Higgs Review Splits City Again; Opinion Is Divided over When to Introduce Its Reforms. (Corporate Governance)
Parry, Charlotte, Financial Management (UK)
The much-debated Higgs report on corporate governance has stirred up further controversy in the final week of its consultation period.
Leading UK investment institutions, including Merrill Lynch and Gartmore Investment Management, called for its proposed reforms to be adopted as soon as possible. "Wholesale change or delay is not required. We look forward to the timely introduction of the new code," they wrote in a letter to the Financial Times, published on the last day of the 12 weeks of consultation.
They dismissed criticism of Higgs's "comply or explain" approach, claiming that it wouldn't affect their investment decisions: "When casting votes at company meetings, we shall continue to give careful consideration to meaningful explanations."
But the London Stock Exchange (LSE) called for the Higgs proposals to be translated into principles rather than rules. Don Cruickshank, the LSE's chairman, warned that the proposed move towards a prescriptive approach would lead to "box-ticking".
"The aggregation of rules--we move from 13 to 43--may take corporate governance standards in an unwelcome direction," said Cruickshank. He urged the Financial Reporting Council, which is assessing responses to Higgs, to postpone the start date for the revised code from July 2003 to January 2004. …