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Press Release

For immediate release: Friday 11th April 2003

The IMA supports the amendments to the Combined Code following Higgs and Smith recommendations

In its response to the Financial Reporting Council, the IMA has lent its support to the final report following the Higgs and Smith Reviews.  

Many of the recommendations in the IMA’s original submission have been reflected in the final report.  The IMA welcomes the proposals to update the Combined Code to enhance the board’s role and clarify the roles of its members.  In particular, it supports the concept of the “senior independent director”.  IMA Members do not want to interfere in the running of companies but they need to be aware of what is happening.  The senior independent director will strengthen companies’ relationships and interaction with institutional investors.  

The IMA does not consider there are “fatal flaws” in the changes proposed to the Code but does believe that the present draft could be improved.  It is important to have a Code that is widely respected and commands a degree of consensus.  The IMA has therefore put forward a number of proposed changes to the Code’s wording designed to achieve that outcome.  For example, the IMA suggests that:

  • certain of the disclosures are unnecessarily detailed and could be removed;
  • the non-executive directors should be free to decide who leads their meetings;
  • smaller listed companies should be exempt from the requirement for half the board to comprise non-executives; and
  • it should not be mandatory for investors to attend AGMs and meet newly appointed non-executives.

Richard Saunders, Chief Executive of the IMA, said:

 “Derek Higgs’ proposals to update the Combined Code will enhance the board’s role and improve non-executives’ relationship with shareholders. We welcome particularly the proposal to appoint a senior independent director.  However, we do consider that the text can be improved in places and understand that Derek himself has indicated that he is relaxed if others can suggest improvements to the drafting.  Thus in our response we have suggested some amendments to the text.”

The IMA’s response to the FRC is attached.

For further information, please contact:
Richard Saunders, Chief Executive, IMA, 020 7831 0898
Liz Murrall, Senior Adviser - Corporate Governance, IMA,  020 7831 0898 
Helen Stephenson, Communications Officer, IMA,  020 7831 0898

65 Kingsway London WC2B 6TD 
Tel: +44 (0) 20 7831 0898 Fax:+44 (0) 20 7831 9975 
Investment Management Association is a company limited by guarantee registered in England and Wales Registered number 4343737.  Registered office as above. 

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