UK Corporate Governance Code

Produced by a committee chaired by Sir Adrian Cadbury, the Report was a response to major corporate scandals associated with governance failures in the UK.

The committee was formed in 1991 after Polly Peck, a major UK company, went insolvent after years of falsifying financial reports.

Initially limited to preventing financial fraud, when BCCI and Robert Maxwell scandals took place, Cadbury's remit was expanded to corporate governance generally.

Before long, a further committee chaired by chairman of Marks & Spencer Sir Richard Greenbury was set up as a 'study group' on executive compensation.

It added that, It rejected the idea that had been touted that the UK should follow the German two-tier board structure, or reforms in the EU Draft Fifth Directive on Company Law.

[7] A further mini-report was produced the following year by the Turnbull Committee which recommended directors be responsible for internal financial and auditing controls.

Paul Myners also completed two major reviews of the role of institutional investors for the Treasury, whose principles were also found in the Combined Code.

Shortly following the collapse of Northern Rock and the Financial Crisis, the Walker Review produced a report focused on the banking industry, but also with recommendations for all companies.

As part of their role as members of a unitary board, non-executive directors should constructively challenge and help develop proposals on strategy.

The board and its committees should have the appropriate balance of skills, experience, independence and knowledge of the company to enable them to discharge their respective duties and responsibilities effectively.

The board should establish formal and transparent arrangements for considering how they should apply the corporate reporting and risk management and internal control principles and for maintaining an appropriate relationship with the company's auditor.

An additional reason for a Code, was the original concern of the Cadbury Report, that companies faced with minimum standards in law would comply merely with the letter and not the spirit of the rules.