Studio Retail Group (SRG) is under fire from its new owner, Frasers Group, due to concerns over management and corporate governance. Frasers Group, which acquired SRG for £28.6 million, is calling for urgent reform in UK corporate governance and suggesting criminal penalties for wrongdoing.

Frasers Group alleges that SRG failed to adapt to a changing market and disregarded the realities of its business. It accuses the board and advisors of either inadequately scrutinizing the company or intentionally concealing its problems. Frasers, as the largest shareholder in SRG with a 30% holding, purchased the company shortly after it announced its intention to call in administrators.

In a statement, Frasers emphasized its commitment to protecting shareholder value and referred to its action taken in the case of Debenhams plc. It had long recommended a strategic review for SRG to maximize and safeguard shareholder value. Frasers had expressed concerns about accounting estimates and judgments, questioning whether management had taken a conservative enough stance.

Looking at the bigger picture, Frasers argues that business regulation should prevent sudden company collapses that devastate lives, destroy shareholder value, and damage the reputation of the UK business system. The failures of publicly listed companies like Debenhams and Goals were cited as examples of systematic governance failures and a lack of accountability.

Frasers is urging the government to prioritize meaningful regulation of UK business, including a comprehensive investigation into the collapse of all listed companies. It suggests imposing fines or criminal penalties on individuals found to be complicit in or responsible for any wrongdoing that contributed to these failures.

This strong criticism from Frasers Group underscores the need for improved corporate governance and greater accountability in the UK business landscape. The acquisition of Studio Retail Group demonstrates Frasers’ dedication to protecting shareholder value and advocating for stronger regulation and enforcement. The government should heed these concerns and focus on investigating and reforming corporate governance practices. Only through accountability and regulation can businesses and jobs be safeguarded, ensuring the stability and reputation of the UK business system.

Useful links:
1. Corporate Governance Reform
2. Corporate Governance Factsheet