SESSION TWO FULL DISCLOSURE The fear is that open communication between companies and shareholders would effectively be ‘killed off’ by the over involvement of regulators, and that our system of ‘Comply or Explain’ would be seriously undermined. EU Green Paper proposals could potentially mean that, if a company does not comply with certain provisions of the Code, it is not the shareholders who are going to decide whether their explanation is acceptable, it is going to be the regulators, be it in the UK, Spain or elsewhere. Amid the flurry of new initiatives and changes, many believe it is crucial the UK protects its unique reporting mechanisms and characteristics. As we have seen, there is a huge opportunity in corporate reporting for companies to communicate properly with the people from whom they derive their capital. This is a very, very important relationship, and it’s one of the most crucial aspects of our reporting culture. “…ultimately we need to keep faith in the quality of our corporate codes and guidance in the UK, which provide excellent advice on how companies should be run. We need to keep faith in the power of corporate reporting to deliver the clear and credible communication that is so essential to good governance.…” Perhaps ultimately we need to keep faith in the quality of our corporate codes and guidance in the UK, which provide excellent advice on how companies should be run. And we need to keep faith in the power of corporate reporting to deliver the clear and credible communication that is so essential to good governance. These days, stakeholders are understandably demanding greater evidence of accountability in companies’ everyday operations. And through good quality, principles-based reporting, companies can satisfy this demand. Keeping the faith Elsewhere, other industry figures are more sanguine about the proposed changes, believing that all we need is clear communication with Brussels as to what the EU Green Paper will actually mean for UK companies. A more pressing question, is how we want our Boards to be spending their time – for example, actually running their business rather than getting caught up in compliance - which takes us back to the issue of principles and provisions at the heart of the governance agenda. There are also suggestions that improvements could be made at Board level to help achieve good corporate governance. Fixed-term Chairmen and more punitive measures for directors of failed companies could deliver a step-change in governance procedures. This would encourage directors to leave Boards earlier and encourage dialogue and communication as to why they have left. 14 © Black Sun Plc 2011 www.blacksunplc.com
