CORPORATE GOVERNANCE

Corporate Governance



Introduction2

Discussion3

Part A: Comparison of UK Corporate Governance3

Examples of UK Corporate Governance4

Part B: Non-Executive Directors ( NED) in UK Corporate Governance6

Role of Non-Executive directors7

Examples of NED role in UK business8

Weakness of Corporate Governance structure UK business9

Recommendation for Good Corporate Governance in UK business10

Summary11

Conclusion11

Corporate Governance

Introduction

“Corporate governance is a system in which the companies are controled and directed.It consists mainly the relation between the directors , the shareholders and the board.” (Bundred, Pp.4, 2012) In case a country has high quality corporate governance, as in the United Kingdom, companies are being helped in order to strengthen their long term performance, thus attracting more investors to the market. (Anderson, Pp.16, 2010)

The UK's Corporate Governance Code, was issued in 1992, and via the listed sector is spreading the best boardroom in practice. Compliance and explanation are the main principles of the basic operation of the Act. It also stated that all companies have to comply with the rules otherwise they will be obliged to give explanations when it comes to the coverage of the issues for the board committee role, the effectiveness of the board, their relation with the shareholders and the risk management policy. (Financial Reporting Council, 2012)

Discussion

Part A: Comparison of UK Corporate Governance

When it comes to English law, shareholders are actually the owners of the company. They are the ones that appoint, change or even remove the directors of the board which are the people who run the business. It is required, under the Listing Rule that any company listed within the UK, has to comply with the provisions of the Corporate Governance Code. In case a company has not done so, it is obliged to explain to the current shareholders in their annual report or, when future investors are concerned, in their next annual report. If, however, the shareholders' criteria are not met they are entitled to use their powers, as previously mentioned, for removing or changing the directors that run the company so that the company will keep track within the rules. (Financial Reporting Council, 2012)

Before moving on with the discussion, it is essential to come to terms with the role of the board of directors of the organization. The board of directors play a pivotal role in corporate governance models. This is because of the fact that they serve as the bridge between the stakeholders of the organization and the management team responsible for the organization's processes .The sensitivity of the role of the board of directors can be judged through the fact that an extensive degree of research has been performed on the functions and composition of the board of directors. Regardless of the corporate culture in the organization, the board of directors remains present as a critical connection between the organization's human capital and the organization's stakeholders. Another reason because of which the board of directors are given extensive relevance is the fact that almost all corporate governance models look towards the board of directors when it comes to the implementation of the corporate governance ...