The Financial Reporting Council (FRC) has published its second review of the application of the Wates Corporate Governance Principles by large private companies.
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: (i) more than 2,000 employees; and/or (ii) 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.
This second review looked at reports for the financial year 2021/22 and identified how many in-scope companies included the necessary statement in their annual report and if the approach of companies in-scope at the time of the first review (published in February 2022) had changed over time.
The review found of the 1,815 in-scope companies, 69% included disclosures on their corporate governance arrangements and of the companies that included these disclosures, 44% used the Wates Principles.
The review also sets out views of the FRC and of different user groups on the quality of the disclosures and improvements which could be made.
