Presentation on

Development of Corporate
Governance Codes

Co urse Co nducto r: Dr. Ara binda Sa ha

Pro fesso r
Dep t. o f Acco u n tin g an d In fo rmatio n Sy stems
ISLAMIC UNIVER SITY, Ku sh tia

M a d e b y. S h o h i d u l I s l a m
 Presentation on
Development of Corporate
Governance Codes

Co urse Co nducto r : Dr. Arab o n d a Sah a

Pro fesso r
Dep t. o f Acco u n tin g an d In fo rmatio n Sy stems
ISLAMIC UNIVER SITY, KUSHTIA

M a d e b y. S h o h i d u l I s l a m
 Development of corporate Governance Codes

Presented by: Imran Hossain

 Period when was the code of corporate governance introduced

In some ways, the concept had existed since the dawn of modern corporations
around the 17th century, when European powers began to expand their dominance
worldwide.
In other ways, corporate governance is new because of the modern idea only
emerged in the latter part of the 20th century.
The code of corporate governance was fully launched in 1998 and was the first to
include the "comply or explain“ concept.
Elsewhere in Europe, attention began to fall on corporate governance in the early
2000s.
In Bangladesh, the code was first issued in 2003.since there Ha
have been three revision 2005,2013 &2018.

Presented by: Imran Hossain

 Corporate governance & Limitations of corporate governance code
In a basic sense, corporate governance refers to the way in which a business operates.

Limitations are as follows;

 Separation of management and it’s owners.
 Illegal insiders trending’s
 Misleading reports
 Regulations costs.

The First corporate governance code in the world;

The cadbury code: the cadbury was the first corporate governance code in the world and the
recommendations were focus on the control and reporting function of boards and role of
auditors.

Presented by: Imran Hossain

 Features of Corporate governance

Corporate governance consist of 5 basic features. They are given below;

 Accountability  Responsibility
 Transparency  Managing risk.
 Fairness
Is corporate governance code is mandatory?
Company do not have comply with the code, but they must state in their annual corporate
governance reports whether they comply with the code provisions, identify any areas of non-
compliance and explain the reasons for non-compliance.

King code principle;

The philosophy of the code consists of the three key elements of leadership, sustainability
and good corporate citizenship. It views good governance as essentially being effective,
ethical leadership.

Presented by: Imran Hossain

 Principles of the code of good governance

 Participatory
 Consistent with the rule of law
 Transparent
 Responsive
 Consensus-oriented
 Equitable and inclusive
 Effective and efficient
 Accountable

King code principle 7

The governing body should comprise the appropriate balance of knowledge, skills, experience,
diversity and independence for it to discharge it’s governance role and responsibilities
objectively and effectively.

Presented by: Imran Hossain

 Cadbury report 1992

The Cadbury Report 1992 is a report in the UK

that focused on corporate governance. It aimed
to improve transparency and accountability in
Adrian Cabury
companies.

Presented by: Md. Dedarul

 Aim of Cadbury report
The primary aim of the Cadbury Report, published in 1992, was to improve corporate
governance in the United Kingdom. It sought to address concerns about corporate ethics,
accountability, and transparency in the wake of various corporate scandals. Specifically, the
report aimed to:
 Enhance transparency
 Strengthen accountability
 Promote responsible behavior
 Improve shareholder relations
 Establish best practices

Presented by: Md. Dedarul

 Objectives of Cadbury Report
i. Transparency: To enhance transparency in corporate financial reporting and operations,
making it easier for shareholders and stakeholders to understand a company's activities.
ii. Accountability: To strengthen accountability by recommending that companies clearly
define the roles and responsibilities of their directors, ensuring they are accountable for their
actions.
iii. Independent Oversight: To promote the role of independent non-executive directors who
could provide unbiased oversight and act as a check on the actions of the executive
directors and management.
iv. Ethical Behavior: To encourage ethical behavior and responsible management,
emphasizing that companies should act in the best interests of their shareholders and the
wider public.
v. Best Practices: To establish best practices for corporate governance that companies
should follow, providing a framework for ethical and effective governance.

Presented by: Md. Dedarul

 Importance of Cadbury report
The Cadbury Report, published in 1992, holds significant importance in the field of corporate
governance for several reasons:
i. Independent Directors: The report advocated for the inclusion of independent non-executive
directors on boards, which has become a standard practice in corporate governance to provide
impartial oversight.
ii. Global Influence: The Cadbury Report's recommendations had a ripple effect beyond the UK,
influencing corporate governance practices in other countries and regions, leading to greater
international convergence in governance standards.
iii. Ethical Behavior: It underscored the significance of ethical behavior and responsible
management, setting the tone for corporate social responsibility and sustainability initiatives.
iv. Restored Public Trust: Following corporate scandals of the time, the Cadbury Report
contributed to restoring public trust in the corporate sector by setting out guidelines for
companies to operate more responsibly.
v. Subsequent Revisions: The Cadbury Report paved the way for subsequent reports and
guidelines, including the Higgs Report and the UK Corporate Governance Code, which built upon
its principles and continued to refine corporate governance standards.

