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Comply or explain     Print

Governance codes are usually prepared in accordance with the so-called Comply or Explain principle. This means that the company shall comply with all recommendations of the Code. But a company may depart from an individual recommendation, however, but in this case, it must account for such a departure and provide an explanation for doing so. The company complies with the Code even if it departs from an individual recommendation provided that the company accounts for and explains the departure.

The Comply or Explain principle gives the company more flexibility in the application of the Code. The company may depart from an individual recommendation of the Code due to, e.g. the ownership or company structure or the special characteristics of its area of business. A clear and comprehensive explanation will consolidate the trust in the decision made by the company and make it easier for the shareholders and investors to evaluate the departure

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