The Year-End Governance Healthcheck: Twelve Questions for Owner-Managers
Photo: Francisclarke, CC BY-SA 4.0, via Wikimedia Commons
Year-end is rarely quiet for an owner-manager. Cash collection, pricing decisions and the next financial year's plan tend to crowd out the quieter work of governance. Yet governance is the operating system of an SME: it determines how decisions are taken, who has authority and whether the company can evidence its position to a bank, investor, purchaser or regulator. A governance MOT before 31 December is therefore less about paperwork for its own sake and more about reducing avoidable risk in 2026 and beyond.
Why a year-end review earns its place
Governance failures rarely announce themselves. They surface during due diligence, a lender review, a shareholder dispute or an insurance claim. By then, the fix is often more expensive than it would have been at the planning stage. A structured healthcheck gives the board a defensible record that it has considered statutory obligations, decision-making authority and succession risk within the current year.
This is not a legal audit and should not replace advice on a specific transaction. It is a maintenance routine: gather the evidence, ask twelve direct questions, record the answers and assign owners for any gaps. Most SMEs can complete the core review in a single session of two to three hours, provided the documents are assembled beforehand.
Prepare a single evidence pack
Before the session, collect the latest confirmation statement and accounts, statutory registers, the shareholder agreement, the delegated authority matrix, the conflict register, board and shareholder minutes, key contracts, the insurance schedule and any recent professional advice. A neutral chair is useful: the finance director or a non-executive can ask the questions without defending the answers.
The twelve questions
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Have statutory filings been made and checked? Confirm the confirmation statement, annual accounts and any event-driven filings are up to date. Red flag: late filing or a mismatch between the filing and the internal register. Simple fix: file promptly and diarise the next deadlines.
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Are the statutory registers accurate? Check the register of members, directors, secretaries, people with significant control and charges. Red flag: an outdated share transfer or an unrecorded charge. Simple fix: correct the register and consider a rectification filing where required.
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Are director duties and conflicts properly documented? Confirm that declarations of interest, outside appointments and related-party arrangements are recorded. Red flag: a conflict discussed orally but never minuted. Simple fix: add a standing conflict item to every board agenda.
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Is the board properly constituted? Review appointments, resignations, quorum requirements and the articles of association. Red flag: decisions taken without a quorum or before an appointment was formally recorded. Simple fix: regularise the position and minute the correction.
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Does delegated authority match current operations? Check bank mandates, contract sign-off limits, capital expenditure approvals and HR authority. Red flag: an outdated matrix that lets a former role approve spend. Simple fix: refresh the matrix and obtain board approval.
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Is the shareholder agreement still fit for purpose? Consider reserved matters, deadlock provisions, share transfers, drag-along and tag-along rights. Red flag: a founder exit or new investor that the agreement does not contemplate. Simple fix: take legal advice before a dispute crystallises.
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Are board minutes and decision trails complete? Review minutes, written resolutions and the audit trail for major decisions. Red flag: a significant contract with no recorded approval. Simple fix: prepare a catch-up minute only where it is accurate and properly authorised.
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Are key contracts and commitments under control? List material customer, supplier, lease and loan agreements, including covenants and change-of-control clauses. Red flag: an unapproved variation or an unnoticed renewal date. Simple fix: maintain a contract register with owners and review dates.
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Is the insurance programme aligned with risk? Check directors and officers cover, employer liability, cyber, property and business interruption. Red flag: a new activity or subsidiary not notified to insurers. Simple fix: request a mid-term review from the broker.
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Is data protection governance operating in practice? Confirm the ICO registration, privacy notices, breach log and processor contracts. Red flag: no record of a recent data incident. Simple fix: adopt a breach log and assign responsibility.
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Are tax and payroll controls reviewed at board level? Consider VAT, PAYE, employment status risk and professional sign-offs. Red flag: overdue filings or unresolved adviser recommendations. Simple fix: obtain a written status report and set dated actions.
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Is there a succession and contingency plan? Review key-person dependence, share transfer arrangements and emergency decision-making authority. Red flag: no documented plan for the absence of a founder or finance lead. Simple fix: prepare a short contingency note and have the board adopt it.
Turning the check-up into an action plan
Classify every gap into three buckets: file or correct now, fix within the quarter, or take professional advice before the next board meeting. Give each action an owner and a date. Record the review itself in the minutes, including the questions asked and the decisions taken. This matters not because a regulator will necessarily inspect the file, but because a contemporaneous record is the clearest evidence that the board has discharged its duties responsibly.
When to call in professional advice
Use the healthcheck to identify issues, not to resolve complex legal, tax or insolvency questions. If the review reveals a likely breach of duty, a disputed shareholder arrangement, an inaccurate register or a covenant breach, take advice early. The cost of a focused conversation is usually modest compared with the cost of an uninformed fix.
A governance MOT is not glamorous, but it is one of the more reliable ways for an owner-manager to close 2026 with fewer loose ends. The objective is not perfection. It is a clear, evidenced position from which the board can make decisions in the new year.
