Many developed countries are currently placing emphasis on reforms of their Corporate Governance structures. In the USA, the Sarbanes-Oxley Act has been enacted. In the UK, the Combined Code is the result of the many committee reports (from the Cadbury report in 1992 to the Hampel report in 1998) and it was redrafted in 2003. The USA has taken the enactment route, which means that listed companies which do not comply with the Sarbanes-Oxley Act have breached the law. The UK has adopted a comply or explained approach. All UK Companies are encouraged and expected to comply with the Combined Code but the Code is not law i.e, it is not mandatory for companies to comply with it.
a) Discuss the strengths and weaknesses of both the USA and UK approach.
b) Presently, the Singapore Code of Corporate Governance is also not law; just as the Combined Code in the UK. Should we make it into law just as the Sarbanes- Oxley Act in the USA?