UK corporate governance has influenced

corporate governance Corporate governance is defined, described or delineated in diverse ways, depending on the writer's purpose. Writers focused on a disciplinary interest or context (such as accounting, finance, law, or management) often adopt narrow definitions th ...

regulation in the European Union and United States. A detailed analysis of several UK corporate governance reports, in particular * the

Cadbury Report The Cadbury Report, titled ''Financial Aspects of Corporate Governance'', is a report issued by "The Committee on the Financial Aspects of Corporate Governance" chaired by Sir Adrian Cadbury, chairman of Cadbury, that sets out recommendations on ...

on “Financial Aspects of Corporate Governance” (December 1992), * Rutteman Guidance (December 1994),

Greenbury Report The Greenbury Report released in 1995 was the product of a committee established under the auspices of the United Kingdom Confederation of British Industry. The committee was formed at the behest of the President of the Board of Trade, Michael Hese ...

(July 1995), *

Hampel Report The Hampel Report was designed to be a revision of the corporate governance system in the UK. The remit of the committee was to review the Code laid down by the Cadbury Report (now found in the Combined Code). It asked whether the code's original p ...

on “Corporate Governance” (June 1998), *

Turnbull Report ''Internal Control: Guidance for Directors on the Combined Code'' (1999) also known as the "Turnbull Report" was a report drawn up with the London Stock Exchange for listed companies. The committee which wrote the report was chaired by Nigel Turnb ...

on “Internal Control: Guidance for Directors on the Combined Code” (September 1999) and *

Higgs Report ''Review of the role and effectiveness of non-executive directors'' (or the "Higgs review") was a report chaired by Derek Higgs on corporate governance commissioned by the UK government, published on 20 January 2003. It reviewed the role and effect ...

on the “Review of the role and effectiveness of non-executive directors” (January 2003) revealed that the UK has been able to influence US corporate governance regulation ( Sarbanes-Oxley Act 2002 OAon “Corporate Responsibility”, enacted by the Senate and House of Representatives of the United States of America). In return, through SOA the US is influencing and accelerating the development of an EU wide governance regulation. “The Commission has expressed serious concerns over the Smeasures put forward, in particular the unnecessary outreach effects of the SOA for EU companies and EU auditors.” (Com 2003/C236/02, page 9). EU based corporations, which have US parent companies or subsidiaries that are listed at the US stock exchange (regulated by the Securities Exchange Commission) need to comply with the Sarbanes-Oxley Act 2002. Therefore, the Commission has reconsidered EU priorities on initiatives on the enhancement of corporate governance, which was initiated by the Commission's 1996 Green Paper (COM 1996/321) on “The Role, Position and Liability of Statutory Auditor in the EU” and laid down in Council Directive 84/253/EC ‘the 8th Directive’. Following recent financial reporting scandals, the requirement to implement standards for the EU capital market to enhance public trust in the audit function in the EU and the need to respond to SOA, the Commission prepared with the Winter report. In September 2003 the Commission published the Communication (2003/236/02) on “Reinforcing the statutory audit in the EU” and in parallel an Action Plan on “Modernising Company Law and Enhancing Corporate Governance in the European Union”. The Directive (2006/43/EC) on “statutory audit of annual accounts and consolidated accounts, amending Council Directive 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC” was adopted by the European Parliament on the 28.9.2005. The new modern regulatory audit framework will be applicable to non-EU audit firms performing audit work in relation to companies listed on the EU capital markets. To achieve recognition of the EU regulatory approaches to the protection of investors and other stakeholders, the Commission has had regulatory discussions in particular with the SEC but also with decision makers in

US Congress The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washin ...

and EU Finance Ministers. Text published by Guido Reinke (2009) "The European Information Society: Governance and the Decision-Making Process for ICT Policy and Standards", Royal Holloway College, University of London (London: PhD Thesis).

Corporate Governance Codes in the UK

There are two main corporate governance codes in the UK: # The Financial Reporting Council's ''

UK Corporate Governance Code The UK Corporate Governance code, formerly known as the Combined Code (from here on referred to as "the Code") is a part of UK company law with a set of principles of good corporate governance aimed at companies listed on the London Stock Exchang ...

'' # The Quoted Companies Alliance's ''

QCA Corporate Governance Code The QCA Corporate Governance Code is a corporate governance code published by the Quoted Companies Alliance (QCA). It is the corporate governance code adopted by the majority of companies on the AIM market in the UK. London Stock Exchange L ...

'' Companies on London Stock Exchange's Main Market are obliged to apply the UK Corporate Governance Code. Companies on London Stock Exchange's AIM market are able to choose which code they apply: * 89% apply the ''QCA Corporate Governance Code'' * 6% apply the ''UK Corporate Governance Code'' * 5% apply a range of other codes, such as those of non-UK territories.

References

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