The Walker Guidelines, which call for broader disclosures by private equity managers, will be updated to bring them in line with regulation such as the Alternative Investment Fund Managers (AIFM) directive and the UK’s rules on narrative reporting.
The voluntary guidelines ask UK private equity firms and their larger portfolio companies to enhance disclosure practices to the standards already in place for UK publicly listed companies on the FTSE350 index.
But to stay relevant in a changing regulatory environment, the Walker Guidelines are to be revised to bridge the gap between them and other regulations. There is significant disparity between companies subject to the guidelines and the AIFM directive, and also a mismatch in the level and type of information required.
Another regulatory change the guidelines will need to accommodate is the UK’s updated narrative reporting laws. Under the new law, all companies (except small private companies) will have to produce a strategic report alongside their directors' report. For private companies, the report will cover risks and will need to include key performance indicators. The guidelines are going to be updated to house those changes after consulting with private equity firms.
The Guidelines Monitoring Group (GMG), the body responsible for overseeing compliance, also is reviewing whether to make more companies subject to the guidelines. The GMG expects to notify the industry at the start of next year if the threshold is to be lowered.
“We welcome the clarity provided by the GMG on such an important issue for our industry,” said a spokesperson for the British Private Equity and Venture Capital Association in an email to PE Manager.
However, the GMG will have to implement changes while in a state of relative flux.
Current chairman Sir Michael Rake, who also is the chairman of BT Group, is to step down from the role once the GMG has found a suitable replacement. Independent member Alan Thomson, the group finance director of Smith’s Group, has already left the group and his successor is being recruited.