Corporate Governance Policies and Practices in Developing and Developed Economies: A Case Study of the English Legal System

Abstract

This case study examines the corporate governance policies and practices in the English legal system mainly focusing on both developed and developing economies. Corporate Governance (CG) plays a significant role in ensuring transparency, accountability, and ethical conduct within organizations regardless of the economic status of a country. This study explores the key principles, regulations, and mechanisms governing corporate governance in the English legal system and compares them with practices in developing economies. The Company Act of 2006 is a comprehensive framework for the English legal system on CG which has numerous regulations and codes of best practices. Some of the key elements of CG in the English legal system include board composition, independence, accountability, shareholder rights and disclosure requirements. The system emphasizes the need to promote a balance of power and accountability between shareholders and stakeholders as well as the separation of ownership and control. Developing economies often face unique challenges on CG due to a number of factors such as a weak legal system, inadequate regulatory frameworks and cultural differences. This study examines these challenges and identifies potential gaps in corporate governance practices in both developing and developed economies compared to the English legal system. The findings of this case study highlight the importance of effective CG in promoting economic growth, attracting investments, and ensuring long term sustainability. It underscores the need for developing economies to strengthen their legal and regulatory frameworks, enhance transparency, and disclosure requirements, and foster a culture of accountability with organizations. The insights from this case study can inform policymakers, regulators, and corporate leaders in both developing and developed economies on the significance of robust corporate governance practices. By adopting and adjusting best practices from the English legal system in both developed and developing economies can help enhance these frameworks on corporate governance thus contributing to a more stable and transparent business environment. This paper concludes with recommendations and explores the key policies and practices that contribute to good corporate in both settings. In developing countries, good CG policies and practices often focus on enhancing regulatory frameworks, improving transparency, and strengthening enforcement mechanisms to combat corruption and promote sustainable business practices. Key components include promoting board independence, establishing effective risk management systems, and enhancing shareholder rights to ensure that companies are managed in the best interest of all stakeholders. On the other hand, developed countries typically have more established corporate governance frameworks, with stringent regulations and guidelines in place to safeguard investor interests and maintain market confidence. Practices such as regular board evaluations, disclosure of executive compensation, and shareholder engagement are common in these settings to ensure effective oversight and accountability.