Chapter7 - CG Chapter 7 Corporate Governance Codes Past few...

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CG Chapter 7 Corporate Governance Codes Past few years: Explosion of interest in corporate governance Company regulation was based on mixture of company law, corporate regulation(mainly filing and disclosure requirements) and accounting standards, stock exchanges’ rules From Cadbury to Combined Code: UK Cadbury (1992) – contained many proposals that remain at the heart of today’s CG thinking Wider use of INEDs Audit committee à 3 non-executive directors with a majority of them independent Separation of chairman and CEO Remuneration committee Nomination committee with independent directors Adherence to a detailed code of best practices Greenbury (1995) – addressed issues of directors’ remuneration Hampel (1998 ) – review of Cadbury (commissioned by directors of major public companies) à did not criticize contemporary CG practices, neither did it advocate any measures which would further limit directors’ power to make unfettered decisions, nor widen the scope of their accountability RATHER: reduced the force of original Cadbury proposals by suggesting greater „flexibility“ UK Combined Code (1998) – incorporated into the London Stock Exchange’s listing rules à set out standards of good practice on matters such as board composition, director remuneration, accountability and audit in relation to shareholders Turnbull (1999, revised 2005) – elaborated on the issue for companies to have appropriate internal controls Higgs (2003) – revised Cadbury, sharpened requirements (commissioned by Labor Government) à amplifying demand for INEDs on the board and board committees, insisting that roles of chairman
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Chapter7 - CG Chapter 7 Corporate Governance Codes Past few...

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