Companies struggle to meet governance rules
Just 47% of the country's largest listed businesses are fulfilling the requirements of the combined code
Less than half of the FTSE100 is fully compliant with the combined code on
corporate governance, despite is being nearly two years since the guidelines
were introduced.
A study by investor representative, the Association of British Insurers,
found that just 46% of the country’s top 100 listed companies meet all the rules
set out by the Financial Reporting Council.
The body analysed 477 annual reports as part of its response to the FRC’s
review of the code and found that the biggest reason for non compliance was that
boards have yet to recruit enough independent non-executive directors to meet
the requirements.
Recently, a survey from Deloitte said that the FTSE350 will need to employ
another 145 non-execs to comply with the code.
ABI director of investment affairs Peter Montagnon said that despite these
shortcomings, investor objections had remained low as they are ‘not adopting a
tick box approach and are willing to accept explanations’.
He added that there is still scope for improvement in the quality of
explanations offered when companies look to appoint their chief executives as
chairmen.