7.1.0 Introduction

Documentgegevens:

N.J.M. van Zijl, datum 05-10-2012

Datum: 05-10-2012
Auteur: N.J.M. van Zijl
JCDI: JCDI:ADS599502:1
Vakgebied(en): Ondernemingsrecht / Algemeen
Ondernemingsrecht / Corporate governance

This section gives an overview of the history of corporate governance codes in the United Kingdom. Corporate governance codes in the United Kingdom trace back to 1992, when the Cadbury Committee published the first version of a code of best practice provisions. In 2010, the latest version of the UK Corporate Governance Code was published as a successor of the code by the Cadbury Committee. In the meantime, several review committees have evaluated the effectiveness of corporate governance codes and have made recommendations for adjustments. Committees, chaired by Greenbury, Hampel, Turnbull, Higgs, Smith, Financial Reporting Council and Walker, have made contributions to the corporate governance discussion in the United Kingdom, which have resulted in updates of the corporate governance codes.

For the description of corporate governance in the United Kingdom, the Companies’ Act 2006 is relevant as well. The Companies’ Act in the United Kingdom has a long history, which is elaborately described by Calkoen (2011). Here, only two important revisions are mentioned. Due to the Great Depression that started in 1929, increased attention was paid to the protection of shareholders in Europe and in the United States of America. To this end, the Companies’ Act of 1929 obliged companies to publish annual accounts and the general meeting had to appoint an auditor annually (Calkoen 2011: 33). After a number of revisions, the Companies’ Act of 1985 provided that managers were accountable to the board and the board was accountable to the general meeting (Calkoen 2011: 58). The Companies’ Act of 2006 is the one currently applied in the United Kingdom and is used in the remainder of this chapter.

This section describes the results of the work of the committees on corporate governance in the United Kingdom; the focus is on independence. A chronological overview of the different committees on corporate governance and the corporate governance codes is given in Table 7-1.

Table 7-1: Chronological overview of corporate governance initiatives in the United Kingdom.

Year	Committee or code	Title and description
1992	Cadbury Committee	Report of the Committee on the Financial Aspects of Corporate Governance First initiative on corporate governance in the UK. Described in subsection 7.1.1.
1995	Greenbury Committee	Directors’ Remuneration - Report of a Study Group chaired by Sir Richard Greenbury Committee makes recommendations for executive remuneration. Briefly described in subsection 7.1.2.
1998	Hampel Committee	Committee on Corporate Governance - Final Report Committee reviews the Cadbury and Greenbury Reports. Described in subsection 7.1.2.
	Combined Code 1998	The Combined Code: Principles of Good Governance and Code of Best Practice Code is based on the Cadbury, Greenbury and Hampel Reports. Described in subsection 7.1.3.
1999	Turnbull Committee	Internal Control - Guidance for Directors on the Combined Code Provides guidance on how to apply the internal control requirements of the Combined Code 1998. Briefly described in subsection 7.1.3.
2003	Higgs Committee	Review of the role and effectiveness of non-executive directors Committee reviews the Combined Code 1998 and makes suggestion for a revision of the Combined Code 1998. Described in subsection 7.1.4.
	Smith Committee	Audit Committees Combined Code Guidance Committee makes recommendations for audit committees. Briefly described in subsection 7.1.4.
	Combined Code 2003	The Combined Code on Corporate Governance Revision of the Combined Code 1998, based on the Turnbull, Higgs and Smith Reports. Described in subsection 7.1.5.
2005	Turnbull Review Group	Internal Control: Revised Guidance for Directors on the Combined Code Group reviews the Turnbull report of 1999 on internal control. Briefly described in subsection 7.1.5.
2006	Combined Code 2006	The Combined Code on Corporate Governance Revision of the Combined Code 2003. Briefly described in subsection 7.1.5.
2008	Combined Code 2008	The Combined Code on Corporate Governance Revision of the Combined Code 2006. Briefly described in subsection 7.1.5.
2009	Walker Committee	A review of corporate governance in UK banks and other financial industry entities Described in subsection 7.1.6.
	Financial Reporting Council	2009 Review of The Combined Code: Final Report FRC reviews the Combined Code 2008 and endorses review of Walker Committee. Described in subsection 7.1.6.
2010	UK Corporate Governance Code	The UK Corporate Governance Code Revision of the Combined Code 2008, based on the Walker and FRC Reports. Described in section 7.2.