New corporate governance code
A new corporate governance code is a set of guidelines and principles that outline the responsibilities and expectations of a company's board of directors, management, and shareholders. The code is designed to promote good governance practices, transparency, and accountability within the company.
Here are some key features of a new corporate governance code:
- Board Composition and Responsibilities: The code outlines the composition and responsibilities of the board of directors, including the roles and responsibilities of the chairman, CEO, and other board members.
- Accountability and Transparency: The code emphasizes the importance of accountability and transparency in corporate governance, including the disclosure of financial information, risk management, and compliance with laws and regulations.
- Risk Management: The code highlights the importance of effective risk management, including the identification, assessment, and mitigation of risks that could impact the company's operations, reputation, and financial performance.
- Independent Directors: The code emphasizes the importance of independent directors who are not affiliated with the company or its management, and who can provide objective advice and oversight.
- CEO Compensation: The code outlines the principles for determining CEO compensation, including the link between compensation and performance, and the need for transparency and accountability.
- Shareholder Engagement: The code encourages shareholder engagement and participation in the company's governance, including the right to vote on key matters and the ability to submit proposals.
- Sustainability and Social Responsibility: The code recognizes the importance of sustainability and social responsibility in corporate governance, including the company's impact on the environment, society, and the economy.
- Whistleblower Protection: The code provides protection for whistleblowers who report suspected wrongdoing or unethical behavior within the company.
- Conflicts of Interest: The code outlines the principles for managing conflicts of interest, including the disclosure of conflicts and the need for objective decision-making.
- Review and Revision: The code provides for regular review and revision to ensure that it remains effective and relevant in promoting good governance practices.
Some examples of new corporate governance codes include:
- The UK's Corporate Governance Code (2018)
- The US's Sarbanes-Oxley Act (2002)
- The EU's Shareholder Rights Directive (2017)
- The Australian Securities Exchange's (ASX) Corporate Governance Council's Principles and Recommendations (2014)
- The Canadian Securities Administrators' (CSA) Multilateral Instrument 52-110 (2014)
These codes are designed to promote good governance practices, transparency, and accountability within companies, and to protect the interests of shareholders, employees, and other stakeholders.