Thursday, 14 June 2018 10:41

Calls for new body to hold directors to account

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The Government should create a new, single authority with the power to punish negligent directors, according to the Investment Association.

The trade body, that represents UK investment managers, whose 240 members collectively manage over £6.9 trillion on behalf of clients, made the call in its response to the BEIS consultation on insolvency and corporate governance.
 
The body said there had been an increasing focus on director behaviour in recent years, with much more emphasis on boardroom performance and director accountability.

The IA’s public register has recorded 28 companies where 20% or more of shareholders had voted against a director resolution including director re-election in the 2018 AGM season.

The IA called on the Government to replace what it called “the fragmented system of director sanctions”, with one single body to provide better scrutiny over sanctioning for directors who are negligent in fulfilling their duties.
 
Andrew Ninian, IA director of stewardship and corporate governance, said: “It is essential that directors of companies are held accountable and appropriately sanctioned when they negligently fail to meet their duties.

“Recent high profile examples have clearly demonstrated that the current framework for sanctioning needs rethinking.
 
“The current system of sanctions is fragmented between many different authorities and often directors are only sanctioned as a result of investigations after a company goes into insolvency.

“By uniting the powers and responsibilities we would be giving real teeth to a single body which could then hold any directors to account for being negligent of their duties.”

 

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Last modified on Thursday, 14 June 2018 10:45
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