Corporate governance

Question 1

What is corporate governance?

Answer 1

They way organisations are directed, administered and controlled, with the aim of ensuring that the organisation is run in a way that is right for all stakeholders, particularly shareholders

Question 2

What is the UK corp gov code?

Answer 2

A set of principles of good corporate governance aimed at companies listed on the LSE, who must ‘comply or explain’

Principles-based approach

Question 3

What are the elements of the UK corp gov code?

Answer 3

1. Board leadership and company purpose
2. Composition, succession and evaluation
3. Audit, risk and internal control
4. Remuneration
5. Division of responsibilities

Question 4

What are the 5 principles of corporate governance?

Answer 4

Ensuring the basis for an effective corporate governance framework

The right of shareholders

The equitable treatment of shareholders

Interest of other stakeholders

Role & responsibilities of the board

Disclosure & transparency

Question 5

Why is governance needed?

Answer 5

The fraudulent and dishonest behaviour of some modern corps has raised interest in corp governance practices. Legislation passed by global governments seeks to prevent the repetition of such incidents

Question 6

What is rules based vs principles based re corp governance?

Answer 6

Rules based - governance that is legislated and sets out in sig detail exactly what must and must not be done

Principles based - general principles around which businesses are expected to operate to assure proper governance. Not compulsory or legislated