Chapter 13 - Other Governance Issues Flashcards
What are the concepts on which King IV is based?
- ethical leadership
- corporate citizenship
- sustainable development
- stakeholder inclusivity
- integrated thinking
- integrated reporting
In what way is the King IV Code unusual?
It adopts a “stakeholder inclusive approach” to governance, whereas other codes (including the UK Code) usually take a shareholder or enlightened shareholder approach.
What is the US’ main law on corporate governance?
The Sarbanes Oxley Act 2002
What are the main requirements of s 404 of the SOX in the US?
Companies must include an internal control report in their annual report.
What are the 4 key consequences of the SOX regime?
- created a central oversight board for audit services
- sets standards for independence of external auditors
- senior executives must take responsibility for financial reporting
- new rules relating to internal control
What are the key criticisms of s 404 SOX?
Takes up too much time, and gives too much liability to CEOs/CFOs, thereby deterring foreign companies from listing shares in the US.
Why should institutional investors want companies to comply with codes of governance?
In order to protect and develop sustainable corporate value.
To which group do the Nolan Principles Apply?
The public sector
What are the Nolan Principles for Public Life?
1 Selflessness 2 Integrity 3 Objectivity 4 Accountability 5 Openness 6 Honesty 7 Leadership
How do governments differ from companies in their governance requirements?
1 Government departments and stock market companies have different requirements
2 Ownership structures are different
What is the code of best practice for central government called?
Corporate governance in central government departments: code of good practice 2011.
What are the principle of the Charity Governance Code?
1 Organisational purpose 2 Leadership 3 Integrity 4 Decision making , risk and control 5 Board effectiveness 6 Diversity 7 Openness and accountability
Why might governance be a particular problem for charities?
Part-time boards of trustees may find it difficult to perform effectively.
What governance guidance is available to unlisted companies?
The IOD Guidance for Unlitsed Companies.
