Which companies are encouraged to apply the UK Corporate Governance Code?

The UK Corporate Governance Code is designed to provide a framework of best practices for companies to follow in order to promote transparency, accountability, and good corporate governance. While the Code is primarily aimed at publicly listed companies, specifically those on the London Stock Exchange, the principles outlined within it can also be applied to smaller and unlisted companies, though they are not mandatory.

Smaller and unlisted companies are encouraged to adopt the principles of the Corporate Governance Code in order to improve their governance practices, even though they may not be legally bound to do so. By applying these principles, these companies can benefit from enhanced stakeholder trust, improved management decision-making, and overall stronger corporate governance frameworks, which can be particularly advantageous for their growth and sustainability.

Larger public companies tend to have stringent obligations regarding compliance with the Code due to their public nature and increased scrutiny from investors. Thus, the application of the Code to smaller and unlisted companies represents an effort to promote good governance across a broader spectrum of the corporate landscape, rather than just within larger corporations.