The U.K. is looking at abandoning the “comply or explain” model that underpins its corporate governance code as a way of easing the compliance pressure on companies.

The Financial Reporting Council (FRC), the U.K. corporate regulator, revealed that it was considering the move when it published an interim report on its current review of the code.

The FRC said a number of commentators responding to its review discussion paper had called for “comply or explain” to be replaced with “apply or explain.”

The argument is that this subtle change of wording “might encourage companies to be more willing to explain where it was appropriate to do so, rather than feeling compelled to comply in all circumstances, and encourage investors and proxy voting services to take less of a box-ticking approach,” the regulator said.

The FRC said it wasn’t sure that this would be the effect, but promised to consider the idea and to look at the experience of countries that already use “apply or explain” in their governance codes, such as the Netherlands.

FRC Chair Sir Christopher Hogg said there had also been a lot of support for the “comply or explain” mechanism, rather than strict rules that companies had to follow. “It is seen as better able to react to developments in best practice, and because it can take account of the different circumstances in which companies operate it can set higher standards to which they should aspire,” he said.

The two main themes to emerge from the review so far are the importance of getting proper challenge in the boardroom through picking the right people and maximizing their contribution to the board’s performance, and the need for better engagement between boards and investors, Hogg said.

The FRC’s interim paper asks more questions about how the code could be improved and explores how it could be adapted to include the recommendations of the Walker Review of corporate governance in banks and financial institutions. It will publish a final report by the end of the year.

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