London, 10 December 2018 – ICSA: The Governance Institute has welcomed the publication today by the Financial Reporting Council of a new code for the corporate governance of large private companies.
The Wates Principles provide a framework to help them meet new legal obligations created by The Companies (Miscellaneous Reporting) Regulations 2018, which will come into force for financial years commencing on or after 1 January 2019. Companies will, from that date, be required to state which corporate governance code, if any, the company applied in the financial year, how the company applied that code and, if the company departed from it, the respects in which it did so, and its reasons for so departing. If the company has not applied any corporate governance code for the financial year, it must state why not and explain what arrangements for corporate governance were applied for that year.
These Principles have been developed by a coalition established by the Financial Reporting Council (FRC), chaired by James Wates CBE, and of which Peter Swabey, Policy and Research Director at ICSA was a member. They are intended to provide an appropriate framework for larger private companies, encouraging them to adopt a set of key behaviours to secure trust and confidence among stakeholders and benefit the economy and society in general.
The six principles are:
Peter Swabey, Policy and Research Director at ICSA: The Governance Institute said: “The new regulations extend the requirement to report on its corporate governance to large private companies and the Wates Principles are an attempt to develop a code more specifically aimed at the requirements of larger private companies. It is important to emphasize that they are not mandatory – large private companies do, after all, have such a variety of ownership structures, ranging from family businesses to the subsidiaries of large public companies and it may be that another code is more appropriate for any individual company. The main issue is that such companies must now be explicit about their governance arrangements, and I believe that these principles are a useful starting point, particularly for those companies which have, perhaps, not explicitly considered their governance arrangements in this way.”
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Notes to Editors: