What is the primary purpose of codes of practice on corporate governance in most countries?

The primary purpose of codes of practice on corporate governance in most countries is to provide guidance on best practice standards for companies. These codes are designed to promote transparency, accountability, and ethical behavior within organizations, rather than create legally binding requirements.

By offering guidelines and recommendations, they aim to enhance the overall governance framework by encouraging companies to adopt high standards of practices that can lead to improved performance and stakeholder trust. While they may not be mandatory, adherence to these codes can signal to investors and the public that a company is committed to effective governance.

In contrast to other options, which imply a more rigid or prescriptive approach, the guidance offered by codes of practice allows for flexibility, accommodating various sizes and types of organizations while still encouraging better governance.