1. Where does governance fit into your strategy?
The UK Corporate Governance Code (the ‘Code’) was published last year and is fast becoming the benchmark by which all organisations are measured – even those companies that are not required to formerly adopt it. The good news is the Code is well written and makes sense so start here; make sure all the Board has read it! Where does governance fit into your organisation’s strategy? How can minor enhancements provide governance enhancements and improve the effectiveness of management and operational decision taking within your business?
2. Does the Chairman have the resource and support he needs?
The code stresses the responsibility of the Chairman to run an effective board, he cannot do this without support. Are the skills in house sufficient to help? Has your organisation implemented structures, frameworks and processes that enable and support an effective board? Do an audit, make the whole board take ownership. Develop a constructive approach and incorporate a governance mentality into your business, make it part of the strategy and implement what is right for your organisation.
3. Is this the year to undertake a facilitated board evaluation process?
Why do so many chairmen and directors resist? A constructive evaluation will enable the skills, knowledge and views of all directors to be aligned; surely it can only be beneficial for a board to become more effective as a team.
4. Are you aware of the new areas of disclosure that the Code will require you to incorporate into your reporting?
The Code broadens the areas requiring comment. These include: board gender mix, the training and induction of directors, annual re-election of directors, as well as your organisations risk appetite, business model and overall financial strategy.
5. Do the Terms of reference of your board and its committees reflect what actually happens?
It is worth checking that they have been updated and making sure that they align to the latest requirements. Helpful new guidelines on audit, nomination, remuneration and risk committees have been published by the Institute of Chartered Secretaries and Administrators.
6. Are you ready for the Bribery Act?
You need to prepare now, latest indications are that it will become law in April 2011. The act has a zero tolerance approach and introduces two new criminal offences (bribing a foreign public official and a corporate offence of failing to prevent bribery). It is up to the board to put in place adequate procedures which should include risk assessment, due diligence, a clear set of policies, as well as monitoring and review.
7. Have you read the UK Stewardship Code?
It was published by the FSA last July and will inform you of the key principles to be adopted by your institutional shareholders.
8. Does your website work for you or could it be improved?
Your website is almost certainly the first port of call for potential customers, suppliers, employees and shareholders. Is it easy to navigate? Does it build your brand? Is the governance section up to date? What does it tell your shareholders about your business? Or is it just full of boiler plate wording? What does it tell your potential shareholder about you?
9. Is it time to review and refresh your board committee structure and membership?
When was this last reviewed by your board as a whole? How do all board members keep up to date with the key debates and decisions of committees they do not attend? Is there a reference note/central point that all directors (but especially non executive directors) can access information and refresh their
memory? Too often it is left to summary sets of minutes circulated months out of date.
10. Have you got the level of expertise to effectively implement commercially appropriate and effective governance frameworks and policies?
If you have a qualified company secretary do they have the experience, gravitas and independence to be effective? If you do not who will? In many ways the company secretary role becomes more pivotal – The Quoted Companies Alliance’s excellent publication, “Corporate Governance for Smaller Quoted Companies”; highlights this when it refers to the company secretary as “a confidential sounding board to one or more directors’. The Guide goes on to say, “it is difficult for the company secretary also to be a director”. Difficult to see how an FD can suddenly put on a company secretary’s hat – but many do!
Carey Group provides professional governance and company secretarial support to listed and other large organisations through a team of highly qualified company secretaries, most of whom have FTSE 100 experience. Support can be on an ongoing or consultancy/project basis. Please contact Richard Butler, FCIS, T: +44 (0) 7917 699170, E: richard.butler@careygroup.co.uk
