Re-elections annually not on, says Stock Exchange
The Irish Stock Exchange has come out against the idea of forcing entire boards of quoted companies to be re-elected every year.
The idea of boards facing annual re-elections has gained ground in the UK since the onset of the financial crisis.
The stock exchange, which plays host to 40 companies on the main market, prefers the idea of chairmen going forward for annual election, rather than entire boards. The exchange, led by chief executive Deirdre Somers, is concerned that annual re-elections of boards could have a "destabilising effect" on smaller companies.
The exchange's views are included in a submission sent in recent days to the Financial Reporting Council in the UK, which is asking for opinions on revising the Combined Code on Corporate Governance, which is adhered to by a range of Irish companies.
"Annual re-election of an entire board could have a destabilising effect on the board, particularly for smaller companies,'' says the exchange's submission.
"We consider that re-election of the chairman every two years, rather than annually, may be more appropriate for smaller listed companies,'' it adds.
Regulators in Britain have yet to decide which is a better system -- compelling boards or chair people to seek re-election.
Some corporate governance experts take the view that annual re-elections would give shareholders extra leverage. But others believe such powers could be used for the wrong purpose in a smaller company with a narrow range of shareholders.