In December 2014 accountancy firm UHY Hacker Young and the Quoted Companies Alliance (QCA) published their joint 2014 corporate governance behaviour review of small and mid-size companies, the largest segment (by number) on the London markets. This review was prepared following the review of a representative sample of 100 companies outside of the FTSE 350 with equity securities admitted to the Main Market, AIM or ISDX.
The report incorporates comments from and sets out investors’ five top tips which are as follows:
- link strategy and corporate governance;
- understand the potential risks faced by the businesses and explain how these influence strategy;
- focus on the audit committee report;
- describe the board evaluation procedures; and
- explain why each director is on the board.
The key observations are that companies must:
- tell their story with confidence;
- tell it straight: don’t surprise investors by trying to manage bad news; and
- don’t waste energy on immaterial boilerplate text (unless required by regulation).
The key message to companies is that they must be open, confident, transparent and honest.
By Edward Craft