Governance Flashcards
Areas to consider
Split NED and ED
Establishing audit committee
create internal aduit function
build responsibility for risk management into job descriptions
create framework to communicate with in and external staeekhodlers
What is corporate governance
set of rules that governs the structure
and determines the objectives of an organisation
and regulates the relationship between management, BOD and shareholders
Accountability and supervision is the concern of
corporate governance
What does the UK CG Code embody
shareholder led approach to CG
Who does CG code apply to
all companies with premium listing on LSE
What must companies with a premium listing do
apply main principals of CG code
Statement of compliance
explain non compliance
What are the key principles of CG code
leadership and company purpose
Division of responsibilities
Composition, succession and evaluation
Audit risk and internal control
Remuneration
CG code
Board leadership and company purpose
company should be headed by effective and entrepreneurial board
whose role is to promote LT sustainable success of the company
What is a BOD expected to do
ensure company generates value for SH and society
Lead by example
ensure resources to meet obj, measure performance against them
provide effective engagement with SH and stakeholders
Ensure practices put in place to ensure staff are able to raise matters of concern
CEO and Char should
not be exercised by the same individual
What is the chair responsible for
leadership of the board, and ensuring its effectiveness in all aspects of the role
what is the role of NED
constructively challenge
help develop proposals on strategies
need to allocate sufficient time to discharge their responsibilities
Board and committees need
appropriate balance of skill, experience and knowledge to discharge duties and responsibilities
How often should directors be re elected
annually
What odes board consider annually re composition
composition
diversity
how effectively members work together to achieve objectives
CG
Audit risk and IC
board needs to establish procedures to ensure independence and effective of internal and audit functions,
satisfy self on integrity of financial and narrative statement
Remuneration and ED
ED remuneration designed to promote LT success of company
Formal and transparent procedure for developing policy on ED remuneration and fixing packages of individual directors
Remuneration committee composed of
NED
members of firm of external auditors also have sat
Who do remuneration committee set remuneration for
all ED and chair
What do remuneration committee consider
remuneration for NED
length of service ED
performance related system of reward
pension
compensation for loss of office
share options
BOD Five principle roles
Accountability
supervision
direction
executive action
risk assessment and management
NED should
bring independent viewpoint to issues of strategy, performance, resources and standards of conduct
be independent
appointed by formal selection
scrutinise performance
satisfy themselves on integrity of financial information and financial controls and systems of risk management are robust and defensible
Directors duty
Act within power
act in accordance with constitution
exercise powers for purpose they are conferred
Directors duty
promote the success of the company
act in a way they consider, in good faith, would most likely promote success of the company for the benefit of its members as a whole
