Corporate governance in the United Kingdom

Combined Code on Corporate Governance (Revision of 1998 Code)



Issued July 2003 - for reporting years beginning on or after 1 November 2003



Listed Companies



The key sections of the Code are:

• Half independent non executive directors within the board (chairman excluded);
• Separation of the roles of Chairman and Chief Executive
• New rules on independence
• Formal procedures for appointment of new directors
• Provision of more and relevant management information to directors
• Training and performance evaluation of Boards, Committees and Directors from cradle to grave
• Role of audit committee and auditors scoped out

Under the Financial Service Authority's Listing Rules a two part Corporate Governance statement is required. In the first part the company reports how it applies the principles. In the second the company either confirms compliance with provisions or provides and explanation. (This is the comply or explain principle.)



In the wake of increasing demands for sound corporate governance following high profile scandals such as Enron and WorldCom revisions were made to the Code. These revisions are drawn from the Higgs Report which focused on the roles and responsibilities of non-executive directors and the Smith Report which focused on the effectiveness of audit committees.