United Kingdom Corporate Governance Code: Achievements and Criticisms

UK corporate code
Spread the love for law

About the Author

Gunish Aggarwal is a law student in Queen Mary University of London

The United Kingdom (UK) Corporate Governance Code (CGC) is the one of the key codes of Corporate Governance (CG) across the globe. Many countries have incorporated its principles in their legislations for the boards of the company to handle their responsibilities effectively. The principle of ‘Comply or Explain’ is one of the key principles the UK CGC focuses upon. A number of committees had made recommendations as to how can the CG practices can be improved in UK. This essay will evaluate the practices of all the committees.

This essay is divided into four sections. Section 1 will explain the principle of ‘Comply or Explain’ of the UK CGC. Section 2 of the explains the Historic Insight of CGC from 1992-2010 that is, initial Cadbury Committee Code of Best Practice in 1992, the post-Enron changes to the UK Combined Code following Higgs Review in 2003 and the 2010 changes to the code, the Kay Review overall, that highlights how board effectiveness can be improved by codification of the code. Section 3 explains the Key components of the UK CG structure, that is, Board Compositions and Structure, Executive Remuneration that also includes importance of women placement in remuneration committees and Institutional Investors (II) and Shareholders. Section 4 explains the reformation techniques, that is, steps needed to re-engineering the code, impact of Coronavirus Pandemic (CP) crisis upon the CG practice in UK, how can the use of technology can improve the practice of the UK CGC.

This essay argues that though UK CGC though has been designed to ensure effective CG in the companies, still it has failed to achieve its purpose in several ways. This essay critiques subsequently how the UK CGC has failed and cites recommendations subsequently how can the code in practice be improved. The essay will conclude with the recommendations as how the UK can improve its CG practice to achieve a harmonious growth of corporate sectors.

Principle of ‘Comply or Explain’ in UK CGC

The CGC has emerged due to corporate mismanagement practices that started with the Cadbury Report of 1992.[1] The approach of “one-size-fits-all” is not a form of good CG principle and therefore it is important to have flexible approach that is to improve the board effectiveness and to increase the scope of accountability of shareholders in the company.[2] The good CGC practice explains that there is a need for separation of ownership and control in order to maximize the value of the company and also to harmonize the national CG code with the international CGC of best practice.[3]

It was in 1980s and 1990s that witnessed corporate collapses and corruption scandals that includes Barings Bank, Bank of Credit and Commerce International, Polly Peck International, and Maxwell Group Pensions.[4] With the failure the ‘Committee on the Financial Aspects of Corporate Governance’ was established to minimize the future CG failures with a view that “one size does not fit all” as it is not a form of good CG practice as explained above.[5] That is why the principle of “comply or explain” approach was formulated that is “reflexive” form of practice. The Confederation for British Industry tried to persuade to exclude regulatory aspects of the code, ie, the reporting requirement and compliance with the code as a part of listing requirements of stock exchange.[6] The code required companies to report issues not only indicating their degree of compliance but also to provide an explanation of deviation that took place while adopting the good practice.[7] The reason for this was the deviations can occur from the good practice and by reporting the issues, amendments can be made in the significant areas where needed in order to overcome the deviations faced in practice of the code. With this, practice reflexivity is introduced in the implementation of the code because it facilitates to make changes in accordance to corporate culture so that the good practice can be refined and improved in accordance “comply or explain” approach.

The interpretation of the ‘comply or explain’ has been ambiguous because the regulators have faced a problem with understanding the code with respect to freedom of action of directors, board effectiveness are not reliable as per UK CGC code. Thus, in the next section we will examine the Historic Insights of CGC from 1992-2010. This is to understand the principle of “comply or explain” from historical perspective.

Historical Insight of Corporate Governance Code from 1992-2010

In this section historic insight of CGC from 1992-2010 is examined, that is, initial Cadbury Committee Code of Best Practice in 1992, the post Enron changes to the UK Combined Code following Higgs Review in 2003 and the 2010 changes to the code in association to the principle of “comply or explain” perspective.

