Implementing Effective Corporate Governance

1 Day In-House Training Course

This 1-day, in-house, training course explains all the aspects of Corporate Governance in the United Kingdom and describes the current codes, rules, regulations and best practice.

With the recurrence of major corporate scandals surfacing fairly regularly, a clear recognition and understanding of the inter-related responsibilities of directors, shareholders, auditors, regulators and the current legislative background to commercial activities is a critical factor in the limitation of similar problems arising in future.

Participants will gain an effective working knowledge of the corporate responsibilities of those who control, manage and monitor the activities of both quoted and unquoted companies for the benefit of shareholders and other stakeholders.

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Course Outline

  • The Evolution of Corporate Governance

    • Cadbury, Greenbury, Hampel – code of best practice, directors’ remuneration
    • Turnbull, Smith, Higgs – internal controls, audit committees, non-executive directors
    • The UK Corporate Governance Code – standards to which companies seek to aspire

  • The Requirement for Corporate Governance

    • What Went Wrong – how, when and why
    • The Decline of the London Stock Exchange – loss of protection for ‘widows & orphans’
    • Protection of Capitalism – from greedy, incompetent and/or fraudulent directors
    • Encouragement of Corporate Honesty – necessity for transparency & accountability
    • Entrepeneurial Directors Essential – no longer ‘company servants’ but ‘guns for hire’
    • Does Corporate Governance Increase Shareholder Value? – chicken or egg conundrum

  • The UK Corporate Governance Code in Detail

    • 18 Main Principles with Supporting Principles & Code Provisions – comply or explain
    • Purple Book Requirements – two part statement for listed companies
    • Common Sense for Smaller Companies – ignore the code if disproportionately onerous
    • A Balanced Board – composition & responsibilities
    • Chairman & CEO – recommended division of roles but not compulsory
    • Appointments to the Board – terms of employment & performance evaluation
    • Directors’ Remuneration – the remuneration committee & comparables
    • Accountability & Audit – the audit committee, auditors & whistle blowing
    • Internal Control – responsibilities of board & management & the design of systems
    • Relationship with Shareholders – Dialogue with institutions, constructive use of AGM

  • Roles & Responsibilities of Directors

    •  Selecting the Negotiating Team – establish individual roles
    • Establishing Clear Objectives – bottom Line, give-aways, resolving an impasse
    • Representations, Warranties & Indemnities – what they are, what they do
    • Earn-outs – how much up front, reasons to delay payment of the consideration

  • Implementation of Corporate Governance

    • Corporate Governance Fatigue – main criticisms of a work in progress
    • Avoid a Box Ticking Culture – a cancer in the system promoting devious hypocrisy
    • Effective Management – intelligent questions reveal unsatisfactory answers
    • Lead by Example – am I considering the substance as well as the form?
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Course Notes, Slides and Exercises

Participants will receive a booklet containing copies of 18 slides and 70 pages of very comprehensive notes. Each slide will cover a number of related topics and the accompanying notes will support the content of the course to be delivered by the trainer.

During the course of the day, participants will undertake one or two exercises (problems) in groups of two or three (depending on the size of the class) which will involve considering what advice should be given to a client in particular circumstances. Participants will discuss the exercise with each other and then with the trainer and will receive a written answer to the problem.

Exercise 1

You are a non-executive director of Consolidated Widgets Plc, a FTSE-100 company the share price of which has just dropped 30 per cent.. You attend a board meeting called to consider a restructuring proposal. You learn that a vulture fund is accumulating a stake in the company’s debt and a major competitor has just announced its purchase of 12 per cent. of the equity from a previously friendly institutional shareholder and demanded a seat on the board. The chairman resigns and you are asked to take his place. How would you manage the rest of the meeting in order to establish your authority and control and to what questions and from whom would you demand immediate answers.

Exercise 2

As the new chairman of Consolidated Widgets Plc, you have called a meeting of the non-executive directors to consider whether the corporate governance procedures of the company are of a standard to which a FTSE-100 company should aspire. The chairmen of the audit, remuneration and nomination committees are present to detail the company’s current procedures for your consideration.

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