Chapter 2 - Legal And Regulatory Aspects Of Governance Flashcards Preview

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Flashcards in Chapter 2 - Legal And Regulatory Aspects Of Governance Deck (8)
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What are the four sources of governance law?

Company law
Financial services and markets law
Insolvency law
Laws on market manipulation


How is insider dealing related to corporate governance?

Insider dealing is often carried out by a director or professional advisor.


What is the relevance of money laundering to corporate governance?

Money laundering often involves directors.


Which companies must apply the UK Code?

Companies with a premium stock exchange listing.


Are AIM companies subject the the UK Code?

No but they must state which governance standards they apply.


What are the two main requirements of SOX 2002 in relation to corporate governance?

CEOs and CFOs were made personally liable for the accuracy of financial statements.

New rules on financial reporting, including the need to publish an internal audit report.


What are the advantages to a rules based approach to governance?

-certain laws are essential to protect stakeholders (e.g. employment law)
- laws are required to punish actions that are so unethical they would be illegal
- regulation restores publish faith


What are the advantages of a voluntary governance regime?

- there is no one size fits all solution
- the biggest concerns apply to stock market companies with public shares
- the largest companies are the most problematic, ad can be targeted
- onerous regulation may encourage companies to migrate
- regulation may deter companies from becoming listed.