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CALDER’S CLARITY FOR GOOD CORPORATE GOVERNANCE PRACTICE
A review by Phillip Taylor MBE, Barrister-at-Law, Richmond Green ChambersAlan Calder’s masterful new work allows the reader to become much more familiar with the practice and the main principles of what we now call the ‘governance’ of a company. He introduces the newly used (and slightly ridiculous) title of ‘governance’ as a strategy by writing that “corporate governance has become critical for all medium and large organisations.
Those without a governance strategy face significant risks; those with one perform measurably better.” Certainly, but what’ new except a change of word from ‘running’ to ‘governance’ (to incorporate compliance)!
Calder goes on to state his aim is “to provide a clear description for managers and executives that will enable them to identify the practical steps necessary to meet today’s corporate governance requirements”. So, has he succeeded in this aim? Yes, and very well indeed with a readable work for the non-lawyer- no cases and statutes in the body text, and useful notes at the end of each chapter.
The book has 19 chapters and 8 appendices (where the legal bit is). This is a down to earth book which explodes the celebrity nonsense of ‘greed is good’ making way for ‘looting is good’ and the repeated challenging behaviour exhibited with the spate of collapses and failures greeting this new century with its uncertainty and sub-prime bad management practices still rife.
Calder should be required reading for directors and shareholders with his chatty style which deals so well with what running a company today means for you, your name in business and how much money you can make. He identifies that studies have shown that share price is often linked to the effective governance (running) or otherwise of the company itself. This price is reflected by providing board members and managers with a string financial incentive to maintain effective corporate governance practices (well covered in the appendices).
The great benefit of this book is how Calder covers what should constitute good governance (which varies in different countries and companies as we all know) so that there can never be a ‘one size fits all’ model for corporate governance.
Alan Calder’s book is timely with his coverage of the United Kingdom’s consolidating Companies Act 2006 (one of the largest pieces of legislation ever passing through our Parliament) and the American Sarbanes-Oxley Act which gives us the current direction in which businesses must go to be successful…and compliant.
This is a practical guide that gives clear and concise information on what makes for good corporate governance and I hope that some notice is taken of the propositions put forward because of past behaviour by directors, investors and staff. He sets out the duties and obligations of company directors and puts today’s corporate governance of day-to-day business in perspective.
Fortunately, most directors are law-abiding business people. ‘Corporate governance’, or running your company legally (and, possibly with a bit of morality to cater for global concerns!) may seem another extension of the nanny state or “like unnecessary bureaucracy and red tape that interferes with the effective management of their company” but Alan Calder achieves his objective with a book designed to give all types of director directional clarity about what is…and what is not…the acceptable practice with their businesses.
It will be fascinating to see what he does with a possible future edition as our global business and financial community develops, and I am sure Mr Calder will be up to the challenge at the time, notwithstanding the unforeseen which has made the business of business so exciting down the ages.