Corporate Governance Code

Question 1

What are the 5 headings in the Corporate Governance Code?

Answer 1

1. Board Leadership and Company Purpose (A - E)
2. Division of Responsibilities (F - I)
3. Composition, Succession and Evaluation (J - L)
4. Audit, Risk and Internal Control (M - O)
5. Remuneration (P - R)

Question 2

What is section 1 of the Corporate Governance Code?

Answer 2

1. BOARD LEADERSHIP AND COMPANY PURPOSE (A - E)

Question 3

What is Principle ‘A’ of the Corporate Governance Code?

Answer 3

Principle A:

A successful company is led by an effective and entrepreneurial board, whose role is to
promote the long-term sustainable success of the company, generating value for shareholders
and contributing to wider society

Question 4

What is Principle ‘B’ of the Corporate Governance Code?

Answer 4

Principle B:

The board should establish the company’s purpose, values and strategy, and satisfy itself that
these and its culture are aligned. All directors must act with integrity, lead by example and
promote the desired culture.

Question 5

What is Principle ‘C’ of the Corporate Governance Code?

Answer 5

Principle C:

The board should ensure that the necessary resources are in place for the company to meet its objectives and measure performance against them. The board should also establish a framework of prudent and effective controls, which enable risk to be assessed and managed.

Question 6

What is Principle ‘D’ of the Corporate Governance Code?

Answer 6

Principle D:

In order for the company to meet its responsibilities to shareholders and stakeholders, the board should ensure effective engagement with, and encourage participation from, these parties.

Question 7

What is Principle ‘E’ of the Corporate Governance Code?

Answer 7

Principle E:

The board should ensure that workforce policies and practices are consistent with the company’s values and support its long-term sustainable success. The workforce should be able to raise any matters of concern.

Question 8

What is section 2 of the Corporate Governance Code?

Answer 8

2. DIVISION OF RESPONSIBILITIES

Question 9

What is Principle ‘F’ of the Corporate Governance Code?

Answer 9

Principle F:

The chair leads the board and is responsible for its overall effectiveness in directing the company.

They should demonstrate objective judgement throughout their tenure and promote a culture
of openness and debate.

In addition, the chair facilitates constructive board relations and the effective contribution of all non-executive directors, and ensures that directors receive accurate, timely and clear information.

Question 10

What is Principle ‘G’ of the Corporate Governance Code?

Answer 10

Principle G:

The board should include an appropriate combination of executive and non-executive (and,
in particular, independent non-executive) directors, such that no one individual or small group of individuals dominates the board’s decision-making.

There should be a clear division of responsibilities between the leadership of the board and the executive leadership of the company’s business.

Question 11

What is Principle ‘H’ of the Corporate Governance Code?

Answer 11

Principle H:

Non-executive directors should have sufficient time to meet their board responsibilities. They should provide constructive challenge, strategic guidance, offer specialist advice and hold management to account.

Question 12

What is Principle ‘I’ of the Corporate Governance Code?

Answer 12

Principle I:

The board, supported by the company secretary, should ensure that it has the policies, processes, information, time and resources it needs in order to function effectively and efficiently.

Question 13

What is section 3 of the Corporate Governance Code?

Answer 13

3. COMPOSITION, SUCCESSION AND EVALUATION

Question 14

What is Principle ‘J’ of the Corporate Governance Code?

Answer 14

Principle J:

Appointments to the board should be subject to a formal, rigorous and transparent procedure,
and an effective succession plan should be maintained for board and senior management.

Both appointments and succession plans should be based on merit and objective criteria and, within this context, should promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths.

Question 15

What is Principle ‘K’ of the Corporate Governance Code?

Answer 15

Principle K:

The board and its committees should have a combination of skills, experience and knowledge.
Consideration should be given to the length of service of the board as a whole and membership regularly refreshed.

Question 16

What is Principle ‘L’ of the Corporate Governance Code?

Answer 16

Principle L:

Annual evaluation of the board should consider its composition, diversity and how effectively members work together to achieve objectives. Individual evaluation should demonstrate whether each director continues to contribute effectively.

Question 17

What is section 4 of the Corporate Governance Code?

Answer 17

4. AUDIT, RISK AND INTERNALCONTROL

Question 18

What is Principle ‘M’ of the Corporate Governance Code?

Answer 18

Principle M:

The board should establish formal and transparent policies and procedures to ensure the independence and effectiveness of internal and external audit functions and satisfy itself on the integrity of financial and narrative statements.

Question 19

What is Principle ‘N’ of the Corporate Governance Code?

Answer 19

Principle N:

The board should present a fair, balanced and understandable assessment of the company’s
position and prospects.

Question 20

What is Principle ‘O’ of the Corporate Governance Code?

Answer 20

Principle O:

The board should establish procedures to manage risk, oversee the internal control framework, and determine the nature and extent of the principal risks the company is willing to take in order to achieve its long-term strategic objectives.

Question 21

What is section 5 of the Corporate Governance Code?

Answer 21

5. REMUNERATION (P - R)

Question 22

What is Principle ‘P’ of the Corporate Governance Code?

Answer 22

Principle P:

Remuneration policies and practices should be designed to support strategy and promote long-term sustainable success. Executive remuneration should be aligned to company purpose and values, and be clearly linked to the successful delivery of the company’s long-term strategy.

Question 23

What is Principle ‘Q’ of the Corporate Governance Code?

Answer 23

Principle Q:

A formal and transparent procedure for developing policy on executive remuneration and determining director and senior management remuneration should be established. No director should be involved in deciding their own remuneration outcome.

Question 24

What is Principle ‘R’ of the Corporate Governance Code?

Answer 24

Principle R:

Directors should exercise independent judgement and discretion when authorising remuneration outcomes, taking account of company and individual performance, and wider circumstances.