Division of Responsibilities Flashcards
What does Principle F say about the Chair?
Chair leads the board and is responsible for its overall effectiveness. They should demonstrate objective judgement and promote a culture of openness and debate. They must facilitate constructive board relations and contribution of all directors.
What does Principle G say?
Should include an appropriate combination of executive and NEDs (in particular, independent NEDS), so that no one individual or group of individuals dominates There should be a clear division of responsibilities between the board and management
According to Principle H, what should NEDs bring to the board?
They should provide challenge, strategic guidance, offer specialist advice and hold management to account.
According to Principle I, the board, supported by the co-sec, should ensure that it…
has the policies, processes, information, time and resources it needs to function effectively and efficiently.
What is the independent criteria highlighted in provision 10?
Employee within last 5 years
material business relationship with company within last three years
additional remuneration from company, close family ties, cross-directorships with other directors, significant shareholder or has served for > 9 years on board
It further adds that identification of each NED being independent should be disclosed in the annual report
Who should be an independent NED according to provision 11?
At least half the board, excluding the chair, should be an independent NED
If the chair and CEO are the same individual, what should happen?
if this is proposed by the board, major shareholders should be consulted ahead of the appointment. The board should set out its reasons and publish on the company website.
What is the function of the SID?
to provide a sounding board for the chair and serve as an intermediary for the other directors and shareholders. SID and NEDs should meet without the chair present to appraise the chair’s performance
NEDs have a prime role in…
NEDs have a prime role in appointing/removing executive directors:
should scrutinise and hold to account the performance of management and EDs
Chair should hold meetings with the NEDs without EDs present
Responsibilities of chair, CEO, board and committes should be…
Responsibilities of chair, CEO, SID, board and committees should be clear, set out in writing, agreed by the board and made publicly available.
AR should set out the number of board/comm meetings and the individual attendance
What does the code say the board should consider when making new appointments?
When making new appointments, board should take into account other demands on directors’ time. Additional external appointments should not be undertaken without prior approval of the board, with reasons for permittance explained in the AR.
Directors should not take on more than one NED directorship in a FTSE 100 company
What does the Code say on a co-sec?
All directors should have access to the advice of the co-sec, who is responsible for advising the board on all governance matters. Both the appointment and removal of the co-sec should be a matter for the whole board.
