Corporate governance is no longer the preserve of listed companies alone. Large private companies in England and Wales are increasingly recognising the importance of robust governance structures to manage risk, improve decision-making, and build stakeholder trust. In response, the UK introduced the Wates Corporate Governance Principles in 2018, a voluntary framework designed to provide guidance to large private companies on governance best practice.
These principles reflect modern expectations around accountability, transparency, and long-term sustainability. For directors, shareholders, and advisers, understanding and applying the Wates Principles is essential for both compliance and strategic advantage. This article explores the framework, its practical application, and the benefits of embedding good governance in large private companies.
Free Initial Telephone Discussion
For a free initial discussion with a member of our New Enquiries Team, get in touch with us today. We are experienced in dealing with all the legal aspects of corporate law, and once instructed, we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you are on the best possible footing from the start and also avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.
Background: why governance matters for private companies
Corporate governance refers to the systems, processes, and behaviours through which companies are directed and controlled. While listed companies are subject to extensive regulatory requirements, private companies often operate with fewer formal obligations.
However, governance is no less important in the private context. Large private companies face complex challenges, including:
- Multiple shareholders with diverse interests
- Complex financial structures and funding arrangements
- Operational risks associated with size and scale
- Stakeholder expectations from employees, suppliers, customers, and regulators
Good governance provides a framework to manage these challenges. It enhances transparency, strengthens decision-making, and protects the company’s reputation. The Wates Principles were developed specifically to guide large private companies in achieving these objectives without imposing prescriptive rules.
Overview of the Wates Principles
The Wates Corporate Governance Principles are designed for private companies with a turnover of more than £250 million, a balance sheet total exceeding £2.5 billion, or more than 2,500 employees. They are non-mandatory but expected to be considered in the company’s annual strategic report.
The framework consists of six core principles:
- Purpose and Leadership
Directors should establish a clear purpose and align leadership decisions with the company’s values, culture, and long-term objectives. Governance should support sustainable success rather than short-term gains. - Board Composition
Boards should be effective, diverse, and appropriately structured. This principle emphasises the importance of appointing directors with the skills, experience, and independence needed to make balanced decisions. - Director Responsibilities
Directors must act in accordance with their statutory duties, exercising skill, care, and diligence. They should monitor performance, manage risks, and ensure that governance supports the company’s purpose. - Opportunity and Risk
The board should identify and evaluate opportunities and risks, ensuring that risk management systems are proportionate and effective. This principle encourages a proactive approach to governance rather than reactive oversight. - Remuneration
Remuneration policies should be designed to promote long-term value creation, align with company purpose, and reflect performance fairly. Transparent disclosure and alignment with stakeholders’ interests are key. - Stakeholder Relationships and Engagement
Companies should consider the interests of stakeholders beyond shareholders, including employees, suppliers, customers, and communities. Effective engagement supports trust and helps inform strategic decisions.
These principles provide a flexible framework, allowing companies to tailor governance to their size, sector, and culture.
Applying the Wates Principles in practice
Implementation of the Wates Principles requires careful planning and commitment from both boards and senior management.
Purpose and leadership
A company’s purpose should be more than a statement of intent. Boards should integrate the purpose into decision-making, strategy, and corporate culture. Practical steps include defining strategic objectives, embedding values in policies, and communicating expectations throughout the organisation.
Board composition and effectiveness
Boards should consider diversity in skills, experience, and perspective. Succession planning and evaluation processes are also critical. For example, regular performance reviews of individual directors and the board as a whole help ensure that governance remains effective and responsive to changing business needs.
Director responsibilities
Directors should document decisions, maintain clear records, and monitor compliance with statutory duties. Risk management frameworks, internal controls, and reporting systems should be proportionate to the company’s size and complexity. In addition, boards should cultivate a culture of accountability and transparency.
Opportunity and risk management
Boards must balance risk and opportunity, particularly in high-growth or innovative sectors. This involves horizon scanning, scenario planning, and embedding risk awareness in operational processes. Regular review of risk registers and engagement with management teams ensures that risks are identified and mitigated in a timely manner.
