UK: The Wates Corporate Governance Principles - assessing the extent, coverage and quality of reporting

In the introduction he wrote in 2018 for the Wates Corporate Governance Principles for Large Private Companies (here, pdf), James Wates - now Sir James Wates - stated: "My hope is that a wide range of companies – and not just those included in the new legislative requirement to report on their corporate governance arrangements – will use the Wates Principles" (p. 1). Today we can begin to judge the extent to which that hope has been met because the Financial Reporting Council has published research it commissioned to explore the extent, coverage and quality of corporate governance reporting under the Wates Principles: see here (pdf). 

The authors of this research identified 1,815 companies believed to be within the scope of the new Regulations, and, after removing from this group those companies that had not submited an annual report by the date chosen by the researchers, were left with 1,206. Of these, 858 were found not to be using the Wates Principles - or, to put this another way, less than a third (approximately 350) had adopted the Principles. Nevertheless, the FRC was able to note, in its press release, that the Principles were the most widely adopted corporate governance code used by large private companies. 

The authors concluded that "disclosure practices are still in their infancy" (p. 40) and that while there were positive aspects in respect of the adoption of the Wates Principles in the first year, there was "much room" for improvement.  In particular, it is recommended that companies provide more detailed information in respect of their application of the Principles so that readers receive a more comprehensive understanding of the chosen governance arrangements.