A company’s constitution may allow its directors to delegate responsibility for certain decisions to board committees. Committees often have directors as members, although a company constitution can allow non-directors to serve on committees.

Committees can typically include the following:

  • a nomination committee, responsible for director appointments;
  • a remuneration committee, responsible for setting directors’ compensation and, increasingly, for setting employee remuneration;
  • an audit committee, responsible for internal audits and reporting; and
  • a risk committee, responsible for internal risk-reporting functions of the audit committee, as well as other compliance responsibilities.

UK company law, however, does not require a board to establish committees, nor does it set out the membership composition or remit of committees. Companies whose securities are traded on a UK regulated market are required to establish an audit committee, and the UK Corporate Governance Code also recommends that listed companies establish a nomination and a remuneration committee. The Code also sets out specific independence requirements for members of committees.

Delegating responsibilities to a committee does not absolve directors of their own responsibilities. Company directors remain chiefly liable for running a company and they need to act carefully and reasonably when delegating duties to a committee.

John leads a global team at Integrity Governance that is focused on making boards more effective. A boardroom expert working with multinationals, SMEs, trade associations and not-for-profits, he provides practical, impartial advice to directors, business owners, executives and CEOs, to help improve board performance. He has 30 years of experience at director level in the corporate world, having worked at blue chip businesses including: Mars, Schroders and Goldman Sachs.

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