Institutions are threatening the future of smaller companies due to their obsession with corporate governance, according to a specialist in recruiting non-executive directors.

Directorbank, a recruiter for public companies, has suggested key changes to the way corporate governance is monitored.

It believes that institutions should agree upon a standard questionnaire which should only go out to FTSE 350 companies.

Directorbank has also suggested that company boards should also structure meetings to concentrate on strategy and delivering results, demoting the priority given to corporate governance issues.

Sarah Grunewald of Directorbank told the FT she believed the agency had seen a surge in the fees demanded by non-executives who were increasingly expected to act as policemen on compliance.

“Fund managers are building up a huge industry based on corporate governance,” said Grunewald.

“They are in danger of losing the plot. If they want to see real growth in their funds, they’ve got to let the boards concentrate on strategy and delivering profits.”