Labour's plans to loosen reporting rules for shareholder-owned companies have been branded 'incoherent' and evidence of 'a lack of joined-up thinking' by governance experts.
The Government wants to update and simplify corporate reporting requirements as part of a pledge to cut red tape and boost economic growth. The proposals were set out in a consultation paper published last week.
The reforms would allow companies to hold online-only annual general meetings, scrap annual shareholder votes on boardroom pay, and remove annual disclosures showing how much more bosses earn than their staff.
Who is pushing the changes
Firms have lobbied for months to loosen the reporting rules, led by GC100, a group representing general counsels and company secretaries at FTSE 100 companies, the London Stock Exchange's index of its 100 largest listed businesses.
One of GC100's former members is Liz Lloyd, who worked as a fixer in Tony Blair's government and was later a senior executive at Standard Chartered Bank. Lloyd returned to politics in 2024 and now serves as the minister responsible for regulatory reform.
'A sizeable gap in Labour's thinking'
Governance expert Tom Powdrill said making stock market-listed firms less accountable to their owners revealed 'a sizeable gap in Labour's thinking'.
"This feels out of step with Burnham's rhetoric to date," Powdrill said, referring to the Prime Minister's promise to give greater public control and scrutiny to private companies such as Thames Water.
Luke Hildyard of lobby group ShareAction was equally critical. "It's quite incoherent," he said. "It seems it is being more interventionist one minute and more laissez-faire the next. It reflects a lack of joined-up thinking."
Campaign for face-to-face meetings
The Mail on Sunday is campaigning for all FTSE 100 companies to hold face-to-face annual meetings so that boards remain accountable to their shareholders. The shift towards virtual-only events has accelerated as some companies exploit a loophole in the law, which ministers say they want to close.
Caroline Escott of the Governance for Growth Investor Campaign, which speaks for some of Britain's biggest pension funds, said good governance was 'a help, not a hindrance, to the UK economy'.
"We are therefore disappointed to see the Government further enabling virtual-only AGMs and proposing to remove the shareholder advisory votes on remuneration reports," she said.
Pay votes and reputational risk
Annual votes on executive pay often produce the biggest protests by shareholders and can cause companies considerable reputational damage, making the proposal to scrap them one of the most contested elements of the consultation.
The Government defended the plans, saying: "Our proposals will help businesses grow by making annual reports shorter, clearer and more focused on the information that investors actually use, while reducing unnecessary duplication and complexity."
