Module 2: Corporate Governance

Question 1

Corporate Governance

Answer 1

System which companies are directed and controlled. Introduces mechanism whereby assurance can be obtained and key element of company’s internal control framework.

Question 2

Eliminating Agency Risk

Answer 2

1. Directors REM Package
2. Monitor Directors Performance
3. External Auditor

Question 3

‘The Principle’ by G20/OECD

Answer 3

Globally recognised for assessing and improving corporate governance.

• transparency
• rights and equitable treatment of SH and key ownership function
• encourage all sort of investors
• active engagement from all stakeholders in corporate governance
• disclosure and transparency
• responsibilities of the board

Question 4

UK Corporate Governance Code

Answer 4

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

Question 5

LSE

Answer 5

• only entities with premium listing on LSE must comply
• must include corporate governance section in annual report (2 Part):
  Narrative: how they applied principle of code
  Compliance; complied with all or not

Question 6

FRC

Answer 6

Issue guidance to assist boards how to apply code to their particular circumstances

Question 7

USA

Answer 7

• annual report: certified by both CFO and CEO
• internal controls
• audit committees: external auditor report to