Cadbury rules

Definition

Guidelines recommended by the UK's 'Cadbury Committee On Corporation Governance' which submitted its report ('Code of Best Practices') in December 1992. Its stated objective was “to help raise the standards of corporation-governance and the level of confidence in financial reporting and auditing by setting out clearly what it sees as the respective responsibilities of those involved and what it believes is expected of them.” A private sector initiative, the committee described corporation governance as, “the system by which companies are directed and controlled,” and presented 19 recommendations for the executive directors, non-executive directors, and those responsible for reporting and control. Although these recommendations are not mandatory, all publicly traded UK corporations are expected to follow them. The London stock exchange, for example, requires the listed companies to declare if they comply with them and, if not, why. The committee was named after its chairman, Sir Adrian Cadbury. See also governance, and corporate governance.