The Wates Corporate Governance Principles for Large Private Companies
In August 2017, the Government released its response to the Green Paper Consultation on Corporate Governance Reform. It received broad support for action to 'encourage high standards of corporate governance in the UK’s largest private companies reflecting the significant impact that these companies have on employees, suppliers, customers and others, irrespective of their legal status'.
In January 2018, the Government appointed James Wates CBE to chair industry Coalition Group tasked with developing corporate governance principles for large private companies. In addition, the Chairman and the FRC have engaged with industry leaders and held public events to raise awareness and seek input prior to consultation.
- James Wates CBE, Wates Group (Chairman)
- Department for Business, Energy and Industrial Strategy (Observer)
- Financial Reporting Council
- British Private Equity & Venture Capital Association
- Climate Disclosure Standards Board
- Confederation of British Industry
- Mark Goyder
- ICSA: The Governance Institute
- Institute of Business Ethics
- Institute of Directors
- Institute for Family Business
- The Investment Association
- Trades Union Congress
Paul George, Executive Director, Corporate Governance & Reporting Division, FRC: The importance of corporate governance for private companies
On 13 June 2018 the coalition issued for public consultation the draft Principles and supporting guidance. The consultation will close on 7 September 2018. The final Principles and guidance will be published in December 2018.
James Wates CBE said:
I believe that business, well done, is a force for good in society. But that doesn’t come automatically. Companies need clarity of purpose, grounded in social value, and strong governance to help them deliver that value.
I hope that these principles will provide a useful tool to help companies understand good practice in corporate governance and, crucially, adopt that good practice widely. Companies will not find in the consultation paper a checklist of actions they must take. These principles are not about box ticking. But they are about fundamental aspects of business leadership and performance, and I hope they challenge and inspire companies to ever-higher standards.
I encourage all interested parties to provide feedback on our consultation paper to guide us in our continued work.
In June 2018 the Government introduced secondary legislation - the Companies (Miscellaneous Reporting) Regulations 2018 which will require private companies of a significant size to disclose their corporate governance arrangements in their directors’ report and on their website, including whether they follow a formal code.
The legislation will apply to private companies which meet a specific threshold, exempting companies that are subject to an existing corporate governance reporting requirement. Companies which do not already follow a code will be able to apply the Wates Corporate Governance Principles for Large Private Companies. It will apply to company reporting for financial years starting on or after 1 January 2019.
It is hoped the principles and guidance will provide a useful tool to help boards of directors understand and apply good practice in corporate governance, and explain their approach to their stakeholders.