Corporate Governance

Corporate Governance News

This section on Corporate Governance provides investors with the latest topical news plus some informal comments and insights from ShareSoc’s directors and other contributors.

Conviviality

It is a great name for a bar, but is a fancy name good for a quoted conglomerate plc? The shares were suspended on 14 March. The FCA and FRC need to look at this and asset managers need to think again why they missed the warning signs! Shares in the wholesaler and distributor of alcohol and impulse are now suspended as it considers the anticipated impact on its funding position of £30m due to HMRC. This business has looked questionable since ...

Black Box Governance Thinking

Yet another board blows up. Why does this happen time and time again? The problem, in my experience, is one of boardroom culture.  With some directors being so set in their ways, they are unable to learn from their mistakes. These issues are brilliantly explained by Matthew Syed in his book, Black Box Thinking. Syed explains why Most People Never Learn from Their Mistakes–But Some Do. Nobody wants to fail. But in highly complex organisations, success can happen only when we confront our ...

Audit Quality and the Caparo Judgement

There was a very good letter from Guy Jubb and Mark Solomon on the subject of the Caparo legal judgement in the Financial Times yesterday (6/2/2018). It was headlined “It is time the curse of Caparo was broken”. Here is some of what it said:  ….the joint inquiry into Carillion by the parliamentary Work and Pensions Committee, and Business, Energy and Industrial Strategy Committee, must examine closely the little-known consequences of the Caparo judgment (Caparo Industries plc v Dickman [1990] 2 AC ...

Quindell and Carillion

The Financial Reporting Council (FRC) have announced that they have fined audit firm Arrandco (formerly RSM Tenon) £750,000 and the Audit Partner Jeremy Filley £56,000 in relation to the audit of the financial statements of Quindell for the 2011 accounts. They also “reprimanded” both parties and Tenon had to pay £90,000 in costs. Both parties admitted liability. Two of their errors were a “failure to obtain sufficient appropriate audit evidence and failure to exercise sufficient professional scepticism”. In other words, quite ...

Government To Review Share Buy-Backs

The BEIS Department of the Government has announced a review of share buy-backs. That’s where the company buys its own shares in the market, a practice that used to be illegal but is now very widespread. Business Secretary Greg Clark said: “…there are concerns that some companies may be trying to artificially inflate executive pay by buying back their own shares. This review will examine how share buyback schemes are used and whether any action is required to prevent them from being ...

RBS Campaign Update 9 – Progress as at 13/12/2017

If you have not yet joined the campaign you can still do so, please click here to download the forms https://www.sharesoc.org/rbs-agm-2018-requisitions/ . EMAIL 1 sent out on 24 Nov 2017 and 80 new campaign members recruited. Resolution and Request for discussion finalised. Click here to see them. EMAIL 2 sent out on 9 Dec 2017 to all campaign members asking them to sign the forms and return them to us. 30 received so far. We need at least 100 ...

Stale Directors and the UK Corporate Governance Code

One interesting fact highlighted by the Financial Times today was the impact of the proposed new UK Corporate Governance Code on company Chairmen. It pointed out that the change in the Code to limit the length of service of directors will include their time as Chairmen and will mean dozens of long-standing Chairmen may need to retire. The FT suggests 67 FTSE-100 chairmen will be affected, and there will be another 48 chairmen of FTSE-250 companies according to an analysis by the ...

New Corporate Governance Code

The Financial Reporting Council (FRC) have published a new UK Corporate Governance Code – a draft that is subject to public consultation. The revised Code sets out good practice so that the boards of companies can: Establish a company’s purpose, strategy and values and satisfy themselves that these and their culture are aligned; Undertake effective engagement with wider stakeholders, to improve trust and achieve mutual benefit, and to have regard to wider society; Gather views of the workforce; Ensure appointments to ...

FRC study: Risk and Viability Reporting

In July of this year, UKSA and ShareSoc members received an email inviting them to participate in a survey being run by the Financial Reporting Council (FRC). The survey was part of a wider study being carried out by the FRC into Risk and Viability Reporting. Over 190 members responded which was an excellent result. The FRC agreed that it would provide feedback for members on the results of the survey. This article from Patrick Leach at the FRC summarises the ...

Round up on recent FRC and FCA developments

Our event at the FRC on 21 November, when the FRC will explain what they do and listen to members’ feedback, is a sellout and we are now operating a waiting list. Below is a roundup of recent FRC and FCA developments, to inform attendees and help guide questioning. FRC says corporate reporting could still be improved In its annual review of corporate reporting, the FRC said disclosures by large listed UK companies are generally good but detailed explanations and clarity could still ...