Learning Centre PAGE 14

news Update Autumn 2010

Different ApproA in corporAte Gov
Relevant to PaPeR P1

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ches ernAnce
Study tiPS: Despite some new additions to the Paper P1 Study Guide in June 2011, a substantial part of the Paper P1 syllabus continues to concern matters of corporate governance. Section A6 of the Paper P1 Study Guide requires to have knowledge of the different approaches to corporate governance, inter alia, the development of corporate governance codes in principles-based jurisdictions (A6(d)), the Sarbanes-Oxley Act (2002) as an example of a rules-based approach (A6(e)) and the objectives, content and limitations of corporate governance codes intended to apply to multiple national jurisdictions, namely the OECD principles of corporate governance (A6(f)). specification in something such as a code of best practice ... One thing is clear, though. Whatever the model, the public must know about it and about how it is operating in practice. Disclosure should be a central feature of any corporate governance regime. Shareholders, potential shareholders and the wider public are entitled to real, meaningful detail about the way the directors say they are carrying out their stewardship role. The annual report and, in these times, the company’s website are important forums for disclosure. Directors who take the fundamental notions of openness, integrity and accountability seriously …… will be well on the way to good corporate governance.” to US and non-US companies with a US listing. Some of the provisions of SOX are in direct conflict with provisions in the law or practices of other countries. In reality, this has led to some companies delisting from the NYSE and deterred other non-US companies from applying to be listed on the NYSE. The aims and objects of SOX are as follows2: • Restoring public confidence in the