Corporate governance codes may either be rules-based or principles-basedWhich of the following statements correctly describes...

A rules-based approach requires that a company complies with the rules or explains why it has not.

A rules-based approach instils the code into law but leaves the sanctions for non-compliance to be decided and enforced by the shareholders.

A rules-based approach instils the code into law but encourages compliance with the spirit of the law.

A rules-based approach instils the code into law with appropriate penalties for transgression.