On 20 May 2016, the Investment Association published a letter informing the chairs of FTSE companies of the recent examples of companies the value of whose assets was written down and future profit expectations scaled back significantly, following the appointment of new management. The Investment Association pointed out that directors should be assessing the likely future profitability of the business and the valuation of its assets on an on-going basis, and that independent directors should be accountable for any significant revaluation of assets, profit forecasts and dividend policy following the appointment of new management. This policy will come into effect for AGMs after 1 August 2016.
The letter can be accessed here:
https://www.ivis.co.uk/media/12237/Board-Oversight-Letter.pdf
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.