“It is clear from the results of the poll that many people consider that more consideration ought to be given to representative statistics such as number of employees, size of balance sheet, et cetera. There is some sense that there should be thresholds at which private companies should be held to higher standards than they currently are. Whilst alignment would be helpful given the size and economic impact of some private companies, it would have to be proportionate. Applying the same rules that relate to public companies to smaller private companies without the resources to comply with them would be too onerous,” says Peter Swabey, Policy and Research Director at ICSA: The Governance Institute.
Views expressed during the poll, which also asked which rules governing public companies should be introduced for private companies, include the following:
- There should be greater alignment between similar sized businesses irrespective of whether they are public or private
- A balance needs to be struck between regulation and encouraging entrepreneurship; smaller private companies need the flexibility to not get tied down with over regulation
- A requirement for a company secretary for private companies should be reintroduced, especially for larger organisations
- For larger private companies the guidance on governance and diversity should be applied
- Reporting requirements for the two should be better aligned, with private companies being required to disclose their governance arrangements.
“Some people feel that encouraging good governance more strongly in private companies by requiring them to adopt a governance code would be a positive step, and I could not agree more. Corporate governance is wider than just protecting shareholders; it should protect all those with a stake in the future of a business including lenders, employees, clients and suppliers. We recommend that a threshold should be set above which private companies should be required to disclose in their annual report the extent to which they comply with a corporate governance code. This threshold might be that they are required under the Companies Act 2006 to have audited accounts and to produce a directors’ report, or that they are subject to gender pay gap reporting requirements. The easiest way of ensuring that larger private companies are held to more stringent corporate governance standards, would be to enforce the need for a company secretary,” concludes Peter.
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For further information, please contact Maria Brookes, Media Relations Manager:
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Notes to Editors:
- ICSA: The Governance Institute is the professional body for governance. We have members in all sectors and are required by our Royal Charter to lead ‘effective governance and efficient administration of commerce, industry and public affairs’. With 125 years’ experience, we work with regulators and policy makers to champion high standards of governance and provide qualifications, training and guidance.
Website: www.icsa.org.uk - The Core Partnership is a niche market recruitment consultancy working with Company Secretaries and their teams to advise on and resource their specialist interim and permanent manpower needs. With relevant professional backgrounds spanning back to the 1980s, The Core Partnership has a wealth of knowledge of the development and dimensions of the role of the Company Secretary. The team provides market advice on relevant qualifications and experience, conducts salary and benchmarking exercises and works throughout the UK and overseas recruiting at all levels to this specific discipline.
Website: www.core-partnership.co.uk - More detail about the poll findings can be found at www.icsa.org.uk/knowledge/governance-and-compliance/indepth/comment/quick-question
