At a time when companies are finding it harder to attract investment, it’s important to demonstrate to potential investors that your business is properly run, in addition to being profitable. With this in mind, the Institute of Chartered Accountants of Scotland (ICAS) has issued free guidance on the principles of good governance and how these may be applied in private companies.

Whilst there is extensive guidance on corporate governance for listed companies, private companies are reliant on their advisers. The guide - ‘Avoiding the Pitfalls in Running a Private Company’ - is for the use of both advisers and company directors.

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The guide considers the collective responsibilities of the board, the role of each director, risk management and internal controls. The practical implications of how each topic can be applied are also considered depending on the company’s ownership.

This guide is designed to be practical and to assist directors when establishing or reviewing the company’s governance procedures. It can also be used by someone who is asked to become a director, to help him or her in evaluating whether or not to join the company board.

Welcoming the guide, ICAS Chief Executive Anton Colella said: "Investors have always been interested in a good return, but the governance of a business is taking on increasing importance. There is felt to be a correlation between long term performance and good governance – it makes sense for private companies to be able to demonstrate that and this guidance can help them to achieve that goal."

(GK/NS)