In relation to managing coporate risk, what are the directors responsible for?
determine the level of risk that is appropriate for the company to bear
ensure that there is a sound system of internal control to safegaurd shareholder's investments and the company's assets
ensure regular risk assessments are carried out
What are the statutory functions of the Companies House?
to incorporate and dissolve companies
to examine and hold documents under the Companies act
to make this information available to the public
What do the registration documents set out?
whether company is public or private
whether the liability of the company is to be limited and if so by shares of by gaurantee
the company's registered office
statement of the proposed officers
the proposed articles of association
What are the Articles of Association?
The Articles of Association contain the main provisions governing the relationship between the shareholders and the company as well as moderating the balance of power between the shareholders themselves.
In the case of a quoted company, what must the business review include?
the main trends and factors likely to affect the future development, perfromance and positions of the company's business
>the company's employees
>social and community issues
>information about persons with whom the company has contractual or other arrangements that are essential to the business
What are the duties of the company secretary?
maintaining the statutory registers
give notice of the AGM
send special and extraordinary resolutions to the companies house
ensuring that statutory forms are filed promptly
supply copies of accounts to members of the company 21 days before a meeting
keep minutes of directors meetings and general meetings
making company accounts and documents available for inspection
What must the external auditor check?
the finacial statements give a true and fair view and compy with the relevant legal and regulatory requirements
the information given in the director's report is consistent with the accounts
the specified parts for the directors remuneration report comply with the legislation
the company has kept proper accounting records
The internal audit function can assist directors with the implementation of good corporate governance by...
maintaining a sound system of internal control by reviewing how the company identifies and manages risk
reviewing board reports to ensure that the present a balanced and understandable viewpoint
ensuring directors are up to date with new accounting and audit issues
communicating with external auditors to ensure a unified approach
ensuring the board receives correct the communications and information required from the external auditors
Items on the agenda of a board meeting...
note the quorum
approval of previous minutes
matters arising from previous minutes
matters adjourned from previous meeting
date of next meeting
Scope and recommendations of the Walker Review
Review coporate goveranance in financial institutions following major failures in the banking system
Non-execs and devote more time to their roles
Induction and regular training for non-execs
Tougher scruitiny of non-execs by FSA
Institutional investors should be less passive and engage earlier if problems are suspected
FRC to sponsor stewardship codeChairperson to face annual re-election
Under the Turnbull Guidance, what should boards of listed companies consider?
nature & extent of risks facing the company
extents & categories of risk which are acceptable for the company to bear
likelihood of risks materialising
the company's ability to mitigate potential impact if risks materialise
costs involved in managing risk
Under the Turnbull Guidance what should the board of listed companies do when reviewing the effectiveness of internal control?
assess how the risks have been identified, evaluated and managed
assess the effectivness of current internal controls
consider whether necessary actions have been taken in relation to significant failings & weaknesses
consider whether findings indicate a need for more extensive internal control measures
Under the Smith Guidance, what are the main roles & responsibilities of the audit committee?
monitoring financial statements and announcements relating to financial performance and reviewing financial reporting judgements contained therein
review the company's internal fincial controls and risk managment systems
monitor & review the internal audit function
recommend external auditor and appove their remuneration and terms of engagement
monitor & review ext. auditor's independence and objectivity
Scope and topics in the Higgs Report
Scope: The role and effectiveness of Non-Execs
Guidance of the role of the chairperson
the role of non-execs
summary of duties of audit committee
summary of duties of remuneration committee
due diligence checklist for new board members
performance evaluation guidance
Duties placed on board members by the Penrose Report
Obtain a proper understanding of the issues being considered
Question effectively and dedicate sufficient time to acquiring sufficient understanding of issues before making decisions
Objectives of the European Commission in relation to company law & corporate governance
providing protection for shareholders and other parties concerned
ensuring freedom of establishment
fostering efficiency and competitiveness
promoting cross-border co-operation between companies
stimulating discussions between member-states on the modernisation of company law and corporate governance
Key points in the Sarbanes-Oxley Act 2002 (USA)
all companies listed on US stock exchanges must comply with SOX
purpose is to protect investors by improving accuracy and reliability of corporate disclosures
aimed at overcoming corporate scandals (WorldCom, Enron)
highlights the need for auditor independance, corp responsibility and enhanced corporate disclosures
Key issues relating to Data Protect Act 1998
directors & officers of corporate bodies can be held liable for offences committed by their institutions
individuals can go directly to court if they feel that their rights under the act have been breached
personal data may only be transfered to non-EU areas provided that certain conditions have been met
subject access requests made on behalf of 3rd parties for criminal/medical histories are forbidden