Influence Of Uk Company Law, Takeover Regulation And Corporate Governance On Policy Making

Corporate governance in itself has no single definition but common principles which it should follow. For example in 1994 the most agreed term for corporate governance was “the process of supervision and control intended to ensure that the company’s management acts in accordance with the interest of shareholders” (Parkinson, 1994)1. Corporate governance code is not a direct set of rules but a self-regulated framework which businesses choose to follow. This code has continued to change in the past 20 years in accordance with what is happening in the business world. For example the Enron scandal caused reform in corporate governance with the Higgs Report which corrected the issues which were necessary. Although it does not quickly fix problems, it gives a better framework to

Managers and shareholders are the utmost contributors of these conflicts, hence affecting the entire structural organization of a company, its managerial system and eventually to the company's societal responsibility. A corporation is well organized with stipulated division of responsibilities among the arms of the organizational structure, shareholders, directors, managers and corporate officers. However, conflicts between managers in most firms and shareholders have brought about agency problems. Shares and their trade have seen many companies rise to big investments. Shareholders keep the companies running

Farrar, J. (2008). Corporate Governance: theories, principles and practice. 2nd ed. South Melbourne, Vic: Oxford University Press

Phenomenal growth of interest in corporate governance has emerged in recent years. The body of literature on the subject has grown markedly in response to successive waves of large corporate failures. Furthermore, there have been numerous attempts to define what constitutes ‘good corporate governance’ and to provide guidelines in order to enhance the quality of corporate governance.

The article is written to help readers gain a solid understanding the roles of corporate governance, both inside and outside the company. Its goal is simply to impart information, not make claims or arguments on its own. I will be judging it mainly on the sources gathered, numerous examples and explanations given and the overall effectiveness it possesses in effectively communicating its ideas.

The first approach which has been prevalent in the U.K in the past and in South Africa (prior to the coming of the Constitution) is the shareholder oriented approach which is a mono-focal approach. Only the shareholders and their interests are considered to be appropriate when focusing on cooperate company decision making. The strengths

De Lacy J. The Reform of United Kingdom Company Law London: Cavendish Publishing Limited. 2003.

One of the prevalent belief is that corporations were set up solely to maximize profit to shareholders. Unlike other business models, corporations have the sole status of being viewed as a ‘legal person’, with the rights similar to natural citizens including “engage in business and contracts, initiate lawsuits, and itself be sued” (Business Dictionary). This unique classification provides corporations with the rare opportunity to take advantage of the power corporations have to benefit society and the economy. One such example is the potential for companies to incorporate under a B-Corp (Benefit Corp) structure rather than as a C-Corp. The way that a companies structures itself can have significant implications on its corporate governance.

Bisacre, J. R. and McFadzean, C. (2011) Company law, Law essentials, Dundee: Dundee University Press.

In recent years the issue of corporate governance has become a keenly debated topic in international finance. In developed countries, some of the biggest corporate collapses in history have brought about a change in focus. No longer are governments and lawmakers trying to deregulate and reduce the controls and disclosure requirements of corporations. The deregulation boom has ended, as regulation comes back into the picture.

The modern corporation is a marvel to behold and is one of the most fascinating inventions by man. What makes the corporation so special is that it allows for the risk of a business venture to be spread and cooperatively held. In contrast, prior to the formation of corporations, the risks of business ventures were shared among a few individuals. However, what corporations have achieved that partnerships could not is immense size due to increases of capital. As mentioned previously, the corporation allows for distribution of risks among its stockholders. Furthermore, management and ownership are separated under the corporate structure. The notion of a separation between management and ownership allows for the corporation to put into the

For example, the European Commission (EU) provides particular governance such as increasing of shareholder’s rights and better discourse for enhancement of corporate governance in European Union (Aguilera & Cuervo-Cazurra, 2009).

This essay provides an analysis of one major issues of corporate governance. Executive Remuneration had been heavily criticised, as senior executives have been receiving generous packages, despite corporate collapses and failures of company performance, which could be seen as a lack of corporate governance.

Answers to Concept Questions 1. In the corporate form of ownership, the shareholders are the owners of the firm. The shareholders elect the directors of the corporation, who in turn appoint the firm’s management. This separation of ownership from control in the corporate form of organization is what causes agency problems to exist. Management may act in its own or someone else’s best interests, rather than those of the shareholders. If such events occur, they may contradict the goal of maximizing the share price of the equity of the firm. Such organizations frequently pursue social or

Corporate governance is the relationship between many individuals participating in trying to determine the direction and the performance of organizations. Some of the functions of the corporate governance are managing subsidiaries, lobbying, disclosures, corporate policies and procedures. The corporate governance is also responsible for working with investors on a range of governance issues to facilitate and open dialogue between the company and its shareholders. Corporate governance also provides legal support to aviation and assures that corporate aircraft usage and reporting for tax requirement and SEC comply with applicable laws and regulations. The complete model of corporate governance includes Industry-based considerations, Resource-based considerations and Institution-based considerations.