UK corporate governance Code

Code of Corporate Governance:

The UK code of corporate governance was previously called the Combined code on corporate governance.The combined code has provided a model for corporate governance codes in other countries.The new code doesnot introduce any substantive changes but merely provides added emphasises to certain points.

Every country has a code of corporate governance,the code only applies to major stock market companies.In UK these are 'Listed' companies.A listed company is a company whose shares are on the offical List of the financial services regulator.A companyshares must be on the offical list they can be traded on the main market of the London stock Exchange.

Using the UK Corporate Governance Code as an example,the primary areas of Corporate Governance are as follows:

Directors:

An effective board of directors should:

Lead company strategy,with prudent controls and risk management,to maximize sustainable long term success of the company.
Set company Values.
Include Non-Executive Directors (NED) who:

(a). Contribute to strategy,and challenge the executives.

(b). Assess performance of the executive directors.

(c). Oversee integrity of financial information,control systems,and risk management.

(d). Decide remuneration of the executive directors.

(e). Appoint,remove,and consider succession planning of executive directors.

Should meet regularly,with a formal agenda.
Should detail its membership(including Chairman,CEO,Senior management,Senior Independent Director,Committee Members) and work in the annual report.
Should ensure Chairman and NEDs meet without the Executives to consider their performance.
Should ensure NEDs meet (with SID leading) without chairman annually,to consider the performance of the chairman.

Chairman and Chief Executive Officer CEO:

Should not be the same person.
Chairman leads board,and sets agenda for Board Meetings ensuring there is enough time for important matters and all directors contribute.
Chairman is a key contact for shareholders.
Chairman is independent on appointment.
CEO runs the company.
Chairman is not the former CEO of the comapany.
Chairman,aided by company secretary,should ensure adequate information flows between board members and in advance of board meetings.

Board Balance:

No one person,or group,should be able to dominate the board.
For the biggest companies(FTSE 350) at least 1/2 the board in the UK,excluding the Chairman,should be Independent NEDs (in singapore,one third of the Board).
Should be an appropriate size,and right balance of skills and experience.This includes diversity,including by gender.
Annual report must detail which NEDs are Considered Independent.
Should appoint a Senior Independent Director (in Singapore Lead Independent Director)-So shareholders (and board members) have an alternative to talking to the chairman.

Appointments to the Board:

Nomination committee majority of whom are independent NEDs.
Chaired by chairman(unless chairman is being discussed).
Have objective merit-based criteria for selection of new board members.
Report its work in the annual report.
Oversee induction and training for all directors(likely to be organised by chairman,assisted by company secretary).

UK Corporate Governance Code 2

Code of Corporate Governance:

The UK code of corporate governance was previously called the Combined code on corporate governance.The combined code has provided a model for corporate governance codes in other countries.The new code doesnot introduce any substantive changes but merely provides added emphasises to certain points.

Using the UK Corporate Governance Code as an example,the primary areas of Corporate Governance are as follows:

Directors:

An effective board of directors should:

Lead company strategy,with prudent controls and risk management,to maximize sustainable long term success of the company.

Set company Values.

Include Non-Executive Directors (NED) who:

(a). Contribute to strategy,and challenge the executives.

(b). Assess performance of the executive directors.

(c). Oversee integrity of financial information,control systems,and risk management.

(d). Decide remuneration of the executive directors.

(e). Appoint,remove,and consider succession planning of executive directors.

Should meet regularly,with a formal agenda.

Should detail its membership(including Chairman,CEO,Senior management,Senior Independent Director,Committee Members) and work in the annual report.

Should ensure Chairman and NEDs meet without the Executives to consider their performance.

Should ensure NEDs meet (with SID leading) without chairman annually,to consider the performance of the chairman.

Chairman and Chief Executive Officer CEO:

Should not be the same person.

Chairman leads board,and sets agenda for Board Meetings ensuring there is enough time for important matters and all directors contribute.

Chairman is a key contact for shareholders.

Chairman is independent on appointment.

CEO runs the company.

Chairman is not the former CEO of the comapany.

Chairman,aided by company secretary,should ensure adequate information flows between board members and in advance of board meetings.

Board Balance:

No one person,or group,should be able to dominate the board.

For the biggest companies(FTSE 350) at least 1/2 the board in the UK,excluding the Chairman,should be Independent NEDs (in singapore,one third of the Board).

Should be an appropriate size,and right balance of skills and experience.This includes diversity,including by gender.

Annual report must detail which NEDs are Considered Independent.

Should appoint a Senior Independent Director (in Singapore Lead Independent Director)-So shareholders (and board members) have an alternative to talking to the chairman.

Appointments to the Board:

Nomination committee majority of whom are independent NEDs.

Chaired by chairman(unless chairman is being discussed).

Have objective merit-based criteria for selection of new board members.

Report its work in the annual report.

Oversee induction and training for all directors(likely to be organised by chairman,assisted by company secretary).