Presented by: Md. Dedarul

 Strategy that Cadbury follows
i. Product Innovation: Cadbury regularly introduces new products and flavors to keep its
product portfolio fresh and appealing to consumers. This often includes limited-edition or
seasonal products.
ii. Marketing and Branding: Cadbury places a strong emphasis on marketing and branding to
maintain and strengthen its brand image. They run advertising campaigns, engage in
partnerships, and promote their products through various channels.
iii. Global Expansion: Cadbury operates in numerous countries worldwide and seeks
opportunities for international growth. They adapt their products to cater to local preferences
and consumer tastes.
iv. CSR and Sustainability: Like many large companies, Cadbury focuses on corporate social
responsibility (CSR) and sustainability. This may involve initiatives related to environmental
sustainability and responsible sourcing of ingredients.
v. Diversification: Cadbury diversifies its product offerings to include a wide range of
confectionery and snack items, ensuring they cater to a broad customer base.

Presented by: Md. Dedarul

 What is the Cadbury code of governance

The Code includes the provisions that non-executive directors should

be appointed for specified terms and reappointment should not be
automatic, that such directors should be selected through a formal
process, and that both their selection and their appointment should be a
matter for the board as a whole.

Presented by: Naim Hossain

 What makes Cadbury so successful

Cadbury, the iconic British confectionery brand, has been delighting

chocolate lovers for over a century. A significant factor contributing to
their success is their astute marketing strategy.
 Building a Strong Brand Identity
 Emotional Storytelling
 Engaging Social Media Presence
 Seasonal and Limited Edition Products

Presented by: Naim Hossain

 What is the conclusion of Cadbury case study ?

In conclusion, Cadbury is facing competition for market share.

Therefore, evaluate and review is required when implementing
administration and marketing activities based on its strategic plan. The
organization has to establish some objectives underpinned by a series
of activities and evaluated standards for evaluate and review. For
Cadbury, it has responsibility to understand customers and
shareholders’ expectations and should be a responsible company.
Through its strategy plan, it realizes its purposes set. Also, it can review
and evaluate all strategies by combining the customer feedback and
staff’s performance in line with the changing market.

Presented by: Naim Hossain

 HISTORY OF GREENBURY REPORT

The Greenbury Report is a UK Corporate Governance Report.

The Greenbury Committee was set up in January 1995 by the
Confederation of Business Industry (CBI), the UK’s top
business lobbying organization. It was chaired by Sir Richard
Greenbury, who was the chairman and chief executive of
Marks & Spencer at the time. Its main focus was to examine
the remuneration of directors in large public companies, and it
Richard Greenbury reported its findings and proposals in July 1995.

In Fact It was one of the first comprehensive governance

codes directly addressing executive and director remuneration.

Presented by: Nahid Hasan

 Purposes of Greenbury Report

The Main purpose of Greenbury Report to identify good practice in

determining directors' remuneration and to provide a code of practice
for UK PLCs. Besides This It is response to public concerns over
recently privatized public utilities and the salaries and bonuses earned
by executives, while they implemented job cuts, and service price
increased .

Presented by: Nahid Hasan

 Major recommendations of the Greenbury report

The Greenbury Report recommended an independent remuneration

committee, linking executive pay to corporate financial and operational
performance measures, and increased the requirements for disclosure
and transparency on directors' remuneration.

Presented by: Nahid Hasan

 The Greenbury committee, (1995)

This committee was set up in January 1995 to identify good practices

by the Confederation of British Industry (CBI) in determining directors’
remuneration and to prepare a code of such practices for use by public
limited companies of the United Kingdom.

Presented by: Nahid Hasan

 Principles and Summary of Greenbury committee
 It is aimed to provide an answer to the general concerns about the
accountability and level of directors’ pay.
 Argued against statutory control and for strengthening accountability by
the proper allocation of responsibilities.
 The proper reporting to shareholders and greater transparency in the
process.
Summary
It stressed the importance of a remuneration committee of non-
executive directors, the provision of information on remuneration policy
in the annual report and accounts, and the restriction of notice and
contract periods to less than one year.
Presented by: Nahid Hasan
 HAMPEL REPORT (1998)

The Hampel report was designed to be a revision of the

corporate governance system in the United Kingdom in
January 1998. Hampel found that there was no need for
a revolution in the UK corporate governance system. The
Report aimed to combine, harmonise and clarify the
Cadbury and Greenbury recommendations.

