Watering down reporting rules with online-only AGMs is ‘ill-advised’ – and even bosses agree!

Business leaders are overwhelmingly opposed to key parts of controversial Government plans to weaken reporting rules for shareholder-owned companies, a major survey has found.

Ministers want to ‘modernise’ corporate reporting requirements to cut red tape and boost growth.

But the reforms face a mounting backlash from campaigners who want to block moves to allow online-only annual meetings (AGMs) and to scrap an annual vote on boardroom pay.

A poll of 250 senior business leaders found 88 per cent of them thought the UK was at risk of losing its market leading reputation for corporate governance if standards were lowered.

And 83 per cent of them said that hybrid AGMs – in person and online – were their preferred format.

Just 5 per cent thought moving to a virtual-only event was a good idea.

The biggest majority, at 92 per cent, also wanted to keep the annual advisory vote on executive pay, which often acts as a magnet for shareholder revolts and can cause considerable reputational damage to companies and their bosses.

‘Our survey shows that watering down the UK’s corporate governance standards… is ill-advised,’ said Caroline Escott, chair of the Governance for Growth Investor Campaign, which represents some of Britain’s biggest pension schemes.

‘In its current iteration, the push for simplification will come at the expense of vital accountability mechanisms,’ Escott added.

‘Good governance is a help, not a hindrance to the UK economy,’ said Craig Heron, investment director at Railpen, the £34billion retirement scheme for railway workers.

The Mail on Sunday is campaigning for all FTSE 100 companies to hold face-to-face annual meetings so boards can be more accountable to their share owners.

The move to digital-only events has accelerated as some companies exploit a loophole in the law, which ministers want to close.

A consultation on the Government’s proposals closes at the end of the month.

‘We look forward to presenting this research…as we work to ensure the consultation delivers a balanced, modern framework that improves efficiency without weakening the standards that everyday savers rely on for their outcomes in retirement,’ Escott said.

‘Modernising corporate reporting should go hand in hand with protecting shareholder rights and maintaining accountability so that good governance continues to drive long-term growth and better outcomes for our members,’ added Diandra Soobiah, director of responsible investment at Nest, which has 14million pension savers.

A Government spokesperson said: ‘Companies spend too much time on corporate reporting that isn’t always useful, so we’re consulting on making annual reports shorter, clearer and more focused on what investors need, generating growth in every postcode.

‘We welcome the constructive engagement we have had from all stakeholders, including the GGIC, during the consultation.’