This book is now in its fourth edition. In developing the handbook, the author has taken the general approach to regard the board as being at the heart of corporate governance, so that corporate governance is concerned with both the accountability of the board to the stakeholders and the latter’s exercise of external control. The book also emphasises corporate governance in relation to public companies.

Corporate Governance Handbook is divided into 10 parts. Part A is concerned with effective boards and directors. It looks at the importance of quality information for the board; schedule of matters reserved for the board; delegation of authority guidelines; tracking shareholder value; the role of the company secretary in plcs; and board effectiveness reviews. There is a useful chapter on being a director; the qualifications required to be a director; joining the board; the issue of “independence”; resigning a directorship and practical implications; board committees and deciding which committees to join; board policies and policy statements.

Part B deals with corporate governance best practice with a definition of “corporate governance” and “the board”; the role of non-executive directors; the 2006 Combined Code including background to the Code with a review of Turnbull and Higgs. It also looks at suggestions for good practice from the Higgs Report. An interesting chapter concerns an analysis of corporate governance under the Companies Act 2006 with a consideration of the codification of directors’ duties. This chapter is slightly disappointing as a detailed analysis of the section of codification of directors’ duties would have been required. Part B also considers the international dimensions.

Part C addresses the issue of remuneration. It looks at remuneration packages; the remuneration disclosure requirements; best practice guidance; the remuneration committee including its role; total remuneration package; and communicating directors’ pay.

Part D addresses audit committees with chapters on the audit committee responsibilities; conduct of audit committee business; audit committees and the Sarbanes-Oxley Act in the United Kingdom; and the role of risk management vis-à-vis audit committees.

Part E looks at risk management and internal control and its relationship to internal audit; the reporting of internal control and the Turnbull Report; and fraud.

Part F considers corporate social responsibility and business ethics. It examines the concept also in relation to the environment; the relationship between corporate governance and corporate social responsibility is also examined.

Part G addresses the issue of external oversight with respect of external control; external audit; stakeholders and reputational management; and narrative reporting.

Part H considers the corporate governance journey with a brief analysis of corporate governance history; UK corporate governance listing requirements; laws and codes of best practice; and the various committees charged to examine corporate governance in the United Kingdom. It would have been more logical to have placed this as the first section in the book rather than in the middle of the book.

Part J concerns public sector corporate governance with a consideration of corporate governance in Whitehall and Westminster; the Nolan Principles; and other public sectors.

Finally, the book includes Appendices. These include a bibliography of UK reports and books; contact details; corporate governance special interest groups; research centres in corporate governance; websites on corporate governance; and terms of reference of board committees.

This book is a practical guide to corporate governance and would have a wide appeal. It is up to date and well presented in terms of style and structure. There are valuable checklists in places though more checklists would have been useful. More analysis of the Companies Act 2006 vis-à-vis corporate governance is required as well as case law in this area.

Dr Saleem Sheikh
Solicitor, Visiting Senior Research Fellow
University of East London
LCCLR 2008

The question of corporate governance is becoming a progressively hotter topic. Certainly in the last 20 years at least since the publication of the Cadbury Code on Corporate Governance published in 1992 much attention has been focused on the subject. The upshot is the so-called Combined Code which came out in 1998. The Combined Code was originally an appendix to the Stock Exchange Listing Rules, being the so-called Yellow Book, and is now an appendix to the Financial Services Authority’s Purple Book.

The Combined Code is reproduced in this book and is essentially a list of desirable objectives which every listed company should aspire to. The topics include perhaps self-evidently a proper board, dealing openly and fairly with levels of remuneration on a cost-effective and proportional basis as well as other aspects of corporate housekeeping such as relations with shareholders including institutional shareholders, audit and accountability questions.

The book is already in its fourth edition. Although it is called a handbook, it contains some 1,310 pages. To some extent the reader has to grapple with the layout since the foreword says little about how the book is in fact organised. Part A deals with boards and directors, Part B with corporate governance best practice, Part C with remuneration, Part D with audit committees, Part E with risk management, Part F with corporate social responsibility and the remaining parts, namely Parts G, H and J, with external oversight, corporate governance frameworks (a reference to the various codes culminating in the Combined Code just referred to) and finally public sector corporate governance.