Presented by: Joydeb Ray

 What is the role of Hampel committee?

The Hampel Committee's remit is to promote high standards

of corporate governance in the interests of investor protection
and top reserve and enhance the standing of companies
listed on the Stock Exchange.

Presented by: Joydeb Ray

 Why was the Hampel report created?

The primary reasons for its creation were to enhance

corporate governance standards, improve transparency, and
restore investor confidence in the wake of corporate scandals
and failures in the 1990s. The report provided
recommendations and guidelines for corporate boards and
companies to strengthen their governance practices.

Presented by: Joydeb Ray

 What are the Recommendations made by the Hampel committee ?

The recommendations made by the Hampel committee are given below:

i. A Code of Best Practice
ii. Non-Executive Directors
iii. Chairman and Chief Executive Roles
iv. Board Effectiveness
v. Audit Committees

Summary of Hampel report :

The Hampel Report's recommendations aimed to enhance corporate governance,
promote transparency, and rebuild investor confidence in UK companies. These
principles became the foundation for subsequent developments in corporate
governance, including the UK Corporate Governance Code.

Presented by: Joydeb Ray

 TURNBULL GUIDANCE(1999)

The Turnbull Report was first published in 1999

and set out best practice on internal control for
UK listed companies.

Presented by: Shariful Islam

 What is the Turnbull code for corporate governance?

The Turnbull guidance on the Combined Code on Corporate

Governance requires listed companies to have robust
systems of internal control, covering not just 'narrow' financial
risks but also risks relating to the environment, business
reputation and health and safety.

Presented by: Shariful Islam

 What is Turnbull committee?

Turnbull Guidance is the former name of the UK Financial

Reporting Council(FRC)'s Internal Control: Guidance to
Director, now integrated within the FRC's Risk Management,
Internal Control and Related Financial and Business
Reporting.

Presented by: Shariful Islam

 What is the purpose of the Turnbull Report?

The report informed directors of their obligations under the

Combined Code with regard to keeping good "internal
controls" in their companies, or having good audits and
checks to ensure the quality of financial reporting and catch
any fraud before it becomes a problem.

Presented by: Shariful Islam

 What is the Turnbull Report for internal control?

The Turnbull Report's guidance required companies to report

whether the board had reviewed the system of internal
control and risk management, and encouraged, but did not
require, the board to express an opinion on the effectiveness
of the system.

Presented by: Shariful Islam

 Higgs Review

In April 2002 the Government commissioned Derek Higgs

to undertake an independent review of the role and
effectiveness of nonexecutive directors. It was published
on Monday 20 January 2003.
It follows the existing framework of corporate governance
which began with the publication of the Cadbury report
followed by the Greenbury and Hampel reports, all of
which were combined to form the Combined Code.

Presented by: Shohidul Islam

 Principal recommendations of the board
Half of the Board, excluding the chairman, should be "independent" non
executive director.
A non-exclusive director is to be considered independent when the Board
determines he is independent in character and judgment and where there are
no relationships or circumstances which might affect that director’s judgement.
A director will not be independent if he:-
 has been an employee of the company within the last five years;
 has had a material business relationship with the company within the last three years;
 receives remuneration from the company beyond the non-executive director’s fee;
 has close family ties or cross-directorships;
 is a significant shareholder or has served on the Board for more than ten years.

Presented by: Shohidul Islam

 Role of the non-executive director

The Higgs review does not propose to introduce a legal distinction between
the duties and responsibilities of executive directors and non-executive
directors. however, a clarification of the role of a nonexecutive director was
viewed as being useful. The role is defined under the following headings:
 Strategy (to constructively challenge and contribute to the development of a company’s
strategy),
 Performance (to scrutinize and report on the performance of management),
 Risk (to be satisfied with the reliability of financial information)
 People (to have responsibility for determining appropriate levels of remuneration for
executive directors)

Presented by: Shohidul Islam

Presented by: Shohidul Islam
 The Smith Report(2002)

The Smith Report, officially known as the "Smith

Guidance on Audit Committees," was a report on
corporate governance submitted to the UK government in
2003. It was authored by Sir Robert Smith and
commissioned in the wake of the high-profile corporate
scandals involving Enron and Arthur Andersen in the
Robert Smith
United States in 2002. The report aimed to address
concerns about the independence and effectiveness of
auditors and audit committees in ensuring the integrity of
financial reporting and corporate governance.

