ONLY 31 per cent of companies on the Irish Stock Exchange are fully compliant with the combined code on corporate governance, accounting firm Grant Thornton claims in a new report.

The firm said the rate of full compliance among 32 Irish Stock Exchange companies it surveyed contrasted with a full compliance rate of 41 per cent in a similar review by the firm of some 306 companies on the FTSE-350 index in London.

All Irish listed companies whose annual reports it reviewed complied with listing rules, which require them to make a disclosure statement about how it applies the principles applied in the code, the firm said.

"Of those that had applied the combined code, 31 per cent (down from 35 per cent among the same group of 32 companies in our 2007 review) claimed full compliance while 69 per cent (59 per cent in 2007) claimed compliance with a number of exceptions."

Paul Raleigh, managing partner of Grant Thornton Ireland, noted improvements in some areas over the last year, but said Irish firms were still a "considerable distance from full compliance" with corporate governance best practice.

"In the current, more challenging economic climate, it is absolutely essential that Ireland develops a culture of world-leading corporate governance. International research shows that well-governed companies outperform those that are poorly governed in terms of both operating performance and share price returns."

Grant Thornton said the principles not complied with mainly included matters such as lack of attendance of certain directors at the agm, board balance, committee membership and lack of written responsibility statements for executive directors.