Is comply or explain effective?
Using comply-or-explain effectively means that businesses can provide market- based solutions that are worked out between companies and their shareholders without the need for regulatory intervention. Nevertheless, comply-or-explain is not simply about having no requirements at all.
Why comply or explain?
The comply or explain principle stipulates that corporations should company with the Corporate Governance Code (also called Code) or explain reasons why they do not comply. Comply or explain essentially requires that companies hold true to good governance without being compelled by a regulatory body.
In what context comply or explain is to be used?
‘Comply or explain’ is especially important in giving companies flexibility to make the arrangements that suit their circumstances, rather focing them to adopt a one-size-fits-all approach, and then to explain to shareholders why those arrangements are appropriate.
What kind of approach does India follows for the enforcement of corporate governance norms?
Satyam resulted in India committing itself to a wholly mandatory approach to corporate governance, making it one of only a handful of countries to have adopted a ‘comply or else’ approach to the issue of how corporate governance is to be enforced.
What is comply or rule?
Comply or explain is a regulatory approach used in the United Kingdom, Germany, the Netherlands and other countries in the field of corporate governance and financial supervision. The purpose of “comply or explain” is to “let the market decide” whether a set of standards is appropriate for individual companies.
How does comply or explain work?
The “Comply or Explain” approach is characterized by voluntary compliance with the recommended provisions and mandatory disclosure: companies have to state in their annual reports whether they comply with the Code provisions, identify any areas of non-compliance, and explain the reasons in light of their own particular …
What is Cadbury committee report?
The Cadbury Report, titled Financial Aspects of Corporate Governance, is a report issued by “The Committee on the Financial Aspects of Corporate Governance” chaired by Adrian Cadbury that sets out recommendations on the arrangement of company boards and accounting systems to mitigate corporate governance risks and …
Is corporate governance a legal requirement?
The UK Corporate Governance Code is not law, therefore compliance is not compulsory. The FRC asks companies to ‘comply or explain’ – either follow the Code or explain why they do not. The Code speaks a lot of sense on how a company should be directed.
What is comply or else approach to corporate governance?
Under the comply-or-else approach the regulators prescribe a set of rules which all companies are required to comply with. These rules are generally introduced through legal statues. If a company does not comply with the rules then the company is liable to be penalized by the regulator.
What is apply and principle?
apply or explain approach simply means for example that where the Board of directors takes a decision that to follow a recommendation from the Code will not be in the best interest of the company; that such a Board may apply another practice or apply the recommendation differently, provided that the practice being …
When was comply or explain introduced?
Generally, at the heart of such an approach is the concept of ‘comply or explain. ‘ This concept originated in the UK with the Cadbury Report in 1992 and provides that a company is to comply with a set code of practice, but if it does not then it is to state that it does not and explain why it does not.
What is Narayan Murthy committee?
The committee on corporate governance set up by SEBI under the chairmanship of N.R. Narayana Murthy which submitted its report in February 2003 was yet another committee on the subject signifying the regulator’s anxiety to expeditiously promote corporate governance practices in Indian companies.
What is the difference between efficiency and effectiveness?
Findings – Effectiveness and efficiency are exclusive performance measures, which entities can use to assess their performance. Efficiency is oriented towards successful input transformation into outputs, where effectiveness measures how outputs interact with the economic and social environment.
What’s the difference between efficiency and strategy formulation?
Efficiency is to be maintained at the time of strategy implementation, whereas strategy formulation requires Effectiveness. Efficiency is measured in operations of the organisation, but Effectiveness of strategies is measured which are made by the organisation.
How is efficiency used to calculate performance and productivity?
Efficiency is also considered a parameter to calculate the performance and productivity by making comparisons between the budgeted output and the actual outputs produced with the fixed number of inputs. It is the ability to do things in a well-mannered way, to achieve the standard output.
Which is the efficient cause in our example?
The efficient cause in our example was the king’s assassination, which led to a revolution. See more on this here. Effectiveness is also a noun and is defined as the degree to which something is successful in producing a desired result. I am not sure of the effectiveness of that diet plan. His effectiveness as a public speaker is outstanding.