Corporate Governance in UK for Large Listed Companies

This assignment provides information about the UK corporate governance code and the developing awareness of the actual corporate governance disclosures made in UK annual report and accounts.

CORPORATE
GOVERNANCE

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Corporate governance work in UK for large listed companies ..................................................1
CONCLUSION ..............................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Corporate governance is the system through which the organisation or the corporation is
governed or controlled. It includes the set of practices and processes. Corporate governance
Code UK set out the standards for the listed companies of UK and it emphasis on relationship
between companies, shareholders and their stakeholders. It will consider the UK listed
companies which are Tesco and Sainsbury. Tesco is the British general retailers and the
supermarket which provide variety of food products and other products. Sainsbury is the largest
supermarket chain in UK which provides different products to the customers. These companies
are involved in the same business and the industry. In this assignment it will provide information
about UK corporate governance code and the developing awareness of the actual corporate
governance disclosures made in UK annual report and accounts.
MAIN BODY
Corporate governance work in UK for large listed companies
UK Corporate Governance Code
Corporate governance Code set out the standards which are required to followed by the
UK listed companies for their good practices. The code focus on application of the principles. It
is the system by which the companies are directed and controlled. The Corporate Governance
Code is published by Financial reporting council. The mission of this council is to transparency
and integrity in the business. It monitors and take action required for the quality of corporate
reporting. As per this code, the boards of Directors are responsible for the governance of their
companies. The principle of collective responsibility within the unitary board is successful.
Moreover, the Stewardship activities of investors assist ion delivering the higher standards of
corporate governance (THE UK CORPORATE GOVERNANCE CODE, 2018). The Code does
not provide the rigid set of rules but instead it provides flexibility through application of
principles. The code contains the five section which are as follows:
Section 1: Board leadership and purpose
Section 2: Division of responsibilities
Section 3: Composition, succession and evaluation Section 4: Audit, risk and internal controls
Section 5: Remunerations

Section 1 – Board leadership and purpose- The principles which are being contained in this
section include the role of the board is to promote long term sustainability of the firm and
enhancing the value for the shareholders. The board as per this code is required to establish the
company's purpose, values etc. and all the directors of the organisation are required to act with
integrity. The board is required to meet the objectives of the organisation by providing with the
resources required. The board should establish the framework of prudent and effective controls.
It is required that board should ensure that the workforce policies and practices are consistent
with the companies’ values in order to support the long term success of firm.
Section 2: Division of responsibility- The principles which are being set out in this section for
the compliance of the corporate governance which includes. The chair leads the board and is
responsible for its overall effectiveness in directing the company. The board should include the
combination of executive and non- executive directors. Moreover, there should be clear division
of the responsibilities between the leadership of board and the executive leadership. it is essential
that the non-executive directors should have sufficient time to meet their board responsibility.
Section 3: Composition, succession and Evaluation- The principles which are contained in
this section of the corporate governance code which include that It is required to have the
appointment of the board in formal, rigorous and transparent procedure. Also, it is required that
the appointment and succession plan should be based on the merit and objective. It is essential to
have skills, knowledge am experience for the board and committees. In to context to annual
evaluation the board is required to consider its composition.
Section 4 – Audit, Risk and Internal control- It is required to have the effective internal
control for the good corporate governance. The code provided with the principles which can
assist the companies in implementing the effective internal control. They consist of The board of
the company is required to establish the formal and transparent policies to ensure the
effectiveness of internal and external audit function. It is required to disclose the true and fair
position of the organisation in the financial statement. It is required that the board should develop
procedure to manage risk.