Corporate governance—fundamentals

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Corporate governance—fundamentals
  • UKCG Code
  • To which companies does the UKCG apply?
  • How should companies report against the UKCG Code?
  • What does the UKCG Code cover?
  • AIM companies, investment companies and private companies
  • What corporate governance requirements apply to AIM companies?
  • What corporate governance code should investment companies follow?
  • Do private companies have to prepare a corporate governance statement?
  • Companies (Miscellaneous Provisions) Reporting Regulations 2018
  • More...

Corporate governance—fundamentals

The following paragraph from the Cadbury Report has been the generally accepted definition of corporate governance since 1992:

'Corporate governance is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place. The responsibilities of the board include setting the company’s strategic aims, providing the leadership to put them into effect, supervising the management of the business and reporting to shareholders on their stewardship. The board’s actions are subject to laws, regulations and the shareholders in general meeting.'

Over a number of years, the Cadbury Report and other recommendations have been brought together into a single code of corporate governance now known as the UK Corporate Governance Code (UKCG Code) (previously known as the Combined Code) of the Financial Reporting Council (FRC).

The FRC also administers the UK Stewardship Code, a code for institutional investors, which supplements the UKCG Code and aims to enhance the quality of engagement between institutional investors and the companies in which they invest. For further details, see Practice Note: The UK Stewardship Code.

The principles and provisions of the UKCG Code and the Stewardship Code are in turn supplemented by best practice guidelines published by the FRC itself,

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