Shareholders fear weak Hampel report

The Government will come under severe pressure to toughen up rules on corporate governance if the Hampel report, due to be published tomorrow, pulls its punches on key aspects of companies' responsibilities to their shareholders.

One leading corporate governance consultancy says ministers would be duty-bound to take further steps if the Hampel Committee, the successor to the Cadbury and Greenbury committees, failed to propose specific new guidelines.

Its forthcoming report is expected to disappoint shareholder groups by taking a general approach to issues such as requiring institutions to declare voting policies, reviewing the role of non-executive directors and introducing a shareholder vote on directors' pay.

Anne Simpson, joint managing director of Pirc, the corporate governance consultancy, says the Government's decision is likely to depend on the reaction to the Hampel proposals.

"If Hampel gets a resounding round of applause and people feel it has taken on the major issues then the Government will feel it is not worth re-inventing the wheel. But if it doesn't, then it would be an abdication of responsibility if the Government did not come forward," she said.

The Government has already pledged to set up another committee of experts to consider corporate governance. But it is thought to favour self-regulation over new legislation.

Corporate governance specialists are concerned that the Hampel Committee seems ready to draw a line under the more specific proposals of the Cadbury and Greenbury committees and adopt a more general, flexible approach.

Some even expect a watering-down of some of the Cadbury principles and an easing of the burden on smaller and medium-sized companies.

Sir Ronnie Hampel, the ICI chairman who heads the committee, has already said he has no desire to produce "an earth-shattering report". Ms Simpson says: "I hope I am going to be pleasantly surprised."

Pirc wants City institutions to be required to publish their voting policies and for them to have a duty to vote.

It also wants pension fund trustees and individual fund members to have the right to ask institutions how they voted on particular issues. It is keen for small and medium-sized business to be included in all the proposals so that a "level playing field" exists.

The consultancy is particularly concerned about reports that the Hampel Committee will relax the regulatory burden on smaller companies.

Ms Simpson said: "The issue of corporate governance is more important for smaller companies . If they are growing rapidly they will benefit from the experience of non-executive directors."

Pirc is concerned that some medium-sized public companies do not have any non-executives.

In its submission to the Hampel Committee it argued that, with smaller quoted companies: "Investors are faced with relative illiquidity, a paucity of analyst and media attention and perhaps founder shareholders and directors which weights the Government's balance in favour of the internal players."

Some corporate governance specialists have argued that if the requirements on smaller companies are eased, then their market valuations could suffer as investors would perceive them to be a higher risk.

The Hampel Committee was set up last year as the successor body to the Cadbury Committee on corporate governance, which reported in 1992 and the Greenbury Committee, which was prompted by rows of executive pay, whose report was published in 1995.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Financial Controller

£45 - £55k DOE: Guru Careers: A Financial Controller is required to join a suc...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£12500 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Recruitment Genius: Sales Adviser - OTE £24,500

£22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...

Recruitment Genius: Business Development Executive / Sales - OTE £40,000

£18000 - £40000 per annum: Recruitment Genius: This fast growing Insurance Bro...

Day In a Page

Mullah Omar, creator of the Taliban, is dead... for the fourth time

Mullah Omar, creator of the Taliban, is dead... again

I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

Margaret Attwood on climate change

The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

New Dr Seuss manuscript discovered

What Pet Should I Get? goes on sale this week
Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

The cartoon hedgehog leading the way into a whole new reality

Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
Ants have unique ability to switch between individual and collective action, says study

Secrets of ants' teamwork revealed

The insects have an almost unique ability to switch between individual and collective action
Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

Donovan marks his 50th year in folk

The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

Simulator recreates thrill of F1 circuit

Rory Buckeridge gets behind the wheel and explains how it works
Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

Twitter accused of 'Facebookisation'

Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

Jane Birkin asks Hermès to rename bag

The star was shocked by a Peta investigation into the exotic skins trade
10 best waterproof mascaras

Whatever the weather: 10 best waterproof mascaras

We found lash-enhancing beauties that won’t budge no matter what you throw at them
Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

Diego Costa: I go to war. You come with me...

Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
Ashes 2015: England show the mettle to strike back hard in third Test

England show the mettle to strike back hard in third Test

The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

Charley Hull: 'I know I'm a good golfer but I'm also just a person'

British teen keeps her feet on ground ahead of Women's Open
Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'