On a Comply or Explain?

These codes are based on a “comply or explain” approach – which, plainly put, means that companies either comply with the principles and guidelines set out or explain why they have not. “Comply or explain” has been criticised for not being clear about whether a rule should be applied or not.

Does comply or explain work?

Comply or explain is a regulatory approach used in the United Kingdom, Germany, the Netherlands and other countries in the field of corporate governance and financial supervision. ... The purpose of "comply or explain" is to "let the market decide" whether a set of standards is appropriate for individual companies.

What is the principle of comply and explain?

The comply or explain principle stipulates that corporations should company with the Corporate Governance Code (also called Code) or explain reasons why they do not comply. ... Comply or explain essentially requires that companies hold true to good governance without being compelled by a regulatory body.