DEVELOPMENT OF CORPORATE GOVERNANCE CODE IN UNITED KINGDOM

DEVELOPMENT OF CORPORATE GOVERNANCE CODE IN UNITED KINGDOM

1992: The Cadbury Committee

Focused Area

ü  The structure and responsibilities of boards of directors.

ü  The role of auditors and recommendations to the accountancy profession, and

ü  The rights and responsibilities of shareholders

1995: The Greenbury Committee

Focused Area

ü  Director’s remuneration and Compensation Package.

ü  There should be balance between Salary, Performance and Bonus of the directors.

ü  Remuneration Committees made up of non-executive directors.

ü  Full disclosure of each executive's pay package and that shareholder is required to approve them. 

1998: The Hampel Report

Focused Area

ü  The Chair of the board should be seen as the "leader" of the non-executive directors;

ü  Institutional investors should consider voting the shares they held at meetings, though rejected compulsory voting; and

ü  All kinds of remuneration including pensions should be disclosed.

ü  The Cadbury and Greenbury recommendations were merged to form “ The Combined Code on Corporate Governance,1998”

ü

1999: Turnbull Committee

Focused Area

ü  Provide direction on the internal control requirements of the Combined

ü  Direction on how to carry out risk management.

ü  Board should maintain a sound system of internal control.

ü  Board should conduct a review of the effectiveness of that system at least annually.

2003: The Higgs Report

Focused Area

ü  Review the roles of independent directors and of audit committees.

ü  at least half of a board (excluding the Chair) be comprised of non-executive directors;

ü  that the non-executives should meet at least once a year in isolation to discuss company performance;

ü  that a senior independent director be nominated and made available for shareholders to express any concerns to; and

ü  that potential non-executive directors should satisfy themselves that they possess the knowledge, experience, skills and time to carry out their duties with due diligence.

2003: Tyson and Smith Report

Focused Area

ü  Recruitment and Development of Non-Executive Directors

ü  The role of auditors and audit committee.

ü  The Chairman of audit committee should be independent or NED.

2010:  Sir David Walker & FRC

Focused Area

ü  Provided a comprehensive review on Corporate Governance.

ü  In the wake of financial crisis of 2008-09.

ü  The latest edition of UK Corporate Governance Code, 2010.

ü  The Code was found to be fit for the purpose.

2018:  The UK Corporate Governance Code

Focused Area

ü  Provided a comprehensive review of the code, along with extensive outreach and consultation.

ü  The code content:

§  Section A: Leadership

§  Section B: Effectiveness of Board and Audit Committee.

§  Section C: Accountability

§  Section D: Remuneration

§  Section E: Relations with Shareholders