Harper James advises ambitious UK companies on the laws of England and Wales, including the governance systems that help directors balance shareholder returns with the interests of employees, customers, suppliers and the wider community. Stakeholder governance is not a substitute for commercial performance. It is a structured way to make better decisions, record the reasoning behind them and manage long-term business risk.
Section 172 of the Companies Act 2006 requires directors to promote the success of the company for the benefit of its members as a whole. In doing so, they must consider matters including employee interests, business relationships with suppliers and customers, the impact of the company’s operations on the community and environment, and the need to maintain a reputation for high standards of business conduct. Directors also need to exercise reasonable care, skill and diligence under section 174.
Good governance turns these duties into a repeatable process. A board paper should identify the affected stakeholder groups, explain the material risks and benefits, record relevant data and set out the board’s decision and its rationale. Companies should then assign responsibility for follow-up actions, monitor complaints and engagement, and keep accurate minutes. Further guidance on UK company governance provides a useful starting point for building that framework.
The UK Corporate Governance Code 2024 places greater emphasis on board responsibility for risk management, internal controls and corporate reporting. Premium listed companies need to prepare for the new internal control reporting requirements applying to financial years beginning on or after 1 January 2026. Other companies are not automatically subject to every Code provision, but the same disciplines are increasingly expected by lenders, investors, employees and major customers.
Private companies should start with proportionate measures: review the articles of association and shareholder agreement, create a stakeholder risk register, agree escalation routes for serious concerns, and include stakeholder effects in board agendas. Directors should also check that policies on whistleblowing, modern slavery, data protection, health and safety and supplier conduct work together rather than sitting as disconnected documents. A governance review with a commercial solicitor can identify gaps, clarify board responsibilities and produce a practical action plan.