Analyzing the Company Law

Analyzing the Company Law "Works Cited Missing"

“Companies whose standards of corporate governance are high are the

more likely to gain the confidence of investors and support for the

development of their businesses”.

(Report of the committee on the Financial Aspects of Corporate

Governance – Cadbury Committee Report (Para 1.6)

In the light of this statement discuss the relationship that exists in

the UK between the legal rules that govern directors’ duties and

principles of corporate governance.

Corporate governance is a very wide topic area it does not have one

set definition its literal meaning is that of united group control

however it’s a much wider subject area. Corporate governance covers a

wide range of issues from the role of the company secretary and legal

department, to the business strategy, the roles of the executive and

non-executive directors, the relationship between investors and

companies and accounting and information systems. A corporate

governance structure should set guidelines as to how responsibilities

are distributed throughout the company it should also give guidelines

on the decision making process. It should structure the way in which

objectives are met and monitor the progress in meeting such

objectives.

Companies need to maintain a good corporate governance structure to

ensure that they are efficiently run. Good governance could be seen

more as a mentality than an actual set process it is more to do with

how the company portrays itself to the public, the ...

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...ed that the European Union should create

a common approach which would coordinate national corporate governance

codes. If legislation is brought in it would defeat the point of

corporate governance as it would cause restrictions on a company

rather than the flexibility provided by The Combined Code.

It is said that companies who follow a code of corporate governance

have a more stable price/earnings ratio this is due to the management

of their financial assets, the code helps them manage their assets

more efficiently and so they are seen as more stable companies in

which to invest. This in turn creates a confidence in investors who

are willing to support the development of their company as they have

faith in their investment due to the guidelines the company follows

set by The Combined Code.

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