corporate governance guidelines investment & finance definition

Publicly traded corporations are required to adopt guidelines for their ethical behavior that include a code of business conduct and charters for ethics and key committees that have oversight of corporate governance. The documents have be to published on companies’ web sites and included in their annual reports. These guidelines were required with the passage of the Sarbanes-Oxley legislation in 2002.

Corporate governance guidelines must cover directors’ qualifications, responsibilities, compensation, management succession, an annual performance evaluation of the board, and must list the access to management and independent advisors. The codes of business conduct and ethics should address: conflicts of interest and corporate confidentiality, protection and use of company assets, and the steps to report illegal or unethical behavior. Companies also have to disclose any waivers of the code that have been granted by the board of directors or by one of its committees for directors or executive officers.