4.2.1 Introduction

Charkman states that the UK can be described as: "the first country in which industrialisation on a massive scale made corporate governance important". After a number of scandals in the late 1980s the UK gained a reputation as a global leader in its efforts to reform corporate governance. Moreover, several British organisations promoted these developments as well (such as the Association of British Insurers and the National Association of Pension Funds) (Weil, Gotshal & Manges 2002, p. 219). The Cadbury Report issued in 1992 was the first corporate governance code that relied on the comply or explain principle and was highly influential in the UK and the rest of the world (Weil, Gosthal & Manges 2002, p. 226). In this section the above eight key questions are answered for the UK. The UK is part of the research sample for several reasons. As stated above the UK was and still is the front-runner in corporate governance developments. To date the UK corporate governance codes are closely monitored, if necessary modified and item-specific codes or reports are added. A further uniqueness is that judicial corporate governance arrangement B (self-regulation supported by non-statutory rules) applies. Nowadays, after the implementation of Directive 2006/46/EC, judicial corporate governance arrangement B has become quite rare in the Member States, since most countries chose for an embedding of the comply or explain principle in legislation and not the listing rules. At first glance the UK has a typical Anglo-Saxon approach with a market-based corporate governance system embedded in common law, focused on the interests of the shareholders and with unitary boards. However, as it is a Member State of the EU and the frontrunner in corporate governance developments, this initial perception needs adjustment as elaborated further below.