Large unlisted companies need extra scrutiny following the collapse of BHS last year, the Institute of Directors (IoD) has said in its election manifesto.
Bhs in sale
The lobby group is calling for a tightening of controls on big private firms to prevent a repeat of the retail scandal.
It wants private businesses with more than 2,000 employees to follow a corporate governance code similar to the regime around public companies, where they either follow the rules or explain why they have not done.
“There are a number of large unlisted companies – BHS was a prominent example before it collapsed – whose size means extra scrutiny is justified,” the IoD said. ”A code for large private companies which is similar to, but not as prescriptive as, the FRC’s [Financial Reporting Council’s] main code, would open up the ‘black box’ of corporate governance in these firms.”
The IoD is also seeking stronger controls over executive pay.
“UK corporate governance is highly regarded across the world, but there is still a pressing need to rebuild public trust in big business to work in the long-term interests of investors and employees, rather than the short-term interests of managers,” said Oliver Parry, head of corporate governance at the IoD.
“Now is the time for sensible reforms.”