CORPORATE GOVERNANCE

Corporate Governance as regards to Combined Code 2010

Corporate Governance as regards to Combined Code 2010

Summary of 2010 Combined Code

The combined code is a substantial concept that aims at addressing the role of corporate governance in companies. Its main function is to assist the boards in complying with their duties in an appropriate manner. The code makes sure to align the performance of duties with the Organization goals and thus is widely implemented by UK companies.

The code instructs the boards to think intensely, comprehensively and on a consistent basis pertaining to their major tasks and duties and the intricacies of these tasks on the personalized roles of the individuals. The Leadership aspect is paramount considering the role of a Chairman, the level of assistance provided by the Chief Executive Officer, and the level of maturity and transparency exhibited by the directors in taking major corporate governmental decisions.

The code suggests in the context of greater responsibility that companies should make it a point to focus on re election. All the directors of FTSE 350 should be subjected to re election in order to give them opportunities for greater accountability. Even in the case of small companies, they are advised to refocus and make amendments in their policy of re election. The provision of combined code suggests companies to explain the reasons of the alignment between their organizational practices and accountability is in equality with each other.

There is no bondage for the directors to communicate the reasons if their organization is guilty of non compliance towards the code. There is a chance of two considerations happening for companies. Either their activities are so well aligned with accountability that they head towards board effectiveness or they might require a transformational approach in order to introduce annual re election. An effective implementation of the new code would result in an enhanced communication with shareholders (FRC, 2010).

Leadership

When/how it started

Development

Of the theory

Why and how it changes annually

Effectiveness

2003

The board and its sub groups should have a focus on the balance of skills, expertise, degree of freedom and adequate knowledge in order to perform their respective duties and responsibilities effectively (Financial Reporting Council, 2010).

Since performance levels vary at different periods it is important to have effectiveness criteria in place. The chairman should conduct regular review meetings with each director in order to check the progress made on board's performance as well as ascertaining the level to which the strengths and weaknesses are known by employees. Board effectiveness reviews should be conducted on a regular basis in order to evaluate the progress company has made as far as effectiveness is concerned (Financial Reporting Council, 2010).

Accountability

2003

As far as accountability is concerned, the board should present a logical and uniform evaluation of the organization's reputation and progress (Financial Reporting Council, 2010).

Since accountability is vital as regards ascertaining causes of success or failure of the organization, it is necessary for directors to be aware of the accountability ...