They endorse organization plan, come up with directional policy, appoint supervise and pay senior executives they sure transparency of the firm to its authorities and owners. (McCahery, Moreland, Reinboag, Raaijmakers. 2002, 2)
Corporate governance's high standards, compliance, effective operations and administration are maintained by a trained company secretary who is supposed to be a high ranking professional. It has a set of relationships between the board, company's management and its shareholder. Corporate governance provides a structure by which the goals of the company are set, how they will be implemented and achieved and a monitoring performance system is put in place. The very essential elements of corporate governance are accountability framework and strategic decision making systems. Corporate Governance in UK is based on combination of voluntary codes which have gone through a sequence of amendments over the past they include (McCahery, MoerLand, Reinboag, Raaijmakers. 2002, 176)
Hampel committee: This committee was formed in 1996 so as to review the Cadbury code, if it was implemented, the roles given to executive directors and also review the Greenbury Committee recommendations in their report. Lastly it was to address the role of auditors and shareholders in Corporate Governance.
The Combined Code: This was as a result of the Hampel Committee put together the work of the other committees and also its own in 1998 to come up with this code. This code was as a result of 10 years of gradual improvement.
Comply or Explain: Comply or Explain was a follow up of the combined code since it did not have legislative force. It was a list of rules that companies were meant to follow and disclose in their annual report if they were following them, and if not they were meant to give a reason why.
Post Enron Initiative: The UK government was not ready to be complacent after the accounting scandal in the USA. Though their systems were different they were afraid that the same could happen the UK responded through Post Enron Initiative.
Company Law review: Company Law is concerned with legal rules in detail that intend to support the competitive financial system, unlike the Combined Code that deals with best practice.
Operating and financial review: is a form of a revised company law that seeks to address irregularities in the reporting rules by redefining director's roles, wider stakeholder interest whereas maintaining their legal responsibility to shareholders only.
A Holistic Approach to Regulation: Addresses the pillars of corporate governance this are the executives, NEDs, internal and external auditors, and senior managing board committees.
The decision rights in corporations are delegated by the shareholders to the managers for them to act in best principle interest. Shareholders lose control to the managers by separation of control from ownership. The result of separation on both parties a system of corporate governance controls is put in place. It helps align the ideas of the shareholders and those of the managers. (Colgate,2006, 203, 220)