5th October 2018
By Kirstie Elliot, Company Secretarial Administrator in the Corporate & Commercial team
Private limited companies are the most widely recognised corporate structure in the UK, yet they do not currently follow a formal corporate governance code or have the same reporting requirements and accountability as public companies, but this is set to change for large private companies.
The new regulations will require companies of a significant size to disclose details of all corporate governance arrangements in their directors’ reports, and on their websites, including if they follow any formal codes, such as the Wates Corporate Governance Principles.
The Principles have been established by a Coalition Group lead by the appointed chair, James Wates CBE. James Wates is also the Chairman of one of the UK’s largest family-owned construction firms, the Wates Group, based here in Surrey.
The Wates Principles will apply to private companies that meet the following criteria:
The Principles will follow the same basis as the UK Corporate Governance Code to “comply or explain”. They are therefore not compulsory but any deviations will need to be justified.
There are six draft Principles, each supported by a short explanation. These are as follows:
Companies that meet the criteria must publish a statement of their corporate governance arrangements in their directors' report. This includes subsidiaries of listed companies and subsidiaries of parent companies that prepare a consolidated directors' report. In circumstances where a subsidiary (but not the parent) meets the criteria, and the parent prepares consolidated group accounts, the parent company would not have to publish a corporate governance statement in the group directors' report.
The public consultation of the draft Principles and guidance will close on 7 September 2018. The final Principles and guidance are expected to be published in December 2018 and will apply to companies with a reporting period starting on or after 1 January 2019.
Guidance can be found by clicking here
The contents of this update are intended as guidance for readers. It can be no substitute for specific advice. Consequently we cannot accept responsibility for this information, errors or matters affected by subsequent changes in the law, or the content of any website referred to in this update. © Mundays LLP 2018.
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