1. The “comply or explain” approach is the trademark of corporate governance in the UK.
It has been in operation since the Code’s beginnings and is the foundation of its
flexibility. It is strongly supported by both companies and shareholders and has been
widely admired and imitated internationally.
2. The Code is not a rigid set of rules. It consists of principles (main and supporting) and
provisions. The Listing Rules require companies to apply the Main Principles and
report to shareholders on how they have done so. The principles are the core of the
Code and the way in which they are applied should be the central question for a board
as it determines how it is to operate according to the Code.