Comply or explain – explanations found wanting

December 20, 2012

ABI highlights investor expectations for corporate governance explanations

The Association of British Insurers (ABI) HTWB-question-markhas published a report following its review of the explanations made by 128 companies that had departed from the UK Corporate Governance Code. It found that many of the disclosures failed to meet investors’ needs.

The report identifies six criteria to assist companies in preparing their explanations of non-compliance and gives examples of good and bad practice. The criteria largely reflect the elements of the guidance now included in the latest update to the UK Corporate Governance Code. A company’s explanation of non-compliance should:

  • describe the company-specific context and historical background;
  • provide a convincing and understandable rationale;
  • describe mitigating action to address any additional risk;
  • be time bound;
  • specify deviations from the provisions as well as the principles of the Code; and
  • explain how the alternative is consistent with Code principles and contributes to good governance.

According to the report, only 27% of companies provided a convincing and understandable rationale for non-compliance and only 20% provided any description of mitigating action. 16% of companies met none of the criteria.

The ABI found that disclosure was better where the chairman provided an introduction to the corporate governance statement and encourages all chairmen to do this. It also encourages smaller companies to make improvements to their disclosures, stressing that such companies may well have good reasons for departing from the Code given the nascent development of their business or the uniqueness of their products and services.

The ABI’s report can be found here..



Companies of all sizes could benefit from Corporate Governance and Stewardship Codes

December 19, 2012

Empty Conference RoomFRC reports positive uptake of UK Corporate Governance and Stewardship Codes in 2012

The Stewardship Code has been a catalyst for greater engagement between companies and their shareholders in 2012. Introduced in 2010, there are now over 250 signatories to the Code, including most major institutional investors.

This is one of the conclusions in the Financial Reporting Council’s annual report on its monitoring of developments in corporate governance, published today.

The FRC also found strong take-up by companies of the recommendations introduced to the UK Corporate Governance Code in 2010. Ninety-six per cent of FTSE 350 companies now put all directors up for re-election every year, and the majority of those companies will have the effectiveness of their board independently reviewed at least every three years. Overall compliance with the Code among listed companies of all sizes remains high.

Commenting on progress during 2012, FRC Chairman Baroness Hogg said:

“Companies and investors have responded positively to the changes we introduced in 2010, as they have done consistently in the twenty years since the first corporate governance code was published. In response to further consultation, the 2012 Code focuses on the role of the audit committee – its selection of auditors and how it reports – and asks companies to articulate their policies on boardroom diversity, which many are doing even in advance of the new Code taking effect. Meanwhile changes to the Stewardship Code ask investment managers to explain what use they make of proxy advisers, and ask asset owners such as pension funds to reflect their stewardship policies in the mandates they award to managers.”
Corporate Governance is not just for listed companies however, no matter what their size, companies should be looking to review the effectiveness of their boards annually – and they should check their Articles of Association to see when their directors should be put up for re-election by the shareholders.


Britain’s most widely used antibiotic “useless” researchers argue

December 19, 2012

237A study carried out by researchers at the University of Southampton has concluded that amoxicillin, Britain’s most widely used antibiotic, is “useless” for the majority of people who are currently prescribed it for coughs and common chest infections.

Paul Little, Professor of Primary Care Research at the University of Southampton said that patients should instead take paracetamol and wait to get better. He argued that the study should be the “final nail” that killed of widespread prescribing of antibiotics for minor ailments. More than 13 million prescriptions for amoxicillin were written by GPs last year, and the NHS spends £16 million a year on it.

Patients should simply take some paracetamol and wait to get better, experts say. Family doctors should stop prescribing the drug in most cases, researchers advise, to prevent side-effects and stem the rise of superbugs.

More than 13 million prescriptions for amoxicillin were written by GPs last year, a third of all antibiotic prescriptions in England.

But Paul Little, Professor of Primary Care Research at the University of Southampton, who led the latest research, said: “It’s useless for most of the people who are getting it at the moment.”

He said the study should be the “final nail” that killed off widespread prescribing of antibiotics for minor ailments. As well as concerns over antibiotic resistance, emerging evidence has suggested that many common problems were not caused by bacteria and could not, therefore, be treated by antibiotics.

To resolve the issue, scientists carried out a trial of more than 2,000 patients around Europe with common chest complaints, for which amoxicillin is most commonly prescribed. Half the patients were given the antibiotic while the rest were given a placebo.

After a week, symptoms had lasted just as long and were just as bad in both groups, they report in The Lancet Infectious Diseases.

