Corporate governance under English common law : the respective roles of executive and non executive directors
Table of Contents
- Introduction
- Motivations for a board reform
- The unitary board model and its influence on the role of directors
- The board's responsibility as the management organ of the company
- The monitoring role of non-executive directors
- Clarification on directors' duties
- Statutory codification or self-regulation?
- The board reform in the light of the higgs report
- Composition of boards
- The role of non-executive directors
- Closer discussion boards
- Independent monitors
- Remuneration and audit committees
- Critical view of the reform
- Conclusion
- Bibliography
Summary The role of boards and its relationship to management must be clearly identified. The Companies Act provides that companies must have directors but does not define their functions. This is left to the articles of association, where the most undertaken practice consists of vesting the board of all the powers necessary for the management of the business, apart from those reserved by the Act to be exclusively exercised by the shareholders in general meetings. Thus, the need for a statutory statement of directors' duties makes no doubt. Derek Higgs has issued a review on the role and effectiveness of non-executive directors. The recommendations were introduced in the revised Combined which came into effect in November 2003. Nearly all of the 50 recommendations made in the Higgs Report were incorporated into the revised Code. The terms of reference of the Higgs review included an assessment of the population of non-executive directors in the UK, the process of appointment, the extent to which they are independent, their effectiveness, their accountability including their relationship with institutional investors and issues relating to their remuneration and the role of the Combined Code on Corporate Governance.
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