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The "Combined Code" on Corporate Governance (comprising of the…
The "Combined Code" on Corporate Governance (comprising of the UK Corporate Governance Code & Irish Stock Exchange Annex)
Mainly used by companies on the UK stock Exchange but many Irish companies both public & private adhere to its principles - listed companies expected to comply but not legally mandated to do so
Code is regularly updated from suggestions put forward by various Committees e.g. Cadbury & Greenbury
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If companies wish to depart from the code they are to explain why in there annual report under the "comply or explain" principle
The AIM of the Code: "to provide a set of principles that ensure that company directors take responsibility for their actions and provide sufficient disclosure at regular intervals on the financial status of their company.
Principles of "The Code"
Effectiveness
Directors should be able to discharge sufficient time to the company to discharge their responsibilities
Directors should receive an induction on joining the Board and should regularly update and refresh their skills and knowledge
Formal, rigorous and transparent procedures for the appointment of new Directors to the Board
The Board should be supplied with quality information in a timely manner to enable them to discharge their responsibilities
The Board and its committees should have an appropriate balance of skills, experience, independence and knowledge of the company to enable them to discharge their duties and responsibilities
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All directors should be submitted for re-election at regular intervals, subject to continued satisfactory performance
Accountability
The Board is responsible for determining the nature and extent of any significant risks that it is willing to undertake in order to achieve its strategic objectives - sound risk management and internal controls required
Board must establish formal and transparent arrangements/processes for considering how they should apply the corporate reporting, risk management and internal control principles and for maintaining an appropriate relationship with the company's auditor
Board should present a balanced and understandable assessment of the company's position and prospects
Leadership:
Clear division of responsibilities between the board and the executive for running the company's business
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Headed by an effective board which is collectively responsible for the long-term success of the company
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Remuneration
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Levels of remuneration should be sufficient to attract, retain and motivate quality directors to run the company successfully
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