Sports Direct and BHS: BIS launches corporate governance inquiry
Earlier this week, the Business, Innovation, and Skills (BIS) Committee announced that it is launching an inquiry on corporate governance, focussing on executive pay, directors’ duties, and the composition of boardrooms, including worker representation and gender balance in executive positions.
The BIS inquiry follows on from the corporate governance failings highlighted by the Committee’s recent inquiries into BHS and Sports Direct, and in the wake of commitments from the Prime Minister to overhaul corporate governance.
"Irresponsible business behaviour and poor corporate governance tarnishes the reputation of business and undermines public trust in enterprise. We need to look again at the laws that govern business and how they are enforced. Good corporate governance shouldn't be a hindrance to business; it can contribute to companies' long-term prosperity and performance as well as showing to the world that a business is transparent, accountable and responsible,” said Iain Wright, chair of the BIS Committee.
The Committee will examine whether company law is sufficiently clear on the roles of directors and non-executive directors and will look at how the interests of shareholders and employees are best balanced, particularly in the boardroom. The inquiry follows on from increased criticism from industry bodies including ICSA, The Governance Institute, which wrote to the Prime Minister Theresa May in the summer emphasising the need for reform of corporate governance for private companies following the collapse of BHS. “All company boards have a duty to act in a way that is in the long-term benefit of both the company and society at large,” said Simon Osborne, Chief Executive of ICSA. “As the case of BHS has demonstrated, the fact that a large company may be privately owned does not reduce the public impact when it fails.”
The Committee has asked for written submissions by Wednesday 26 October 2016.
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