Benefits to shareholders over the long term

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QCA Guideline

Additional disclosure guidance

Vested interests should not be able to act in a manner contrary to the common good of all shareholders: transactions with management, major shareholders and other related parties should be reported in a transparent manner.

The roles of chairman and chief executive should not be exercised by the same individual or there should be a clear explanation of how other board procedures provide protection from the risks of concentration of power within the company. A company should have at least two independent non-executive directors and not be dominated by one person or group of people.

The identity of those directors the board considers to be independent and the reasons why it has determined a director to be independent notwithstanding factors which may appear to impair that status.

An explanation to shareholders of how, if the auditor provides significant non-audit services, auditor objectivity and independence is safe-guarded.

A dialogue should exist between shareholders and board so that :

• the board understands shareholders’ objectives; and
• shareholders understand the constraints on the company.

There should be a dialogue with shareholders based on the mutual understanding of objectives. The board as a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place.