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Why governance matters for large private companies

Sarah Bell Sarah Bell

The first day of 2019 sees the start of key governance regulation with both the Financial Reporting Council's (FRC) revised UK Corporate Governance Code and the Companies (Miscellaneous Reporting) Regulations 20182 coming into effect.

These changes provide a great opportunity for companies to review their existing corporate governance arrangements and see if they are aligned with company strategy and future fit3.

For the purposes of the regulations, a large private company is defined as a company with either 2,000 or more employees globally or a global turnover of more than £200 million and a balance sheet of more than £2 billion globally.

The regulations require companies that meet this threshold to make a statement of corporate governance arrangements to include the following:

  • which governance code has been applied, if any
  • how the chosen code was applied, and any departures from it
  • or what other arrangements are in place

The statement must be included within the Directors’ Report and, if the company is unlisted, it must also be published on the website.

Large subsidiary businesses are expected to provide this new reporting, including the major UK operating subsidiaries of a number of international groups.

Meeting the governance needs of large private companies

Premium-listed companies are required to report against the UK Corporate Governance Code while other quoted companies can choose any recognised code to follow. To help large private companies that meet the threshold to comply with these regulations, The Wates Corporate Governance Principles for Large Private Companies were launched on 10 December. Also coming into effect on 1 January, the guidance is comprised of six principles:

  1. Purpose and leadership
  2. Board composition
  3. Director responsibilities
  4. Opportunity and risk
  5. Remuneration
  6. Stakeholder relationships and engagement

Operating under “apply or explain”, the Wates Principles are designed to allow large private companies to “look at themselves in the mirror”4 – with the aim of seeing their successes and shaping their corporate governance arrangements accordingly. The ultimate goal is to improve wider stakeholder engagement and build trust.

Why does governance matter?

Which code to choose?

To inform your thinking on governance guidance, our quick code comparison provides an overview of key governance themes and how each of the three principal UK codes addresses them.

We can help you make the most of the new reporting. Get in touch with Sarah Bell or Simon Lowe to find out more about our governance advisory services.


  1. The Companies (Miscellaneous Reporting) Regulations 2018 Q&A, Department for Business, Energy & Industrial Strategy, November 2018
  2. The Wates Corporate Governance Principles for Large Private Companies, Financial Reporting Council, December 2018