Business warn over ‘heavy-handed’ elements of corporate governance shake-up

Greg Clark addresses the Commons on Nissan.

Greg Clark addresses the Commons on Nissan.

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Government proposals to give workers greater say in the running of a company and to make pay levels more transparent have been given a cautious welcome by business leaders, but concerns over the impact that ‘heavy-handed regulation’ could have on investment persist.

The proposals are contained in a green paper on corporate governance unveiled by Business Secretary Greg Clark in the House of Commons.

Also included in the proposed shake-up are possible moves to give shareholders a binding vote on executive pay levels and to extend governance rules for publicly listed companies so that they cover the largest privately owned firms too.

CBI deputy director-general Josh Hardie said that businesses accepted there were “legitimate concerns” about governance and were ready to work with the Government to find solutions but he warned that requirements to publish pay ratios have “the potential to be genuinely misleading”.

Adam Marshall, director general of the British Chambers of Commerce, said: “While there is a real appetite from many firms to see action on the very small number of companies and executives whose actions negatively impact the business community as a whole, there is also concern that heavy-handed regulation could reduce investment or create significant costs for firms.”

Simon Walker, director general at the Institute of Directors, said greater scrutiny for unlisted companies had been ”long overdue”.

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