Remuneration
Remuneration policies should incentivise behaviours aligned with long-term goals. Linking executive rewards to performance metrics, sustainability outcomes, or cultural objectives can reinforce the company’s purpose. Transparent reporting to shareholders and stakeholders enhances credibility and accountability.
Stakeholder engagement
Effective engagement goes beyond consultation. Boards should identify key stakeholders, understand their perspectives, and integrate feedback into strategic planning. This may include employee forums, supplier partnerships, customer advisory boards, or community initiatives. Such engagement strengthens trust, mitigates reputational risk, and informs sustainable decision-making.
Benefits of adopting the Wates Principles
Although voluntary, implementing the Wates Principles provides tangible benefits:
- Enhanced decision-making: Boards that are diverse, well-structured, and proactive in governance make more informed, balanced decisions.
- Risk mitigation: Systematic identification and management of risks reduces the likelihood of operational, financial, or reputational harm.
- Investor confidence: Strong governance demonstrates professionalism and reliability, attracting investment and facilitating funding.
- Employee engagement and retention: Transparent governance and clear purpose foster trust and commitment among employees.
- Stakeholder trust: Engaging with stakeholders promotes goodwill, strengthens commercial relationships, and reduces conflict.
- Strategic resilience: Companies with robust governance frameworks are better equipped to adapt to market changes and regulatory developments.
Reporting and disclosure obligations
Large private companies are required to report on their application of the Wates Principles in the strategic report accompanying their annual accounts. While the principles are non-prescriptive, the reporting should:
- Explain how each principle has been applied
- Outline governance arrangements, including board composition and committees
- Describe stakeholder engagement and material decisions taken in the year
This transparency demonstrates accountability and allows shareholders, investors, and other stakeholders to assess the company’s governance practices. It also encourages boards to review and improve governance regularly.
Practical tips for boards and directors
To make the most of the Wates Principles, boards should consider the following practical steps:
- Conduct a governance audit: Review existing structures, policies, and practices against the Wates Principles to identify gaps and opportunities.
- Develop a governance roadmap: Create a plan to embed principles into board processes, reporting, and decision-making.
- Engage external advisers: Legal, financial, and governance experts can provide insight into best practices and regulatory expectations.
- Document and communicate: Record governance decisions, board evaluations, and stakeholder engagement activities. Transparent documentation supports accountability and statutory reporting obligations.
- Regularly review and update: Governance is not static. Periodic review ensures the framework remains relevant to the company’s size, strategy, and sector dynamics.
The role of legal advisers
Legal advisers play a critical role in helping large private companies interpret and implement the Wates Principles. They can:
- Advise on alignment with statutory duties and corporate law requirements
- Draft or review board charters, policies, and shareholder agreements
- Assist in preparing disclosures for annual strategic reports
- Provide guidance on stakeholder engagement and dispute prevention
At Blackstone Solicitors, we support boards across England and Wales in strengthening governance frameworks, embedding best practices, and ensuring that governance arrangements meet both legal obligations and commercial objectives.
Conclusion
The Wates Principles provide a modern, flexible framework for corporate governance in large private companies. They encourage boards to focus on purpose, accountability, risk management, remuneration, and stakeholder engagement while recognising the practical realities of private ownership.
Applying these principles helps companies improve decision-making, mitigate risk, build investor confidence, and foster a culture of transparency and accountability. For directors and boards, embedding the Wates Principles is not merely a reporting obligation—it is a strategic opportunity to strengthen governance, safeguard the company’s long-term success, and ensure sustainable growth.
In today’s competitive and complex business environment, large private companies that embrace robust governance frameworks are better positioned to navigate challenges, seize opportunities, and maintain the trust of shareholders, employees, and wider stakeholders alike.
We have a proven track record of helping clients deal with the legal implications of corporate law. We will guide you diligently and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting. You can read more about the range of corporate services we offer by clicking here: https://blackstonesolicitorsltd.co.uk/corporate-legal-services/
How to Contact Our Corporate Solicitors
It is important for you to be well informed about the issues and possible implications of corporate law. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Corporate solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
Comments are closed.
