.
Risk management and internal control. Smaller companies often have effective controls and no framework describing them. The disclosure requirement is about the framework, and writing it down usually reveals one or two genuine gaps.
Board evaluation. Externally facilitated evaluation is expensive at this scale. An internal evaluation done seriously, with the process and the findings described, is a reasonable position — an evaluation that exists only as a sentence in the annual report is not.
The contrast with the UK Corporate Governance Code
It is worth knowing where the other code has got to, because larger-company practice sets expectations that flow downwards.
The 2024 edition of the UK Corporate Governance Code has applied since 1 January 2025, for financial years beginning on or after that date. One provision was deliberately deferred: Provision 29, which requires boards to declare the effectiveness of their material internal controls, applies from 1 January 2026 — a year after the rest.
Provision 29 does not apply to QCA Code adopters. But the direction it sets — a board declaration about the effectiveness of controls, supported by evidence — is the standard that investors, lenders and acquirers will increasingly have in mind, and a growing company expecting to move to the Main Market should treat it as the destination. Our guide to the directors' report covers the statutory reporting that sits underneath either code.
Practical steps
Map each of the ten principles to where the company's disclosure lives and who owns it, and put a review date on each. Rewrite any explanation that does not say what is done instead and why it is adequate. If disclosures sit on the website, assign the update to someone with a calendar reminder rather than to the annual report cycle. And where a principle is genuinely not applied, decide whether the answer is a better explanation or an actual change — sometimes the cheaper fix is to appoint the non-executive.
Acumon supports quoted and growing companies through corporate governance, internal audit and risk management work, with statutory audit and reporting accountant services for transactions. If your governance statement lives on the website, the first task is to read it as an investor would.