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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1
Q

What is the difference between a principle and a provision?

A

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

2
Q

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

A

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.

3
Q

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

A

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

4
Q

What are the 5 sections of the UK Code?

A
Leadership
Effectiveness
Accountability
Remuneration
Relations with shareholders
5
Q

Which body is responsible for the UK Code?

A

The Financial Reporting Council

6
Q

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

A
  • Guidance on board effectiveness 2011
  • Guidance on audit committees 2016
  • Guidance on internal control, risk management and related financial and business reporting 2014
7
Q

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

A

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

8
Q

List 6 rights of shareholders according to the OECD Principles.

A
  • 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
9
Q

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

A

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

10
Q

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

A
  • ability to consult with each other
  • all holders of a certain class treated equally
  • protection for minority shareholders
11
Q

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

A
  • 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
12
Q

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

A

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
13
Q

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

A

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

14
Q

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

A
  • responsibilities derived from the Code
  • responsibilities relating to statutory and regulatory compliance
  • corporate responsibility
15
Q

What is the meaning of “conscience of the company”?

A

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

16
Q

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

A

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

17
Q

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

A

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

18
Q

What are the CoSec responsibilities around board composition and procedures?

A
  • 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
19
Q

How can the independence of the CoSec be protected?

A

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.