First, there will be an evaluation as to how the UK CGC code has transformed over the years and the shortcomings witnessed over the years. Second, there will be an examination of all possible solutions to the shortcomings/problems over the years.

It has been explained in the previous section, separation of ownership and control is important to facilitate effective CG practice. However, the risks of separating ownership of corporate assets in the present world from control by self-interested people of the company in order to overcome managerial capitalism.[8] But, separation of ownership from control can go is a systematized manner if the boards give a comprehensive report about overall company’s performance to shareholders. The UK CGC in practice also adopts this same principle of separation of ownership and control is necessary in order to avoid self-interest actions taken in a company.[9] This is because, in order to develop trust between principal and the agent and executives are accountable to the shareholders.[10] The executives have a responsibility not only to the shareholders but also to the society and that is why executives now have to disclose information on executive remuneration, environment, what the corporate strategy is there for the future, ie, policies, principles and actions needed.[11] This is the reason, principle of ‘comply or explain’ is important and why UK companies have to comply with the regulation or provide an explanation why they are not in compliance with these regulations and this has offered flexibility to the board to explain to the society as how they have complied or not complied with the principle regulations.[12]

Codification of CGC can help in creating better boards. CGC is important to understand because it highlights how businesses set policy, strategic goals and how their regulations are weighted by government. The first wave started in 1992, with UK Cadbury Code, followed by the second wave of collapse of Enron in 2000.[13] This was followed by the Higgs Review of Non-Executive Directors (NEDs), that led to the changes in UK combined code.[14] The 2007-2008 financial crisis explain that poor CG practice persists in the world and UK.[15]

This essay is about CG practices in UK, so there is no deep discussion about Enron. The focus will be on CG practice that led to failures of Enron. Enron had the tendency to shuffle people.[16] Enron CG practice was like it was running a business mafia firing out people to from the company who did not do any much discussion let people know they meant business.[17] The company was running a dictatorship form of CG practice because it did not hire people to share business ideas, but “to make sure that natural gas flowed and that people got what they expected”.[18] At the meetings, nobody was allowed to discuss any problems and could not ask for ideas and suggestions because if done so, people would school you why not to report problems at all and keep them to yourself.[19] A pertinent question arises, what kind of CG practice is that? This does not seem to be a CG practice. It seems like that Enron was not running a company, but a circus where it was meant for employees to behave like clowns as they had to only follow orders of their superior. CG practice in reality, is not a one man’s job, but a teamwork where each and every should have the ‘right to be heard’. CG principles are followed in order to convert a vision into reality. Though this failure took place in US, it did have impacts in UK. This kind of unethical CG practice is not even advised by CG committees that were there in UK as discussed in the following essay.

Cadbury Report on CG was published in 1992. Since the publication of Cadbury Report, the relationship between shareholders and executives has weakened because of increased domination of finance that has resulted executives into losing interest over long-term success of the company.[20] The Cadbury Report was published over the scandal of Robert Maxwell for the fraud over the pension funds. This involved audit failure and fraud conducted by both major shareholders and managers.[21] With this, the employees will have fear in their minds over pension funds as to whether and if, their future is secured or not. The Cadbury and the Hampel were commissioned by Financial Reporting Council and Higgs, Walker and Kay committee were commissioned by the UK Government while Greenbury Committee was unofficially commenced by UK Government under the agency of CBI.[22] From here itself, it can be concluded that despite so many committees that were initiated, still there could not be devised effective CG system for CG practice in UK? The 2007-2008 financial crisis is then a perfect conclusion of non-directional CG system that had an impact in UK as well.

