Jurisdiction(s):
United Kingdom

Key definition

Corporate governance definition

What does Corporate governance mean? Corporate governance describes the system by which a company is directed and controlled: how the board, management and shareholders exercise authority, make decisions, manage risk and ensure accountability, transparency and long-term success. In practice it covers board composition (including independent non-executive directors), division of responsibilities, audit and internal controls, remuneration, shareholder rights, stakeholder engagement and reporting. The term is descriptive rather than a single statutory concept. In the UK, expectations are set mainly by soft-law codes (notably the UK Corporate Governance Code on a “comply or explain” basis, and the Wates Principles for large private companies) alongside companies legislation (for...

UK private companies: corporate governance and narrative reporting obligations (section 172, SECR, climate disclosures), 2025 changes, and voluntary governance codes (Wates Principles, IOD Code, Walker Guidelines)

Published by a LexisNexis Corporate expert

Practice notes

Traditionally, the UK’s corporate governance system has concentrated on listed companies. A key pillar of that system, the uk corporate governance code (UKCG Code), applies to companies with a listing of equity shares in the equity shares (commercial companies) category, or in the closed-ended investment funds category.

However, the good governance principles it advances also matter for other companies, especially AIM companies and large private companies. These organisations may elect to adopt the UKCG Code’s principles and follow a ‘comply or explain’ approach, although there is no obligation to do so, and they may instead select an alternative governance code that better fits their circumstances.

A framework designed specifically for large private companies has been taking shape slowly, and in a somewhat ad hoc manner, over many decades.

The development of a corporate governance framework for large private companies

Companies have been required to prepare a directors’ report for more than a century. Under the Companies Act 2006 (CA 2006), every public and private company—other than one qualifying as a micro-entity—must produce a directors’ report for each financial year as part of its annual report and accounts...

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Web page updated on 21/05/2026

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