Presented by: Masud Rana

 What was the purpose of the Smith Report

The Smith Report aimed to restore trust in financial reporting and

auditing by promoting greater transparency, independence, and
accountability in the corporate governance and auditing processes. It
had a significant impact on corporate governance practices in the UK
and contributed to the ongoing evolution of global corporate governance
standards.

Presented by: Masud Rana

 What are the recommendations of Smith Report (2002)?

Its recommendations sought to enhance transparency, accountability,

and the integrity of financial reporting in the aftermath of major
corporate scandals, such as Enron and Arthur Andersen. Many of these
recommendations have since become part of the corporate governance
framework in the UK and have influenced similar efforts globally to
strengthen auditor independence and oversight

Presented by: Masud Rana

 Sarbanes-Oxley Act (2002)
The Sarbanes-Oxley Act of 2002 is a federal law that established sweeping
auditing and financial regulations for public companies. Lawmakers created
the legislation to help protect shareholders, employees and the public from
accounting errors and fraudulent financial practices.
Example of the Sarbanes-Oxley Act
SOX established a criminal charge for conspiring to committing Securities
fraud. It also increased the criminal and civil penalties for committing
securities and SOX provides additional protection against discrimination for
those reporting conduct that violates the securities laws protection

Presented by: Masud Rana

 What is under the Sarbanes-Oxley Act of 2002?

Sarbanes-Oxley Act of 2002

Title 1: Public Company Accounting Oversight Board - Establishes
the Public Company Accounting Oversight Board (Board) to:
 Oversee the audit of public companies that are subject to the
securities laws.
 Establish audit report standards and rules.
 Inspect, investigate, and Enforcement Registration Annual Reporting.

Presented by: Masud Rana

 NYSE Corporate Governance Rules (2003)

Presented by: Miraj Hossain

 What are the requirement for the code of conduct?

Honest and ethical conduct, including fair dealing and the ethical
handling of actual or apparent conflicts of interest; • Full, fair, accurate,
timely and understandable disclosure; • Compliance with applicable
governmental laws, rules and regulations

Presented by: Miraj Hossain

 What is the NYSE rule 803 and 78?

NYSE rule 803

Rule 803 requires that all members of the audit committee be
independent and defines independence

NYSE rule 78
Exchange rules such as NYSE Rule 78 and certain laws such as the
Commodity Exchange Act prohibit these market makers from collusively
exchanging securities among each other.

Presented by: Miraj Hossain

 What are the NYSE rules for corporate governance?

NYSE rules require that listed companies have a nomination/corporate

governance committee and a compensation committee composed
entirely of independent directors and governed by a written charter
addressing the committee's required purpose and detailing its required
responsibilities.

Presented by: Miraj Hossain

 Chandra Report (2002)

The Naresh Chandra Committee was appointed

as a high level committee to examine various
corporate governance issues by the Department
Naresh Chandra of Company Affairs on 21 August, 2002.

Presented by: Swakshar

 What is the Chandra Committee on Auditing and governance?

The primary objective of this committee was to scrutinize and recommend

radical amendments, if necessary, for the laws governing auditor-client
relationships and the role of independent directors. The theme of the report
was to enunciate additional guidelines that can elevate corporate
governance in both theory and practice.

Presented by: Swakshar

 What are the Recommendations of Chandra Report (2002)?

The committee's recommendations mainly concerned issues such as these:

1. the auditor-company relationship;

2. disqualifications for audit assignments;
3. list of prohibited non-audit services;
4. independence standards for consulting:
5. compulsory audit partner rotation;
6. auditor's disclosure of;
7. appointment of auditor.

Presented by: Swakshar

 BEI Code of corporate Governance (2004)

In March 2004 Bangladesh Enterprise Institute (BEI) published code

of corporate governance for Bangladesh Suited for private sectors,
financial institutions state Owned Enterpriser (SOEs) and NGOs.

Presented by: Swakshar

 What is SEC Code of corporate governance?

The Code of Corporate Governance for publicly listed companies is the first
of a series of Codes that is intended to cover all types of corporations in the
Philippines under supervision of the Securities and Exchange Commission
(SEC).
How many principles does the SEC Code of corporate governance
have?
The Code promotes 16 principles across different corporate governance
subjects, namely: board's governance responsibilities, disclosure and
transparency, internal control and risk management frameworks, cultivating
a synergic relationship with shareholders/members, and duties to
stakeholders.

Presented by: Swakshar

 What are the SEC codes?

An SEC code is a three letter code that describes how a payment was
authorized by the consumer or business receiving an ACH transaction. SEC
stands for 'Standard Entry Class'. SEC codes are defined and maintained
by NACHA, the governing body for the ACH network.

Presented by: Swakshar