Cadbury committee in 1992 published its report on financial aspects of CG and recommended to split the role of chairman and chief executives, establish committee structure and voluntary approach to disclosure.[23] Greenbury in 1995, published its report on Director Remuneration and explained that remuneration committee should determine pay and publish annual remuneration committee report.[24] The views of Greenbury Committee give some emphasis to the principle of compliance and explanation.  Hampel in 1998 adopted ‘Box-Ticking’ approach as they adopted Cadbury and Greenbury recommendations.[25] Reddy elucidates that box-ticking is explained on the basis of two conditions, “companies complying with the letter rather than the spirit of the provisions, and, second, by companies not utilising the inherent flexibility of the code to implement their optimum firm-specific governance structures by explaining rather than complying”.[26] This means that companies will adopt box-ticking approach without actually understanding the effects and the results that will be the outcome when this principle is applied. Box-Ticking approach emphasis on adopting self-owned and self-regulated approach. This approach also lobbied London Stock Exchange (LSE) to amend the list of obligations and company to publish statement in its annual report whether it complies with the Code of Best Practice and give reasons for any non-compliance.[27]

This has several disadvantages because it’s a time-consuming approach and increasing of more of ‘Red Tapism’ because citing reasons for adopting one approach over other is not appropriate. Because, it may happen that company may find it difficult to comply with the Code of Best Practice. And if asked for explanation, will that be accepted or not is another loophole of box-ticking approach. Another disadvantage is that with box-ticking approach, the companies might adopt alternative governance mechanisms.[28] Furthermore, this approach focuses more on one-size-fits-all approach form of CG practice that will suit all corporations.[29] Moreover, the principle of ‘comply or explain’ either to comply or to explain whereas box-ticking has focus on ‘comply and explain’ and not on ‘comply or explain’. Also, a rift might develop between shareholders and board because board may find it difficult to follow box-ticking approach and shareholders might pressurize boards to follow box-ticking approach because companies listed in LSE, it may happen that these companies might be delisted.

Hampel accepted the proposal of Cadbury and Greenbury Higgs in 2003 published report on the review of the role of effectiveness of NEDs and recommended that half members of the board should be NEDs.[30] It is fine to have NEDs but half of the members of the board should be NEDs does not sound proper as it is step to concentrate power in the hands of few people.  The 2010 code elucidates that shareholder must be careful in responding to the statements of the company in a manner, that they support ‘comply or explain’ approach.[31] A question of paramount importance arises as to how many shareholders are aware of CG principles. Do they really understand the CG objectives? Because, many people in UK are shareholders in companies. Are they all aware of legal terminology applied in CG? The Kay Review of 2012 explained the need for long-term relationships to be built on trust and confidence and recommended to introduce investor forum for better engagement between owners and executives and need for incentives in director remuneration for long-term sustainable business.[32]

If we examine all the recommendations, then, apart from Kay Review, other committees stress more on building hierarchy of exercising organisational and supervisory functions in the company whereas Kay Review stresses on inter-woven functions for long-term success of the company that can be built on trust and confidence. And this is the reason why before Kay Review, short-comings have been witnessed over the years, because focus is more upon concentration of power in the hands of a few individuals, while Kay offers solutions to build relations on trust and confidence for both sustainable and long-term success of the company. From this analysis, a conclusion can be drawn do the boards really follow the principles elucidated by CG committees. Is the board really concerned about long-term success of the company? Although Kay focuses on long-term success of the company there is not a single point about protecting interest of the employees of the company, because of whom the company functions.

It’s important to understand whether the recommendations of Cadbury Committee, Greenbury Committee, Higgs Review, Kay Review had any impact on Board Composition and Structure, Executive Remuneration, II and shareholders.

Key Components of UK Corporate Governance

The effectiveness of the board is envisaged from the fact as to how boards carry out the functions, ie, how do they operate and execute their functions that is, take decisions in accordance to their knowledge and skill for the betterment of the company. “The UK codes either establish or give strong support to core elements of board design: structures like the balance between executives and NEDs; the separation of chairman and CEO; board committees and their composition; and the routines boards follow for reviewing accounts, nominating new directors, setting pay policy or evaluating the work of the board.”[33]

Forbes and Hodgkinson support the view the Cadbury Code has actually helped to improve and CG practice in the UK as it continues to be an important part of CG code practice.[34] As explained in the previous section that Cadbury Committee explained to divide the roles of chairman and chief executive, that is, CEO. The Cadbury Committee cited these recommendations with a belief that British Industry had a good system of CG practice and this “was simply to bring the weaker brethren up to the standard of the best”.[35] It’s important to mention here that there were no recommendations for active role of shareholders in a company. Even the II were not a part of Cadbury Recommendations as they met with the opposition.[36] It is the Stewardship Code that was issued by Financial Reporting Council in 2010, that actually elucidates to strengthen quality relationship between II and companies as well as to ensure long-term returns to shareholders.[37]

