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Designers of UK private-sector governance standards criticize the government’s plan to extend some of the strictest regulations on large public companies to unlisted companies, arguing that the changes will have a “significant negative impact.” Did.
Sir James Wates, chairman of Wates Group, one of the UK’s largest family-owned construction companies, said: Suggestions to extend the definition The introduction of “public interest entities” (PIEs), including large private companies, will increase costs and discourage growth and innovation.
The proposed reforms follow public opposition to the collapse of the outsourcer Carillion, the café chain Patisserie Valerie, and the privately owned retailer BHS.
Waits, who also chairs the Institute for Family Business, said the proposal was a “sledgehammer” and questioned the need to expand the PIE regime, which currently applies only to large publicly traded companies and financial groups. Presented.
“A few high-profile cases of poor governance — the Patisserie Valerie and BHS cases are often cited, but it is widespread to suggest that they reflect trends — the minister said,” Do something. Encourage them to look like they’re launching a big company, “he told the Financial Times.
The proposed changes will only be PIE if sales or employee numbers exceed certain thresholds until a privately held company or a company with an Aim list, such as Patisserie Valerie, collapses on suspicion of fraud in 2019. Means that it meets the definition.
The government’s white paper, published in March, included a broader definition of options that could more than double the number of PIE companies to about 4,000. Public consultation on plans for directors to also be responsible for the accuracy of corporate accounting ended earlier this month.
The change will be a burden to the private sector, Waits said. “Additional audit and reporting requirements come at a considerable cost, and perhaps even more worrisome, the innovation and growth of many family-owned businesses that employ 14 million people and account for about one-third of UK GDP. It will establish an impediment. “
“Private companies are subject to regulations designed for publicly traded companies,” he said, despite the fact that the structure of the PIE system is generally quite different.
Instead of imposing more rules on private groups, Waits will assess the impact of the new company’s reporting regulations introduced in 2019 and work with private companies to address gaps in disclosed information. I asked for it.
He said the minister should give him time “to spread good practices.” Work to create the principles of Warts.. These are a series of voluntary corporate governance guidelines for large private companies issued in 2018 with the support of the Financial Reporting Council.
Proponents of the proposal believe that this change will provide greater protection for employees, pension plan members, supply chains and other stakeholders.However, some companies, investors and accountants have raised concerns that overhaul is possible. Suppress company growth and increase costs..
Separately, the Charity Commission opposed the proposal to extend the definition of PIE to include large nonprofits, saying it was unaware of the failure of the philanthropic sector to rival the corporate world. ..
In a statement, the government said, “The largest private companies have a wide range of economic importance and are often much larger than some listed companies, so they can be avoided by designating them as public interest entities. It reduces the risk of failure for a successful company and enables proper oversight to protect UK employment. “
The UK Government has criticized the “sledgehammer” approach to corporate governance reform
Source link The UK Government has criticized the “sledgehammer” approach to corporate governance reform