International Ana support The board should be supplied in a timely manner with information in a form and of a laity appropriate to enable it to discharge its duties. 8. 6 Evaluation A formal and rigorous evaluation should be undertaken annually based on the performance of the board and the performance of its committees and individual directors. 8. 7 Re-election Subject to the continued satisfactory performance of the board, all directors should be submitted for re-election at regular intervals. Section C; Accountability C.
I Financial and business reporting An understandable and balanced assessment which includes a company’s position and prospects should be presented by the board. C. 2 Risk Management and Internal Control The board should develop internal control systems and a risk management system to determine the nature and extent of the significant risks. C. 3 Audit Committee and auditors Corporate reporting, risk management and internal control systems should be established and applied in a formal and transparent way by the board. The board should maintain an appropriate relationship with the company’s auditor.
Section D: Remuneration D. L The level and components of remuneration Executive directors’ remuneration depends on the corporate and individual performance. The purpose of the remuneration is to attract, retain and motivate erectors of the quality required to run the company successfully. However, a company shouldn’t pay more than it is necessary. D. 2 Procedure There should be a formal and transparent procedure for developing policy on executive remuneration. It is forbidden for any director be involved in deciding his or her own remuneration.
Section E: Relations with shareholders E. I Dialogue with shareholders It is responsible for the board to ensure a satisfactory dialogue with the shareholders auto ten mutual adjectives. E. 2 Constructive use of the GM The GM is used by the board to communicate with the investors and encourage heir participation. (FRR, 2010) The development of Corporate Governance Academy Report 1992 The Academy Report is entitled ‘The Report of the Committee on the Financial Aspects of Corporate Governance’, following the recommendations of the Academy Committee. Academy, A. , 1992) Greenberg Report 1995 During the sass’s the issue of director’s remuneration was becoming a primary concern for investors and the public at large. Specifically, the levels of remuneration of directors in privatized industries were rising and remuneration packages were failing to provide the necessary incentives for directors to perform better. Greenberg, R. , 1995) Hamper Report 1998 The Hamper Committee was established in 1996 to review and revise the earlier recommendations of the Academy and Greenberg Committees.
The Final report emphasized principles of good governance rather than explicit rules in order to reduce the regulatory burden in companies and avoid ‘box-ticking so as to be flexible enough to be applicable to all companies. It was recognized that good corporate governance will largely depend on the particular situation of each company. This emphasis on principles would survive into the Combined Code. (Hamper, R. 1998) Combined Code 1998 The Combined Code consolidated the principles and recommendations of the Academy, Greenberg and Hamper reports.
It was formulated in 1998 an d revised in 2003 following the publication of the Highs report. The Code is divided into two sections. The first outlines principles of best practice and their supporting provisions for companies, while the second does the same for shareholders. While compliance with the Code is not mandatory, the Code was appended to the listing rules and listing rule 12:AAA requires a statement by companies to provide shareholders with efficient information to be able to assess the extent of compliance with section one of the Code.
Instances of non-compliance should be Justified to shareholders. (The Combined Code on Corporate Governance. 1998) Meyers: Review of Institutional Investment 2001 Paul Meyers ‘Institutional Investment in the I-J: A Review published in 2001, was commissioned by the Government, to consider whether there were factors distorting the investment decision-making of institutions. ‘ (Meyers, P. , 2001) Highs Report 2 A report was published in 2003 following Derek Highs’ report into the role of non- executive directors.
The report recommended a number of changes to the Combined Code and a revision of the Code in July 2003 incorporated most of the Highs recommendations. (Highs, D. , 2003) Revised Combined Code 2003 The revised Combined Code, published in July 2003 was a direct result of the recommendations of the Highs report outlined above and also the Smith review concerning Audit Committees. As with the 1998 Combined Code, companies are required to report on their compliance against the Code and should explain areas of non-compliance. The revised Combined Code is effective for Companies with financial years starting on or after 1 November 2003.
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