Also, as explained above, Hampel who accepted Cadbury and Greenbury recommendations that half of the members of board should be non-executive directors (NEDs). But the issue with this is that, “the role of NEDs in promoting good corporate governance is hampered by interlocking directorships leading to a reciprocal benefit for one another”[38]. Though it been argued that it is easy to serve few NEDs.[39] Also, it is important to mention that NEDs that have been appointed should be well served by top hierarchy of the company for efficient CG system. When NEDs are served properly, this will also help to avoid insider trading. Also, there should be no greediness to derive self-financial benefit from the company by not serving NEDs properly. It is pertinent to mention that companies who have a greater number of family members have little scope of insider trading.[40] To encourage board effectiveness, it is important to encourage board evaluation in terms of compliance and accountability to understand whether the board adjudicates problems and provides effective solutions.[41] Also, if the principle of ‘comply or explain’ should be followed, the board should have been given freedom, either to comply or explain rather than emphasizing upon composition of the board.

In the case of executive remuneration, shareholders were distanced from important internal governance matters of the company.[42] In reality, the shareholders had the responsibility for setting up the salaries of the members of the board, this function had actually given powers to the board to set up executive remuneration.[43] The shareholders were removed from voting over conflict of interest over licensing process as per company articles.[44] However, after 1979 onwards, reforms took place and encouraged business to utilise “share options to solve agent/principal issues between shareholders and executives”.[45] In late 1980s, corporate scandals took place and a conflict of interest arose out at directors pay.[46]

The Cadbury Committee was formulated in 1992 and as explained above, the relationship between shareholders and executive had weakened. Greenbury and Hampel also supported the views of Cadbury that is, the ‘Box-Ticking’ approach as explained above. Furthermore, Hampel also explained that half of the board members should be NEDs is the key loophole as explained above.  Dignam also supports the view that the distance between the shareholders and any responsibility for remuneration is a distance that began conflict licensing regime.[47] Dignam explains that this led to distance the shareholders through the medium of NEDs and disclosure of remuneration information would have played a crucial role over the remuneration problems that were there.[48] Though it is pertinent to mention that Company Law has always stressed on disclosure of information about the company to the public, this was also recommended by Cadbury and this enabled not only limited shareholders to know the information about the company, but also general public started to know about this.[49] The UK government accepted as Higgs Review in 2003 that NEDs should remain independent.[50] In 2007, the collapse of Royal Bank of Scotland, Lloyds TSB took place.[51] The Walker Review in 2009 had explained for increasing the role of shareholders that is, for long-term shareholder engagement in a company.[52] Also, the Kay Review recommended that it is important to encourage shareholder engagement that is primarily important for the long-term success of the company.[53] But there is no preference over bridging the shareholders distance from the company board in any of the committees views. It is the Directors’ Remuneration Report Regulation, (DRRR) 2002 which introduced regulations for the requirement of shareholder votes and directors’ remuneration report.[54] However, Roach argues that shareholder approval is just giving shareholders more information that would not improve matters to a considerable extent.[55] Furthermore, most shareholders are not able to table a resolution at Annual General Meeting (AGM) even if they have reliable information.[56] Roach arguments seem to be meaningless and vague, because on one hand, he wants there’s no need to give shareholders much information while on the other hand, even if the shareholder have information, it’s pointless as they are not qualified enough. DRRR is actually an important legislation that is fruitful for CG practice.

There is no mention about placing women in remuneration committees. It has been explained that participation of women directors in boards has increased since 2011 in the UK.[57] Even II have stressed on the idea of having women in boards in 1990s.[58] It has been examined women can help in avoiding unethical practices, can be effective monitors on boards and will listen to shareholders feedback and give immediate solutions to overcome problems.[59] It is pertinent to mention that none of the committees, ie, Cadbury, Greenbury, Higgs, Kay Review suggested for placing women in boards.

