Corporate Governance: Duty to Comply with UK Code

Corporate Governance

Table of Contents
INTRODUCTION.................................................................................................................................3
MAIN BODY........................................................................................................................................3
Company’s duty to comply with UK corporate governance..............................................................3
Financial governance issues...............................................................................................................7
CONCLUSION.....................................................................................................................................9
REFERENCES....................................................................................................................................11
INTRODUCTION
Corporate governance is defined as the collection of mechanism, processes and
relationship by which corporations with other stakeholders involved in the business can be

controlled and operated. This report is based on the case study of Carillion Plc Company in
respect to its corporate governance aspects. The organisation was established in the year
1999. Tarmac group is the predecessor of the company. Headquarter of the company is
established in United Kingdom. Company is engaged in conducting operations in
construction civil engineering and facilities management functions. Henceforth, report will
emphasis on the company’s duty to comply with the corporate governance code based on the
United Kingdom. In this report code related to the financial governance applicable on
company will be specifically discuss. Different financial tools and ratios like gearing ratio,
remuneration, and profit after tax and gearing ratio will be discussed in this report. Different
aspects related to the corporate governance and financial governance of company will be
discussed in this project.
MAIN BODY
Company’s duty to comply with UK corporate governance
Corporate governance is the system that controls the company’s functions. Boards of
director in every company are solely responsible for implementing corporate governance
codes over the organisation. Shareholders also play a crucial role in the corporate governance
in order to appoint directors of company and also the auditors for controlling the financial
authenticity of the company and also in respect to satisfy themselves that the corporate
governance structure has been in the right place in the organization structure of company
(Dzomira, 2017). The code and conducts of corporate governance ensure that it is the
responsibility of the board of directors of company to setting up strategic aim of the
company, provide leadership to company, supervising the entire business activity and to
report the shareholders of company about the company’s financial position time to time. In
Carillion Plc Company shareholders of company are very much active ad aware in respect to
the professional code and conducts of the corporate governance. It becomes essential that
shareholders of company must be aware in respect to the corporate governance code and
conducts than only they can ensure the proper control over the company’s operations
otherwise management and leadership of company may influence the knowledge of the
shareholders in respect to the business operations of company.

In context to the financial governance different codes are applicable over the
organisation as a part of corporate governance practices. Following are the codes that will be
applicable over the Carillion Plc Company in respect to the financial governance.
Act within power
Section 171 has allowed acting within the power as a par of the corporate governance
practice. This section provides powers to the management and directors to implement all such
practices related to company’s operations to achieve the growth and success for the
company’s business (Christensen and Hearson, 2019). This code also specify that each
director and leaders and employee must be work within the power he is associated with as a
part of the designated position role in Carillion Plc Company so that proper hierarchy of
company can be maintained. The organisation has overlapped this section many times when it
goes into liquidation and in many other cases.
Common law
Corporate governance also implements common law over the organisation. This
involve to exercise skill and care, act in the best interest of company, act within the power in
company, not to fetter direction, not to make secret profits and other related implications as a
part of the corporate governance function in company. All common laws allow company to
work in the best of the capacity to achieve the higher level of financial stability and
profitability against the operations company undertakes (Paech, 2017). Not to make secret
profit is the major implications associated with the common that associated with the financial
governance in the company. This code involves that all directors and the individuals involved
in formation of company must not make any secret profits in against to the services they are
granting to company. It is illegal to make any kind of secret profit against the services deliver
to the company in any professional capacity at the organisation. Many professionals like
chartered accountant, legal advisors, company secretary and other associated designated
officers in Carillion Plc Company serves professional services in company. It is illegal that
they make any kind of secret profits against the services they deliver to the organisation.
Company has may times been involved in practices like showing fake profits to take extra
advantages. These all actions of company is unfavourable as per the companies act.
The listing rule