Blog

I think I first heard the term “corporate governance” in the early-1990s as politicians and the media fretted over the high profile collapses of the early 90s recession.  Those long forgotten go-go stocks of the 80s bull market, such as Brent Walker, British & Commonwealth and Polly Peck, had collapsed on mountains of debt, domineering chief executives and dubious accounting practices, and it was concluded that that company boards had to buck their ideas up.  There was a perception (probably not an unfair one), that many non-executive directors on public company boards turned up for meetings, made a few sage-like comments, took their fees and not a lot else.

This was followed by a series of reports by the great and the good of the day on the state of corporate governance in the UK:

• The Cadbury Report – 1992
• The Greenbury Report – 1995
• The Hampel Report – 1998
• The Turnbull Report – 1999
• The Higgs Report – 2003

Following the Hampel Report, the UK’s first corporate governance code was published, and since then, 9 editions the UK Corporate Governance Code have been published, swelling from 10 pages to 37, before returning to a more manageable 15 pages, albeit now accompanied by voluminous amounts of guidance notes.  

Since 1998, the UK Corporate Governance Code has been compulsory for Premium Listed companies, but AIM-quoted companies had managed to avoid any formal corporate governance beyond rather wooly statements until September 2018.  Since then, AIM-quoted companies have had to adopt a “recognised corporate governance code”, which typically results in a choice between the the UK Corporate Governance Code and the QCA Corporate Governance Code. The latter, while somewhat more sensitive to the nature of smaller companies, still extends to 24 pages (including guidance), and is accompanied by other guides on audit and remuneration committees totalling almost 100 pages.

All this points to corporate governance moving in just one direction – greater and greater demands on the boards of quoted companies.  The New Year sees the introduction of the enhanced s173 of the Companies Act 2006, which while not requiring anything that is not already included in either the UK or QCA Corporate Governance Codes, it does bring certain elements into the statutory realm.

Corporate governance cannot be undertaken on a tick-box basis and still be considered compliant.  Any attempt to do so will invariably involve a run-in with your auditor, financial/nominated/corporate adviser or both.  It is time to let VAA take the strain.