The combined code (for listed companies)
In force for year ends ending after 30 December 1998
Summary
The Combined Code replaces and refines the earlier requirements of the Cadbury and Greenbury reports on corporate governance and directors' remuneration. The requirements are broadly similar but in one important respect - reporting on controls - there is effectively a major development in hand.
Key development - formal risk management procedures effectively mandatory
Whilst "Cadbury" had envisaged companies reporting on controls generally, the guidance which was then issued to clarify those requirements permitted, and indeed encouraged, companies to restrict their review of controls, and the disclosures relating to that review, to financial controls. Thus potentially more important matters relating to operational control were left outside the reporting framework.
The Combined Code persists with an emphasis on all controls, requiring listed companies to review their controls annually and stating that this review should "cover all controls, including financial, operational, compliance and risk management. "
We now have the guidance note on what listed companies have to do to comply with this requirement; the Turnbull committee has decided to meet the code head on. Accordingly, listed companies report
- that there is a risk management programme fully in place
- and how its effectiveness has been reviewed, or
- an explanation of what the company is doing to rectify any problem situation.
This website is intended for general guidance only. No responsibility for loss occasioned to any person acting as a result of any material in this publication can be accepted.
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