What are corporate governance codes?
Corporate governance codes or principles set forth rules for corporations in a regulatory context such as a national law or stock exchange listing. A pioneering example was the 1992 Code of Best Practice from the Committee on the Financial Aspects of Corporate Governance, in the United Kingdom, chaired by Sir Adrian Cadbury. The London Stock Exchange required all listed companies to disclose whether or not they conformed to the code, which had 19 recommendations regarding the role of boards, nonexecutive directors, executives, and regarding financial reporting and controls. Thanks in part to the personal ambassadorship of Sir Adrian Cadbury, the Cadbury code sparked similar initiatives around the world, including Canada (the Dey Report) and South Africa (the King Commission Report). The Cadbury code proposed separation of the chairman and CEO roles; majority of independent directors on audit, compensation, and governance committees; and independent communication between nonexecutive di
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