On 10 December 2018, the FRC published the final Wates Corporate Governance Principles for Large Private Companies. In publishing the six principles, the FRC is aiming to assist companies in complying with the Companies (Miscellaneous Reporting) Regulations 2018.

The six principles covered in the guidance report are:

  • Principle one — Purpose and leadership: this principle aims to encourage companies to have a well-defined purpose, which should be promoted by the board and support the company's long-term success. A company's purpose should reflect the values of a company and establish expected behaviours and practices which should help create an effective culture within the workplace.
  • Principle two — Board composition: this principle aims to ensure companies have a diversified board composition, led by an effective chair that facilitates meaningful discussion. The size of the board should reflect the size and nature of the company comparatively.
  • Principle three — Director responsibilities: this principle aims to encourage companies to create and sustain a strong sense of director accountability to help nurture an effective culture of stewardship and leadership within an organisation. Maintaining strong corporate governance practices and transparent polices will help solidify the relationship between the company's directors and owners.
  • Principle four — Opportunity and risk: this principle aims to encourage companies to plan for long-term growth by finding the equilibrium between preserving company value and taking educated risks where opportunities arise in the marketplace.
  • Principle five — Remuneration: this principle aims to encourage companies to align executive remuneration with performance and overall achievement of the company, as well as reflecting remuneration levels across the whole of the organisation to ensure a shared sense of purpose and achievement is reflected by the remuneration award.
  • Principle six — Stakeholder relationships and engagement: this principle aims to encourage companies' boards to focus on engagement with the wider community and the external impact its businesses. Increasing external engagement should be considered in view of developing effective relationships with key stakeholders, such as the workforce, customers and suppliers as well as specific industries or sectors the company operates in.

The Wates Corporate Governance Principles for Large Private Companies can be found here.

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