Directors worry about regulation

REBECCA STEVENSON
Last updated 11:50 06/12/2012

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Recovery from the Global Financial Crisis and concerns about a changing regulatory and compliance regime focused on investor protection were the biggest worries for Kiwi directors over the past year according to a new survey.

Deloitte's Director 360: Degrees of Progress survey asked 288 directors globally, and 29 New Zealand directors, about their views on the top issues facing boards from the previous year and coming two years.

Over half of the Kiwi directors surveyed singled out the Global Financial Crisis (GFC) and recovery as the top issue facing boards for the past year and for the next two years.

Internationally, 43 per of directors were most concerned about the GFC over the past year and 37 per cent saw it as the biggest issue for the coming two years.

Across the ditch 60 per of Australian directors agreed it was the biggest issue in the past 12 months and 40 per cent saw that trend continuing for the next two years.

Deloitte head of audit Peter Gulliver said the fact New Zealand directors have a higher focus on the GFC than the Australians "may reflect more optimism about the recovery across the Tasman".

Regulation, governance and compliance were tagged as the second biggest concern by Kiwi and international directors over the last 12 months.

The report said locally this concern could be linked to a number of factors including the establishment of the Financial Markets Authority (FMA) and high profile court cases involving directors, and potential increased director liability.

Dovetailing in with these worries was a focus on risk oversight the in the preceding year.

Some 67 per cent of survey respondents indicated time devoted to risk oversight was not expected to decrease. New Zealand directors were in tune with their global counterparts on this issue.

Directors were concerned new regulations to protect investors' interests may distract from their board's agenda as they directed their energies into risk management instead.

"Directors must feel confident that whatever they need to disclose is completely accurate," the report said.

Gulliver said it was unsurprising that 83 per cent of the New Zealand directors surveyed see the level of shareholder scrutiny increasing in the next few years.

"However, increased shareholder activism need not have negative implications."

New Zealand directors said increased scrutiny may have a positive impact on "sharpening the focus of boards on corporate governance practices", he said.

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Talent and capital management were the two other key issues New Zealand directors were focused on for the next two years.

- BusinessDay.co.nz

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