The Irish Stock Exchange (ISE) has said there appeared to be a “disconnect” between the findings of a report into corporate governance for Irish plcs and commentary contained in the study.
Acounting firm Grant Thornton recommended in its report that new legislation be introduced to incorporate into law key provisions of the Combined Code on Corporate Governance, in particular relating to the role of audit committees and directors.
Almost half of Irish plcs said they were not fully compliant with the voluntary code prompting Grant Thornton managing partner Paul Raleigh to say that there is a “comply or explain away” culture among some publically listed Irish companies.
However, the ISE said today that while the findings identify strong compliance with key components of the code “the commentary suggests that there is significant divergence away from generally accepted standards. This is regrettable.”
It points out that the Code is the same as that used on the London Stock Exchange and “is regarded as best practice in Europe”.
Mr Raleigh said if elements of the code had been incorporated into law, former Anglo Irish Bank chairman Seán FitzPatrick would have been unable to assume that role because he had already served as chief executive.
Another issue raised by the Grant Thornton Governance Review was the number of other boards (four) on which Mr FitzPatrick sat.
“What we have noted with the Code is that you can comply or explain. If you don’t want to comply with a provision you can explain why you are not complying.”
“A number of companies have chosen, in particular instances not to comply and just explain it away. We would have a view that needs to be amended,” Mr Raleigh said today.
He admitted to being puzzled by the Irish Stock Exchange’s reaction to the report.
“We are trying to make recommendations to improve. Clearly events over the last couple of weeks would say this something that needs to improve”.
Given that the Iseq shared its Combined Code with the LSE he said the recommendations in the report were equally applicable for the UK.
Many firms paid only lip service to the spirit of good governance he said and the law should be changed to oblige them to have independent audit committees.
