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WELCOME TO

OUR
PRESENTATION
FIN-5206 CORPORATE GOVERNANCE & RESTRUCTURING
ON
CADBURY REPORT
Presenting to:
Shaikh masrick hasan
assistant professor,
Department of finance,
Jagannath university..
Presented By
Salman Rahman
On behalf of the Group,
MBA (6th batch),
Department of Finance,
Jagannath University.
GROUP LIST

NAME ID
Md. Anisuzzaman Sarker M150203081
Sarowar Alam M150203082
Salman Rahman M150203084
Md. Shaiful Islam M150203088
Khalil-ur-Rahman M1502030101
CADBURY REPORT 1992
Failure of 1980s and early 1990s.
Setup in May 1991.
By the financial Reporting council the London stock exchange and accountancy
profession.
The Cadbury Report: titled Financial Aspects of Corporate Governance, is a
report of a committee chaired by Adrian Cadbury that sets out recommendations
on the arrangement of company boards and accounting systems to lessen
corporate governance risks and failures.
The report was published in 1992. The report's recommendations have been
adopted in varying degree by the European Union, the United States, the World,
and others.
CONTENT OF THE REPORT
Reviewing the structure and responsibility of BOD & recommending code of best
practice.
Considering role of auditor & addressing various recommendations to the
accounting profession.
Dealing with the rights and responsibility of share holder.
THE CODE OF BEST PRACTICES HAS BEEN
DIVIDED INTO FOUR SECTIONS, THEY ARE
Board of Directors.
Non-Executive Directors.
Executive Directors.
Reporting and Controls.
BOARD OF DIRECTORS
Regular meetings and full control-The board should meet
regularly, retain full and effective control over the company and
monitor the executive management.
Clearly accepted division of responsibilities-There should be a
clearly accepted division of responsibilities at the head of company,
which will ensure a balance of power and authority, such that no
one individual has unfettered powers of decision.
Include non-executive directors-The board should include non-
executive directors of sufficient caliber and number for their view to
carry significant weight in the boards decisions.
BOARD OF DIRECTORS
Formal schedule of matters specifically reserved to it-The board should
have a formal schedule of matters specifically reserved to it for decisions to
ensure that the direction and control of the company is firmly in its hands.
Agreed procedure for directors to take independent professional advice-
There should be an agreed procedure for directors in the furtherance of their
duties to take independent professional advice if necessary, at the companys
expenses.
Access to the advice and services of the company secretary-
All directors should have access to the advice and services of the company
secretary, who is responsible to the board for ensuring that board procedures
are followed and that applicable rules and regulations are complied with.
Any question of the removal of the company secretary should be a matter for
the board as a whole.
NON-EXECUTIVE DIRECTORS
Independent judgement- Non-executive directors should bring an
independent judgement to bear on issues of strategy, performance,
resources, including key appointments, and standards of conduct.
Independent of management and free from business
relationship-
The majority should be independent of management and free
from any business or other relationship which could materially
interfere with the exercise of their independent judgement, apart
from their fees and shareholding.
Their fees should reflect the time which they commit to the
company.
NON-EXECUTIVE DIRECTORS
Specific term-
Non-executive directors should be appointed for specific term.
Reappointment should not be automatic.
Selection through formal process-Non-executive directors
should be selected through a formal process and both this process
and their appointment should be a matter for the board as a whole.
THE EXECUTIVE DIRECTORS

Directors Service Contracts-They should not exceed three years


without the shareholders approval.
Full and Clear disclosure of emoluments-The salary or fees of
the directors should be properly disclosed including pension
contribution and those of the chairman as well.
Pay subject to remuneration committee-The pay of the
executive directors should be subject to the recommendations of
the remuneration committee made up of non-executive directors.
REPORTING AND CONTROLS

It is the boards duty to present a balanced and understandable


assessment of the companys position.
The board should ensure that an objective and professional
relationship is maintained with the auditors.
The board should establish an audit committee of at least three non-
executive directors with written terms of reference which deal
clearly with its authority and duties.
REPORTING AND CONTROLS

The directors should explain their responsibility for preparing the


accounts next to a statement by the auditors about their reporting
responsibilities.
The directors should report on the effectiveness of the companys
system of internal control.
The directors should report that the business is a going concern,
with supporting assumptions or qualifications as necessary.
THE MAJOR RECOMMENDATIONS MADE BY
THE COMMITTEE ARE AS FOLLOWS
A single person should not be vested with the decision making
power. i.e., the role of chairman and chief executive should be
separated clearly.
The Non-executive directors should act independently while giving
their judgment on issue of strategy, performance, allocation of
resources, and designing the code of conduct.
A majority of directors should be independent non- executive
directors, i.e., they should not have any financial interests in the
company.
The term of the Directors can be extended beyond three years only
after the prior approval of the shareholders.
THE MAJOR RECOMMENDATIONS MADE BY
THE COMMITTEE ARE AS FOLLOWS

A remuneration committee with majority of non- executive directors


should decide on the pay of the executive directors.
The interim company report should give the balance sheet
information and reviewed by the auditor.
The information regarding the audit fee should be made public and
there should be regular rotation of the auditors.
An objective and professional relationship with the auditors must be
ensured.0
It must be reported that a business is a growing concern.
THANK YOU