2 minute read 26 Mar 2019
brightly coloured steps

How governance in large private companies and the Wates Principles could affect you

Authors
Mala Shah-Coulon

EY UK Corporate Governance, Associate Partner

Passionate about governance – a vital ingredient to running a successful enterprise and not a compliance imperative. Mum of twins and trustee at Bliss.

Ken Williamson

EY UK&I Professional Practice Partner and Partner in Corporate Governance

Passionate about governance and audit which are critical to trust in business and a renewed focus on social purpose. Wine and exercise enthusiast - a perfect combination.

2 minute read 26 Mar 2019

As a result of the Companies (Miscellanenous Reporting) Regulations 2018, large privately-held businesses in the UK must make a statement on their corporate governance arrangements.

The statement applies to corporate governance arrangements for financial years beginning on or after 1 January 2019, and must detail which corporate governance code the company applies; how it is applied; and, if the company departs from the code, both the respects in which it departed and its reasons for doing so. Companies choosing not to apply a code must make a statement about their governance arrangements, including an explanation of the reasons for choosing not to apply a code.

To provide a proportionate, relevant corporate governance code, the Government invited a coalition of industry experts to develop a voluntary set of governance principles.

In an environment where the bad apples of corporate behavior taint the reputations of the private sector as a whole, we need to press continually for more transparency and better corporate governance in our companies to rebuild trust with all our stakeholders.
Sir James Wates CBE
Chairman, Wates Group of Companies and Chair of the Coalition Group of the Wates Principles

James Wates CBE was appointed to chair the group, and the FRC published a consultation on the Wates Corporate Governance Principles devised by the Coalition in June 2018.

The Coalition has aimed to keep the principles as flexible as possible. However, if companies choose to adopt these principles, the proposed application is on an ‘apply and explain’ basis. There are six high level principles; purpose, composition, responsibilities, opportunity and risk, remuneration and stakeholders, with associated guidance providing further detail on why each principle is important.

Should companies want to go further than the Wates principles they can opt to comply with the UK Corporate Governance Code or the Quoted Companies Alliance Code. Some companies may also already comply with industry specific governance codes which would fulfil the criteria.

“In an environment where the bad apples of corporate behavior taint the reputations of the private sector as a whole, we need to press continually for more transparency and better corporate governance in our companies to rebuild trust with all our stakeholders,” says Sir James Wates CBE, Chairman, Wates Group of Companies and Chair of the Coalition Group of the Wates Principles.

Read the full report.

If your company is tackling its first Statement of Corporate Governance Arrangements, you’ll want to read the key learnings in Maria Kępa’s blog.

Mala Shah-Coulon, Associate Partner, EY, Sir James Wates CBE, The Wates Group, and Elizabeth Bagger, Institute for Family Business, discuss the new private company governance requirements and the Wates Corporate Governance Principles for Large Private Companies.

Summary

In our view, the Wates Principles are proportionate and high level enough to provide flexibility in the context of a wide variety of ownership structures, and there are a number of benefits of using the Principles as a tool for board discussion and improving governance practices.

About this article

Authors
Mala Shah-Coulon

EY UK Corporate Governance, Associate Partner

Passionate about governance – a vital ingredient to running a successful enterprise and not a compliance imperative. Mum of twins and trustee at Bliss.

Ken Williamson

EY UK&I Professional Practice Partner and Partner in Corporate Governance

Passionate about governance and audit which are critical to trust in business and a renewed focus on social purpose. Wine and exercise enthusiast - a perfect combination.