Corporate Governance

By Amr Azan

1.0 Introduction

Corporate government is one of those concepts that are considered extremely important in United Kingdom. For any organization to sustain its position in the long run and achieve considerable profits it is important to practice corporate governance in its operations particularly. It is because of this reason that United Kingdom has been seen highlighting the importance and standards for corporate governance repeatedly (Zabihollah, 2002). Oblige or justify was the central idea behind the corporate governance of UK when it first showed its existence back in 1992. Corporate governance has been defined as "Corporate governance is the system by which businesses are directed and controlled." (Cadbury Committee, 1992) This concept of corporate governance centralize and represents all the major day to day operations that demand effective monitoring such as scheduling the board, managing the board members and settling their issues, risk assessment and dealing with it, compensation plan of the employees and the relationship that exist between the shareholders can also be handled through this concept (Thomson, 2009).

For every organization it is important to have a set code of conduct and it should be implied on all the workers to abide on these code religiously. The shareholders of the organizations are responsible to provide explanation if the conduct of the organization and its employees are not up to the satisfactory level set by the organization for itself. In case of unjustified explanation of the act the shareholders have this authority to hire competent employees removing the previous inefficient directors. This is not an easy job however, as the shareholders are required to determine these code of conducts and make sure that each of their employees are not just well aware with them but are also trained in such a manner that they follow these line of actions (Thomson, 2009). Furthermore, it is the responsibility of shareholders to...