FSB hails government's focus on corporate governance

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A new public consultation on measures to strengthen corporate governance has been hailed by the Federation of Small Businesses (FSB).

The government is seeking views on proposed ways of strengthening worker and customer voices in the boardroom, reform executive pay and build a stronger corporate governance framework for large, privately-held companies.

The FSB noted that the government's emerging corporate governance agenda reflects "what small businesses have been asking for".

For instance, it noted that ministers have proposed forcing large companies to appoint a dedicated non-executive director to their board to give small suppliers a voice, tackle supply chain bullying and stop late payments.

Mike Cherry, national chairman of the FSB, said it is has been "pushing hard for this reform".

"We will now work to flesh out how this could work in practice," he commented.

"Small businesses right across country will want to see this proposal adopted, so that whole Boards own a company’s payment practice and are held accountable for it.

"In our view, this issue lies at the very core of good corporate governance, and is required alongside reforms to transparency and the proposed Small Business Commissioner."

Mr Cherry insisted that putting an end to late payments is vitally important to the success of the UK economy in the future.

He added that the proposed reforms represent an "important step forward" and said it is pleased the government is suggesting measures put forward by the UK's small business community.

The government's renewed focus on corporate governance has also been hailed by the CBI.

Josh Hardie, deputy director-general of the body, stated that the UK's approach to this issue is respected across the globe.

Indeed, he said companies in Britain recognise that building great relationships with customers, employees and communities is the "cornerstone of success".

However, Mr Hardie pointed out that legitimate concerns still exist and that businesses are "determined that the unacceptable behaviour of the few should not tarnish the effectiveness of the many".

As a result, he believes it is right that approaches to governance continue to evolve to "support a modern, fair economy".

Business secretary Greg Clark added that the government is determined to ensure the UK is "one of the best places in the world to work, to invest and to do business".

This, he stated, means it must have a framework of corporate governance that is internationally admired.

"This review will help us achieve that aim and the views of businesses, investors, employees, consumers and others with an interest in successful business are warmly welcomed," Mr Clark said.