While 16 per cent of patients taking amoxicillin said their symptoms got worse, compared to 19 per cent of the placebo group, this was outweighed by side-effects such as nausea, rashes and diarrhoea which were seen in 29 per cent of people taking the drug, compared to 24 per cent of the placebo group.

“Patients given amoxicillin don’t recover much quicker or have significantly fewer symptoms,” Professor Little said. “People just need to take paracetamol or ibuprofen, look after themselves and wait for the thing to settle.

Like all antibiotics, amoxicillin is effective at killing bacteria. But Professor Little said this was no help against most mild respiratory problems. “The evidence to date suggests that a large proportion of these infections are caused by viruses and therefore antibiotics just aren’t going to work,” he said.

Even when were infections are caused by bacteria, inflammation can linger even after the bugs are killed off, meaning antibiotics are no help in shortening symptoms.

GPs needed to get tough and break the cycle which made patients ask for antibiotics. The NHS spends £16 million a year on amoxicillin and tens of millions more on other antibiotics. “If you prescribe these antibiotics, patients get better and they ascribe that to the antibiotic and so you get into this cycle of medicalising illness,” he said.

“These infections can last for three weeks — it’s a very nuisancy illness. You can’t blame people for wanting to be assessed but I think we have a responsibility.”

He said the research was “pretty definitive evidence, really. The issue now is can we identify the subgroups who can benefit.”

Amoxicillin can cure pneumonia, which can be fatal if not treated and Professor Little said more effort was needed to identify the minority of patients who really needed the drug.

“I think GPs should have a high threshold for prescribing antibiotics where they don’t think the patient has pneumonia. We have to be a bit cautious”, he said. “Using amoxicillin to treat respiratory infections in patients not suspected of having pneumonia is not likely to help and could be harmful.”

Campaigners have repeatedly warned that overuse of antibiotics by GPs is fuelling the rise of life-threatening superbugs, as bacteria evolve resistance. Last month Professor Dame Sally Davies, the Chief Medical Officer, said that antibiotic resistance was one of the greatest threats to modern medicine.

Professor Little added: “Resistance is a serious problem. There aren’t really any new antibiotics coming in the pipeline and we know that if we overuse antibiotics they will at some stage become useless. We all want our children to have antibiotics that work for them when they have a serious illness, so we do have to be careful about conserving the antibiotic stock.”

Dr Michael Moore, spokesman for the Royal College of GPs, who was involved in the study, said: “It is important that GPs are clear when they should and should not prescribe antibiotics to patients to reduce the emergence of bacterial resistance in the community. This study backs the approach taken in the NICE guidelines that patients who present with acute lower respiratory tract infection where pneumonia is not suspected can be reassured by their GP that they will recover without antibiotics and that the illness is likely to last about three weeks in total whether or not they have a prescription.”

The Department of Health said: “The more you use an antibiotic, the more bacteria become resistant to it. Therefore the Government urges patients and prescribers to think about the drugs they are requesting and dispensing and only use them when necessary.”


How to become an effective Executive Director – Oxford 11 January 2013

December 10, 2012

The effective Executive Director course helps you to be a more effective member of the board. The step-up from senior management to a board role requires a new skill-set and a different way of looking at things. As an Executive Director you are not only responsible for your functional role but now have collective responsibility for the strategic direction of the organisation.

The effective Executive Director

This one-day interactive course is aimed at aspiring, newly appointed or current Executive Directors and covers essential knowledge about roles, responsibilities, strategy and corporate governance that are key foundations for an Executive board role. It also considers up to date thinking on corporate governance and the responsibilities of owners, the board and employees.

This course identifies the various ways and circumstances in which executive directors can make an effective contribution to a board’s work.

Who should attend?
Individuals who aspire to an executive board position, those who are newly appointed to a board role and those who have held an executive director role for some time.
What to expect?

  • Clarifies the roles and responsibilities of an executive director
  • Provides practical guidance on how to balance the demands of functional and strategic responsibilities.

