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Company Law and the
Listing Rules for public companies determine the bare minimum obligations
that companies have to shareholders (and that directors have to companies).
However it has been recognised for many years that public companies should
manage their affairs according to certain principles and using certain
practices that extend these obligations. Only by so doing are the best
interests of the company and shareholders met. These extensions are more
"recommended codes of conduct" than legal obligations - although they are
now included in the Listing Rules it is permitted for companies to ignore
some of the provisions (although they are asked to explain why they have
done so in their Annual Report).
The size and history of
the company can have some impact on adherence to these Corporate Governance
Codes. For example, a company that was founded and continues to be dominated
by a single entrepreneur who has a major shareholding may find it acceptable
to combine the roles of chief executive and chairman based on the argument
that any other chairman may be purely a figurehead. Other particular
circumstances can also justify exceptions to the code, and there is still
argument about the merits of some of the rules in the latest Combined Code.
Numerous committees and
inquiries have been held in the last few years in the UK to recommend
resulting codes including Cadbury, Turnbull, Smith, Higgs and Hampel. They
tend to cover such matters as directors' pay, the appointment and duties of
directors, and audit practices. As such many of the individual topics are
covered elsewhere in the Policies section of this web site. Other bodies
such as the Association of British Insurers and individual institutional
investors have also published their own additional guidelines in some areas.
The current Combined
Code of Corporate
Governance can be seen at:
www.frc.org.uk/corporate/combinedcode.cfm and the
corporate governance guidelines of the Association of British Insurers:www.abi.org.uk
UKSA submitted the
following comments on the operation of the Combined Code in June 2007:
Combined_Code
For historic UKSA
submissions on Corporate Governance, see:
Corporate_Governance_Cadbury_1992
Corporate_Governance_Hampel_1997
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