Main principles of Codes
A company or organisation would generally be run by a board of people who will be responsible for the long term success of the company. The power of the board would be distributed within the board in such a manner that no one person would gain more power and control of the business than another board member. Usually a few people would be put down responsible for the running of the board whilst another lot would be put responsible for the running of the business. The chairman of the business is the person who would need to exert his leadership responsibilities and make sure that all the roles of the board are very effective in their duties.
The board’s role is to provide entrepreneurial leadership of the company within a framework of prudent and effective controls which enables risk to be assessed and managed. The board should set the company’s strategic aims, ensure that the necessary financial and human resources are in place for the company to meet its objectives and review management performance. The board should set the company’s values and standards and ensure that its obligations to its shareholders and others are understood and met. All directors must act in what they consider to be the best interests of the company, consistent with their statutory duties
The board and committee of the board should be comprised of members who have relevant balance of skills, independence, experience and knowledge of the industry so that they are able to carry out their respective responsibilities and duties effectively. When appointing a new member to the board, the board and committee should have a formal and accurate procedure to assess the credentials of the candidate being appointed for the board. Board members should give themselves enough time to carry out their duties effectively. When members join the board, they should receive a welcoming introduction of the company and should on a regular basis go over their skills and knowledge and then try to expand where possible. The board should be provided with information at an appropriate time and manner in a quality format so that the board members can carry out their duties effectively. The board should on an annual basis take an evaluation test of its directors and committees and assess their performance. If the board finds that some members’ performance has been unsatisfactory then they should carry out a re-election for that position. The company should carry out re-elections on a regular basis; this way the board can be more effective in its duties and won’t spend too much time with a low performing member.
The board should be of sufficient size that the requirements of the business can be met and that changes to the board’s composition and that of its committees can be managed without undue disruption, and should not be so large as to be unwieldy. The board should include an appropriate combination of executive and non-executive directors (and, in particular, independent non-executive directors) such that no individual or small group of individuals can dominate the board’s decision taking.
The value of ensuring that committee membership is refreshed and that undue reliance is not placed on particular individuals should be taken into account in deciding chairmanship and membership of committees. No one other than the committee chairman and members is entitled to be present at a meeting of the nomination, audit or remuneration committee, but others may attend at the invitation of the committee.
The board should provide a reasonable, balanced and clear assessment of the company’s position in all areas and what are their prospects at present time and in the long run. The board is also responsible in governing the mount of significant risks it is willing take in order to achieve its strategic goals. The board should…