03 Board Committee

The board should use committees where this will enhance its effectiveness in key areas, while still retaining board responsibility.

Every board committee should have a clear, formal charter that sets out its role and delegated responsibilities while safeguarding the ultimate decision-making authority of the entire board.
Where boards have board committees, the charter and membership of each should be published on their website and be easily accessible.
Proceedings of committees should be reported back to the board to allow other directors to question committee members.
Each publicly owned company should establish an audit committee of the board with responsibilities to recommend the appointment of external auditors; oversee all aspects of the entity-audit firm relationship; and to promote integrity and transparency in financial reporting.
Audit committees should comprise:
- all non-executive directors, a majority of whom are independent;
- at least one director who is a qualified accountant or has another recognised form of financial expertise; and
- a chairperson who is independent and who is not the chairperson of the board.

Generally, board committees should be majority independent and the chairperson of each committee should be independent.
Board committees should contain or have access to the necessary expertise and training to execute their charters effectively.
Boards should have a nomination committee (where the company is of sufficient size) and disclose the processes it employs to nominate candidates to the Board and the process for shareholders to nominate candidates.

The board should establish appropriate protocols that set out the procedure to be followed if there is a takeover offer for the company including any communication between insiders and the bidder. It should disclose the scope of independent advisory reports to shareholders. These protocols should include the option of establishing an independent takeover committee, and the likely composition and implementation of an independent takeovers committee.