The apathy of most shareholders has allowed company boards so much latitude that they seemed beyond reasonable control. To fill this vacuum the City has produced a series of codes of conduct to guide directors on best practice. The latest of those, the Hampel Report (following the Cadbury and Greenbury Reports), which is backed by the Stock Exchange, suggested for instance, that:
- the task of chairing the board and the work of chief executive should be separate;
- directors should stand for re-election every three years;
- board members should not have a service contract of more than two years;
- a third of the board should be non-executives who should be independent of the company;
- shareholders should be told at least 20 days in advance of an annual general meeting;
- when raising new capital the company should give existing investors first refusal;
- any questions not answered at the annual general meeting should get written answers soon afterwards.