Governance, Corp Resp and Ethics Flashcards
Corporate perspective
maximise wealth of shareholders
Public policy perspective
company meets:
~ shareholders’ objectives
~ interests of stakeholders
~ interests of public
Stakeholder perspective
balance between:
economic + social goals vs
individual + communal goals
Stewardship perspective
act in the best interest of the company when acting as ‘stewards’ of its resources
Good practice in corporate governance
~ openness and transparency
~ integrity and accountability
~ reducing potential for conflict
~ reconciling interests of directors and shareholders
Key elements who support drive towards good corporate governance
~ board of directors ~ senior mgt ~ shareholders ~ external auditors ~ internal auditors
Bank-based financial systems
~ prefer little risk
~ less access to investment in physical assets
~ low investment in securities via intermediaries
~ more government regulations
~ banks and businesses highly integrated
Market-based financial systems
~ bear more risk ~ greater access to physical assets ~ high indirect investment via intermediaries ~ comparatively unregulated ~ banks and businesses are less close
5 main principles of Corporate Governance Code 2016
~ Leadership ~ Board effectiveness ~ Accountability/Audit ~ Remuneration ~ Investor relationships
Executive vs non-executive directors
Executive: business operations
Non-executive: challenging board and assisting w/ strategy
Board members should be re-elected…
FTSE 350: every year
Other: Exec: 1st AGM, then every 3 yrs
Non-exec: every year after 9yrs
Committees supporting corporate governance
Audit committee: review FS and recommend external auditors
Remuneration committee: policy on remuneration for exec and non-exec directors
Nomination committee: recommending appointment of exec and non-exec directors
Unitary board
responsible for mgt of business and reporting to shareholders
Dual/Supervisory board
roles split between mgt board and supervisory board
Stewardship Code
principles of good practice on how to engage with companies they invest in + encourage stewardship
