Comply or else

The FT reports push back on the FRC’s ‘comply or explain’ boardroom code:

The companies are seeking a change in the code’s underlying principle of “comply or explain”. This principle, which has influenced similar codes round the world, requires companies to meet guidelines of best practice or explain publicly why not.

Companies believe that the “comply or explain” encourages investors to be unduly critical of any departure from the code.

In a letter, M&S told the FRC “‘comply or explain’ is sometimes interpreted as ‘comply or else’ by some shareholders”.

Is this a problem? Why shouldn’t boardroom people be accountable?
Richard Murphy says:

And you thought we were heading for tougher regulation? Good heaven’s no: the chums still want to work with and be regulated by their chums. And they want to then have it endorsed as being good for us.

If the big companies are successful in getting an amendment to the code then it will make audit more difficult. Depending on how any changes are made, it could have the knock on effect of diminishing audit liability.

Does this horrify you or do you shrug?

Tagged as: Best practice