Why are non-executive directors taken by surprise when events take a turn for the worse?
A common feature of recent corporate governance debacles has been that boards – and especially the non-executive directors (NEDs) – have been unaware of unfolding events.
This may be because they have not received all the information they needed from management – but there is also an underlying concern that a great many NEDs are not properly trained or able to commit enough time to fulfil their important roles properly.
In ACCA’s response to the UK’s Financial Reporting Council’s Review of the Effectiveness of the Combined Code, which sets out standards for corporate governance, we call for more robust regulation to strengthen the position of NEDs, and to ensure that shareholders can rely on them to challenge boards and hold them to account more effectively.
This is not just an issue for the UK, but a global challenge, and I’d welcome your thoughts on this issue.
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