Directors back increased regulation

SEVENTY percent of directors agree that increased regulation is the only way that corporate governance standards can be improved, a study has shown.

According to research conducted among members of the Institute of Directors in Ireland (IoD), almost half (48%) of directors in multinationals believe that increased regulation is needed to improve corporate governance standards, with more than two-thirds (68%) of directors in the financial services sector agreeing.

The research also found that while the majority (60%) of directors claim they had adequate training when they took up their post, three in five (59%) said they need to undergo further training to carry out their role.

This figure increased in the financial services sector, with two-thirds (64%) of directors acknowledging that they need to undergo additional training.

In relation to non-executive directors, 45% of those surveyed claim their company does not have non-executive directors on its board, despite them being viewed as an integral part of good corporate governance.

Non-executive directors were found to feature highly in the financial services sector, with two-thirds (66%) of directors in the industry claiming that their company has them on its board.

When asked about the presence of separate board committees:

* 67% of those surveyed claim to have a committee in place to deal with audits.

* 58% have a committee for remuneration.

* 40% have a committee for nominations, with this figure rising to 63% in plcs.

The research also found that 9 in 10 (91%) directors agreed the roles of the chief executive and the chairman should be kept separate.

IoD chief executive Maura Quinn said: “Increasing regulation is one way to tackle the problem, though we must be conscious of the danger of over-regulation and the effects on business. We need to create a balance between regulation and education by ensuring that directors are fully equipped with the appropriate skills, knowledge and expertise to carry out their role.

“It is imperative to this country’s recovery that those leading our businesses are qualified to do so, and that our boards have a suitable mix of executive and non-executive directors to ensure high standards of corporate governance.”