Many UK companies are walking blindly towards a regulatory burden that could end up crushing their b...
Many UK companies are walking blindly towards a regulatory burden that could end up crushing their businesses, according to a new report released jointly by law firm DLA and the London School of Economics today.
Regulators in the US, Europe and even the UK are getting more powers to control business processes and are able to impose stricter penalties for transgressions - yet most directors of UK mid-cap firms remain oblivious of their responsibilities, DLA's report says.
The regulators are being pushed by events such as the collapse of former US energy company Enron and the subsequent legislation threatening new penalties for executives who sign off on poor company accounts.
According to responses from UK firms, "only 36% of respondents believe that their boards discuss regulatory risks in detail".
Nearly 70% of those surveyed felt their companies were unable to monitor new regulations properly, while a whopping 90% felt they were unable to influence the development of new regulations.
The findings are likely to cause concern for both direct and indirect investors as they imply that a larger discount needs to be applied to share prices of listed firms to take account of the growing risk associated with the developing regulatory burden.
Non-executive board members are already under pressure from the ongoing Higgs Review, which may yet recommend people appointed to such positions must take greater responsibilities for understanding business risks.
First mentioned in Cridland Report
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