The purpose of "comply or explain" is to "let the market decide" whether a set of standards is appropriate for individual companies.

What is “comply or explain”? It’s a legal principle attached to many new corporate regulations. It relates hugely to both governance and ESG.

What does ‘comply or explain’ mean in practice? The Code recognises that there is no single path to achieving effective corporate governance for all companies and therefore a single approach does not suit all companies.

2. What is ‘comply-or-explain’? The basic idea behind comply-or-explain is to allow for some flexibility in the application of the rules set out in the code. The codes are explicitly meant to be applied flexibly. It is not intended that all companies covered by …

Oct 15, 2024 · Additionally, the disclosure regime examined in this paper is essentially a “comply or explain” type of regulation, where firms either mandatorily report chemical information or explain the reason for their nondisclosure.

comply or explain approach means that corporate governance principles and codes are advisory, and therefore must not necessarily be complies with. However, a company that has chosen not to comply with any one or other rule is required to provide a reasonable explanation for doing so.

In summary, “comply or explain”, when properly implemented, provides a sound basis for a conversation between a company and its stakeholders about its corporate governance practices.

Jul 1, 2009 · The comply-or-explain principle relies upon third parties to provide such monitoring and thus to enforce conformance with the code (Brunsson, et al. , 2000; Kerwer, 2005; Seidl 2007).

Dec 22, 2016 · This chapter critically examines the relative advantages of the comply-or-explain approach vis-à-vis the more traditional comply-or-else approach and identifies the specific institutional conditions which are required for its success in achieving effective governance of …

“Comply or explain” has been criticised for not being clear about whether a rule should be applied or not. However, there are clear benefits to a “comply or explain” regime where the principles and guidelines in the code are developed to reflect generic best practices in corporate governance.