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AUE2602 slides e-tutor lecture 5 April

The lecture focuses on Principle 7 regarding the composition of the governing body, emphasizing the need for a balanced mix of executive, non-executive, and independent members with appropriate knowledge, skills, experience, and diversity. Key points include the importance of independence, annual declarations of interests, and specific roles such as the chair of the governing body. Participants are expected to understand and apply these principles to scenarios involving governance composition.

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2 views

AUE2602 slides e-tutor lecture 5 April

The lecture focuses on Principle 7 regarding the composition of the governing body, emphasizing the need for a balanced mix of executive, non-executive, and independent members with appropriate knowledge, skills, experience, and diversity. Key points include the importance of independence, annual declarations of interests, and specific roles such as the chair of the governing body. Participants are expected to understand and apply these principles to scenarios involving governance composition.

Uploaded by

phakssir
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Presented by Raeesah Moosa

Focus for today’s lecture:


Principle 7: The governing body should comprise the
appropriate balance of knowledge, skills, experience,
diversity and independence for it to discharge its
governance role and responsibilities objectively and
effectively

We will be focusing on all the paragraphs in this principle that deal with the
composition of the governing body.

By the end of this session you should be able to answer a question on the composition
of the GB and be able to identify the paragraphs applicable and know how to apply it to the
Scenario.
Composition

• Appropriate mix of executive, non-executive and independent non-exec members – par. 7b

• Majority of non-executive members – most of whom should be independent – par. 8

• Appropriate mix of knowledge, skills and experience – par. 7a

• Suitable Diversity – par.7f

• Target: Race & gender representation – par.10

• Number of members – consider certain factors – know the detail here!! – par 7c, 7d

• Min: CEO & at least ONE other EXECUTIVE – par. 9

• Suitable diversity - par. 7f


• Target: Race & gender representation – par. 11

• Periodic, staggered rotation of members – par 12


• Succession plan
Independence & Conflicts

• ANNUALLY = declaration of financial, economic & other interest held


• At each meeting – declare interest

• Independent non‐executive – When? – par 27


• Independent MEMBER – When? – par 28
• 9 year rule – independence of independent non‐exec should be tested every year AFTER 9 years – par. 29

• Disclosure = regarding composition – par 30


NB!! LOTS OF DETAIL HERE
Reflects mix knowledge, skills, experience, diversity & independence
Targets for gender & race = did meet? For each member: Category executive / non‐executive
For non‐executive: Independence? 9 yr rule?
Age
Qualification & experience
Period serving on Governing Body
Other governing bodies / positions held
Chair of governing body

• Independent AND non‐executive director – par 31

• “Lead Independent” = independent non‐executive – par. 32

• Functions of Lead Independent NB!!– know the detail here!! – par 32


• Charter – role & responsibilities

• CEO NOT also Chair of governing body – par 34


• 3 year rule – Retired CEO not chairman until 3 years have elapsed – par 34

• Consider number of chairmanships- par 36


• Chairman: NOT Member of audit committee
NOT Chair of remuneration committee (Can be member)
NOT Chair of social & ethics committee (Can be member)
MAY Chair the risk committee (Can be member)
MAY Chair the nominations committee (SHOULD be a member)
• Succession plan
• Disclosure
Discussion Question

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