This year brings in a new era of corporate governance for large private companies. For financial years beginning on or after 1 January 2019 qualifying companies will, for the first time, have to report on whether they follow a formal code of corporate governance and, if not, explain why not. The compulsory reporting requirements apply to companies with more than 2,000 employees and/or companies with a turnover of more than £200m and a balance sheet of more than £2bn. However, good corporate governance is important for all companies and can create value, protect against crises and support the long-term sustainability of a business.
The reporting rules do not specify what code of governance companies should apply. The publication in December 2018 of The Wates Corporate Governance Principles for Large Private Companies (the Wates Principles) therefore provides some welcome clarity for private companies subject to the new regime. They are also a useful guide for smaller companies, and other organisations for whom specific codes of governance have not been imposed, to help shape their governance structures and best practices.
The Wates Principles set out a principles-based code, flexible enough to be adopted by a wide range of private businesses and organisations. The themes addressed include “purpose and leadership”; “opportunity and risk”; and “stakeholder relationships and engagement” (among others). Getting these things right are important to all well-run businesses.
For more detailed commentary on the Wates Principles, please see our briefing.
We are also running a breakfast seminar focusing on the Wates Principles on Thursday 11 July 2019 as part of our series of seminars for private businesses. If you would like to attend please contact Ellie Richards / +44 (0)20 3375 7176.
If you require further information about anything covered in this article, please contact Marie Bates, or your usual contact at the firm on +44 (0)20 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, June 2019