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    The Cadbury Committee

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    Ashutosh Sharma
    The Cadbury Committee report defined corporate governance as "the system by which companies are directed and controlled". The Cadbury Committee was formed in 1991 by the Financial Reporting Council, the London Stock Exchange, and the accountancy profession to improve corporate governance standards and audit confidence. In 1992, the Cadbury Committee published a Code of Best Practice recommending separating the CEO and chairman roles, having at least three non-executive directors, and establishing audit committees. The report also advocated for greater involvement by institutional investors in promoting good corporate governance practices.

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    The Cadbury Committee

    Uploaded by

    Ashutosh Sharma
    2K views11 pages
    The Cadbury Committee report defined corporate governance as "the system by which companies are directed and controlled". The Cadbury Committee was formed in 1991 by the Financial Reporting Council, the London Stock Exchange, and the accountancy profession to improve corporate governance standards and audit confidence. In 1992, the Cadbury Committee published a Code of Best Practice recommending separating the CEO and chairman roles, having at least three non-executive directors, and establishing audit committees. The report also advocated for greater involvement by institutional investors in promoting good corporate governance practices.

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    The Cadbury Committee report defined corporate governance as "the system by which companies are directed and controlled". The Cadbury Committee was formed in 1991 by the Financial Reporting Council, the London Stock Exchange, and the accountancy profession to improve corporate governance standards and audit confidence. In 1992, the Cadbury Committee published a Code of Best Practice recommending separating the CEO and chairman roles, having at least three non-executive directors, and establishing audit committees. The report also advocated for greater involvement by institutional investors in promoting good corporate governance practices.

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    Download as PPT, PDF, TXT or read online from Scribd
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    2K views11 pages

    The Cadbury Committee

    Uploaded by

    Ashutosh Sharma
    The Cadbury Committee report defined corporate governance as "the system by which companies are directed and controlled". The Cadbury Committee was formed in 1991 by the Financial Reporting Council, the London Stock Exchange, and the accountancy profession to improve corporate governance standards and audit confidence. In 1992, the Cadbury Committee published a Code of Best Practice recommending separating the CEO and chairman roles, having at least three non-executive directors, and establishing audit committees. The report also advocated for greater involvement by institutional investors in promoting good corporate governance practices.

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    of 11

    Corporate

    Governance Report
    CORPORATE
    GOVERNANCE

     The Cadbury Committee report defines it as “the system by


    which companies are directed and controlled”.
    CADBURY
    COMMITTEE REPORT

     Set up in May 1991.


     It was formed by the Financial Reporting Council, the London
    Stock of Exchange and the accountancy profession.
     Its objective being “to help raise the standards of corporate
    governance and the level of confidence in financial reporting and
    auditing by setting out clearly what it sees as the respective
    responsibilities of those involved and what it believes is expected of
    them.”
    CADBURY
    COMMITTEE REPORT

     In December 1992, the Cadbury Committee published their


    Code of Best Practice.
     The recommendations included separating the roles of CEO
    and chairman, having a minimum of three non-executive
    directors on the board and the formulation of audit
    committees.
     The Code also advocated that a more active role be taken by
    institutional investors in the promotion of good practice in
    corporate governance.
    CADBURY
    COMMITTEE REPORT

     The report was mainly divided into three parts:-


    1. Reviewing the structure and responsibilities of Boards
    of Directors and recommending a Code of Best
    Practice
    2. Considering the role of Auditors and addressing a
    number of recommendations to the Accountancy
    Profession
    3. Dealing with the Rights and Responsibilities of
    Shareholders
    CADBURY
    COMMITTEE REPORT
    Reviewing the structure and responsibilities of Boards
    of Directors and recommending a Code of Best
    Practice

    1. Board of directors:
    meet regularly, retain full and effective control over the
    company and monitor the executive management
    balance of power and authority
    CADBURY
    COMMITTEE REPORT
    2. Non-Executive Directors
    independent judgment
    independent of management and free from any business

    3. Executive Directors
    full and clear disclosure of directors’ total emoluments

    4. Financial Reporting and Controls


    a balanced and understandable assessment of their company’s position
    should report that the business
    should ensure that an objective and professional relationship is
    maintained with the auditors
    CADBURY
    COMMITTEE REPORT

    Considering the role of Auditors and addressing a


    number of recommendations to the Accountancy
    Profession
    •external and objective check
    •professional and objective relationship between the
    board of directors and auditors should be maintained
    •to design audit
    •regular rotation of audit partners to prevent unhealthy
    relationship
    CADBURY
    COMMITTEE REPORT

    Accountancy Profession should take the lead in:-


    (i)developing a set of criteria for assessing
    effectiveness;
    (ii)developing guidance for companies on the form in
    which directors should report; and
    (iii)developing guidance for auditors on relevant audit
    procedures and the form in which auditors should
    report.
    CADBURY
    COMMITTEE REPORT

    Dealing with the Rights and Responsibilities of


    Shareholders
    •elect the directors to run the business on their behalf
    •appoint the auditors to provide an external check
    •Committee's report places particular emphasis on the
    need for fair and accurate reporting of a company's
    progress to its shareholders
    •to make greater use of their voting rights and take
    positive interest in the board functioning
    •effectiveness of general meetings could be increased
    Thank You

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