Consultation: Water Governance Code Rule

Overview

This consultation invites views on the introduction of an updated governance code for the water sector.  

The Water (Special Measures) Act 2025 gave Ofwat powers to introduce new rules on remuneration and governance.  The Independent Water Commission's review of the water sector,  and a New Vision for Water published by the Department for the Environment, Food and Rural Affairs, both included references to this legislation and recommended alignment with the UK Corporate Governance Code.

What we're asking

We're seeking views on these areas:

• Are there particular aspects of the existing Board Leadership Governance or Transparency Principles or other sector codes which would be useful to consider?
• Do you consider that there should be a comprehensive transparency requirement covering reserved matters? Or can other measures be used to generate greater clarity and understanding in this area?
• Do you agree that it is important to have a definition of independence for independent non-executive directors (INEDs)?
• Do you agree that the independence of an INED who also sits on the board of another company in the same group may be compromised? Do you agree with our proposal to prohibit individuals from being an INED on the board of a water company if they sit on the board or boards of other companies in the same group?
• Can share ownership impede actual or perceived independence? Should future allocations of shares to INEDs be prohibited?
• Do you agree with the characteristics which we think should prevent an individual from being independent and therefore being an INED? Should characteristics be deleted, or other characteristics added?
• Do you agree with the characteristics which we think may impair independence, and which should therefore be subject to careful consideration by boards, and reported by companies if applicable? Should some characteristics be deleted, or other characteristics added?
• Do you agree that the definition of independence, and associated reporting obligations, should be consistent for INEDs and chairs?
• Do you agree with our proposals relating to multiple chair appointments? Are there other measures we should consider?
• Do you agree with a requirement for all water companies to have boards which include a greater proportion of INEDs? Is an implementation date of 1 April 2028 appropriate for companies which currently have a lower proportion of INEDs on their boards?
• Do you agree with the principle that audit, remuneration and nomination committees of water companies should not also serve the boards of other companies?
• Do you have views as to whether any of the proposals set out above would reasonably take longer than 1 April 2028 to implement?

How to respond

We encourage you to respond via the form below, by clicking 'Share your views.' Please read the consultation documentation before responding. 

If, for any reason, you cannot use the form, you can respond by email to governancecode@ofwat.gov.uk.

Note that responses may be published. If you would prefer your response to remain confidential, please indicate this clearly. 

We will publish an outcome document after the consultation has closed.