Course objectives
Participation on this course will provide you with the knowledge to:

  • Clarify the board’s role, purpose and key tasks
  • Appreciate the legal and fiduciary obligations of a company director
  • Make an effective contribution to the board
  • Recognise the qualities and experience needed to fulfil an executive director role

Course Leader: David Doughty CDir FIoD

David Doughty - Chartered DirectorThe course is delivered by David Doughty, a Chartered Director and highly experienced Non-Executive, Chief Executive, Chair, Entrepreneur and Business Mentor. David has extensive executive and non-executive experience in small and medium enterprises in private and public sectors. He is also a board level consultant to multi-national organisations and a Chartered Director Ambassador for the Institute of Directors. See his LinkedIn profile here: (

Key Details
Duration: 1 day

Advanced Business Solutions
5G Milton Park
Abingdon, Oxon
OX14 4RY

£330.00 (ex VAT)
Early Bird Discount Price
£300.00 (ex VAT)
Book Now
To see course dates and to book your place now follow this link:
Course Registration
The fee includes lunch, refreshments and a copy of the course handbook

Courses can be delivered ‘in-house’ to a group of Executive Directors – to find out more contact or call 01865 350345


Revised NAPF Corporate Governance Policy and Voting Guidelines

December 7, 2012

Revised guidance for shareholders sets out what is expected from boards in key areas

The National Association of Pension Funds (NAPF) has published updates to its Corporate Governance Policy and Voting Guidelines, issued to help shareholders assess how the listed companies in which they invest comply with the UK Corporate Governance Code. The revised Guidelines replace the previous Guidelines (dated November 2011) and will be relevant to both companies and investors for the forthcoming 2013 AGM season.

The Guidelines refer to the latest version of the UK Corporate Governance Code, published in September 2012, and continue to state that NAPF’s policy is rooted in the provisions of the Code. As a result, the revised NAPF Guidelines do not introduce major new requirements but, on the whole, serve to re-emphasise certain matters. The Guidelines also refer favourably to the significant Government reforms to company reporting and executive remuneration which are currently in progress and to the Financial Reporting Council’s work to improve audit committee reporting and transparency.

Investors and stewardship

The Guidelines stress the importance of dialogue between issuers and investors, in particular, over the next year in developing their responses to the Government’s proposed reforms affecting company reporting and directors’ pay.

Tweaks to the wording of the Guidelines also indicate a renewed focus on the importance of responsible investment, in line with the FRC’s re-published Stewardship Code (September 2012) and NAPF’s first ever Stewardship Policy, issued in November 2012. Companies should continue to report effectively and listen to shareholder concerns, whilst investors are now also urged to appreciate the company’s approach to governance. The NAPF welcomes the increasing use of the Chairman’s statement to set out governance policies.

In addition, shareholders are actively encouraged to make use of all the powers at their disposal to support the highest standards of governance, including in relation to director re-elections, adoption of the report and accounts, approval of the remuneration report and appointment of the auditors, which NAPF notes “at present are only rarely challenged”.


The revised Guidelines clarify and re-emphasise what is expected from companies in order to promote greater diversity, in particular of gender.

Explanations to shareholders should include a description of the board’s policy on diversity (including professional, international and especially gender diversity), any measurable objectives that the board has set for implementing the policy and progress on achieving the objectives.

Statements on succession policy should cover the company’s policy on diversity, including gender. This means setting out diversity objectives and progress towards achieving them. The NAPF also states that it is opposed to diversity quotas but expects companies to set targets for gender diversity and to demonstrate progress towards achieving these.

Absence of a diversity policy may lead to shareholders abstaining on or opposing the re-election of the chairman of the nominations committee and/or the chairman of the board.

Absence of a statement on a diversity policy and its application may lead shareholders to vote against the election of a director, or in extreme cases the chairman.

Accountability and audit

The revised Guidelines strongly support the recent changes to the UK Corporate Governance Code which encourage enhancing the audit committee report to include an assessment of the effectiveness of the external audit process, the approach taken to auditor appointment and re-appointment, the length of tenure of audit firms, when tenders were last conducted and explaining how auditor objectivity and independence are safeguarded.

According to the NAPF, investors believe that auditor independence is crucial to audit quality. The NAPF, therefore, supports the Code recommendation that the external audit contract should be put out to tender at least every ten years, as this should allow the audit committee to compare audit firm services. This goes further than the previous encouragement that companies consider periodic tenders. Shareholders should be informed in advance of the decision to tender the audit contract.


NAPF believes companies should provide simpler remuneration arrangements and directors should be required to hold greater numbers of shares for long periods. Companies which choose to adopt the new Government regulations on directors’ pay in advance of their formal introduction in October 2013 can expect shareholders to review compliance rigorously, whilst acknowledging that best practice will still be evolving.

In addition, changes to the NAPF policy include a new statement that increases in directors’ base pay should be in line with the rest of the workforce. Remuneration committees should be prepared to use discretion when finalising pay arrangements to ensure that awards are aligned with the success of the business over time. In addition, the Guidelines stress that the remuneration committee should be in charge of its policies, not totally reliant on the advice of consultants and able and willing to justify its plans to both directors and shareholders.

