If you’re on the board or about to join the board of a UK private company with either 2,000 employees and/or a turnover over £200 million and a balance sheet over £2 billion, it is vital that you familiarise yourself with the Wates Principles on Corporate Governance for Large Private Companies.
The history of the Wates Principles
In January 2018, the Government appointed James Wates CBE to chair an industry body to create a framework for the governance of large private companies. Wates is chairman of one of the UK’s largest family-owned construction firms, the Wates Group.
In conjunction with the Financial Reporting Council, the Institute of Directors, the Trades Union Congress and other interested parties, Wates drew up the UK’s first-ever set of guiding principles for large private companies to meet their corporate governance legal requirements and to promote their long-term success. These were published in December 2018.
What are the Wates Principles?
There are six Wates Principles. They are designed to encourage companies to adopt a set of key behaviours to secure trust and confidence among stakeholders, and to benefit the wider economy and society. They are:
Purpose and Leadership – The board must develop and promote the purpose of the company and ensure that its values, strategy and culture align with this purpose.
Board Composition – An effective board must include an effective chair and a balance of skills, backgrounds, experience and knowledge. The individual directors must have the time to make a valuable contribution and the size of a board should be guided by the scale and complexity of the business.
Board Responsibilities – The board and its directors should have a clear understanding of their accountability and responsibilities. The board’s policies and procedures should be designed to support effective decision-making and independent challenges.
Opportunity and Risk – The board should work to promote the long-term sustainable success of the company. It should do this by identifying opportunities to create and sustain value and by establishing procedures to identify and mitigate against risks.
Remuneration – The board must promote executive remuneration structures that take into account pay and conditions elsewhere in the company and that are aligned to the long-term sustainable success of the company,
Stakeholder Relationships and Engagement – Directors must foster effective relationships with stakeholders aligned to the company’s purpose. The board must oversee meaningful engagement with stakeholders, including the workforce, and consider their views when making decisions.
Read the full Wates Principles document here.
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