United Kingdom Company Law - Corporate Governance

Corporate Governance

Corporate governance is concerned primarily with the balance of power between the two basic organs of a UK company: the board of directors and the general meeting. The term "governance" is often used in the more narrow sense of referring to principles in the UK Corporate Governance Code. This makes recommendations about the structure, accountability and remuneration of the board of directors in listed companies, and was developed after the Polly Peck, BCCI and Robert Maxwell scandals led to the Cadbury Report of 1992. However, put broadly corporate governance in UK law focuses on the relative rights and duties of directors, shareholders, employees, creditors and others who are seen as having a "stake" in the company's success. The Companies Act 2006, in conjunction with other statutes and case law, lays down an irreducible minimum core of mandatory rights for shareholders, employees, creditors and others by which all companies must abide. UK rules usually focus on protecting shareholders or the investing public, but above the minimum, company constitutions are essentially free to allocate rights and duties to different groups in any form desired.