Uk Governance SU2

Question 1

The Maxwell affair 1991

Answer 1

• stole £727 million from the pension funds of the two public companies
• £1 billion was lost from shareholder value after the companies crashed

Question 2

The Maxwell affair governance failures

Answer 2

• lack of segregation of positions of power
• non executive directors didn’t preform an independent function
• failed external and internal audit function
• pension fund trustees and regulators failed to investigate Maxwell’s activities

Question 3

The Cadbury report 1992

Answer 3

• Published code of best practice (not legally binding but requirement to ‘comply or explain’)
• Focus of report on: Board of directors, auditing and shareholders

Question 4

UK CG Code

Answer 4

• In line with preferred approach of company away in the uk
• overseen by the FRC
• details principles of good corporate governance
• uses a comply or explain system

Question 5

Why is the UK code of 2018 popular

Answer 5

• designed to avoid a one size fits all approach so is adopted by many countries
• established against a tradition of self regulation

Question 6

potential drawbacks of UK CG code

Answer 6

• significant number of explanations to deviations from code are poor or non existent
• code relies on engaged and active shareholders