What is good governance?
The UK Corporate Governance Code (‘the UK Code’)
In the UK, there are many institutional and legal pressures on companies to govern themselves in a shareholder-focused way. These range from the Companies Acts through stock exchange regulations, accounting body rules and the oversight of the Financial Conduct Authority (FCA).
The UK Corporate Governance Code is mainly concerned with the principles that underlie an effective board, while the UK Stewardship Code sets out the principles of effective stewardship by investors.
Together the two codes provide a robust framework for governance. The codes are not mandatory but are applied on a ‘comply or explain’ basis: compliance is not absolutely required but non-compliance should be explained.
Underlying this idea is that a general set of guidelines cannot be drawn so that they are applicable to all companies in all situations. So, non-compliance is accepted, if the explanation is credible in the eyes of investors.
Treasury: The Importance of Governance, Ethics, Compliance, and Audit
Treasury: The Importance of Governance, Ethics, Compliance, and Audit
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