Explain the disadvantages of a rules-based approach to corporate governance, compared with a principles-based approach?

Rules cannot keep pace with developments and emerging initiatives. The

time taken to formulate and implement new rules means that there can be a

substantial time lag before the regulatory framework catches up with events.

This may be a significant disadvantage to firms wishing to take advantage of

new developments.

It can result in a ‘tick-box’ approach to compliance, focusing on the letter and not

the spirit of the rules.

The rulebook simply cannot cover every circumstance or eventuality, leaving

gaps that could potentially be exploited