Kalhari- 16YACMD080

 The Cadbury Committee was set-up in May 1991 by

the Financial Reporting Council of the London
Stock Exchange.

 The committee published its report in December

1992.

 Adrian Cadbury the chairman of the Cadbury

committee.

 The report sets out recommendations on the

arrangement of company boards and accounting
systems to mitigate corporate governance risks
and failures.

 Reasons..
 Role of Board of Directors, duties of the
board and its compositions.
 Role of Non-Executive Directors.
 Dealing with their Remunerations.
 Addressing questions of financial reporting
and financial controls.
 The board should meet regularly.

 The board should include non-executive

directors of sufficient caliber.

 Alldirectors should have access to the advice

and services of the company secretary.
 Non-executive directors should bring an
independent judgment.

 Non-executive directors should be appointed

for specified terms.

 Non-executive directors should be selected

through a formal process.
 Itrecommend that future service contracts
should not exceed three years without
shareholders.

 The remuneration of directors should be both

fair and competitive.

 TheAnnual General Meeting provides the

opportunity for shareholders
 Itis the board’s duty to present an
assessment.

 Professional relationship is maintained with

the auditors.

 Establish an audit committee.

 Thedirectors should explain their
responsibility for preparing the accounts.

 The directors should report on the

effectiveness of the company’s system of
internal control.

 The directors should report that the business

is a going concern.
 A single person should not be vested with the
decision making power.

 The Non-executive directors should act

independently.

 A majority of directors should be independent

non- executive directors.

 The term of the Directors can be extended

beyond three years only after the prior approval
of the shareholders.
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.

 Itmust be reported that a business is a

growing concern.
Compliance with the Code of best Practice was
not enforced and it was not mandatory. How
ever, many firms conformed because they did
not want to fall victim to the destructive
consequences resulting from the disregard of
corporate governance.