Corporate governance = the system by which companies are directed and controlled
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UK Corporate Governance Code (2014)
Purpose of CG = to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the company
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Enron
E undertook creative and fraudulent accounting;booked profits and hidden debts of over $1bn by improperly using off-the-books partnerships;bribed foreign govts;manipulatyed markets;lessons: exemplified pathology of shareholder value system;short-term
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WorldCom
Team commiteed around$3.8bn fraud; 2002 bankruptcy;2004:debt creditors wating;convicted of fraud, conspiracy and filings doc and imprisoned
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Parmalat
Investgn: €3.95bn=obtained through forgery and corpn went into corp rescue;€8bn hole in accounts resulted in several subsidiaries liqdn;Tanzi=financial fraud and money-laundering
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BCCI
Revealed widespread fraud and manipulation and obtained its forced closure in many jurisdictions
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FSMA 2000, s 91
If a listed company fails to include within its annual report, the statements reqd, then that will constitute a breach of the Listing Rules, which can result in a penalty
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Sarbanes-Oxley Act 2002
Extremely strict and onerous accounting and reporting obligns; impose stronger penalties for fraud;high compliance costs;resulted in major delisting by foreign companies moving to London
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Norweigan Code of Practice for Corporate Governance 2014
Equity and didvidends; equal treatment of shareholders;diversity beyond gender; financial reporting; risk management (ethical guidelines must be incorporated); remuneration performance-based on not short-term approach; takeover bid must not disrupt b
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UK Corporate Governance Code (2014), Section A
Leadership: effective boad coolectively responsible for company’s long-term success; clear division of responsibilities between mebers and directors; chairman responsible for leadership of board and ensuring its effectiveness on all aspects of the ro
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UK Corporate Governance Code (2014), Section B
Effectiveness: formal, rigorous and transparent procudeure for appointment of new directors to board; all directors should be able to allocate sufft time to company to discharge theior responsibilities effectively; all directors receive induction on
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UK Corporate Governance Code (2014), Section C
Accountability: board present fair. Balanced and understandable assessment of copmany’s position and prospects; board resp for determining nature and extent of principal risks it is willing to take in achieving its strategic objves;board est formal a
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UK Corporate Governance Code (2014), Section D
Remuneration: designed to promote long-term success of compay- performance reated elements transparent, stretching and vigorously applied; formal and transparent procedure for developing – no director involved in deciding his/her own remuneration
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UK Corporate Governance Code (2014), Section E
Dialogue with shareholders based in mutual understanding of objves – respy of board as whole to ensure satisfactory dialogue with shareholders; board should use gen meetings to communicate with investors and to encourage their participation
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Other cards in this set
Card 2
Front
Purpose of CG = to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the company
Back
UK Corporate Governance Code (2014)
Card 3
Front
E undertook creative and fraudulent accounting;booked profits and hidden debts of over $1bn by improperly using off-the-books partnerships;bribed foreign govts;manipulatyed markets;lessons: exemplified pathology of shareholder value system;short-term
Back
Card 4
Front
Team commiteed around$3.8bn fraud; 2002 bankruptcy;2004:debt creditors wating;convicted of fraud, conspiracy and filings doc and imprisoned
Back
Card 5
Front
Investgn: €3.95bn=obtained through forgery and corpn went into corp rescue;€8bn hole in accounts resulted in several subsidiaries liqdn;Tanzi=financial fraud and money-laundering
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