Company - Corporate governance issues - Notes (1)

VII. Corporate Governance Issues

Grounds for disqualifications proceedings
CDDA 1986:
* Misconduct in connection with companies
s2 Conviction of indictable offence
s3 Persistent breaches of companies legislation
s4 Fraud / Breach of duty
s5 Summary convictions
* Unfitness
s6 Unfit directors of insolvent companies
s8 Unfit after company investigation
Secretary of State for Trade & Industry v Amiss 2003
- Director had engaged in behaviour that he knew to be dishonest. It was accepted that this dishonest behaviour was endemic within his industry but that did not excuse his actions
- His action were a breach of his fiduciary duty to the company and also the company’s to its clients
- Director was disqualified as a director for 9 years under s8 of CDDA 1986

* Others
s10 Wrongful trading
- Meaning of unfitness
Schedule 1 Part I
Schedule 1 Part II

Role of Board
- The older conception of the director’s role
- Increasing the number of non-executive directors
- Increasing the number of board sub-committees
- Separating the role of chairman and chief-executive

Combined (Corporate Governance) Code
- Cadbury Report 1992
- Greenbury Report 1995
- Hampel Report 1998
- Combined Code (v1 – 1998)
- Modern Company Law: Final Report (DTI)
- UK Govt’s ‘Post Enron’ initiatives
- Higgs Report
- Combined Code (v2 – 2003)

Operating & Financial Review (OFR)
- Came to an end in Nov 2005 when the Chancellor announced that the regulations implementating it would be repealed from Jan 2006.- A retreat by the Government from its attempt to introduce higher levels of accountability for directors