The regulator said it will examine the way in which companies set out how they meet the requirements of the Code in their financial statements for 2012-13, as it looks to improve transparency and governance in the sector.
“We want companies to operate to the highest governance standards,” the information note said. “This applies not only to the regulated company board but also the way in which the holding company operates and interacts with the regulated company.”
It said where information is currently only disclosed at a holding company level, but relates significantly to the regulated company, it expected clear and transparent disclosure to the Code standards. This meant full disclosure of management contracts and incentive arrangements for executives “devoting significant time” to the regulated business, or serving on the board of the regulated company.
Ofwat said board governance and leadership was essential to maintaining confidence in the sector and companies would need to draw an appropriate balance of risk and reward between their customers and investors.