What insights into effective business practices are coming out of the QCA review of Good Governance on AIM?
January 23, 2020
MM&K are members of the Quoted Companies Alliance (“QCA”) and sit on both the Corporate Governance and Share Schemes experts group. Here are four insights coming out of the recently published AIM Good Governance Review.
1) There is an increasing trend for more disclosure in the year-end financial reports of AIM companies. This trend towards more detailed reporting, which we think is likely to continue, is expected to create a situation where low levels of reporting and the use of “boiler plate responses” – even perhaps in private companies – will start to be commented on unfavourably by shareholders and proxy agents.
2) There is still a low level of reported engagement with employees as a distinct “stakeholder” group. It is surprising that companies are not taking the opportunity to self-regulate in this area and show more openness on this point. We suspect that, if this does not show improvement during 2020, this may be an area for fresh intervention from the government.
3) Board Experience and Evaluation is seen as an increasingly key issue for investors – although some of the attitudes highlighted remain very “traditional” in that sector expertise in Non-Executives is seemingly prized above ability to challenge and develop the business.
However, as work with our partner organisations in the Board Evaluation space is beginning to show more and more, the effectiveness of Boards is less about industry knowledge and more about having all the right skills in the Boardroom.
4) Succession planning is starting to get the attention it deserves. The review showed that companies which included a statement on succession planning had increased from 20% to 48%. However, it does still look like many of the statements made are generic in nature. Good succession planning can act as an effective antidote to the pressure of bringing in new Directors in the future on high remuneration packages.
For further information about the issues raised in this article or to discuss any questions you may have, please contact Stuart James.
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