Governance, Risk, and Compliance Handbook: Technology, Finance, Environmental, and International Guidance and Best Practices

CHAPTER 65

UNITED KINGDOM'S COMBINED CODE

Anthony Tarantino, PhD

65.1 INTRODUCTION

65.2 BOARD OF DIRECTORS

65.3 CHAIRPERSON AND CHIEF EXECUTIVE

65.4 BOARD BALANCE AND INDEPENDENCE

65.5 APPOINTMENTS TO THE BOARD

65.6 INFORMATION AND PROFESSIONAL DEVELOPMENT

65.7 PERFORMANCE EVALUATION

65.8 REELECTION

65.9 FINANCIAL REPORTING

65.10 AUDIT COMMITTEE AND AUDITORS

65.11 SUMMARY

NOTES

65.1 INTRODUCTION

Companies incorporated in the UK and listed on the UK stock exchange are subject to the Combined Code. The 2003 version combines the Greenbury and Cadbury Reports on corporate governance, the Smith Guidance on audit committees, the Turnbull Guidance covering internal controls, plus some elements of the Higgs Report.

The Financial Aspects of Corporate Governance is better known as the Cadbury Report of 1992 because the committee was chaired by Adrian Cadbury. Cadbury was a director of the Bank of England and IBM, as well as a member of the Organization for Economic Cooperation and Development's (OECD) Business Sector Advisory Group on Corporate Governance. The Cadbury Report was truly pioneering in its guidance on the organization and activities of corporate boards, and has been accepted as a role model by many nations or organizations. The Combined Code owes much to Cadbury and the commission he championed many years before corporate governance became such a major issue throughout the world.

The Combined Code follows a "comply or explain" basis, in which companies may choose not to comply ...