Thirty Years and Done – Time to Abolish the UK Corporate Governance Code

68 Pages Posted: 14 Jun 2022 Last revised: 12 Apr 2023

See all articles by Brian R. Cheffins

Brian R. Cheffins

University of Cambridge - Faculty of Law; European Corporate Governance Institute (ECGI)

Bobby V. Reddy

Faculty of Law, University of Cambridge

Date Written: June 9, 2022

Abstract

A 1992 Code of Best Practice developed by a committee Sir Adrian Cadbury chaired revolutionised UK corporate governance. The Code, which introduced non-statutory best practice provisions with which listed companies could choose not to comply so long as they explained why, has evolved into the more expansive UK Corporate Governance Code of today. This paper argues that after three decades it is time to do away with the code approach and ‘comply-or-explain’. Much of the current Code’s content is now irrelevant, and disclosure and compliance expectations have escalated to levels that create substantial net costs for companies. Additionally, the Code is now being used to address ‘stakeholder’ issues for which the Code’s shareholder enforcement dependent comply-or-explain mechanism is poorly suited. The Code correspondingly should be abolished, with some key points it addresses being dealt with instead by new disclosure requirements under the Financial Conduct Authority’s Listing Rules.

Keywords: Corporate governance, UK corporate governance code, Cadbury Code, London Stock Exchange, Listing Rules, Stakeholders

JEL Classification: G18, G30, G34, G38, K22

Suggested Citation

Cheffins, Brian R. and Reddy, Bobby, Thirty Years and Done – Time to Abolish the UK Corporate Governance Code (June 9, 2022). European Corporate Governance Institute - Law Working Paper No. 654/2022, University of Cambridge Faculty of Law Research Paper No. 13/2023, Available at SSRN: https://ssrn.com/abstract=4132617 or http://dx.doi.org/10.2139/ssrn.4132617

Brian R. Cheffins (Contact Author)

University of Cambridge - Faculty of Law ( email )

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European Corporate Governance Institute (ECGI) ( email )

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Bobby Reddy

Faculty of Law, University of Cambridge ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom

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