Corporate Governance Codes aim to promote high levels of corporate governance

by putting forth principles and provisions with which companies are expected to

comply. Such Codes play vital roles in underpinning the integrity and efficiency of

financial markets. Indeed, well-governed companies will usually outperform other

companies and will be able to attract investors whose support can help to finance

further growth.

In its latest "Review of Corporate Governance Reporting," in November 2020, the

Financial Reporting Council (FRC) says some companies continue to treat the UK

Corporate Governance Code as a "box-ticking exercise," adding it was "surprised

that in many cases corporate governance reporting was not coherent and

cohesive."

Too often, says the FRC, "the objective of reporting appears to be to claim strict

compliance with the Code through box-ticking compliance rather than through

effective governance and reporting."

The regulator also complains companies are keen to talk up their commitment to

"hot topics" like diversity and culture but fail to explain what they are actually doing

to promote, assess, and measure their progress in practice.

Often many jurisdictions opt for a "comply-or-explain" approach to corporate

governance obligations as opposed to mandatory legally binding rules.

Discuss.