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The Financial Reporting Council (FRC) has published its first report on the application of and reporting against the Wates Corporate Governance Principles for Large Private Companies (Wates Principles) since it assumed oversight of them.
Under the Large & Medium-Sized Companies and Groups (Accounts & Report) Regulations 2008, in-scope companies are required to include a statement in their directors' report on their corporate governance arrangements (if they are not already required to report against a specific corporate governance code, for example under the UKLRs). The requirement applies to companies which have: more than 2,000 employees; and/or a turnover of more than £200 million and a balance sheet total of more than £2 billion. The Wates Principles were developed to provide large private companies with a framework to comply with these requirements. The FRC assumed responsibility for oversight of the Wates Principles in 2025 (and its previous reports on application of the Wates Principles had been prepared in conjunction with a third party).
The six Wates Principles are, in summary:
- Purpose and Leadership – a clear purpose and strong leadership set the tone for good governance and long-term success;
- Board Composition – boards should have an effective mix of skills, experience and independence to make sound decisions;
- Director Responsibilities – directors should act with integrity, lead by example and promote the company's long-term sustainable success;
- Opportunity and Risk – boards should promote innovation and manage risk to achieve sustainable growth;
- Remuneration – executive pay should promote long-term success and align with company purpose and values; and
- Stakeholder Relationships and Engagement – boards should foster positive relationships with stakeholders and ensure effective engagement.
The report highlights reporting trends alongside examples of good disclosures from companies of varying sizes and complexity. The review found generally strong reporting on risk management and stakeholder engagement, while identifying areas for improvements in reporting on purpose, board composition and remuneration.
The FRC has also produced an explainer illustrating the Wates Principles "Apply and Explain" approach, covering how and why it differs from the UK Corporate Governance Code for UK listed companies.
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