Hampel Committee,

1995
Presented by:-
Shivam Vermani (141171)
Ayush Todi (141172)
Introduction
Formed in November, 1995 under the leadership of Sir
Ronald Hampel

Initiated by the Chairman of the Financial Reporting

Council, Sir Sydney Lipworth

Ensure the implementation of recommendations of the

Cadbury and Greenbury committees
Hampel Committee Report
Corporate Governance and its principles

Role Of Directors

Directors Remuneration

The Role Of Shareholders

Accountability And Audit

Corporate Governance
the system by which companies are
directed and controlled -Cadbury Committee
Good Corporate Governance
No Need for rigid Prescriptions
show flexibility in the interpretation of codes
companies should be prepared to review and explain their
governance policies, including any special circumstances
Should continue to evolve
Recommendations for Principles of
Corporate governance

Statement to be involved in annual report and accounts

Statement should include-

Ways in which principles are applied in various circumstances

description of the way in which the board has applied the

principles of corporate governance
Principles VS Guidelines
Guidelines Of Corporate Governance Principles Of Corporate Gvernance

Stringent policies that need to be followed Considerations to be kept in mind while

during general course of business. following the guidelines.

How far are they complied with How are they applied in practice?

Given by Cadbury and Greenbury Given by the Hampel Comittee

Committees
Rigid Prescriptions Flexible suggestions
Board Of directors

Executive
Directors
Board of
Directors Non
Executive
directors
Role Of Executive Directors

to act in good faith in the interests of the company and

for a proper purpose

to exercise utmost care, due diligence and skill in their

duties

leadership and control of the company

Role Of Non Executive Directors
have both a strategic and a monitoring function.
may contribute valuable expertise not otherwise
available to management
act as mentors to relatively inexperienced executives
independent of management and free from any
business or other relationship which could materially
interfere with the exercise of their independent
judgement
 the remuneration committee is a committee of the board
and responsible to the board. It is clearly wrong for
executive directors to participate in decisions on their own
remuneration packages, and the determination of these
should be delegated to the remuneration committee.
the decision whether to seek shareholder approval for the
remuneration report should be one for the company. To
require shareholder approval for a single aspect of
company policy would, in our view, be inappropriate.
Directors remuneration
Directors remuneration is of legitimate concern to the
shareholders.
The remuneration needed to attract and retain
executive directors of the required caliber is largely
determined by the market.
Remuneration levels are often set with the help of
comparisons with other companies, including
remuneration surveys.
A significant part of executive director-s remuneration
should be linked to the companys performance,
whether by annual bonuses, share option schemes, or
The Role Of Shareholders
Institutional investors have a responsibility to their clients to
make considered use of their votes; and we strongly recommend
institutional investors of all kinds, wherever practicable, to vote
the shares under their control.
Companies and institutional shareholders are to adopt as widely
as possible the recommendations in the report Developing a
Winning Partnership.
companies should count all proxy votes and announce the proxy
count on each resolution after it has been dealt with on a show of
hands.
shareholders should be able to vote separately on each
substantially separate issue; and that the practice of bundling
unrelated proposals in a single resolution should cease.
The decision on who should answer questions at the AGM is one
for the chairman; but it is considered good practice for the
 Notice of the AGM and related papers should he sent to
shareholders at least 20 working days before the meeting
Companies may wish to prepare a resume of discussion at the
AGM and make this available to shareholders on request
The committee commend the practice of some companies in
establishing in-house nominees, in order to restore rights to
private investors who use nominees; and noted that the DTI
and the Treasury are considering changes in the law for the
same purpose
 Accountability And Audit
Each company should establish an audit committee of at
least three non-executive directors, at least two of them
independent.
The bodies concerned should consider reducing from 10%
the limit on the proportion of total income which an audit
firm may earn from one audit client.
The audit committee should keep under review the overall
financial relationship between the company and its auditors,
to ensure a balance between the maintenance of objectivity
and value for money.
The auditors should report on internal control privately to
the directors, which allows for an effective dialogue to take
place and for best practice to evolve.
 Directors should maintain and review controls relating to all
relevant control objectives, and not merely financial
controls.
Companies which do not already have a separate internal
audit function should from time to time review the need for
one.
Auditors are inhibited from going beyond their present
functions by concerns about the law on liability. Account
should be taken of these concerns by those responsible for
professional standards and in taking decisions on changes
in the law.
THE END