Regulation by law or the Code?

THE corporate scandals of the late 1990s and the global financial crisis of 2008 caused governments around the world to identify causes and undertake regulatory action to forestall a recurrence. Against this backdrop, it is interesting to take a look at the different ways the United States and the United Kingdom approach the task of regulating for better corporate governance.

The UK Code-based approach

The UK first issued its Corporate Governance Code in 1992, following the publication of the Cadbury Report. The Code sets out governance principles and guidelines of "best boardroom practices" for how they should be implemented. Corporations have the option of either complying with the Code or explaining why they have not done so.