The Wates Corporate Governance Principles for Large Private Companies
Published: 24 September 2023
3 minute read
What are the Wates Principles?
The Wates Principles provide a framework to help large private companies raise their standards of corporate governance by offering a structure for reporting to fulfil their legal requirements and demonstrate good practice.
Under The Companies (Miscellaneous reporting) Regulations 2018 private companies of certain size are required to disclose their corporate governance arrangements in their directors’ report and on their website, including information on whether they follow a formal code.
|Name||The Wates Corporate Governance Principles for Large Private Companies|
|Publication date||10 December 2018|
|Format||PDF, 787.6 KB|
James Wates CBE, Chair, Wates Group
‘I believe that good business, well done, is a force for good in society. The Wates Corporate Governance Principles are a tool for large private companies that helps them look themselves in the mirror, to see where they’ve done well, and where they can raise their corporate governance standards to a higher level. Good corporate governance is not about box-ticking It can only be achieved if companies think seriously about why they exist and how they deliver on their purpose then explain – in their own words – how they go about implementing the principles. That’s the sort of transparency that can build the trust of stakeholders and the general public.’
It is hoped the Principles, together with the incorporated 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.
Who do the Wates Principles apply to?
The legislation applies to private companies which meet a specific threshold, either or both of the following:
- more than 2,000 employees;
- a turnover of more than £200 million, and a balance sheet of more than £2 billion.
Further, the legislation exempts companies that are subject to an existing corporate governance reporting requirement.
Companies that do not already follow a code are able to apply the Wates Corporate Governance Principles for Large Private Companies in order to disclose their corporate governance arrangements.
How were the Wates Principles created?
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 August 2017 the Government asked the FRC to establish a coalition group and act as Secretariat to take forward this work. In January 2018, the Government appointed James Wates CBE to chair the 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.
On 10 December 2018, the Coalition Group issued the first Wates Corporate Governance Principles for Large Private Companies.
The Wates Principles were issued following a public consultation which ran from 13 June to 7 September 2018. The Feedback Statement to the consultation was also issued on 10 December 2018.
Is the reporting against the Wates Principles assessed?
Yes, it is. In February 2022 the FRC issued a report on the first in-depth assessment of how companies are responding to the legislation, and, of those companies who have chosen to follow the Wates Principles, the quality of their reporting. The research, which was conducted with the University of Essex, shows that the Wates Principles are the most widely adopted corporate governance code used by large private companies.
The Wates Principles have been widely adopted by large private companies and have become an important part of the UK’s corporate governance environment. But how are companies actually applying them and how is best practice evolving?
On 25 October 2022, the FRC hosted an in-person event that explored the benefits and opportunities the Wates Principles offer for individual companies and what good practice in corporate governance looks like.
If you missed the event, you can watch it below.