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Corporate Governance
The UK Corporate Governance Code
The UK Corporate Governance code (from here on referred to as
"the Code") is a part of UK company law with a set of principles of
good corporate governance aimed at companies listed on the 
London Stock Exchange. It is overseen by the 
Financial Reporting Council and its importance derives from the 
Financial Conduct Authority's Listing Rules. The Listing Rules
themselves are given statutory authority under the 
Financial Services and Markets Act 2000 and require that public listed
companies disclose how they have complied with the code, and explain
where they have not applied the code – in what the code refers to as
'comply or explain‘
https://en.wikipedia.org/wiki/UK_Corporate_Governance_Code#Origi
ns
Origins
The Code is essentially a consolidation and refinement of a number of
different reports and codes concerning opinions on good corporate
governance. The first step on the road to the initial iteration of the
code was the publication of the Cadbury Report in 1992. Produced by
a committee chaired by Sir Adrian Cadbury, the Report was a
response to major corporate scandals associated with governance
failures in the UK. The committee was formed in 1991 after 
Polly Peck, a major UK company, went insolvent after years of
falsifying financial reports. Initially limited to preventing financial
fraud, when BCCI and 
Robert Maxwell scandals took place, Cadbury's remit was expanded to
corporate governance generally.
https://en.wikipedia.org/wiki/UK_Corporate_Governance_Code#Origi
ns
The Main Principles of UK’s CG
Section A: Leadership
 Every company should be headed by an effective board which is
collectively responsible for the long-term success of the company.
 There should be a clear division of responsibilities at the head of the
company between the running of the board and the executive
responsibility for the running of the company’s business. No one
individual should have unfettered powers of decision.
 The chairman is responsible for leadership of the board and ensuring
its effectiveness on all aspects of its role.
 As part of their role as members of a unitary board, non-executive
directors should constructively challenge and help develop proposals
on strategy.
Section B: Effectiveness
 The board and its committees should have the appropriate balance of skills,
experience, independence and knowledge of the company to enable them to
discharge their respective duties and responsibilities effectively.
 There should be a formal, rigorous and transparent procedure for the
appointment of new directors to the board. All directors should be able to
allocate sufficient time to the company to discharge their responsibilities
effectively. All directors should receive induction on joining the board and
should regularly update and refresh their skills and knowledge.
 The board should be supplied in a timely manner with information in a form
and of a quality appropriate to enable it to discharge its duties.
 The board should undertake a formal and rigorous annual evaluation of its
own performance and that of its committees and individual directors.
 All directors should be submitted for re-election at regular intervals, subject
to continued satisfactory performance.
Section C: Accountability
 The board should present a fair, balanced and understandable
assessment of the company’s position and prospects.
 The board is responsible for determining the nature and extent of
the principal risks it is willing to take in achieving its strategic
objectives.
 The board should maintain sound risk management and internal
control systems.
 The board should establish formal and transparent arrangements
for considering how they should apply the corporate reporting, risk
management and internal control principles and for maintaining an
appropriate relationship with the company’s auditors.
Section D: Remuneration
 Executive directors’ remuneration should be designed to promote
the long-term success of the company. Performance-related
elements should be transparent, stretching and rigorously applied.
 There should be a formal and transparent procedure for
developing policy on executive remuneration and for fixing the
remuneration packages of individual directors. No director should
be involved in deciding his or her own remuneration.
Section E: Relations with shareholders
 There should be a dialogue with shareholders based on the mutual
understanding of objectives.
 The board as a whole has responsibility for ensuring that a
satisfactory dialogue with shareholders takes place.
 The board should use general meetings to communicate with
investors and to encourage their participation.
Introduction
• Originally developed by the OECD in 1999, then updated
in 2004, the 2015 revision of the Principles of Corporate
Governance addresses these and other emerging issues
that are increasingly relevant.
• Building on the expertise and experience of policy
makers, regulators, business and other stakeholders from
around the world, the Principles provide an indispensable
and globally recognized benchmark for assessing and
improving corporate governance.
Introduction (continued)
• The Principles have been adopted as one of the 
Financial Stability Board's key standards for sound
financial systems, and have been used by the World
Bank Group in more than 60 country reviews
worldwide. They also serve as the basis for the
guidelines on corporate governance of banks issued by
the Basel Committee on Banking Supervision.
About the Principles
• The Principles are intended to help policymakers evaluate and
improve the legal, regulatory, and institutional framework for
corporate governance, with a view to support economic efficiency,
sustainable growth and financial stability.
• The Principles are intended to be concise, understandable and
accessible to the international community.
• The Principles focus on publicly traded companies, both financial and
non-financial.
• The Principles do not intend to prejudice or second-guess the
business judgment of individual market participants, board members
and company officials.
About the Principles (continued)
• The Principles recognize the interests of employees and other
stakeholders and their important role in contributing to the long-
term success and performance of the company.
• The Principles are developed with an understanding that corporate
governance policies have an important role to play in achieving
broader economic objectives with respect to investor confidence,
capital formation and allocation.
• The Principles are non-binding and do not aim at detailed
prescriptions for national legislation.
 1
The corporate governance framework should
promote transparent and fair markets, and the
efficient allocation of resources. It should be
consistent with the rule of law and support
effective supervision and enforcement.
 2
The corporate governance framework should
protect and facilitate the exercise of
shareholders’ rights and ensure the equitable
treatment of all shareholders, including
minority and foreign shareholders. All
shareholders should have the opportunity to
obtain effective redress for violation of their
rights.
 3
The corporate governance framework should
provide sound incentives throughout the
investment chain and provide for stock
markets to function in a way that contributes
to good corporate governance.
 4
The corporate governance framework should
recognize the rights of stakeholders
established by law or through mutual
agreements and encourage active co-
operation between corporations and
stakeholders in creating wealth, jobs, and the
sustainability of financially sound
enterprises.
 5
The corporate governance framework
should ensure that timely and accurate
disclosure is made on all material matters
regarding the corporation, including the
financial situation, performance, ownership,
and governance of the company.
 6
The corporate governance framework should
ensure the strategic guidance of the
company, the effective monitoring of
management by the board, and the board’s
accountability to the company and the
shareholders.