CG Week 2 Flashcards
(11 cards)
What is the role of the chairman in leading the Board of Directors (BOD)?
The chairman leads the BOD and the objectives of the company, must remain objective, and foster a culture of openness, debate, and effective contributions from all non-executive directors.
What is the required combination of Executive Directors (ED) and Non-Executive Directors (NED) on the Board of Directors (BOD)?
The board should have an appropriate combination of EDs and NEDs, with an emphasis on independent NEDs. The chairman and CEO must not be the same person.
What should Non-Executive Directors (NEDs) contribute to the Board?
NEDs provide constructive challenge, strategic guidance, offer specialist advice, and hold management to account.
What support should the BOD receive from the company secretary?
The company secretary should provide the BOD with access to policies, processes, information, time, and resources to perform effectively.
What does the UK Corporate Governance Code (2024) say about the chairman’s independence?
The chairman should be independent and cannot also be the CEO. If exceptionally proposed to be the same person, all major shareholders must be informed, and the reasons should be published on the company website.
How many Independent Non-Executive Directors (NEDs) should the Board have?
Excluding the chair, at least 50% of the BOD should be independent NEDs.
What is the role of the Senior Independent Non-Executive Director (SID)?
The SID acts as an intermediary between the chair, the board, and shareholders. The SID should meet annually with NEDs without the chair to discuss the chair’s performance.
What is the responsibility of the chair regarding meetings and the performance of Executive Directors (EDs)?
The chair should meet separately with the NEDs to discuss the performance of the EDs, as they have the authority to appoint and remove them.
What should be included in the annual report regarding the roles and responsibilities of the board?
The annual report should clearly state the responsibilities of the chair, CEO, Senior Independent NED, committees, and the BOD, along with the details of meetings and attendance.
What restrictions are there on full-time Executive Directors taking Non-Executive Director (NED) roles?
Full-time EDs should not take up more than one NED position in FTSE 100 companies or in any significant position.
Who appoints and removes the company secretary?
The appointment and removal of the company secretary must be done by the entire BOD.
