7.3 Summary and conclusion

The previous two sections describe the history of corporate governance in the United Kingdom and the six legal issues of independence. The history of corporate governance starts with the Cadbury Committee and its views on independence, the committees chaired by Greenbury, Hampel, Higgs and Walker subsequently elaborated on corporate governance issues, one of which is independence. Section 7.1 shows that views on independence have emerged over time, which Table 7-5 summarises. The Cadbury Committee, Hampel Committee and Higgs Committee are listed in the table, because these committees have made large contributions to the development of corporate governance in the United Kingdom. The table lists the UK Corporate Governance Code as well, because it is the current corporate governance code.

The six legal issues contribute to the three building blocks of independence: person, composition/structure and preconditions. (Consideration 7.1) Theperson building block is very strong and there is a considerable focus on independence in fact and in appearance, by giving the board the right to assess the independence of a director. The structure/composition building block is also a robust part of the independence chain in the United Kingdom, by having a majority of independent NEDs on the board and in its board committees. However, the diversity policy is not well developed and needs to be adjusted, which is going to happen in October 2012. The preconditions building block of independence shows some weak points by allowing CEO duality on the board and a very dominant role of the general meeting in the appointment and removal of directors. Furthermore, the CEO and other executive directors may have a seat on the nominating committee, which enables them to influence the composition of the board and the choice of NEDs. These preconditions have a negative influence on the chain of independence in the United Kingdom. However, evaluation, dealing with conflict of interest situations and enforcement of rules are strong. Below, all three building blocks are described. They are compared with the situation in the Netherlands and Sweden in chapter 10 of this study.