The
UK Corporate Governance Code (from here on referred to as "the Code") is a set of principles of good
corporate governance aimed at companies listed on the
London Stock Exchange. It is overseen by the
Financial Reporting Council and its importance derives from the
Financial Conduct Authority's
Listing Rules. The Listing Rules themselves are given statutory authority under the
Financial Services and Markets Act 2000 and require that public listed companies disclose how they have complied with the code, and explain where they have not applied the code in what the code refers to as 'comply or explain'. Private companies are also encouraged to conform; however there is no requirement for disclosure of compliance in private company accounts. The Code adopts a principles-based approach in the sense that it provides general guidelines of best practice. This contrasts with a rules-based approach which rigidly defines exact provisions that must be adhered to.