THE director of the London Stock Exchange's UK Listing Authority last night indicated there would be no move towards a two-tier regulatory system that could make it easier for smaller companies to comply with listing rules.
Speaking at the CBI annual conference in Birmingham, Ken Rushton said: ''I don't think there should be a second tier for SMEs. If you are a listed company, you should comply with the same rules as everyone else.''
This view will frustrate thousands of Scottish SMEs, who view the increasing amount of red tape surrounding regulation and corporate governance as a hindrance to business.
It comes as Grant Thornton, the professional services adviser, reported an increasing number of FTSE 100 and Mid 250 companies are complying with corporate governance best practice guidelines.
Grant Thornton's report found that 54% of FTSE-100 and 42% of Mid-250 consider themselves to be fully compliant, compared to 41% and 32% respectively last year. However, the adviser also noted there was still a great deal of progress to be made.
Simon Lowe, head of Grant Thornton's risk management services, said: ''While there has been improvement, our survey found that over half of FTSE-350 companies still do not comply fully with the combined code.
''When it comes to explaining why they are not compliant, two thirds choose to give the barest minimum of explanation - if at all - for their reasons for choosing explain over comply.''
Grant Thornton also noted that if the UK is to continue to promote a principles-based approach to regulation as opposed to the US-favoured prescriptive approach, which seeks to formalise such rules, then top companies must dem-onstrate that they are able to support this in practice.
Warren East, chief executive of microelectronics company ARM, added that the company was considering dropping its second listing in the US due to the onerous costs involved.
He said the costs of maintaining dual listings in both the US and in London were one and a half times as much as if ARM just listed in London. East highlighted one of the extra costs involved with the US listing was quarterly reporting.
Asked how serious a consideration this was, he said: ''It's always a topic for discussion, and we always seek feedback from investors.'' However, he noted that in discussions with US investors, many said they traded ARM shares mainly on the London exchange, thereby neg-ating the need for a dual listing.
East also expressed the need for corporate governance to be about ''what's right'', and not to be suffocated by red tape.
He said ARM's experience is that corporate governance is not as high on the agenda of those investors making investment decisions as many may think.
He added: ''They are generally agnostic (towards corporate governance), they are more interested in the fundamentals of the business. I think there has to be a common sense balance. Therefore I would argue in favour of strong principles rather than suffocation.''
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