Corporate Governance - Other Governance Issues

Question 1

What are the Key Components of the U.S. Corporate Governance System?

Answer 1

1. Rules-based via Sarbanes-Oxley Act 2002.
2. Similarities with UK system:
   - Majority of independent directors required on boards.
   - Audit, nominating and compensation committee requirements.
   - Requirements re. auditor independence.
   - Compensation clawback provisos.
   - Robust whistleblowing framework.
3. Principle-based via the Corporate Governance Framework for U.S. Listed Companies.

Question 2

What are the Key Components of the South African Corporate Governance System?

Answer 2

1. Hybrid system via:
   - King IV; and
   - Companies Act 2008.
2. King Code compliance required for all listed companies.
3. King IV is positioned as a means of achieving organisational sustainability, rather than only investor protection.
4. King IV is a ‘stakeholder inclusive’ approach, capable of being applied to many forms of organisation.

Question 3

What are the seven Nolan Principles for Public Life?

Answer 3

1. Selflessness.
2. Objectivity.
3. Integrity.
4. Honesty.
5. Accountability.
6. Openness.
7. Leadership.

Question 4

What do the Companies (Miscellaneous Reporting) Regulations prescribe by means of Corporate Governance?

Answer 4

Regulation 26 - Directors’ report must include a ‘statement of corporate governance arrangements’, stating:
- Which corporate governance code, if any, the company applied for the FY;
- How the company applied such code; and
- If the company departed from such code, its reasons for doing so.
If no code was applied, the statement must explain the reasons for this and arrangements for the following year.