Throughout the everyday operation of a company, pitfalls can arise for directors and other company officers that entail consequences ranging from reputational damage to, in rare cases, criminal prosecution. In recent years, regulatory compliance has become increasingly complex with added layers provided by EU directives, which, despite the Brexit vote of 2016, will continue to apply for the time being. As a result, it is vital that a company’s senior management holds a sufficient and ongoing grasp of this constantly changing area of guidelines and law. It is appropriate when any corporate governance matters arise to contact a solicitor who specialises in this area of the law. At Lewis Nedas, we routinely advise corporate clients on all matter relating to corporate governance. Contact us today for proactive, tactical legal advice.
What common operations fall under the term corporate governance?
In the UK, company “best practices” are determined by the UK Corporate Governance Code, published by the Financial Reporting Council (FRC). The FRC often issues further guidelines. The Code covers nearly all aspects of corporate governance, and for listed UK companies it follows a “comply or explain” model where departures from FRC best practices have to be justified as following the company’s best interests.
Some of the most important current issues facing management through either binding law or regulation include executive pay, reporting (including non-financial), shareholder relationships and risk management.
In recent years, rates of executive pay have come under increased scrutiny, with questions being raised over whether they are in the best interests of the company concerned. As a result, pressure has mounted, fronted by organisations such as the Investment Association, upon companies to review their remuneration structures and increase transparency.
Reporting (including non-financial)
Regulations promulgated under the Equality Act 2010 have put in place compulsory gender pay gap reporting for companies with 250 employees and over. Over the past few years, EU Directives, incorporated into UK domestic law, have created obligations for certain large listed and unlisted companies to disclose in annual reports their policies with regards to the environment, anti-corruption and board diversity. Lastly, the Modern Slavery Act 2015 obliges large companies to provide online statements pertaining to human trafficking.
Relationship with shareholders
The Companies Act imposes disclosure requirements upon management to shareholders, and in some cases to the wider public, in order to render their voting and appointment powers more effective for the company’s interest and promote accountability.
The UK Corporate Governance Code requires listed companies to implement risk management and financial controls subject to annual review by an auditor.
What are the potential criminal sanctions?
Suspected money laundering, bribery, fraud, tax evasion, insider dealing and anti-competitive conduct can be met with potential criminal investigation and prosecution of directors and senior management. Pursuant to securities laws, public companies trading on the UK market are subject to criminal investigation where found to have made false or misleading statements.
Contact our Corporate Governance Solicitors in Mayfair and throughout London
Lewis Nedas' solicitors hold extensive experience in matters concerning FCA guideline compliance, in addition to over 35 yearsof practice in corporate criminal issues such as money laundering, fraud, bribery, regulatory and competition law.