The Guidelines Monitoring Group (the “Group”) was created in 2007 as an independent body to monitor the private equity industry’s compliance with Sir David Walker’s Guidelines for Disclosure and Transparency in Private Equity (the “Guidelines”). Over the past five years, the industry has embraced and adopted these Guidelines with thirty-five private equity firms and almost eighty of their portfolio companies currently providing additional disclosure voluntarily. This publication outlines our plan for promoting and developing the Guidelines.

Our objective has been to promote the Guidelines as an effective way to engage with stakeholders by ensuring private equity firms publish key information on their websites, and that covered portfolio companies report to at least the standard seen in the FTSE 350. It was disappointing to see the overall level of compliance fall last year and the Group is continuing its work with private equity firms and portfolio companies that did not meet the required benchmark. This fall could, in part, be attributed to new and generally smaller entrants to the Walker population and fewer companies being taken private. In Section 2 we therefore answer some of the most commonly asked questions about the Guidelines and hope this, along with our good practice guides, will assist firms in the coming years.

To ensure private equity firms commit to their responsibilities, we request that they sign a statement of conformity each year as set out in Appendix 1. Many firms had signed such a statement when the Guidelines were first launched and we are institutionalising this as an annual commitment. We will also review the disclosures provided by private equity firms on their websites.

The Group is committed to enhancing transparency and disclosure and this means adapting the Guidelines over time to ensure they remain relevant and fit for purpose. In Section 3 we provide further detail on how the Guidelines interact with the requirements of the most significant EU directive to affect firms from a regulatory perspective – the Alternative Investment Fund Managers Directive, which will become law from 22 July 2013. In Section 4 we explain the changes to narrative reporting we are monitoring that would require the Guidelines to be updated, such as the introduction of a strategic report. These changes to the Companies Act 2006 will affect all private companies, as well as quoted companies, and it is the responsibility of the directors of those companies - which often include private equity firms – to ensure compliance from October 2013.

We will consult on significant amendments to the Guidelines and, in particular, the additional disclosures for quoted companies which would be incorporated. Our expected timetable is outlined in Section 5. The consultation process also includes a review of the size thresholds set in the Guidelines to assess if they remain appropriate in light of corporate governance and regulatory developments.