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Hello there
I just wanted to know whether Corporate governance is a legal requirment by the government for the companies. In other words is coprate governance a legislated law
I wanted to know this because in one of the principles of the coporate governance is the remuneration comittee which appoints NED to fix salaries for the executive directors
The reason why I am asking this is …
Why would the government bother making a law that is there to fix a proiblem internally in that of companies
It’s not really the government’s concern about how they manage the company right??
That’s more like an internal problem that must be sorted out by themselves in the companyIn the UK, following the UK Corporate Governance Code is not a legal requirement. However, all listed companies are expected to comply with its requirements is if they do no then they are expected to explain why not. Non-compliance usually attracts investor, investor advisor and financial press criticism. Ultimately, the sanction is that the Stock Exchange could suspend the company’s listing or even delist the company.
Other countries have a different approach. For example, in the USA, the Sarbanes Oxley Act imposes statutory duties on directors and auditors with respect to governance. No-compliance can lead to prison sentences.
Ok so in the UK it isn’t legally required but the stock exchange could delist your company and the company has to explain why they haven’t followed compliance
However in the USA, I am assuming that it is legally requires since they make the companies go on a prison sentence if I am not mistaken
Please correct me if I am wrong
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