IR professionals are divided on the effects of the Company Law Reform Act. According to a recent survey of IROs at FTSE 100 companies conducted by corporate reporting agency Pauffley, 84 percent believe the act will have no effect on the IR role at their organization. Andrew Mann, IRO at BAE Systems, says his company has been fully disclosing all along. ‘If a company is already committed to transparency, it’s not going to be a major change,’ he points out.
Yet many IROs say the legislation is provoking change. Nearly half the respondents asked say they are planning to invest in their corporate web site as a direct result of the Companies Act and 48 percent believe the act will improve the quality and design of the annual report. But does it follow that IROs think the full force of the Companies Act will be absorbed elsewhere in their organization? Perhaps so: 58 percent of those asked think the act will increase the role of the corporate communications department in their company.
Andrew Thomas, development director at Pauffley, thinks one of the most striking discoveries is that ‘of those asked, 38 percent couldn’t cite any examples of how the Companies Act would affect them.’ This would be more understandable if IROs thought their role had been left unchanged by the act – but only 8 percent believe this to be the case.
The survey also shows that over three quarters of respondents think the Companies Act will have no impact on the audience for the annual report, while 76 percent have no concrete plans to engage with a wider audience. Thomas is slightly taken aback by the fact that companies aren’t using their annual report as a chance to reach out more. ‘The Companies Act emphasizes a wider stakeholder base as an important audience for the annual report so it is surprising that only 24 percent say they would use their annual report to communicate with the wider community,’ he says.
Early signs are that larger corporations are continuing to reach stakeholders via their web sites rather than their annual reports. A significant proportion of IROs agree that the web site is still the best way to reach a wider stakeholder audience, and Mann shares this sentiment. ‘One of the key implications of the act should be to drive more investors and stakeholders to the web site,’ he says. If this is the case, the act will have a pronounced effect on smaller companies with less developed web functions.