II can be defined as group of organizations that includes banks, public and private pension funds, mutual funds, insurance companies, who exercise influence over companies where II have invested their money.[60]

II hold 90% of UK FTSE in UK corporations and their actions play an important role how companies are managed.[61] If an institutional shareholder exits from a company, it is considered as a threat as it is doubted that management fails to control the corporation.[62] This means that if II leaves the company due to any problem, it is believed that the company is not good in terms of Corporate Management. It’s further understood that II want transparency and accountability in CG practice by the management of the company. However, John Kay has criticised II because their investments are basically for short-term as they risk the shareholders who have a long-term success objective for the company.[63] Kay argument is correct as II have become an integral part of equity markets that are witnessed as the key drivers of getting money out of the company. However, it can be argued that effectiveness of company boards depends upon II. If II exit the company, the board must answer whether it has complied with UK CGC or explain what method/form of CG did the company use.[64]

UK has a diversified form of shareholder structure that has developed by adapting and responding to changes and with the globalization of stock markets.[65] Shareholder Activism (SA) has a different meaning in UK because stakeholders carry the function of monitoring the duties of the controller that is, shareholder who is a controlling shareholder for long-term success of the company.[66] And II usually exploit SA as they rebel to ensure that management of the company takes effective decisions as their exit from company is an alarm bell for the management of the company as explained in previous paragraph. II act as a voice of minority shareholders as they have little say in the company. And the shareholders of the company are driven by II, as more II with the company ensures a systematic SA whereby it’s understood that the company has a good system of CG. The II have increased the importance of stakeholders and minority shareholders in a company.

Other Aspects and Reformation Techniques:

There is a need for an effective and impartial CG system that is useful for shareholders and the people/public.[67] For this, it is important to examine the board functions and shareholder participation in it, separation of ownership and control, company performance, II and stakeholders attached to the company.[68] “The basic principle of CG is includes information and integrity and prevention of information misuse or abuse”[69]. To achieve this legal and regulative frameworks should be designed, effective UK CGC is needed, performance of board should be monitored and rules and regulations must be there.[70]

The CP has not only impacted health of individuals but also it has had an enormous impact on CG system. Each and every country has faced the pandemic crisis and when the pandemic will be over, it will leave a different world behind.[71] The pandemic has ushered for national sovereignty to protect people’s health as well as the economic situation. In UK, the Board of Directors health and safety of workers, cashflow impacts should be monitored, risk assessment should be done as one or more new committees may be formed to manage the pandemic impact.[72] An explanation may be offered how CG practice is going at the time of pandemic to understand the impacts of CG practice and amend code for the future accordingly. The companies to consider relevant UK CGC provisions and directors to exercise independent judgement as to whether price sensitive information must be disclosed and AGMs should be postponed or should take place virtually.[73] So we get to learn that after pandemic, things have begun to change. Furthermore, the policies to overcome the after effects of pandemic must be in a manner that does not compromise with the rights of some people of the company. This is because of the ability of investors worried about future cash flows auditor ability to provide information and monitor the financial situation of the company is quite challenging.

To achieve a good CG system and overcome pandemic crisis, technology plays an important role. Today companies need the facility of ‘Internet’ a technology platform to facilitate communication with board, shareholders, II, stakeholders, for AGMs etc.[74] This is a step to innovation and also to create an organization form of CG practice and to eliminate or reduce hierarchy form of CG.[75] This will facilitate a new CG and will re-engineer the old code as equal participation will be there of board, shareholders, II, stakeholders, minority shareholders and focus will be on long-term growth of the company in accordance to Kay’s recommendations.[76] In addition to this, each and every information and suggestion must be made available on the company website, that facilitates to understand effectiveness of boards, learning, and future planning and avoid wastage of time, during pandemic as interactions will be there online. With this, a meaningful CG system can be achieved.

Conclusion

It can be concluded that though the UK CGC has been designed to facilitate effective CG system, but still it failed on many aspects and recommendations have been explained subsequently. CP came sometime ago, still there are parts in UK CGC that can help to execute a smooth CG practice. The board composition suggested for half members should be NEDs, is not practical. There is no place for women in remuneration committees, however importance of shareholders and institutional investors has been given by UK CGC. Technology is the key aspect that can facilitate smooth CG system as it encourages for an effective CG system in the UK through the medium of internet. Kay Review to a considerable extent is acceptable for an effective UK CGC practice as compared to other committees suggesstions.

