UK Corporate Governance Code

Question 1

How does the Financial Reporting Council (FRC) define corporate governance?

Answer 1

The system by which companies are directed and controlled

Question 2

What is the reporting requirement for companies listed on the LSE?

Answer 2

Comply or explain

Question 3

What are the 5 principles of the UK corporate governance code?

Answer 3

Leadership
Effectiveness
Accountability
Remuneration
Relations with shareholders

Question 4

Explain the “Leadership” principle of the UK corporate governance code

Answer 4

Every company should be headed by an effective board that is collectively responsible for its long-term success

Question 5

Explain the “Effectiveness” principle of the UK corporate governance code

Answer 5

Board and committees should have a balance of skills, experience, independence and knowledge to carry out their duties effectively.

Question 6

Explain the “Accountability” principle of the UK corporate governance code

Answer 6

Fair, balanced and understandable assessment of the company’s position and prospects.

Board determines risk appetite and maintains sound RM and internal controls procedures.

Question 7

Explain the “Remuneration” principle of the UK corporate governance code

Answer 7

Sufficient pay to attract, retain and motivate directors of the quality required, avoiding paying more than is necessary.

Question 8

Explain the “Relations with shareholders” principle of the UK corporate governance code

Answer 8

Satisfactory dialogue with shareholders based on mutual understanding of objectives.

Question 9

Is the UK Corporate Governance Code only used by companies listed on the LSE?

Answer 9

No, also used outside of the LSE by private companies, charities and public sector services