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Sir James Wates sets out his initial views on Wates Principles reporting

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08 Feb 2021

Sir James Wates has issued an article highlighting some of the reporting trends he has observed so far from those companies choosing to report against the Wates Corporate Governance Principles (the Principles) for large private companies in their statement of governance arrangements.

In the short article he draws attention to the following disclosure practices and names a number of companies where he believes these practices have been displayed effectively:

  • provision of concise yet rigorous analysis of how the Principles have been applied using cross-referencing to other parts of the Directors’ Report for further detail;
  • reference to the Principles as a guide for reviewing and, where appropriate, improving governance arrangements;
  • wholly-owned subsidiaries applying the Wates Principles and commenting specifically on how they apply to the subsidiary, rather than just referring to their holding company’s governance standards; and
  • clear description of examples of issues that the board is grappling with.

There are two matters which Sir James cites as being “some disappointments”. Similar to previous Financial Reporting Council (FRC) comments on reporting on the UK Corporate Governance Code, there is reference to companies not fully embedding Purpose in their organisation and failing to provide specific examples of how the purpose has actually guided Board-level discussions and decisions. There is also criticism of companies who fail to make the Corporate Governance report easily accessible on their website.

In a final comment Sir James commends some common sense principles of good communication that he believes should apply to all corporate governance reporting:

  • Brevity, Comprehensibility and Usefulness
  • Relevance
  • Company-specific
  • Comparability

The full article is available via the FRC website here.

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