The water industry regulator has set out its expectations for the information that water companies in England and Wales will publish about how they are meeting Ofwat’s principles for Board leadership,transparency and governance.

Ofwat published ‘Board leadership,transparency and governance –principles’ for the regulated companies in January 2014, alongside a consultation on holding company principles on the same issues.

Commenting on its expectations, Ofwat said :

“If we are to deliver on a less intrusive approach to regulation, and the benefits that can bring, we need to be confident that companies are operating to the very highest standards of corporate governance.”

All of the the regulated companies have told the regulator they will have a code in place by 1 April 2014 stating how the principles will be met. Some companies have already published their codes and are actively taking steps to meet the principles.

Ofwat expects all companies to meet the principles in full by 1 April 2015 and to demonstrate how they do so – but recognises that 2013-14 and 2014-15 will be transition years.

The regulator said it is up to the companies themselves to determine how they demonstrate they meet the principles. Ofwat said it is not "seeking to prescribe a uniform minimum standard" to companies’ reporting, and will not be providing a template that companies will be expected to adhere to.

However, the regulator has provided some ideas on what the companies might do - for example by providing clarity in relation to:

• the composition and performance of Boards;
• the way in which remuneration of directors and the executive is linked to the long-term performance of the company;
• where the regulated company fits within the group to which it belongs.

It also cites examples of the actions already seen in companies’ reporting in 2012-13, including:

• Description of the induction programmes that directors undertake to make sure that they understand and are equipped to fulfil their obligations as a director.
• Tables that set out the full details of remuneration arrangements and how they change over time.
• Detailed breakdown of how the company met the UK Corporate Governance Code principles with page references to where information was provided in the report.
• Clear explanations of issues dealt with at the regulated and holding company and a description and explanation of matters of relevance to both Boards and how they are handled.
• Clear explanations of financial structures, such as corporate governance arrangements arising from securitisation.
• Clear and informative descriptions and diagrams of the company structure, including explanations of the activities of each company within the structure.
• Explanations of framework for control and requirements for the competency of members of the Board and its committees.Clear explanation of ownership structure including stakes of each of the consortium of owners.