1 - Sources of co law and governance

Question 1

New directors notice or contract period - UKCG code

Answer 1

1 year or less

Question 2

CA2006 - what length of directors contract must members approve

Answer 2

More than 2 years

Question 3

5 notable functions of subordinate legislation

Answer 3

1. (fleshing out AoPs) Expanding on basic rules found within an AoP
2. Bring parts of AoP into force
3. Amend existing legislation including AoPs
4. Previously used to implement EU law
5. Empower certain persons or bodies to create law

Question 4

What is BEIS?

Answer 4

Department for Business, Energy and Industrial Strategy

Question 5

What is BEIS & what is it responsible for?

Answer 5

Gov department most closely involved in co. law and corp gov reform.
Leading the government’s relation with business.

Question 6

3 examples of bodies that can make rules with legislative backing - and their sets of rules

Answer 6

FCA - FCA handbook
Takeover Panel - City Code on Takeovers and Mergers
FRC - standards for auditors (quality and ethics)

Question 7

4 reasons why Case Law is an important source of company law

Answer 7

1. Certain co. law topics are largely creations of case law
2. Well established case law principles may be codified into statute
3. Determining scope and application of remedies and punishments
4. Interpretation and application of legislative rules (which are often purposely broad and vague for this reason)

Question 8

Example of co. law topic where rules are entirely made by judges

Answer 8

Rules relation to attribution (whose actions can be attributed to company)

Question 9

Example of co. law topic where case law has been codified into statute

Answer 9

General duties of directors

Question 10

Example of topic which CA 2006 says nothing about

Answer 10

Directors’ remuneration

Question 11

Example of topic of CA 2006 which can be excluded by provision in articles

Answer 11

Pre-emption rights

Question 12

Three dominant CG codes, and who they apply to

Answer 12

UKCG Code - Companies with premium listing & their directors
UK Stewardship Code - Institutional Investors
Wates CG Principles - Large private companies

Question 13

When was current UKCG Code published?

Answer 13

2018

Question 14

On what basis does UKCG Code operate, why

Answer 14

Comply or explain - understanding that non-compliance with a provision may be justified by size, complexity, history, ownership structure

Question 15

Where must companies with premium listing state re. application of UKCG Code?
What must they state?

Answer 15

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

Question 16

When were Wates CG principles published?

Answer 16

2018

Question 17

Six core principles of Wates CG principles - PBORDS

Answer 17

Purpose and Leadership
Board composition
Opportunity and risk
Remuneration
Director responsibilities
Stakeholder relationships and engagement

Question 18

On what basis does Wates CG principles operate?

Answer 18

Apply and explain

Question 19

How does Wates apply and explain work, in more detail?

Answer 19

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.

Question 20

Which companies are required to produce statement of CG, and can therefore apply Wates Principles?

Answer 20

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

Question 21

When was UK Stewardship Code published and most recently updated?

Answer 21

2010, 2020

Question 22

On what basis does UK Stewardship Code now operate?

Answer 22

Apply and explain

Question 23

Completed acronym with 4 CG reports

Answer 23

Higgs Report
Effectiveness of NEDs
Smith Report
Audit Committees
Turnbull Report
Internal Control
Greenbury Report
Director’s Remuneration