51% compliance with the UK Corporate Governance Code

Grant Thornton have issued their annual Corporate Governance Review for 2012; which is a review of the annual reports of the FTSE 350 to analyse their compliance with the UK Corporate Governance Code.

The headline grabbing figure is that full compliance with the Code has hit a plateau, with 51% of the FTSE 350 being in full compliance. However, this initially pessimistic figure hides some very optimistic underlying statistics, including:

  • 44% of those companies that did not comply with the Code are intending to do so next year;
  • 73% of companies provided detailed reasons for their failure to comply (which was up from 69% in 2011);
  • 96% of companies are complying with the new provisions on the annual re-election of directors; and
  • 98% of companies are complying with the provisions relating to triennial external board evaluations.

On the other hand, there is still some considerable room for improvement, including:

  • 25% of chairman gave no information on their board’s governance practises;
  • only 5% of chairman are emphasising how important culture is to an effective governance regime;
  • two thirds of those companies who did not comply with the Code gave the same explanation as the previous year; and
  • nearly 20% of the companies had insufficient NEDs throughout the year.

It is, as always, a very detailed and informative report and I would recommend that anyone with the time, takes the opportunity to read it properly. The full report can be found here.

This article was written by Nick Lindsay of Elemental Cosec, UK process agent and providers of company secretarial services. This article is for informational purposes only and should not be relied upon as specific advice or acted upon without seeking legal advice.