1 - Sources of co law and governance Flashcards
New directors notice or contract period - UKCG code
1 year or less
CA2006 - what length of directors contract must members approve
More than 2 years
5 notable functions of subordinate legislation
- (fleshing out AoPs) Expanding on basic rules found within an AoP
- Bring parts of AoP into force
- Amend existing legislation including AoPs
- Previously used to implement EU law
- Empower certain persons or bodies to create law
What is BEIS?
Department for Business, Energy and Industrial Strategy
What is BEIS & what is it responsible for?
Gov department most closely involved in co. law and corp gov reform.
Leading the government’s relation with business.
3 examples of bodies that can make rules with legislative backing - and their sets of rules
FCA - FCA handbook
Takeover Panel - City Code on Takeovers and Mergers
FRC - standards for auditors (quality and ethics)
4 reasons why Case Law is an important source of company law
- Certain co. law topics are largely creations of case law
- Well established case law principles may be codified into statute
- Determining scope and application of remedies and punishments
- Interpretation and application of legislative rules (which are often purposely broad and vague for this reason)
Example of co. law topic where rules are entirely made by judges
Rules relation to attribution (whose actions can be attributed to company)
Example of co. law topic where case law has been codified into statute
General duties of directors
Example of topic which CA 2006 says nothing about
Directors’ remuneration
Example of topic of CA 2006 which can be excluded by provision in articles
Pre-emption rights
Three dominant CG codes, and who they apply to
UKCG Code - Companies with premium listing & their directors
UK Stewardship Code - Institutional Investors
Wates CG Principles - Large private companies
When was current UKCG Code published?
2018
On what basis does UKCG Code operate, why
Comply or explain - understanding that non-compliance with a provision may be justified by size, complexity, history, ownership structure
Where must companies with premium listing state re. application of UKCG Code?
What must they state?
Annual Financial Report
How the company applied the Code’s Principles; and
A statement as to whether or not company has complied with all relevant Provisions of Code, or
A statement identifying:
- which provisions were not complied with,
- the period within which they were not complied with
- the reasons for non-compliance
When were Wates CG principles published?
2018
Six core principles of Wates CG principles - PBORDS
Purpose and Leadership
Board composition
Opportunity and risk
Remuneration
Director responsibilities
Stakeholder relationships and engagement
On what basis does Wates CG principles operate?
Apply and explain
How does Wates apply and explain work, in more detail?
Companies adopting principles should follow them in a way that is most appropriate for their organisation, having considered them within the context of the company’s specific circumstances. Board should explain how they have addressed the Principles in their governance practices.
Companies provide statement of how CG policies and processes operate to achieve desired outcome for each Principle.
Which companies are required to produce statement of CG, and can therefore apply Wates Principles?
Any company that
Has more than 2,000 employees; and/or
has a turnover of more than £200 million and a balance sheet of more than £2 billion
When was UK Stewardship Code published and most recently updated?
2010, 2020
On what basis does UK Stewardship Code now operate?
Apply and explain
Completed acronym with 4 CG reports
Higgs Report
Effectiveness of NEDs
Smith Report
Audit Committees
Turnbull Report
Internal Control
Greenbury Report
Director’s Remuneration
