UK - Only half of FTSE100 companies are on track to meet corporate governance standards outlined in the new combined code, research shows.
The code, which lays down corporate governance best practice recommendations, will be adopted in November. But the Audit Committee Institute claims many top companies still need to make “significant changes” to comply.
The ACI study of FTSE100 corporate governance statements found that only half of companies had started to “actively deal” with the code’s demands.
One of the main recommendations in the code – based on the report on corporate governance by Sir Derek Higgs – is the 50:50 split of executive and independent non-executive directors on the board.
But more than a quarter (29%) of companies still fail to meet the requirement.
While firms do not have to adhere to the code, they will have to give “sound reasons” for any non-compliance.
KPMG director Timothy Copnell said while wide-scale non-compliance would affect the credibility of the code, it should not be seen as a failure.
He said: “Boards must explain their governance procedures in an open and transparent way and not be bullied into code compliance if it is not in the best interests of the company. Likewise investors must ensure they interpret governance disclosures in an enlightened and objective manner.”
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