On January 1, 2019, the new UK Corporate Governance Code came into effect. But what is Corporate Governance and who does it apply to?
To put it simply, corporate governance is the internal set of rules, practices and procedures adopted by a company. It identifies who has power and accountability, and who makes decisions. It is, in essence, a toolkit that enables management and the board to deal more effectively with the challenges of running a company.
Why do I need it?
Good corporate governance provides:
- a vision for the company
- a plan for growth
- an internal structure
- a clear division of responsibilities and decision-making process
- support for management
- opportunities for oversight and monitoring
- protection of the rights and interests of shareholders
- effective compliance with legislation and regulation that affects businesses.
Accordingly, good corporate governance to help achieve objectives is relevant to all businesses although the governance framework in each business may vary.
In larger companies, for example, it involves establishing a framework of systems and controls that encourages and supports the Board and the management team to act in the best interest of the shareholders and other stakeholders (employees, suppliers etc.). Whereas in family owned businesses and many SMEs (where the owners may also be the management) the focus is mainly about complying with regulations, improving business efficiency and improving performance.
How can Harper Macleod help improve your corporate governance?
The services provided by our Corporate Governance team include:
- Assistance in developing and updating corporate governance documents, policies and procedures.
- Advice on conflicts of interest, director's duties and shareholder's rights and the drafting of Articles of Association and shareholder's agreements to ensure compliance with the Companies Act and relevant codes of conduct.
- Advice and guidance on best corporate governance practice in relation to:
- The appointment and role of non-executive directors
- The appointment and removal of directors
- Risk management
- Board decision making
- Formation and operation of Board Committees
Legal support on day-to-day operations:
4. Legal support on day-to-day operations
- Advice on general corporate law compliance
- Facilitating (and hosting, if required) board meetings including the taking of formal minutes of meetings;
- Providing guidance to senior management, boards of directors and board committees in the exercise of their fiduciary duties.
- Advising boards of directors and board committees (including audit, remuneration and nominations committees) on board oversight responsibilities and the governance requirements of applicable laws and regulations.
- Developing governance guidelines, codes of conduct for directors, officers and employees, risk management programmes (these include Risk Registers, Business Continuity and Disaster Recovery Plans) and other policies and procedures to support boards of directors and their committees.
- Advising companies on the establishment of whistleblower policies and procedures for conducting internal investigations.
Corporate governance should not be a burden, or a box-ticking exercise, but instead it should be a way of stepping back from day to day management and taking time to examine the company’s core values, basic strategy and future prosperity.
Corporate governance does not depend upon the size of the company. As a starting point, a small/medium sized business owner should have a well documented system of the company's policies, procedures and processes. They are easy to implement and add structure to what the business is already doing.
Get in touch
If you have any queries regarding corporate governance or how your business might benefit from a clearer set of internal policies and procedures please contact David Kaye.