There are abundant appendices including a very detailed bibliography, and reference to the various special interest groups which have to do with corporate governance generally and to academic and other centres which specialise in the subject.

The book is not in any real sense a legal textbook. It is very much a practical guidebook collecting all the various original materials and commentaries to do with the above subjects. The table of statutes is very short, reflecting this reality as well as the fact that only three legal authorities seem to be referred to throughout the whole work. The book, however, is written by numerous specialists including Sir Adrian Cadbury himself. Unfortunately a reader has to go through the entire text to find the passages which specialist contributors have provided to see something about their personal history and specialised areas. It might have been helpful to have set this out in a separate section at the beginning of the work.

The style is very much a spare one. Perhaps this is in keeping with the condensed nature of the Code itself. The commentary varies between setting out bullet points, sometimes in diagrammatic form relating to the topics being considered, and extensive and more discursive sections where the authors and contributors have set out their more considered thoughts on a particular subject. The overall effect is admittedly suitable for what is after all, as said above, a handbook, but some overall guidance to the formal structure would have been welcomed either at the outset of the work or in a separate chapter.

Matters are to some extent assisted by the index but, given the sheer size and scope of the work, the index which is provided might gain even more usefulness from being expanded.

The overall effect is that of a patchwork and the reader will take some time to acquaint himself with the layout unless he is already familiar with the previous editions. Clearly, familiarity with the subject will help. This can be seen from the description of the parts which has been set out above.

Overall the effect is that of a distinctly down-to-earth approach: what one could call a “how to” approach, e.g. how to join a board and/or deal with auditors, etc. Certainly the bullet point approach which has been referred to is more conducive to a “how to” guide than any form of more reflective commentary on the areas in question. If one is not familiar with the subject (and this may well be true of many lawyers) then there is a need to go through the whole work in some way to acquaint oneself with the overall subject area and to fasten on those areas which are of particular concern. Matters are not helped by a very detailed breakdown within individual chapters including a numbering system which is somewhat bizarre since there seems to be no correlation between the subsections within a particular paragraph, e.g. B2.4 (which references are listed in the top corners of each page), with the contents of the text themselves so that a particular number will not be necessarily reprinted within the body of the page. This is confusing and surely could benefit from a fresh editorial approach in the next edition. It is particularly confusing since the index which as otherwise indicated is relatively complete refers to subsections of each part, e.g. C2.2, etc., and not to page numbers which are found at the bottom of each page.

A particular virtue of the book, however, is its international and comparative content. There are valuable discussions of the relevant US and Commonwealth positions which add to the work’s overall practical slant. These entries and contributions will be of immense value to companies with presences in those other jurisdictions.

It can also be said, as the book itself declares, that there is what can justifiably be called an “authoritative” coverage of the principles and policies underlying remuneration packages. This is contained within Part C, which is full of practical examples which need to be navigated quite carefully. However, it is fair to say that this part is perhaps more easily read and understood, at least at first blush, than some of the other parts. There are checklists, e.g. as to the requirement for any remuneration package, and there are passages dealing with so-called best practice guidance giving practical examples of such guidance to help and/or educate investors and their intermediaries and which generally act as useful templates. The same observations can be made with regard to the treatment afforded by the book to the growing responsibilities of audit committees. In this latter respect there is the additional impact of a European Directive, the so-called 8th Directive. Not only are the relevant Articles of the Directive reproduced in the book but there is a good commentary on the legislation as a whole. This same section also includes a commentary on the US perspective and the effects of Sarbanes-Oxley which is of particular value when set in the context of a comparison table showing how the Cadbury Code, the 1998 Combined Code and the 2003/2006 Combined Code respectively have addressed the auditors’ roles.

Yet another example of a flow chart or diagrammatic treatment that renders the book of overall practical value is the suggested mode for assisting in the assessment of a company’s audit by the company’s audit committee or committees.

Subject to the presentational reservations expressed above, this is a highly relevant practical guide to the subject. The principal caveat is that it is not really a book which professes to be a minute examination of the more academic aspects of the subject. However, this is not to denigrate its value and if some of the editorial comments made above are taken into account in the next edition this will be an invaluable hands-on guide to those concerned with this very important subject.

David Marks

JBL, 2008, Issue 6

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