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.
UKSA submitted these comments on the operation of the Combined Code in June 2007.
In October 2009, we responded to the FRC's consultation on the Combined Code in this document. It particularly covered the possible role of shareholder committees and the voting procedures at General Meetings.
For historic UKSA submissions on Corporate Governance, see: