International Boards

Question 1

EU taxonomy

Answer 1

1. climate change mitigation;
2. climate change adaptation;
3. sustainable use of protection of water and marine resources;
4. transition to a circular economy, waste prevention and recycling;
5. pollution prevention and control; and
6. protection of healthy ecosystems.

Question 2

The Nominations Committee

Answer 2

aims to ensure that the board overall is balanced and effective, ensuring that
management is accountable.

Question 3

Audit Committee

Answer 3

oversees financial reporting and the audit, delivering accountability in the accounts.

also oversee internal audit, where this exists, and unless there is a separate risk
committee will have responsibility for risk oversight also.

Question 4

Remuneration Committee

Answer 4

to deliver a proper alignment through executive pay.

Question 5

In the UK, shocks around pay levels at newly-privatised utilities led to

Answer 5

Greenbury report, which revised the
corporate governance code in 1995

increased the visibility of remuneration structures and pressed towards transparency over the KPIs

Question 6

The Enron, Tyco and WorldCom scandals in the USA led to

Answer 6

Sarbanes-Oxley Act in 2002. This lifted

expectations for greater integrity in financial reporting

Question 7

The 2003 failures at Ahold and Parmalat, in the Netherlands and Italy respectively, led to pressure for
heightened standards of

Answer 7

corporate governance and both board and auditor independence across Europe

Question 8

The financial crisis of 2008 led to

Answer 8

legislative changes was the 2010 Dodd-Frank Act in

the USA

Question 9

In Japan, the Olympus scandal of 2011–12 revealed long-running market deceit, whereby more than US$1.5 billion (£1.07bn) in losses were hidden,

Answer 9

to maintain the apparent health of
the company and jobs for its workforce. When the much larger Toshiba revealed its own scandal of overstated
profits in 2015, some felt that there might be something culturally wrong in Japanese companies that sought to
hide the truth and failures of governance.

Question 10

a transaction affects more than 5% of any of a company’s assets or 25%

Answer 10

additional disclosure/ Shareholder vote

Question 11

Country where single executive sits on the board and often bears the responsibility of both chair and CEO

Answer 11

USA ( on decline) and France

Question 12

Country where the CEO is usually the
board’s single executive director (and does not usually chair the board), but is typically not subject to election
by shareholders.

Answer 12

Aus

Question 13

single-tier board dominated by executive directors with only a small handful of
non-executive directors

Answer 13

Japan

Question 14

single-tier boards have a few executive directors and a majority of non-executives
(most of whom are independent), one of whom acts as chair.

Answer 14

All ex US/France/Jap/Aus

Question 15

supervisory boards are largely constituted in the same way, with all members being

Answer 15

nonexecutives.

Question 16

Differnances in AU

Answer 16

Australia has a single-tier board structure with just a single executive director (MD and CEO)

This individual is typically not subject to election by shareholders, who vote on the appointment of the non-executive directors annually

Boards are also relatively small in
comparison to public companies in most other major markets, with six or seven directors being typical

if not, why not’ – can be reflected in a
sometimes-combative relationship between companies and their shareholders

Investors have a strong influence on Australian companies (super companies)

Shareholder resolutions are relatively common in Australia, with only US companies facing more such
proposals. This is partly because Australian law has been interpreted in a relaxed way, and also as a reflection of the strength and organisation of the shareholders.

Though the thresholds for
other shareholder resolutions are higher – 5% of the issued capital or 100 shareholders – campaigners using
social media find the number of shareholders threshold in particular relatively easy to reach.

Question 17

Corp Governance in France

Answer 17

scope for two-tier boards in France, the vast majority of French boards are single-tier and led by
a combined chair/CEO, sometimes still referred to as the President Directeur General (PDG).

Standards require
that 40% of the directors be female, and around a third of the board should be employee representatives,
ensuring that the stakeholder voice is clearly heard in the boardroom

Conflict of Interest very seriosu

Require Joint Auditors (only Juristication to ask this - one is big 4 other is lower tier)

Under Florange Act - unless 2/3 vote contrary all sharholders greater than 2+ year have double voting rights

Question 18

Corp Governance in Germany

Answer 18

The two-tier board structure in Germany

Shareholders appoint half the members of the supervisory board, and the other
half are appointed from among the workforce. All supervisory board members are charged with acting in
the best interests of the corporation.

As shareholders vote on the appointment of half of the supervisory board, which in turn is responsible for
the appointment of the management board, the supervisory board are accountable to them, rather than the
management board.

Question 19

Corp Governance in Italy

Answer 19

Italy has a single-tier board structure, with typically a single executive director and an independent chair.

The unusual feature of the country’s governance framework arises from its history where most company
shareholder bases have been dominated by a single shareholder, or group of shareholders

Requirment for statutory auditors, who have a legal role to affirm the legality of certain actions by the board.

Both the boards and the statutory auditors are elected for multi-year periods, usually five years, and are not
subject to re-election in the intervening period.

Strong planning, but weak transitions in last year

Question 20

Corp in Japan

Answer 20

the structure of having statutory auditors, which are in addition to the independent audit firm that assures the accounts

with it likely that a requirement of
30% female board membership will be introduced.

Question 21

Corp Governance in Netherlands

Answer 21

upervisory board structures, the shareholders appoint the supervisory board in the Netherlands and are kept at a distance from holding management accountable for performance and
strategy.

Question 22

corp governance in Sweden

Answer 22

been shaped by the dominance of major shareholders in the registers of many
leading companies.

This dominance of the share capital, and particularly of the votes, could lead to Investor AB being able to
appoint the bulk of corporate boards in Sweden and having even more disproportionate influence than
it already does.

Question 23

Corp in USA

Answer 23

the USA is the only major market – and almost the sole country – not to have a code of its own.

Corporate law is a matter for the states, and so there is no scope for a federal set of rules to
govern corporations. Race to bottom of standards won by Deleware who has disproportionate rule of US corp law

Best practice
The Commonsense Corporate Governance Principles, 2018

The Investor Stewardship Group’s (ISG) Corporate Governance Principles for US Listed Companies 2018

The Corporate Governance Policies of the Council of Institutional Investors (CII).

Security Law
say on pay’ vote. Under
Dodd-Frank,

access to the proxy’ standard permits shareholders that fulfil certain criteria