Corporate Governance in UK - Assignment Example

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The study tells that corporate governance could be defined as “the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled”. This concept has an elaborated framework by which it tries to eradicate the principal-agent problems…
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Corporate Governance in UK
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Download file to see previous pages The paper throws light on corporate managements that always work on corporate governance strategies so as to meet the increasingly changing market trends. The corporate governance policy also helps to manage the interrelationship between stakeholders and the organisation’s fundamental objectives which shape the way the firm operates. The top management is always eager to know whether its corporate governance policy is efficient enough to meet the shareholder values even though the management also focuses on impacts of the policy on the firm’s operational efficiency. Nowadays corporate governance frameworks specifically target internal check policies as a series of corporate failures in 2001 were ascribed to accounting fraud. In addition, corporate scandals of various forms throughout the last decade attainted public and political interest. Consequently, managements adopted more regulative approach towards the development and execution of corporate governance practices. As Laura points out, Continental Europe’s multi-stakeholder model specifically emphasises on the interests of workers, customers, managers, and suppliers whereas the Anglo-American corporate governance model values shareholder interests. However, every organisation takes into account the rights and privileges of its shareholders while framing its corporate governance policies. In addition, a corporate governance framework clearly states the roles and responsibilities of the board of directors, integrity and ethical standards of the organisation, and concerns of disclosure and transparency. It is observed that corporate governance practices vary from organisation to organisation and country to country. Corporate governance laws Corporate governance laws in UK clearly define rights, powers, and duties of directors, managers, and auditors, and the position of stakeholders including employees and communities in which companies operate. Since board of directors are the persons at the helm of affairs of a company, the corporate governance policies intent to establish a mechanism to ensure their accountability. According to Fairley (2010), the UK corporate governance law is “shareholder friendly” and it allows shareholders to enjoy their sole voting rights in the general meeting. Likewise, directors possess a series of basic rights including issue of resolutions and removal of board members. At the same time, directors have also a set of duties to be carried out toward their company. Directors are obliged to carry out their duties and responsibilities with competence, in good faith, and strong loyalty to the organisation. If the voting mechanisms seem to be inadequate to meet the interests of shareholders, directors’ rights may be questioned in a court of law. The UK Takeover Code protects the interests and rights of shareholders to a great extent and assists ...Download file to see next pagesRead More
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