Chapter 3 - Voluntary Codes Of Corporate Governance: The Role Of The Company Secretary Flashcards Preview

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Flashcards in Chapter 3 - Voluntary Codes Of Corporate Governance: The Role Of The Company Secretary Deck (19)
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What is the difference between a principle and a provision?

A principle is non-specific while a provision is a specific description of how a principle should be applied.


How does comply or explain apply to foreign companies with a premium listing?

Foreign companies must explain in their report and accounts whether they comply with their country’s code, and how this differs from the provisions of the UK Code.


What is the difference between “comply or explain”, and “apply and explain”?

There is concern that “comply” encourages a box ticking exercise. Apply and explain allows a view of governance as something that will yield results.


What are the 5 sections of the UK Code?

Relations with shareholders


Which body is responsible for the UK Code?

The Financial Reporting Council


Other than the UK Code, what are the 3 FRC guidance notes in governance?

- Guidance on board effectiveness 2011
- Guidance on audit committees 2016
- Guidance on internal control, risk management and related financial and business reporting 2014


What are the 6 aspects of corporate governance covered by the G20/OECD Principles?

1 Ensuring the basis for an effective corporate governance framework
2 The rights and equitable treatment of shareholders and key ownership functions
3 Institutional investors, stock markets and other intermediaries
4 The role of stakeholders in corporate governance
5 Disclosure and transparency
6 The responsibilities of the board


List 6 rights of shareholders according to the OECD Principles.

- secure methods of ownership registration
- transfer shares
- obtain relevant information about the company
- participate and vote in general meetings of the company
- elect and remove Directors
- share in the profits of the company


Why might there be impediments for cross border voting for shareholders?

If shareholders are unable to vote in person, they might find difficulty unless absentia voting is possible.


What are three ways in which treatment of shareholders can be made more equitable (OECD Principles)?

- ability to consult with each other
- all holders of a certain class treated equally
- protection for minority shareholders


What approach and framework do the OECD Principles set out for institutional investors?

- disclose corporate governance and voting practices
- votes should be cast in line with the directions of beneficiaries
- disclose how conflicts of interest are managed
- prohibit insider dealing and market manipulation


What do the OECD Principles state about the role of stakeholders in corporate governance?

Corporate governance should recognise the rights of shareholders
- allow mechanisms for employee participation
- employees and other stakeholders should be able to freely communicate concerns without compromising their rights.
- governance should be complemented with an effective insolvency framework


According to the OECD Principles, what are the benefits of a string disclosure regime?

Disclosure can help influence the behaviour of companies and protect investors. This in turn attracts capital and maintains market confidence.


What are the three main areas of responsibility of the CoSec, according to ICSA guidance?

- responsibilities derived from the Code
- responsibilities relating to statutory and regulatory compliance
- corporate responsibility


What is the meaning of "conscience of the company"?

The CoSec should seek to ensure that the company acts ethically.


Why is it important that a company secretary should be independent?

The CoSec must be able to act impartially, as an important control mechanism in the company.


Why is it inappropriate to give corporate governance responsibilities to the in-house lawyer?

An in-house lawyer must at times consider the specific interests of employees/directors, and so cannot be independent.


What are the CoSec responsibilities around board composition and procedures?

- establish a formal schedule of matters for the board
- schedule board meetings, agendas, board papers etc.
- ensure appropriate insurance cover is arranged
- ensure board committees are constituted in line with the Code
- support board succession


How can the independence of the CoSec be protected?

ICSA Guidance recommends:
- be accountable to the board as a whole
- report to the CEO on executive matters
- remuneration should be set by the board as a whole.