Here’s what you need to know
The Government should create a new, single authority with the power to punish negligent Directors, according to the Investment Association (IA), the trade body that represents UK investment managers, whose 240 members collectively manage over £6.9 trillion on behalf of clients. The IA calls for a single authority to take responsibility for sanctioning Directors who do not meet their duties and has proposed a set of recommendations in its response to the BEIS consultation on insolvency and corporate governance.
There has 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 per cent or more of shareholders have voted against a director resolution including director re-election in the 2018 AGM season. The IA is calling for the Government to replace 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, Director of Stewardship and Corporate Governance at the Investment Association, 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 re-thinking.
“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 who could then hold any Directors to account for being negligent of their duties.”