BIBLIOGRAPHY

Journal Articles:

Nerantzidis M., ‘Measuring the quality of the “comply or explain” approach’ [2015] Managerial Auditing Journal, Emerald Group Publishing Limited 373

Price M. and Harvey C., Mairi Maclean, David Campbell, ‘From Cadbury to Kay: discourse, intertextuality and the evolution of UK corporate governance’ [2018] Accounting, Auditing & Accountability Journal, Emerald Publishing Limited 1542, 1544

Nordberg D., McNulty T., ‘Creating better boards through codification: Possibilities and limitations in UK corporate governance, 1992–2010’ [2013] Business History, Routledge (Taylor and Francis Group) 348

Reddy B., ‘Thinking Outside the Box – Eliminating the Perniciousness of Box-Ticking in the New Corporate Governance Code’ [2019] The Modern Law Review 692

Madsen S. and Vance C., ‘Unlearned lessons from the past: an insider’s view of Enron’s downfall’ [2009] Emerald Group Publishing Limited 216, 219

Alkalbani N., Cuomo F., Mallin C., ‘Gender diversity and say‐on‐pay: Evidence from UK remuneration committees’ [2019] John Wiley & Sons Ltd 378, 380.

Nordberg D. and Booth R., ‘Evaluating the effectiveness of corporate boards’ [2019] 19 (2) Emerald Publishing Limited 372, 380, 381.

Allcock D., ‘The “invisible” hand: views from UK institutional investors’ [2018] 18 (6) Emerald Publishing Limited 1074, 1076.3

Lazarides T. and Drimpetas E., ‘The missing link to an effective corporate governance system’ [2008] 8 (1) Emerald Group Publishing Limited 73, 74.

Fenwick A., McCahery J., Vermeulen E. ‘The End of ‘Corporate’ Governance: Hello ‘Platform’ Governance’ [2019] 171, 175.

Online Journal Articles:

Veldman J. and Willmott H., ‘The cultural grammar of governance: The UK Code of Corporate Governance, reflexivity, and the limits of ‘soft’ regulation’ (2016) 69(3) Human Relations 584 < https://www.researchgate.net/publication/283452223_The_cultural_grammar_of_governance_The_UK_Code_of_Corporate_Governance_reflexivity_and_the_limits_of_%27soft%27_regulation > accessed on April 6, 2021

Working Papers:

Dignam A., ‘Remuneration and Riots: Rethinking Corporate-Governance Reform in the Age of Entitlement’ (2013) < https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2207682 > < https://poseidon01.ssrn.com/delivery.php?ID=112001112005004076026121006114023071053009053038065056030072023066020091100004092094098007039126015013042084115026029079127114027039038017006091066004066000118030003051034072005090107118027003109025029114006121098065070111115089075065004030115098126&EXT=pdf&INDEX=TRUE > accessed on April 12, 2021.

Command Paper and Law Commission Reports:

Walker D., ‘A review of corporate governance in UK banks and other financial industrial entities: Final Recommendations’ 26 November, 2009 < http://image.guardian.co.uk/sys-files/Guardian/documents/2009/11/26/walker-review.pdf > accessed on April 12, 2021.

Kay J., ‘Implementation of Kay Review: Progress Report’ (October 2014); < https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/367070/bis-14-1157-implementation-of-the-kay-review-progress-report.pdf > accessed on April 12, 2021.

Financial Reporting Council, The UK Stewardship Code (July 2010) < https://www.frc.org.uk/getattachment/e223e152-5515-4cdc-a951-da33e093eb28/UK-Stewardship-Code-July-2010.pdf > accessed on April 15, 2021.

Books:

Forbes W. and Hodgkinson L., Corporate Governance in the United Kingdom: Past, Present and Future (1st edn, Palgrave Macmillan 2015) 26.

