The green paper specifically cites the Big Four as providing examples of good corporate governance among privately-held businesses. It states: ‘The four leading accountancy firms (EY, Deloitte, PWC and KPMG), for example, all of which are limited liability partnerships, have signed up on a voluntary basis to the FRC’s audit firm governance code. This mirrors the UK corporate governance code’.

However, accountancy firms and professional bodies have expressed concerns about how some of the proposed changes would work in practice.

Kate Elsdon, PwC partner, governance and compliance said: ‘Whilst we are supportive of improving standards of corporate governance within privately owned businesses, with such a broad range of organisations impacted, any corporate governance reforms must be flexible, tailored and proportionate in order for them to be successfully embedded and effective.

‘Regulation for regulation's sake risks becoming a box ticking exercise; to be truly effective, corporate governance must aligned to the core of a business's purpose and culture.’

For its part, the ACCA described the proposed adoption of the UK governance framework by private companies as ‘an interesting initiative which should help encourage best practice’.  Jo Iwasaki, head of corporate governance at ACCA said: ‘Ultimately however, the focus should be on a framework that serves the need of investors.’

Writing in a blog Michael Izza, ICAEW president argued that large companies might well feel dismay over governance proposals which they may argue have been based on the poor behaviour of a small minority.

He pointed out that ‘if private companies are drawn into the net of regulation surrounding public ones, then how will this be monitored in the absence of any shareholders?’

Izza described the proposals as ‘contentious’, pointing out that: ‘Senior executives will be concerned shareholders will be empowered to set pay levels, whilst others will wonder why bonuses can’t be clawed back or why there is no proposal to link pay at the top with pay at the bottom.

‘Unions are angry that proposals to have workers on boards have been dropped – in favour of advisory panels for workers and consumers and the allocation of special responsibilities to non-executives.’

In general, there were calls for wider debate on how governance information should be reported.

Fiona Camenzuli, partner in PwC’s reward and employment team, said: ‘While publishing pay ratios might be the right decision for some companies, there is a danger that it could lead to misleading and unhelpful comparisons across companies. For example, comparing pay ratios between a hospitality company and a bank will offer little actionable data and is unlikely to lead to any real change. A fair pay charter, with a requirement to engage with employees, should create the right incentives for boards to address the fairness question.’

Similarly, Camenzuli raised questions about how boards can make sure that they are obtaining appropriate input from a range of stakeholders including employees.

‘We do not think that there is a single way of doing or that it should be necessarily achieved within the existing UK unitary board structure, which on the whole has been successful. For some companies employees on boards may be the route to achieving this objective. But for others, a form of stakeholder committee may be more appropriate,’ she said.

In its response to the green paper, Moore Stephens, pointed out that any employee representative will need to be carefully selected and their full engagement with the wider workforce ensured- either through regular employee surveys or forums.

Sarah Hillary, partner and head of the governance, risk and assurance department at the firm, said: ‘If they go ahead, most businesses will have a strong preference for the introduction of these reforms on a “comply or explain’ basis, rather than as statutory regulation. Large corporates have been facing an increasing amount of red tape over recent years, and forcing more ideas on them would be unwelcome.’

‘Both executive and non-executive directors have long complained that too much of their time is now spent with box ticking exercises. This runs the risk of adding to this also.’

Iwasaki agreed, saying that while proposals intended to encourage greater shareholder activism are to be welcomed, they need to be introduced ‘in a balanced and proportionate way’.

‘The UK government needs to meet public expectations on boardroom accountability without putting the brakes on UK competitiveness. The publication of this green paper provides an important opportunity to evaluate the current corporate governance framework and see what remains fit for purpose,’ Iwasaki said.

The Institute of Directors have welcomed the plans. Oliver Parry, head of corporate governance, said: ‘The government is right to bring a new focus to the corporate governance of unlisted companies, which at the moment is a bit of black box - we don't know what's going on in there until something goes wrong.’