The shareholder group is set to issue a rare “red-top” alert to investors, indicating its highest level of concern ahead of the the company’s annual meeting on February 7.
SCI, best known for its Lara Croft games, is in takeover talks with Midway, the American games firm.
Where most companies are lambasted for not complying with best practice on one or two counts, the ABI said SCI contravened five separate rules, each of which would be enough to warrant a red-top alert.
The company’s founder and chief executive, Jane Cavanagh, is also the SCI chairman. The separation of the roles of chairman and chief executive is central to the combined code of corporate governance.
Cavanagh also sits on the audit committee, with non-executive directors Nigel Wayne and Tim Ryan. The same trio make up the remuneration committee. The directors benefit from three-year rolling contracts and there is an option scheme based on length of service rather than performance.
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Peter Montagnon, head of investment affairs at the ABI, said: “This is the most extreme and flagrant breach of best practice I have ever seen. We have no choice but to react in the strongest possible way.
“It is clear this company needs an independent chairman to put it back into shape.”
Cavanagh founded SCI in 1988 and floated it on the stock market in 1996. Last year the company, which also owns Lawnmower Man and Kingdom O’Magic games, bought arch-rival Eidos, best known for its Tomb Raider series. Montagnon said: “This group has grown quickly and generally escaped the scrutiny of investors but this is a lesson that, if companies want to grow and rise up the index, they must recognise they are required to adopt governance processes fit for that larger position.”
Last week SCI reported sales ahead of expectations following the surprise success of a Lego version of the Star Wars game. The company reported first-half sales of over £40m, beating expectations by £15m.
The shares rose 2.6% to finish the week at 5.24p. The stock has waned recently amid concerns about the takeover.