Contributions to Edited Books:

Ringe W., ‘Shareholder Activism: A Renaissance’ in Jeffrey N. Gordon and Wolf-Georg Ringe (eds), The Oxford Handbook of Corporate Law and Governance (OUP 2018), 390.

Website:

Dr Lee Roach, ‘The    Directors’    Remuneration    Report    Regulations    2002    and    the    Disclosure    of    Executive    Remuneration’ (Cardiff University) < https://www.academia.edu/1331844/The_Directors_Remuneration_Report_Regulations_2002_and_the_Disclosure_of_Executive_Remuneration > accessed on April 17, 2021.

Zedraadmin, ‘Corporate Governance and Covid-19’ (United Kingdom, 17 September, 2020) < https://www.zedra.com/news-events/news/uk-corporate-governance-and-covid-19/ > accessed on April 27, 2021.


[1] Michail Nerantzidis, ‘Measuring the quality of the “comply or explain” approach’ 30, (4/5) Managerial Auditing Journal, Emerald Group Publishing Limited 373.

[2] ibid 374.

[3] ibid 375, 376.

[4] Jeroen Veldman and Hugh Willmott, ‘The cultural grammar of governance: The UK Code of Corporate Governance, reflexivity, and the limits of ‘soft’ regulation’ (2016) 69(3) Human Relations 584 < https://www.researchgate.net/publication/283452223_The_cultural_grammar_of_governance_The_UK_Code_of_Corporate_Governance_reflexivity_and_the_limits_of_%27soft%27_regulation > accessed on April 6, 2021.

[5] ibid.

[6] ibid 585.

[7] ibid.

[8] Donald Nordberg, Terry McNulty, ‘Creating better boards through codification: Possibilities and limitations in UK corporate governance, 1992–2010’ 55 (3) [2013] Business History, Routledge (Taylor and Francis Group) 348, 349.

[9] Michael Price and Charles Harvey, Mairi Maclean, David Campbell, ‘From Cadbury to Kay: discourse,

intertextuality and the evolution of UK corporate governance’ 31 (5) [2018] Accounting, Auditing &

Accountability Journal, Emerald Publishing Limited 1542, 1544.

[10] ibid, 1544.

[11] ibid.

[12] ibid 1544, 1545.

[13] Nordberg and McNulty (n8) 349.

[14] ibid.

[15] ibid.

[16] Susan Madsen and Charles Vance, ‘Unlearned lessons from the past: an insider’s view of Enron’s downfall’ 9 (2) [2009] Emerald Group Publishing Limited 216, 219.

[17] ibid, 219.

[18] ibid, 220.

[19] ibid, 220.

[20] Price, Harvey, Maclean, Campbell (n9) 1545.

[21] Nordberg and McNulty (n8) 350.

[22] Michael Price and Charles Harvey, Mairi Maclean, David Campbell (n9) 1546.

[23] ibid, 1547.

[24] ibid.

[25] ibid.

[26] Bobby V. Reddy, ‘Thinking Outside the Box – Eliminating the Perniciousness of Box-Ticking in the New Corporate Governance Code’ [2019] 82(4) The Modern Law Review 692.

[27] ibid, 694.

[28] ibid, 701.

[29] ibid, 701, 702.

[30] Michael Price and Charles Harvey, Mairi Maclean, David Campbell (n9) 1547.

[31] Nordberg and McNulty (n8) 358.

[32] Michael Price and Charles Harvey, Mairi Maclean, David Campbell (n9) 1547.

[33] Nordberg and McNulty (n8) 359.

[34] William Forbes and Lynn Hodgkinson, Corporate Governance In The United Kingdom: Past, Present and Future (1st edn, Palgrave Macmillan 2015) 26.

[35] ibid, 27.

[36] ibid, 28.

[37] Financial Reporting Council, The UK Stewardship Code (July 2010) < https://www.frc.org.uk/getattachment/e223e152-5515-4cdc-a951-da33e093eb28/UK-Stewardship-Code-July-2010.pdf > accessed on April 15, 2021.

[38] Forbes and Hodgkinson (n34) 29.

[39] ibid, 29.

