The Association of British Insurers plans to issue a warning to Shire shareholders after the drugmaker last week announced plans to appoint its ceo as non-executive chairman, The Financial Times reports. Peter Montagnon, ABI’s director of investment affairs, tells the paper that before Shire’s annual meeting next June, his group would place an “amber top” on its institutional voting information service, which alerts investors to potential breaches of best UK corporate governance practice.

His comments came after Shire disclosed that Matthew Emmens, the ceo since 2003, would become non-executive chairman from June next year. While such a change is acceptable in US corporate culture, it is frowned upon in the UK, although other examples have taken place including at HSBC, Barclaysl, and most recently in the planned nomination of James Murdoch to chair British Sky Broadcasting. Shire’s reshuffle is still more unusual and may attract extra investor scrutiny because Emmens is to be replaced as ceo by Angus Russell, the long-standing cfo.

Montagnon stressed that although the ABI had held private talks with Shire about the changes, it hadn’t approved the reshuffle and would consult its members to see whether they were satisfied. He said he was passing no judgement on Shire’s decision but that in a number of previous examples companies appointing their chief executives as chairmen “did not perform terribly well.”

“The chairman is supposed to oversee strategy and make sure the board tests it and decision-making is robust. If the chairman was the chief executive who developed the strategy, he is supervising himself,” he tells the paper. “There are risks in that.”

Shire had only offered so far what he described as “a statement” on the changes, and the ABI would now see whether its members - whom he estimated represented a little under one fifth of the equity - would like a more detailed explanation.

David Kapplar, Shire’s senior independent director who co-ordinated the appointments, stressed the board’s confidence in the existing team and their ability to boost valuation. He will take on an additional supervisory role to safeguard corporate governance by becoming deputy chairman. He said he had consulted with a significant number of shareholders who had raised no objections, although some smaller investors had preferred not to be informed in advance about market sensitive information which precluded them from trading the shares.