Does your organisation’s board have a catalysing or constraining influence?

When the time comes for your organisation’s annual meeting, as a shareholder, it is likely that you will be asking yourself whether each member of your board is still qualified for their position.

It is certainly a question that should be carefully considered by prospective and current users of board secretary services like those that London Registrars can provide, but it is not the only one that is important.

That’s because it is also vital to think about your firm’s board as a whole, and whether its mix of people is the right one for the company.

Theranos saga brings crucial lessons

The importance of the right board mix in the context of recent events can be perhaps best understood with reference to the scandal that has engulfed the high-profile start-up Theranos in the past year.

The company stated that it would revolutionise blood testing by requiring only a few drops, rather than vials, of blood from patients, and maintained this even amid mounting evidence against its technology.

However, while the firm was eventually exposed, had anyone considered its board members merely as individuals, they would have struggled to find a “bad one” among the many distinguished leaders – including former US secretaries of state, senators, admirals, generals and a defence secretary.

The lesson to be learned here is not that the Theranos board had any disreputable members, but that it lacked the necessary mix of general experience and specific knowledge with either biotechnology or start-ups.

Such members of the board were unable to challenge the firm’s charismatic founder, Elizabeth Holmes, and her insistences that the technology was developing as expected.

What does this mean for the composition of your firm’s own board? 

Such scandals arguably show that even when individual directors seem well-qualified, care needs to be taken to ensure that boards demonstrate certain characteristics.

These include the presence of one or two “utility player” directors who are wise, battle-worn business leaders, as well as a strong CEO, as the board itself does not run the company. Instead, the board’s most crucial daily requirement is to oversee the performance of the CEO, so whoever occupies this role must be strong.

A strong relationship between the CEO and the chair/lead independent director is also a must, as is a board overindexed on industry experience, to aid fast and informed decision-making. It is also essential for members to be willing to fire themselves, as boards that don’t continually monitor their own performance are doomed to failure.

While shareholders aren’t aware of the inner workings of boards, they do need to consider the mix of board members and its overall agenda, rather than merely the individuals’ qualifications, when they come to cast their votes.

UK corporate governance ‘at a crossroads’ as Brexit looms

 All manner of organisations with an interest in a company secretary service will have also had reason to take note of the recent comments on the UK Corporate Governance Code by the Financial Reporting Council (FRC)’s Head of Communications, Peter Timberlake.

Call for a “fundamental review”

Observing that the Code was now a quarter of a century old and had “worked well to inspire confidence in UK businesses and instil trust among investors”, Timberlake nonetheless called for “a fundamental review of the Code to set it on a course for the next 25 years and to ensure it continues to attract goodwill and capital from across the globe, particularly as geopolitics and world economies look less certain.”

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What the 2017 Spring Budget means for EIS and R&D tax credits

As the 2016 Autumn Statement promised, this week saw the presentation of the final Spring Budget, which – given plans for an annual budget presentation providing a longer-term outlook – focused on areas of potential change since the Autumn Statement, such as the deficit. The Budget also sought to reaffirm the new government’s vision of how it would achieve a “stronger, better, fairer Britain”.

Firms using corporate secretary services like those of London Registrars are therefore likely to be particularly heartened by the Chancellor of the Exchequer Philip Hammond’s reiteration of the government’s commitment to preserving Britain’s status as a premier global business destination.

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Disciplinary action highlights importance of AIM companies liaising with their nominated advisers

Of interest to many an AIM company secretary wishing to ensure compliance within their organisation will be disciplinary action recently taken by the AIM Disciplinary Committee (ADC) in relation to an AIM company breaching rules by failing to provide its nominated adviser (nomad) with “information reasonably required to carry out the nomad’s responsibilities”. Continue reading

Steps are being taken to guard against modern slavery in UK supply chains

Modern slavery, in its various forms, affects around 21 million people worldwide and is a multi-billion pound industry. It is surprising that slavery even exists in the 21st century, but it does. In 2015, then-Home Secretary Theresa May introduced the Modern Slavery Act to try to prevent UK businesses from becoming part of the problem.

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The ‘Brexit’ vote and the unforeseen consequence for corporate governance  

The UK electorate’s decision to leave the European Union has triggered a period of uncertainty for the nation until Article 50 is triggered at some point next year. Jobs, economic growth and freedom of movement are sure to be big issues for the public, but perhaps one area that is likely to see especially great, albeit largely unforeseen change as a result of the vote is corporate governance. Continue reading

Changes to the guidance for multi-academy trust governing bodies

Regardless of the size of organisation, good governance is essential – it helps to hold key decision makers to account, ensure that records are kept correctly and accurately and enhance transparency. Ultimately, good governance should be seen as a means of making a business’s procedures more efficient, not as a layer of red tape through which to break. Continue reading

Revamp to EU data protection legislation for 2018

The European Commission has recently moved to strengthen and improve data protection laws in the European Union, with the introduction of the General Data Protection Regulation (GDPR).

The GDPR comes into force in May 2018 and operates similarly to the Data Protection Act that it replaces. Although the current legislation applies to all “personal data” that is received by organisations, following advancements in technology, the new legislation offers a broader definition of “personal data”, with online identifiers – such as IP addresses – receiving greater protection than previously. Continue reading

People with Significant Control Registers – a guide to the newest statutory register

The Small Business, Enterprise and Employment Act 2015 made changes to the Companies Act 2006, creating a requirement that companies keep a new register detailing the individuals or legal entities that have control over them, known as a People with Significant Control Register or a PSC Register.

The requirement to keep a PCS Register was introduced as part of the government’s commitment to improve the transparency of companies to state publicly who owns and controls UK businesses. Previously, it was only listed companies who had to publish this information.

Since 6 April 2016, the majority of UK companies and LLPs have been required to maintain a PSC register, which must be filed at Companies House as part of the first annual confirmation statement, which will replace the annual return from 30 June 2016.

The details of any individuals who meet the criteria of having significant control need to be entered in to the register. The PSC register can also contain details of corporate entities that have control if they are classed as Registerable Legal Entities (‘RLEs’) under the legislation. The definition of a RLE includes UK companies as well as overseas incorporated companies that are listed on certain specified, regulated markets. Where a non-UK company has control but does not meet the definition of a RLE, it is necessary to identify the individuals behind that company.

We have produced a short guide which details the tests used to decide whether a person or legal entity has significant control over your company and explains the definition of a RLE.

London Registrars offers a range of corporate governance, risk and compliance services. As part of our basic company secretarial support service we would hold and maintain your company’s statutory registers, including the PSC register, securely at our central London office, file changes with Companies House, and prepare and file your company’s annual return or confirmation statement. For an informal, no obligations discussion on how we can assist you, please contact us.

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