P3. Effective board practices Flashcards
Is board evaluation a statutory requirement?
No, but it is generally accepted good practice
What are the 3 major roles performed by the board?
Direction through setting strategy
Control through monitoring the executives’ progress
Support through it advisory role
Other than performance, what else should be reviewed?
Structure, composition, size and processes
Governance Code’s recommendations for listed companies on NEDs (2)
Half of FTSE350 boards should be independent NEDs, excluding chair (other co’s to have at least two NEDs)
Majority of board committee members should be independent NEDs
What are considered ‘board processes’? (8)
Schedule of future dates
Standing agenda items
Process for adding non-standard items
Structure and format of board papers
Process for calling for board papers
Circulation of board pack
Process for tracking and progressing outstanding actions
Drafting and commenting on draft minutes
2 key roles of the board (the efficiency of which should be reviewed)
Set corporate strategy
Monitor financial performance, internal control and risk management processes
Governance Code requires what after evaluations of boards of listed co’s?
Findings and recommendations to be reported, along with details of how recommendations will be implemented
Who will typically evaluate the chair?
NED’s, led by the SID
Who reviews performance of directors?
Themselves, and their peers
What is CPD?
Continuing professional development
Significance of CPD/considerations (3)
Induction process is just the start of continuing programme of education and updates
Directors must be kept informed of new legislation, regulatory requirements & tech, as well as filling gaps in their knowledge
Important to also be wary of information overload
Main sources of external support for directors
Seminars & webinars
How should listed companies ensure no conflicts between what can be approved by board, and by executive management?
Make demarcations, as agreed by the board, clear and set out in writing and publicly available
6 example of items included in standard directors code of conduct
Commitment to corporate values and culture
Confidentiality
Conflicts of interest
Induction and CPD
Serving on other co’s boards
Carrying out director’s responsibilities
Is there a max tenure period in legislation or code for NEDs?
No
