By Daniel Hunter

The owner and founder of Sports Direct Mike Ashley almost has free reign to do what he likes with the company, according to the Institute of Directors (IoD) has said.

The IoD said that the sports retailer's board is dysfunctional and does not check on Mike Ashley enough.

“The board needs to think about how it becomes more transparent and, from shareholders’ perspective, how it scrutinises decisions,” said Oliver Parry, senior adviser on corporate governance at the IoD.

Mr Parry called for Sports Direct's shareholders to use the company's AGM in September to "express their concerns" and consider a change of leadership.

The comments come after Sports Direct chair Keith Hallawell was last week forced to admit that he wasn't aware of plans to put part of the company into administration until the day before it happened.

Around 200 workers at a warehouse in Scotland lost their jobs after USC, the fashion retailer owned by Sports Direct, was put into administration. Mr Hallawell told the Scottish affairs select committee that non-executive directors weren't aware of the move until the day before.

Mr Hellawell admitted Mike Ashley and a handful of senior executives, including chief executive David Forsey, took key decisions without any discussion at board level. Mr Parry said: “This is a further indication of how dysfunctional the Sports Direct board is. Last year we saw the board trying to push through a huge pay plan for Mike Ashley and you don’t need to be a forensic lawyer to figure out that there isn’t a sufficient check on Ashley’s powers.”