Don Solman is CFO of James Richardson & Sons, Limited, a family-run corporation based in Winnipeg, Canada that owns businesses in sectors including agriculture, financial services, real estate and oil and gas. He explains that the obligations listed companies in Canada are subjected to – which largely mirror those in the US and the UK – are subtly different to those faced by private businesses.
“With public companies, a lot of time is taken up dealing with statutory requirements,” he says. “The fact that we, as private companies, are not subjected to the same requirements does not abdicate us in any way from good corporate governance. However, we are not subjected to the same level of form-filling.”
Alaaeldin Shousha, Director, Finance and IT at Saudi Arabia-based Sunbulah Group (a privately owned food manufacturing company), agrees that there is no abdication of good corporate governance in a well-run private business. Indeed, he maintains that demands on the CFO of a private company only differ marginally from those that their counterpart in a public organization has to deal with, and gives short shrift to any suggestion that the role of a public company CFO is more about compliance with legislation.
“In my case, I don’t really see any difference,” he says. “Other than publishing financial and investor information on government and company websites, we have the same IFRS reporting requirements.”
But is there a danger that private companies that disclose less financial information risk therefore being perceived as less open or trustworthy than listed businesses?
“I would have agreed with this statement before 2017,” says Shousha. “However, all companies, listed and private, are now required to follow IFRS reporting and international auditing standards, with very minor exceptions.”
In Sunbulah Group’s case, the preference is to issue quarterly financial statements – despite the additional cost and the fact that they are in no way mandatory. Shousha explains that regular quarterly reports show how different sectors of the business are performing. He argues that this level of transparency has helped to establish trust with debtors and made it easier to secure extended credit terms.
“Following the best practice of corporate governance engenders the trust of investors and debtors in the group. This also allows us to be viewed as a solid and well-established partner in our joint ventures, both inside and outside the Kingdom,” he stresses.