Corporate Governance Rules of the Road

There is growing interest in the area of Corporate Governance and how companies can leverage best practices to attract investors and lower the cost of raising capital.  To provide companies with the “rules of the road” we recently hosted a webinar with Compass Investor Relations.  

Here are five key takeaways companies should consider:

Make your financial reporting the best among your peers

Investors reward companies for their record of on-time reporting and clear and consistent disclosure.  Establishing excellent internal processes that anticipate and address tricky disclosure issues will help ensure you deliver on this critical requirement.  Working with the best external auditor you can afford to make it possible to meet reporting deadlines.

Have a great board of directors

There are no hard and fast “how much, how many” rules for a great board.  Start by putting yourself in your investors’ shoes.  What would they expect the best board to do to direct the executive suite and protect investors’ interests?  Assemble a board capable of impressing investors with their level of engagement, involvement and knowledge of the business.  Put best in class board charters in place and report regularly on the board’s activities and their evaluation of their own effectiveness.

Show you can be trusted with shareholders’ money

Convince your shareholders that past projects have yielded high returns on investment. With future projects, it’s important to justify the use of capital that could otherwise be paid out as dividends or used to buy back shares.

Talk and listen to investors

Investors want to hear from you and in turn for you to listen to them.  In your discussions, keep in mind the following:

• Be clear and consistent.
• Keep your promises.
• Be transparent.
• Give updates.
• Be timely.
• Be proactive.

Make sure you establish credibility by making statements that can be endorsed by credible third parties.  Addressing key issues good and bad and explaining what you are doing about them are also important in establishing credibility with your investors. Start by listening and then talk about things your investors regard as important.

Keep the best company you can

Investors judge you by the company you keep.  Always strive to be associated with the best, whether that be your banker, auditor, strategic partner, or the market tier on which you trade.

The capital markets are very competitive.  This is a crowded field where you need to compete to win, and great corporate governance is a significant advantage for those who practice it. In the end, be the best any shareholder can ask for given your circumstances.  Shareholders have a history of paying for the best. The costs are more than justified by the superior returns.

Elaine Ketchmere and Mark Collinson from Compass Investor Relations, are industry veterans who have guided many companies through IPOs, capital-raising processes and enhancements to their disclosure practices

You can watch the webinar, here: https://youtu.be/VupeEGfDbLk