[40] ibid, 30.

[41] Donald Nordberg and Rebecca Booth, ‘Evaluating the effectiveness of corporate boards’ [2019] 19 (2) Emerald Publishing Limited 372, 380, 381.

[42] Alan Dignam, ‘Remuneration and Riots: Rethinking Corporate-Governance Reform in the Age of Entitlement’ (2013) 3 < https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2207682 > < https://poseidon01.ssrn.com/delivery.php?ID=112001112005004076026121006114023071053009053038065056030072023066020091100004092094098007039126015013042084115026029079127114027039038017006091066004066000118030003051034072005090107118027003109025029114006121098065070111115089075065004030115098126&EXT=pdf&INDEX=TRUE > accessed on April 12, 2021.

[43] ibid, 4.

[44] ibid, 7.

[45] Ibid, 8.

[46] Ibid, 9, 10.

[47] ibid, 10.

[48] ibid, 11.

[49] ibid, 11, 12.

[50] ibid, 13.

[51] ibid, 15.

[52] David Walker, ‘A review of corporate governance in UK banks and other financial industrial entities: Final Recommendations’ 26 November, 2009 < http://image.guardian.co.uk/sys-files/Guardian/documents/2009/11/26/walker-review.pdf > accessed on April 12, 2021.

[53] John Kay, ‘Implementation of Kay Review: Progress Report’ (October 2014); < https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/367070/bis-14-1157-implementation-of-the-kay-review-progress-report.pdf > accessed on April 12, 2021.

[54] Forbes and Hodgkinson (n34) 35, 36.

[55] Dr Lee Roach, ‘The    Directors’    Remuneration    Report    Regulations    2002    and    the    Disclosure    of    Executive    Remuneration’ (Cardiff University) < https://www.academia.edu/1331844/The_Directors_Remuneration_Report_Regulations_2002_and_the_Disclosure_of_Executive_Remuneration > accessed on April 17, 2021.

[56] ibid.

[57] Nasser Alkalbani, Francesca Cuomo, Christine Mallin, ‘Gender diversity and say‐on‐pay: Evidence from UK remuneration committees’ [2019] John Wiley & Sons Ltd 378, 380.

[58] ibid, 379.

[59] ibid, 381.

[60] Deborah Allcock, ‘The “invisible” hand: views from UK institutional investors’ [2018] 18 (6) Emerald Publishing Limited 1074, 1076.

[61] Forbes and Hodgkinson (n34) 42.

[62] ibid, 41

[63] ibid, 41, 46, 47.

[64] Deborah Allcock (n60) 1074.

[65] Wolf-Georg Ringe, ‘Shareholder Activism: A Renaissance’ in Jeffrey N. Gordon and Wolf-Georg Ringe (eds), The Oxford Handbook of Corporate Law and Governance (OUP 2018), 390.

[66] ibid, 392, 393.

[67] Han Donker and Saif Zahir, ‘Towards an impartial and effective corporate governance rating system’ [2008] 8 (1) Emerald Group Publishing Limited 83.

[68] ibid, 84, 85, 86, 91.

[69] Themistokles Lazarides and Evaggelos Drimpetas, ‘The missing link to an effective corporate governance system’ [2008] 8 (1) Emerald Group Publishing Limited 73, 74.

[70] ibid.

[71] Yael (Yuli) Tamir, ‘Why nationalism? Because nothing else works’ [2020] Nations and Nationalism 538, 541.

[72] Zedraadmin, ‘Corporate Governance and Covid-19’ (United Kingdom, 17 September, 2020) < https://www.zedra.com/news-events/news/uk-corporate-governance-and-covid-19/ > accessed on April 27, 2021.

[73] ibid.

[74] A Mark Fenwick, Joseph A. McCahery, Erik P. M. Vermeulen ‘The End of ‘Corporate’ Governance: Hello ‘Platform’ Governance’ [2019] 171, 175.

[75] ibid, 176.

[76] ibid, 177, 179, 180, 183.

1 thought on “United Kingdom Corporate Governance Code: Achievements and Criticisms”

Leave a Comment

Your email address will not be published. Required fields are marked *