Shareholders on the other hand should judge the suitability of pay arrangements by looking at how these link to the long term success of the company.


As before, companies are asked to explain in the annual report if directors are unable to attend a number of board or committee meetings. The Guidelines now clarify that this applies to all meetings, whether they were scheduled or ad hoc.

In addition the Guidelines include a new recommendation for directors’ contracts to be made available on-line for inspection by shareholders.

Shareholder dissent at meetings

NAPF continues to advise that where there have been significant votes against a resolution at a meeting companies should seek to understand and address the reasons for this. In addition, companies are now asked to disclose the outcome by way of an RNS announcement.

The new Guidelines

The revisions to the NAPF Guidelines were published on 4 December 2012. On the same day the NAPF published revised Corporate Governance Policy and Voting Guidelines for Smaller Companies (aimed primarily at AIM companies) and for Investment Companies. All three sets of revised Guidelines are available here.

Why Corporate Governance Isn’t Working

December 7, 2012

Director development expert calls for ‘new leadership’ at global convention.

Corporate governance has not delivered according to Colin Coulson-Thomas speaking at a global convention at London’s Lords Cricket Ground. The author of Developing Directors claimed that to move on from avoiding risks to sustainable business growth we need to embrace ‘new governance’ which business leaders should want because of the clearly beneficial results it brings for companies, people and the planet.

Having worked with over 100 boards to improve director, board and corporate performance Coulson-Thomas believes people have lost sight of the need for competent directors and effective boards which can innovate and build businesses: “Old governance has involved top-down command and control leadership with its emphasis upon directing, leading, motivating and monitoring. Too many boards have been formulating strategies and producing plans rather than making things happen.”

Coulson-Thomas questions whether corporate governance has been a placebo and distraction when so many boards bark up the wrong trees: “Effort is devoted to restructuring and corporate initiatives to address various challenges rather than creating opportunities and shaping the future. Costly, time consuming and disruptive attempts are made to change cultures and win talent wars when there are quicker ways of competing and winning with existing people, cultures and structures.”

Current corporate governance has not prevented scandals, bailouts and Government intervention to prevent the collapse of financial and economic systems. Another speaker Dr Jeremy Pearce reminded convention delegates that additional regulations “cannot prevent directors from taking poor decisions, attempting cover ups and not acting in the best interests of a company when they feel they can get away with it.”  

Coulson-Thomas finds “Even supporters of corporate governance acknowledge there are missing elements. We need to address such realities as uncertainty, insecurity and a lack of business confidence in key markets. ‘Traditional’ approaches have also proved inflexible and costly, while priorities can change during implementation.”

The University of Greenwich Professor’s search for alternatives has involved issue surveys of some 2,000 organisations and critical success factor surveys of over 2,000 companies and over 500 professional firms. It included working with owners and directors of 50 businesses as a result of European Community support and evaluations of over 20 adoptions of new and better approaches.

The accumulated evidence is compelling and consistent. Coulson-Thomas reveals “Boards are overlooking focused and cost effective options that ensure compliance and deliver large returns on investment and multiple benefits including higher performance, faster responses, lower support costs, increased understanding, greater engagement, and reduced stress and risk.” 

New governance’ includes such missing elements and focuses on the behaviours of directors and boards. There is more emphasis upon implementing strategy and providing performance support. New bottom-up leadership benefits people as well as organisations by helping them to handle uncertainty and excel at difficult jobs.

Developing Directors, a 366 page handbook for building an effective boardroom team by Colin Coulson-Thomas is published by Policy Publications and available from (ISBN 978-1-87298-032-4)

Other Policy Publications titles by Coulson-Thomas include Winning Companies; Winning People which summarises what high performers do differently and his latest reports Talent Management 2 and Transforming Public Services which set out how new leadership can provide a quicker and more affordable route to high performance organisations.

About the Author and Speaker:

Internationally recognised for his work with directors and as a change agent and transformation leader, Prof. Colin Coulson-Thomas has helped boards in many sectors, counselled individual directors and reviewed the business development processes and practices of over 100 companies. The author of over 40 books and reports, he has held corporate and public sector board appointments and spoken at over 300 events in 40 countries. He can be contacted via

About the Global Convention:

The Institute of Directors of India’s London Global Convention 2012 incorporated the 12th International Conference on Corporate Governance and the 3rd Global Summit on Sustainability. The convention started with a business meet at the Royal Overseas League and after two days of presentations and discussions at Lords cricket ground concluded with a study visit to the University of Greenwich and other locations on the Maritime Greenwich UNESCO World Heritage Site.

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