Boards must be clear in reports and ‘avoid formulaic descriptions’
This is one of the key recommendations of an independent review of the level of compliance by Irish-listed companies with the combined code on corporate governance overseen by a review panel, chaired by Professor Niamh Brennan, academic director, Centre for Corporate Governance at UCD.
The review indicates that there is a high level of compliance with the code by Irish-listed companies.
“The bespoke nature of the code regime demands disclosures that are also bespoke.
“There is scope for providing investors with more meaningful and contextual disclosure on how the principles of the code have been applied and in explanations for divergence from the code’s provisions,” the report states.
Prof Brennan said compliance with the code of itself clearly doesn’t guarantee good corporate governance but it is an important indicator to investors of a company’s attitude to the issue and the standards which they apply on the matter.
“While the findings of this review indicate high levels of compliance with the code, it also highlights areas where Irish-listed companies could and should improve how they communicate with shareholders regarding their governance practices under the code,” she said.
“The key challenge faced by boards is to meet rising investor expectations by providing more meaningful disclosures in their annual reports and to ensure the underlying behaviour of the board supports the company’s corporate governance disclosures,” she added.
The Irish Association of Investment Managers (IAIM) welcomed the report and supported its key recommendations.
“Institutional investors place great emphasis on good governance cultures overseen by strong boards and in particular the independent non-executive directors.
“The high level of compliance or explanation in accordance with the combined code is a welcome finding,” said chairman Gerry Keenan.
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