The removal of several non-executive directors from the board of ENRC, a FTSE100 listed company, by its controlling shareholders has remained in the news, not least because the company's general counsel has since resigned. The situation raises many questions concerning the extent to which the UK's governance framework for listed companies is appropriate for a company dominated by a few shareholders. The company's governance reached Prime Minister's Questions yesterday in Parliament where, in response to a question referring to ENRC and governance more generally, the Prime Minister stated (Hansard, col 778):"... we want companies to come to London to access capital and float on the main market or the AIM market. It is one of the attractions of Britain that we are an open global economy, but when those companies come, they must understand that we have rules of corporate governance that are there for a reason, and they need to obey those rules. I am sure my right hon. Friend the Chancellor will address that not only in his speech tonight, but in the papers that we will be publishing in subsequent days".
It will be interesting to see what is forthcoming. What are these rules that must be obeyed to which the Prime Minister referred? It would be difficult to argue that he is referring to the UK's Corporate Governance Code given that it operates on the basis of 'comply or explain'.
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